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Item 1. Financial Statements

2022-06-08 compared with 2022-05-18 · 635 added, 899 removed, 201 unchanged (88% of the section changed)

1 unchanged sentence

CAMBER ENERGY, INC.

CONSOLIDATED BALANCE SHEETS (Restated)

Consolidated Balance Sheets (unaudited)

Current assets

Accounts Receivable, Net of Allowance

Other Current Assets

Accounts receivable - oil and gas - net

Prepaid expenses

Total current assets

Property and Equipment

Oil and Gas Properties - Subject to Amortization

Oil and Gas Properties - Not Subject to Amortization

Other Property and Equipment

Total Property and Equipment

Accumulated Depletion, Depreciation, Amortization and Impairment

(78,354,120 )

(78,351,825 )

Total Property and Equipment, Net

Equity Method Investment – Elysium Energy, LLC

Notes Receivable

LIABILITIES AND STOCKHOLDERS’ EQUITY

Oil and gas properties, full cost method

Proved developed producing oil and gas properties, net

Total oil and gas properties, net

Due from Viking Energy Group, Inc.

Equity method investment

LIABILITIES AND STOCKHOLDERS DEFICIT

Current liabilities

Accounts payable

Common Stock Payable

Accrued Expenses

Current Asset Retirement Obligation

Current Income Taxes Payable

Accrued expenses and other current liabilities

Current taxes payable

Derivative liability

Total current liabilities

Long-term debt, net

Asset retirement obligation

TOTAL LIABILITIES

Commitments and Contingencies (see Note 10)

Temporary Equity

Preferred Stock Series C, 2,951 and 2,819 Issued and Outstanding Respectively, Liquidation Preference of $101,706,215 and $97,156,835, respectively

Commitments and contingencies (Note 11)

STOCKHOLDERS' DEFICIT

Preferred Stock Series A, 2,000 Shares Authorized of $0.001 Par Value, -0- Shares issued and Outstanding

Preferred Stock Series B, 600,000 Shares Authorized of $0.001 Par Value, 0 and 0 Shares issued and Outstanding, respectively

Common Stock, 25,000,000 shares Authorized of $0.001 Par Value, 13,160,530 and 5,000,000 Shares Issued and Outstanding, respectively

Preferred Stock Series C, 5,200 shares authorized of $ 0.001 par value, 1,605 and 3,886 shares issued and outstanding as of March 31, 2022 and December 31, 2021, liquidation preference of $ 55,316,325 and $ 133,930,990 at March 31, 2022 and December 31, 2021, respectively.

Preferred Stock Series G, 25,000 authorized, $.001 par value, 7,908 and 10,544 issued and outstanding as of March 31, 2022 and December 31, 2021, respectively, liquidation preference of $ 0 as of March 31, 2022 and December 31, 2022, respectively

Common stock, 1,000,000,000 shares authorized of $ 0.001 par value, 360,111,110 and 257,132,026 shares issued and outstanding as of March 31, 2022 and December 31, 2021

Additional paid-in-capital

4 unchanged sentences

( 71,813,552 )

(79,813,325 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

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

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

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Restated)

Consolidated Statements of Operations (Unaudited)

Three months ended

Operating Revenues

Natural Gas Liquids

Total Revenues

Oil and gas sales

Operating expenses

Lease Operating Expenses

Severance and Property Taxes

Depreciation, Depletion, Amortization, and Accretion

Lease operating costs

General and administrative

Stock based compensation

Depreciation, depletion, amortization and accretion

Total operating expenses

Operating Loss

Other Expense (Income)

Interest Expense

Loss from Equity Method Investment

Other Expense (Income), Net

Loss on Derivative liability

Total Other Expenses (Income)

$ (13,634,062 )

$ (3,451,489 )

Less Preferred Dividends

Net loss attributable to common shareholders

(15,581,733 )

Net Loss Per Common Share

Basic and Diluted

Weighted Average Number of Common Shares Outstanding

Basic and Diluted

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

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED JUNE 30, 2020 AND 2019 (Restated)

Preferred Stock

Additional Paid-In Capital

Accumulated Deficit

Stockholders’ Deficit

Balances, March 31, 2019 (as restated)

$ 174,804,234

$ (231,643,389 )

Loss from operations

( 1,017,569 )

Common Shares issued for:

Conversion of Series B Preferred Stock

Payment of Series B Dividend

Conversion of Debenture - Abeyance

Payment for Consulting Fees

True up Shares

Series C Fair Value Adjustment

Balances, June 30, 2019

( 1,860,885 )

Other (expense)

Interest expense

( 1,161,275 )

Equity in loss of unconsolidated entity

( 5,871,908 )

Balances, March 31, 2020 (as restated)

Loss on derivative liability

( 65,010,723 )

( 36,601,064 )

Total other expense

( 42,916,808 )

Common Shares issued for:

Conversion of Series C Preferred Stock

Payment of Consulting Fees

Issuance of Series C Preferred Stock

/Deemed dividend

Net loss before income taxes

( 44,777,693 )

Income tax benefit (expense)

Net loss attributable to Camber Energy, Inc.

( 44,777,693 )

Less preferred dividends

( 6,676,994 )

Net loss attributable to common stockholders

$ ( 68,155,477

$ ( 51,454,687 )

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

Loss per weighted average number of common shares outstanding - basic and diluted

Weighted average number of common shares outstanding

Basic and Diluted

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

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (RESTATED)

Consolidated Statements of Cash Flows (Unaudited)

Three months ended

2 unchanged sentences

$ ( 44,777,693 )

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

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

Stock-based compensation

Depreciation, depletion, amortization and accretion

Bad debt Expense

Share-Based Compensation

Loss from Equity Method Investment

Change in fair value of derivative liability

Changes in Components of Working Capital and Other Assets:

Amortization of debt discount

Equity in loss of unconsolidated entity

Changes in operating assets and liabilities

Accounts receivable

Other Current Assets

Prepaid expenses and other assets

Accounts payable and accrued expenses

Net cash used in operating activities

Investing Cash Flows

Cash Paid for Issuance of Notes Receivable

Cash Paid for Deposits

Net Cash Used in Investing Activities

Financing Cash Flows

Proceeds from Issuance of Series C Preferred Stock

Net Cash Provided by Financing Activities

Increase (Decrease) in Cash

Cash at Beginning of the Period

Cash at End of the Period

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

CAMBER ENERGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – GENERAL

Camber Energy, Inc.

(“ Camber ” or the “ Company ”) is an independent oil and natural gas company engaged in the acquisition, development and sale of crude oil, natural gas and natural gas liquids from various known productive geological formations in Louisiana and Texas.

Additionally, from the July 8, 2019 acquisition of Lineal Star Holdings, LLC (“ Lineal ”), until the divestiture of Lineal effective on December 31, 2019, each as discussed below, the Company, through Lineal, was involved in the oil and gas services industry.

On February 3, 2020, the Company entered into an Agreement and Plan of Merger (as amended to date, the “ Merger Agreement ”, and the merger contemplated therein, the “ Merger ”) with Viking Energy Group, Inc.

(“ Viking ”).

Pursuant to the Merger Agreement, at the effective time of the Merger (the “ Effective Time ”), each share of common stock of Viking (the “ Viking Common Stock ”) issued and outstanding, other than certain shares owned by the Company, Viking and the subsidiary of the Company formed as part of the merger (“ Merger Sub ”), will be converted into the right to receive the pro rata share of 80% of the Company’s post-closing capitalization, subject to certain adjustment mechanisms discussed in the Merger Agreement (and excluding shares issuable upon conversion of the Series C Preferred Stock of the Company)(the “exchange ratio”).

Holders of Viking Common Stock will have any fractional shares of Company common stock after the Merger rounded up to the nearest whole share.

The completion of the Merger is subject to certain closing conditions.

A further requirement to the closing of the Merger was that the Company was required to have acquired 30% of Viking’s subsidiary Elysium Energy Holdings, LLC (“ Elysium ”) as part of a $9,200,000 investment in Viking’s Rule 506(c) offering, which transaction was completed on February 3, 2020 (25% and a $5 million investment) and June 22, 2020 (5% and a $4.2 million investment).

See also “Note 6 – Plan of Merger and Investment In Unconsolidated Entity”.

A novel strain of coronavirus (“ COVID-19 ”) was first identified 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 by effects of COVID-19 in March 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 limited oil and gas production and the fact that all of the Company’s current properties are non-operated, the Company has yet to experience a significant adverse impact from COVID-19.

However, the full extent of the COVID-19 outbreak and changes in demand for oil and 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 operations of the Company.

NOTE 2 – LIQUIDITY AND GOING CONCERN CONSIDERATIONS

At June 30, 2020, the Company’s total current assets of $2.2 million were less than its total current liabilities of approximately $88.2 million, resulting in working capital deficit of $86.0 million, while at March 31, 2020, the Company’s total current assets of $1.1 million were less than its total current liabilities of approximately $79.7 million, resulting in a working capital deficit of 78.6 million.

The increase in the working capital deficit of $7.4 million is due primarily to an increase in the recognized loss on the Series C Derivative Liability.

Recent oil and gas price volatility as a result of geopolitical conditions and the global COVID-19 pandemic may 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 inability 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.

The factors above raise substantial doubt about the Company’s ability to continue to operate as a going concern for the twelve months following the issuance of these financial statements.

The Company believes that it may not have sufficient liquidity to meet its operating costs unless it can raise new funding, which may be through the sale of debt or equity.

The Company had no secured debt outstanding as of June 30, 2020.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company has provided a discussion of significant accounting policies, estimates and judgments in its March 31, 2020 Annual Report on Form 10-K/A.

There have been no changes to the Company’s significant accounting policies since March 31, 2020 which are expected to have a material impact on the Company’s financial position, operations or cash flows.

Amounts presented in the consolidated balance sheet as of March 31, 2020 are derived from our audited consolidated financial statements as of that date.

The unaudited consolidated financial statements as of and for the period ended June 30, 2020 and 2019 have been prepared in accordance with U.S.

generally accepted accounting principles (“U.S.

GAAP”) for interim financial information on a basis consistent with the annual audited consolidated financial statements and with the instructions to Form 10-Q.

The consolidated financial statements presented herein reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position of the Company as of June 30, 2020 and March 31, 2020, and the results of operations for the three month periods ended June 30, 2020 and 2019, the consolidated statements of changes in equity for the three month periods ended June 30, 2020 and 2019 and cash flows for the three month periods ended June 30, 2020 and 2019.

All of these adjustments are of a normal recurring nature.

The results of operations for the interim periods are not necessarily indicative of the results expected for a full year.

The statements should be read in conjunction with the audited consolidated financial statements and the notes thereto which are included in our Annual Report on Form 10-K/A (amendment No.

1) for the year ended March 31, 2020.

Principles of Consolidation

The consolidated financial statements include the accounts of Camber and all of its wholly-owned and majority-owned subsidiaries.

All material intercompany accounts and transactions have been eliminated in consolidation.

Accounts Receivable

Accounts receivable, net, include amounts due for oil and gas revenues from prior month production, accrued interest on the notes receivable due from Lineal and Viking and an estimate of amounts due from N&B Energy related to the September 2018 Asset Purchase Agreement entered into with N&B Energy.

The allowance for doubtful accounts is the Company’s best estimate of the probable amount of credit losses in the Company’s existing accounts receivable.

At June 30, 2020 and March 31, 2020, there were allowances for doubtful accounts of approximately $208,000, included in accounts receivable, and there were bad debts of $0 and $17,694, recognized for the three months ended June 30, 2020 and 2019, respectively.

Notes Receivable

Notes receivable includes the $9,200,000, excluding adjustment for excess loss from equity method investment of $126,186, of notes from Viking as described in “Note 7 – Long-Term Notes Receivable” and “Note 5 – Plan of Merger and Investment In Unconsolidated Entity”, and two notes due from Lineal in the amounts of $1,539,719 and $800,000, respectively, as more fully discussed in “Note 7 – Long-Term Notes Receivable” and “Note 12 – Lineal Merger Agreement and Divestiture”.

As of June 30, 2020, the Company had no allowance for uncollectible amounts related to the notes receivable.

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 require 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 three months ended June 30, 2020 and 2019, respectively.

Investment in Unconsolidated Entities

The Company accounts for its investment in unconsolidated entities under the equity method of accounting when it owns less than 51% of a controlling interest and does not have the ability to exercise significant influence over the operating and financial policies of the entity.

The investment is adjusted accordingly for dividends or distributions it receives and its proportionate share of earnings or losses of the entity.

The current investment in unconsolidated entities is a 30% (25% from February 3, 2020 to June 25, 2020) interest in Elysium Energy Holdings, LLC, which, through its wholly-owned subsidiary, Elysium Energy, LLC, is involved in oil and gas exploration and production in the United States.

The balance sheet of Elysium Holdings, LLC at June 30, 2020 included current assets of $2.2 million, total assets of $32.4 million, total liabilities of $33.2 million and net assets of $(0.8) million.

The balance sheet of Elysium Energy Holdings, LLC at March 31, 2020 included current assets of $4.0 million, total assets of $37.7 million, total liabilities of $34.0 million and net assets of $3.7 million.

The income statement of Elysium Energy Holdings, LLC for the three months ended June 30, 2020 included total revenues of $3.8 million and a net loss of $4.3 million.

See also “Note 6 – Plan of Merger and Investment In Unconsolidated Entity”.

Goodwill is tested for impairment annually and whenever events or circumstances make it more likely than not that an impairment may have occurred.

Goodwill is reviewed for impairment at the reporting unit level, which is defined as operating segments or groupings of businesses one level below the operating segment level.

The Company’s operating segments are the same as the reporting units used in its goodwill impairment test.

Goodwill is tested for impairment by comparing the estimated fair value of a reporting unit, determined using a market approach, if market prices are available, or alternatively, a discounted cash flow model, with its carrying value.

The annual evaluation of goodwill requires the use of estimates about future operating results, valuation multiples and discount rates of each reporting unit to determine their estimated fair value.

Changes in these assumptions can materially affect these estimates.

Once an impairment of goodwill has been recorded, it cannot be reversed.

Revenue Recognition

Exploration and Production Revenue

The Company’s revenue for its exploration and production operations are comprised entirely of revenue from exploration and production activities.

The Company’s oil is sold primarily to marketers, gatherers, and refiners.

Natural gas is sold primarily to interstate and intrastate natural-gas pipelines, direct end-users, industrial users, local distribution companies, and natural-gas marketers.

Natural gas liquids (“ NGLs ”) are sold primarily to direct end-users, refiners, and marketers.

Payment is generally received from the customer in the month following delivery.

Contracts with customers have varying terms, including month-to-month contracts, and contracts with a finite term.

The Company recognizes sales revenues for oil, natural gas, and NGLs based on the amount of each product sold to a customer when control transfers to the customer.

Generally, control transfers at the time of delivery to the customer at a pipeline interconnect, the tailgate of a processing facility, or as a tanker lifting is completed.

Revenue is measured based on the contract price, which may be index-based or fixed, and may include adjustments for market differentials and downstream costs incurred by the customer, including gathering, transportation, and fuel costs.

Revenues are recognized for the sale of the Company’s net share of production volumes.

Sales on behalf of other working interest owners and royalty interest owners are not recognized as revenues.

Fair Value of Financial Instruments

Accounting Standards Codification (“ ASC ”) 820 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements.

It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The standard describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

These include quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities that are not active;

and model-driven valuations whose inputs are observable or whose significant value drivers are observable.

Valuations may be obtained from, or corroborated by, third-party pricing services.

Level 3 – Unobservable inputs to measure fair value of assets and liabilities 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 extent that inputs are available without undue cost and effort.

As of June 30, 2020 and March 31, 2020, the significant inputs to the Company’s derivative liability calculations was Level 3 inputs.

Derivative Liabilities

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 Volume Weighted Average Price (“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.

Th e determination of the Conversion Premium for outstanding Serie s C Shares and the potential obligation to issue T rue- U p shares subsequent to a conversion are based on variable s that are not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No.

815 – 40 and required to be accounted for at fair value as are derivatives liabilities.

The derivative liability at the end of each period includes a derivative liability for the outstanding Series C shares Conversion Premium 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.

(See notes 4 and 10)

Recently Issued Accounting Pronouncements

The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying consolidated financial statements.

Subsequent Events

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.

NOTE 4 – Restatement of previously issued financial statements

On October 31, 2020, the Company received a SEC Comment Letter with respect 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 accounting treatment for our Series C Stock.

The Company recorded such sales as permanent equity 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”).

After considering the SEC Comment letter and reviewing the COD, the Company and the holder of the Series C Stock determined there were several errors made in the drafting of the COD that could result in unintended consequences.

Both parties agreed to subsequently correct the COD, and Certificates of Correction to the COD were filed on December 9, 2020 and on April 20, 2021 to correct the errors.

Both parties agreed the corrections would be applied retroactive to the original filing date of the COD, being August 25, 2016.

However, US GAAP requires a transaction to be accounted for in accordance with the terms of an agreement in effect during the period of the financial statements and, consequently, the Company determined that in accordance with the terms of the original COD, the Series C Stock should have been recorded as temporary equity instead of permanent equity.

In addition, certain provisions of the original COD required the Company to recognize a derivative liability for certain conversions of the Series C Stock into common stock.

After consultations with the SEC staff and the Company’s accounting advisors, the Company determined:

(i) the impact of the error(s) is material for the three months ended June 30, 2020;

and (ii) to restate its Quarterly Report on Form 10-Q for the period ended June 30, 2020, inclusive of comparative financial statements for the period ended June 30, 2019.

As a result of the errors described above, we restated our financial statements to reclassify the Series C Stock from permanent equity to temporary equity and to recognize a derivative liability for the potential obligation to issue additional shares after the Series C shares have been converted to common shares with the Amendment No.

1 to our quarterly Report on Form 10-Q/A (“First Amendment”).

We estimated the fair value of the derivative liability at June 30, 2020 and March 31, 2020 using a binomial pricing model and applying the conversion price (or the lowest trading price for the Company’s common stock subsequent to the conversion, if lower than the conversion price) and the historical volatility of the Company’s common stock.

After additional consultations with the SEC staff and review of the applicable accounting requirements, the Company determined that the accounting for the Series C Stock required further adjustment from the accounting treatment applied in the First Amendment.

The Series C Stock were initially issued in September 2016 and should have been recorded with a deemed dividend to recognize the required conversion premium upon issuance and a loss on derivative liability to recognize the variability if the shares were converted to common shares.

Subsequent measurement should have included adjustments to the carrying value of the Series C Stock to recognize changes in fair value due to changes in the Company’s stock price and recognition of gains or losses on conversion of the Series C Stock into common stock.

Our accounting treatment and calculations are more fully described in note 9 .

Then impact of the restatement on our financial statements included in the First Amendme nt are as follows:

The table below sets forth changes to the consolidated balance sheet as of June 30, 2020:

As Previously

Restated (First Amendment)

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

Accrued expenses

Derivative liability – Series C

Current income taxes payable

Total current liabilities

Asset retirement obligations

TOTAL LIABILITIES

TEMPORARY EQUITY

Preferred Stock Series C

( 1,125,064 )

STOCKHOLDERS DEFICIT

Preferred Stock Series A

Preferred Stock Series B

Additional paid in capital

Accumulated Deficit

(197,560,402 )

Cash flows from investing activities:

Loan to Viking

( 4,297,300 )

Net cash used in investing activities

( 4,297,300 )

Total Stockholders’ Deficit

Cash flows from financing activities:

Repayment of long-term debt

( 1,000,000 )

Redemption of Series G preferred stock

( 1,375,000 )

Redemption of Series C preferred stock

( 18,850,000 )

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

The table below sets forth changes to the consolidated balance sheet as of March 31, 2020:

As Previously

Restated (First Amendment)

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

Common stock payable

Accrued expenses

Derivative liability – Series C

Current income taxes payable

Total current liabilities

Asset retirement obligations

TOTAL LIABILITIES

Commitments and contingencies

TEMPORARY EQUITY

Preferred Stock Series C

Proceeds from long-term debt

Net cash provided by financing activities

Net decrease in cash

( 1,647,364 )

STOCKHOLDERS EQUITY

Preferred Stock Series C

Additional paid in capital

Accumulated deficit

Cash, beginning of period

Cash, end of period

Supplemental Cash Flow Information

Cash paid for:

Supplemental disclosure of Non-Cash Investing and Financing Activities:

Issuance of series C Preferred Stock as investment in Viking

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

CAMBER ENERGY, INC.

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

Three Months Ended March 31, 2022 and 2021

Preferred Stock

Stockholders'

For the year ended three months ended March 31, 2022

Balances, December 31, 2021

$ 409,217,417

1 unchanged sentence

( 71,813,552 )

Total stockholders’ deficit

Common Shares issued for:

Conversion of Series C preferred stock

True-Up Shares

Issuance of Common Shares for Consulting Fees

Redemption of Series C preferred stock for cash

( 18,849,998 )

( 18,850,000 )

Redemption of Series G preferred stock

( 1,374,998 )

TOTAL LIABILITIES AND EQUITY

The table below sets forth changes to the consolidated statement of operations for the three-month period ended June 30, 2020:

Three Months Ended June 30, 2020

Total Revenues

Operating Expenses

Lease Operating Expenses

Severance and Property Taxes

Depreciation, Depletion, Amortization, and Accretion

General and Administrative

Total Operating Expenses

Operating Loss

Other Expense (Income)

Interest Expense

Loss from Unconsolidated Entity

Other Expense (Income), Net

Loss on Derivative Liability

Total Other Expenses

( 1,375,000 )

Warrants issued for debt discount

Balances March 31, 2022

$ 480,897,641

$ ( 549,443,592

Less Preferred Dividends

Net Loss Attributable to Common Shareholders

$ ( 68,185,830

Net Loss Per Common Share

Basic and Diluted

The table below sets forth changes to the consolidated statement of operations for the three-month period ended June 30, 2019:

Three Months Ended June 30, 2019

Total Revenues

Operating Expenses

Lease Operating Expenses

Severance and Property Taxes

Depreciation, Depletion, Amortization, and Accretion

General and Administrative

Total Operating Expenses

Operating Loss

Other Expense (Income)

Interest Expense

Loss from Unconsolidated Entity

Other Expense (Income), Net

Loss on Derivative Liability

Total Other Expenses (Income)

Less Preferred Dividends

Net Loss Attributable to Common Shareholders

Net Loss Per Common Share

Basic and Diluted

The table below sets forth changes to the consolidated statement of shareholders’ equity as of June 30, 2020:

As previously restated (First Amendment)

Balances June 30, 2020

Series C preferred Stock

Balances, December 31, 2020

$ 209,362,384

Additional Paid-in Capital

Accumulated Deficit

$ ( 311,612,946 )

( 102,225,562 )

Common Shares issued for:

Conversion of Series C Preferred Stock

True-Up Shares

Issuance of Common Shares for Consulting Fees

Issuance of Series C Preferred Shares for Cash Proceeds

( 6,164,308 )

Total Stockholders’ Equity, June 30, 2020

( 6,164,308 )

Series C fair value adjustment

( 44,777,693 )

The table below sets forth changes to the consolidated statement of shareholders’ equity as of March 31, 2020:

As previously restated (First Amendment)

Balances March 31, 2021

Series C preferred Stock

$ 221,012,998

Additional Paid-in Capital

Accumulated Deficit

$ ( 356,390,639 )

$ ( 135,339,150 )

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

CAMBER ENERGY, INC.

Notes to Consolidated Financial Statements

NOTE 1 RELATIONSHIP WITH AND OWNERSHIP OF VIKING ENERGY GROUP, INC.

On December 23, 2020 Camber Energy, Inc.

(“Camber”, the “Company”) acquired a 51 % interest in Viking Energy Group, Inc.

On January 8, 2021 and on July 29, 2021 the Company acquired additional interests in Viking resulting in the Company owning approximately 63 % of the outstanding common shares of Viking.

The Company accounts for its investment in Viking under the equity method of accounting because the Company has the ability to exercise significant influence over the operating and financial policies of Viking, but not control.

The December 2020, January 2021 and July 2021 transactions and a new merger agreement in February 2021 are described further below.

December 23, 2020 Transaction

On December 23, 2020, the Company entered into a Securities Purchase Agreement with Viking, pursuant to which Camber acquired 26,274,510 shares (“Camber’s Investment”) 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 the Company’s unconsolidated subsidiary, Elysium Energy Holdings, LLC (“Elysium”), to Viking.

Also in connection with Camber’s Investment, 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.

Acquisition of Additional Viking Shares

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, and EMC agreed to cancel and terminate in 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.

February 2021 Merger Agreement with Viking

On February 15, 2021, the Company entered into an Agreement and Plan of Merger (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-owned subsidiary of the Company.

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share:

(i) of common stock, 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 be converted into the right to receive one share of common stock of the Company;

and (ii) of Series C Convertible Preferred Stock of Viking (the “Viking Preferred Stock”) issued and outstanding immediately prior to the Effective Time will be converted into the right to receive one share of Series A Convertible Preferred Stock of the Company (the “Camber Series A Preferred Stock”).

Each share of Camber Series A Preferred Stock will convert into 890 shares of common stock of Camber (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 the Company’s common stock), will be treated equally with the Company’s common stock with respect to dividends and liquidation, and will only have voting rights with respect to voting:

(a) on a proposal to increase or reduce the Company’s share capital;

(b) on a resolution to approve the terms of a buy-back agreement;

(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 of Viking Common Stock and Viking Preferred Stock will have any fractional shares of Camber common stock or preferred stock after the Merger rounded up to the nearest whole share.

At the Effective Time, each outstanding Viking equity award, will be converted 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 converted 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 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 of Viking Common Stock and Viking Preferred Stock in connection with the Merger (the “Share Issuance”).

The completion of the Merger is subject to customary conditions, including (i) adoption of the Merger Agreement by the Company’s stockholders and approval of the Share Issuance 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.

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”/”reverse merger”, the Company (and its common stock) is 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 term of the Merger, which is not cured within 30 days 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.

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 .

The proceeds from the transaction were used by Viking to (i) acquire an approximate 60.5 % interest Simson-Maxwell, Ltd, a Canadian company engaged in the manufacture and supply of industrial engines, power generation products, services and custom energy solutions;

(ii) acquire a license of a patented carbon-capture system for exclusive use in Canada and for a specified number of locations in the United States;

and (iii) for general working capital purposes.

Accounting for the Viking Investment

As noted above, in accordance with the terms of the Viking Investment, Mr.

Doris became the President and Chief Executive Officer of the Company, resulting in Mr.

Doris being the President and Chief Executive Officer of each of the Company and Viking.

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.

NOTE 2 – ORGANIZATION AND OPERATIONS OF THE COMPANY

Camber is an independent oil and natural gas company engaged in the acquisition, development, and sale of crude oil, natural gas, and natural gas liquids from various known productive geological formations in Louisiana and Texas.

Through the recent investment in Viking and through the Company’s subsequent investments and planned merger with Viking, the Company will continue to be engaged in the acquisition, exploration, development and production of oil and natural gas properties, both individually and through unconsolidated subsidiaries or collaborative partnerships with other companies in this field of endeavor.

NOTE 3 – LIQUIDITY AND GOING CONCERN CONSIDERATIONS

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 $ 68,155,477 for the three months ended March 31, 2022 as compared to a net loss of $ 44,777,693 for the three months ended March 31, 2021.

The 2022 loss was comprised of, among other things, certain non-cash items with a total net impact of $66,103,254 including:

(i) a loss on derivative liability of $ 65,010,723 (ii) Loss in earnings of unconsolidated entity of $ 965,910 (iii) stock-based compensation of $ 123,754 ;

and (iv) Depreciation, depletion and accretion of $ 2,867 .

As of March 31, 2022, the Company has a stockholders’ deficit of $ 68,185,830 and total Long-Term Debt of $ 31,503,541 , net of debt discount.

As of March 31, 2022, the Company has a working capital deficiency of approximately $ 80.4 million.

The largest component of current liabilities creating this working capital deficiency is a derivative liability of $ 81 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 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.

None the less, 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 our 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.

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 obligations and repay its liabilities arising from business operations when they come due.

Management believes the Company will be able to continue to develop new opportunities and will be able to obtain additional funds through debt and / or equity financings to facilitate its development 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.

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.

NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company has provided a discussion of significant accounting policies, estimates, and judgments in its December 31, 2021, Annual Report on Form 10-K.

There have been no changes to the Company’s significant accounting policies since December 31, 2021, which are expected to have a material impact on the Company’s financial position, operations, or cash flows.

Amounts presented in the consolidated balance sheet as of December 31, 2021 are derived from our audited consolidated financial statements as of that date.

The unaudited consolidated financial statements as of and for the three-month periods ended March 31, 2022 and 2021 have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

GAAP”) and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in Camber’s latest Annual Report filed with the SEC on Form 10-K.

In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein.

The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Basis of Consolidation

The financial statements presented herein reflect the consolidated financial results of the Company, its wholly owned subsidiaries, Camber Permian LLC, a Texas limited liability company, CE Operating, LLC, an Oklahoma limited liability company, C E Energy LLC, a Texas limited liability company, which was assigned to PetroGlobe in July 2020 as discussed below under “ Note 12 – Commitments and Contingencies ” – “ Legal Proceedings.

All significant intercompany transactions and balances have been eliminated.

Use of Estimates in the Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with 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 fair value of the Company’s Series C Preferred stock, , impairment of long-lived assets, stock-based compensation, asset retirement obligations, and the determination of expected tax rates for future income tax recoveries.

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.

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 expenses and other current liabilities, accounts payable, derivative liabilities, amount due to director, and convertible notes 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:

inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

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.

inputs to the valuation methodology are unobservable inputs to measure fair value of assets and liabilities 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 extent that inputs are available without undue cost and effort.

As of March 31, 2022 and December 31, 2021, the significant inputs to the Company’s derivative liability relative to the Series C Preferred Stock were Level 3 inputs.

Assets and liabilities measured at fair value as of and for the three months ended March 31, 2022 are classified below based on the three fair value hierarchy described above:

Identical Assets

Significant Unobservable

(three months ended March 31, 2022)

Financial liabilities:

Derivative liability- Series C Preferred Stock

( 65,010,723 )

Total Stockholders' Equity, March 31, 2020

Derivative liability- Series G Preferred Stock

( 65,010,723 )

Assets and liabilities measured at fair value as of December 31, 2021 and losses for the three months ended March 31, 2021 are classified below based on the three fair value hierarchy described above:

Identical Assets

Significant Unobservable

Inputs- December 31, 2021

Total (Losses) (three months ended March 31, 2021

Financial liabilities:

Derivative liability - Series C preferred Stock

( 36,601,064 )

$ ( 36,601,064 )

The table below sets forth changes to the consolidated statements of cash flows for the three month period ended June 30, 2020:

Three Months Ended June 30, 2020

As previously reported

Cash Flows from Operating Activities

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

Depreciation, Depletion, Amortization and Accretion

Bad debt Expense

Share-Based Compensation

Loss from Equity Method Investment

Change in Fair Value of Derivative Liability

Changes in Components of Working Capital and Other Assets:

Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and financial instruments which mature within three months of the date of purchase.

The Company maintains cash and cash equivalents in bank deposit accounts, which at times may exceed federally insured limits of $ 250,000 .

At March 31, 2022 and December 31, 2021, the Company’s cash in excess of the federally insured limit was $ 3,957,018 and $ 5,604,382 , respectively.

Historically, the Company has not experienced any losses in such accounts.

The Company had no cash equivalents at March 31, 2022 and December 31, 2021, respectively

Accounts Receivable

Other Current Assets

Accounts Payable and Accrued Expenses

Net Cash Used in Operating Activities

Investing Cash Flows

Cash Paid for Issuance of Notes Receivable

Cash Paid for Deposits

Net Cash Used in Investing Activities

Financing Cash Flows

Proceeds from Issuance of Series C Preferred Stock

Net Cash Provided by Financing Activities

Increase (Decrease) in Cash

Cash at Beginning of the Period

Cash at End of the Period

The table below sets forth changes to the consolidated statements of cash flows for the three month period ended June 30, 2019:

Three months ended June 30, 2019

As previously reported

Cash Flows from Operating Activities

Accounts receivable, net, include amounts due for oil and gas revenues from prior month production.

The allowance for doubtful accounts is the Company’s best estimate of the probable amount of credit losses in the Company’s existing accounts receivable.

At March 31, 2022 and December 31, 2021 there were no allowances for doubtful accounts.

Investment in Unconsolidated Entities

The Company accounts for its investment in unconsolidated entities under the equity method of accounting when it 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.

The Company accounts for its investments in Viking 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.

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:

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

the cost of properties not being amortized;

the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of

the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties.

No impairment expense was recorded for the three months ended March 31, 2022.

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

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.

Income (loss) per Share

Basic and diluted income (loss) per share calculations are 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 common shares 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.

At March 31, 2022 and December 31, 2021 there were 273,746,569 and 262,224,956 common stock equivalents that were anti-dilutive, respectively.

Revenue Recognition

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.

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.

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.

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.

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.

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.

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.

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.

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 is higher, no True-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 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 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 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 March 31, 2022 and 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.

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.

Recently Adopted Accounting Pronouncements

There were no recently adopted accounting standards that management expects to have a material impact on the Company.

Subsequent events

The Company has evaluated all subsequent events from March 31, 2022 through the date of filing of this report.

NOTE 5 – OIL AND GAS PROPERTIES

The following table summarizes the Company’s oil and gas activities by classification and geographical cost center for the three months ended March 31, 2022.

The allocation between the classifications is based on the relationships summarized in the Company’s annual analysis of reserves as of December 31, 2021.

The Adjustments column reflects depletion and all other increases or decreases that occurred during the three months ended March 31, 2022:

Depletion and Adjustments

Proved developed producing oil and gas properties

United States cost center

Accumulated depreciation, depletion and amortization

( 78,364,432 )

( 78,366,035 )

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

Depreciation, Depletion, Amortization and Accretion

Bad debt Expense

Share-Based Compensation

Loss from Equity Method Investment

Change in Fair Value of Derivative Liability

Changes in Components of Working Capital and Other Assets:

Accounts Receivable

Other Current Assets

Accounts Payable and Accrued Expenses

Net Cash Used in Operating Activities

Investing Cash Flows

Cash Paid for Issuance of Notes Receivable

Cash Paid for Deposits

Net Cash Used in Investing Activities

Financing Cash Flows

Proceeds from Issuance of Series C Preferred Stock

Net Cash Provided by Financing Activities

Increase (Decrease) in Cash

Cash at Beginning of the Period

Cash at End of the Period

NOTE 5 – PROPERTY AND EQUIPMENT

Oil and Gas Properties

Proved developed producing oil and gas properties, net

Camber uses the full cost method of accounting for oil and natural gas producing activities.

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If it is determined that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations.

Costs of oil and natural gas properties are amortized using the units of production method.

Amortization expense calculated per equivalent physical unit of production amounted to $0.80 and $1.21 per barrel of oil equivalent for the three months ended June 30, 2020 and 2019, respectively.

All of Camber’s oil and natural gas properties are located in the United States.

Costs being amortized at June 30, 2020 and March 31, 2020 are as follows:

Oil and gas properties subject to amortization

Oil and gas properties not subject to amortization

Capitalized asset retirement costs

Total oil & natural gas properties

Accumulated depreciation, depletion, and impairment

(78,352,769 )

For the three months ended March 31, 2022 and 2021, the Company recorded $ 0 and $ 0 impairments, respectively.

NOTE 6 – INVESTMENT IN UNCONSOLIDATED ENTITIES

The Company accounts for its investment for its investments in Viking under the equity method.

The Company owns 63 % of the outstanding common shares of Viking March 31, 2022 and December 31, 2021.

Table below shows the changes in the investments in unconsolidated entities for the three-month period ended March 31, 2022 and the year ended December 31, 2021.

Carrying amount – beginning of period

Investment in Viking

Proportionate Share of (losses)

( 9,430,946 )

Net Capitalized Costs

For the three-month periods ended June 30, 2020 and 2019, the Company recorded no impairment.

Additions and Depletion

During the three months ended June 30, 2020 and 2019, the Company incurred no costs of for technical and other capital enhancements to extend the lives of the Company’s wells.

Additionally, the Company recorded approximately $2,164 and $4,000 for depletion for the three months ended June 30, 2020 and 2019, respectively.

As part of the Lineal Acquisition, the Company acquired various operating and finance leases for sales and administrative offices, motor vehicles and machinery and equipment.

Due to the Redemption Agreement discussed in – “Note 1 – General” and below in “Note 12 – Lineal Merger Agreement and Divestiture”, the Company no longer owns the operating and finance leases that it had acquired in connection with the Lineal Acquisition.

Effective August 1, 2018, the Company entered into a month-to-month lease at 1415 Louisiana, Suite 3500, Houston, Texas 77002.

The entity providing use of the space without charge is affiliated with the Company’s Chief Financial Officer.

NOTE 6 – PLAN OF MERGER AND INVESTMENT IN UNCONSOLIDATED ENTITY

Viking Plan of Merger and Related Transactions

On February 3, 2020, the Company and Viking entered into a merger agreement (as amended to date, the “ Merger Agreement ”).

Pursuant to the Merger Agreement, at the effective time of the Merger, each share of common stock of Viking issued and outstanding, other than certain shares owned by the Company, Viking and the Company’s merger sub which will be merged with and into Viking, with Viking being the surviving entity in the merger (“ Merger Sub ”), will be converted into the right to receive the pro rata share of 80% of the Company’s post-closing capitalization, subject to certain adjustment mechanisms discussed in the Merger Agreement (and excluding shares issuable upon conversion of the Series C Preferred Stock of the Company).

Holders of Viking Common Stock will have any fractional shares of Company common stock after the Merger rounded up to the nearest whole share.

The Merger Agreement can be terminated under certain circumstances, including by either Viking or the Company if the Merger has not been consummated on or before September 30, 2020, provided that the Company or Viking shall have the right to extend such date from time to time, until up to December 31, 2020, in the event that the Company has not fully resolved SEC comments on the Form S-4 (a preliminary draft of which has previously been filed) or other SEC filings related to the Merger, and Camber is responding to such comments in a reasonable fashion, subject to certain exceptions.

A further requirement to the closing of the Merger was that the Company was required to have acquired 30% of Elysium as part of a $9,200,000 investment in Viking’s Rule 506© offering, which transaction was completed on February 3, 2020 (25% of Elysium and $5 million investment) and June 25, 2020 (5% of Elysium and $4.2 million investment), as discussed below.

In the event of termination of the Merger Agreement, Camber is required, under certain circumstances described below, to return a portion of the Elysium interests to Viking:

Reason for Termination

Percentage of Elysium

Retained by Camber

Termination of the Merger Agreement by mutual agreement of the parties because the conditions to closing the Merger relating to receipt of exchange listing and regulatory approvals and the Registration Statement on Form S-4, being declared effective, have a reasonable likelihood of not being satisfied through no fault of Camber or Viking

Termination of the Merger Agreement due to either (i) Camber’s determination not to proceed with the Merger even though Viking has substantially performed its obligations pursuant to the Merger Agreement, or (ii) a matter raised in Camber’s Merger Agreement disclosure schedule which was (A) not disclosed by Camber in its Securities and Exchange Commission (SEC) reports, (B) could reasonably result in a material adverse effect on Camber in excess of $500,000, and (c) which Viking objected to within 5 business days of disclosure by Camber to Viking

Termination of the Merger Agreement due to a material breach of the Merger Agreement by Camber or its disclosure schedules

In the event the Secured Notes (defined below) are not repaid within 90 days of the date of termination and the Additional Payment (defined below) is not made

*Assumes the payment of Secured Notes within 90 days of the date of termination of the Merger Agreement and the Additional Payment (defined below) is made.

The Merger Agreement provides that the Secured Notes (defined below) will be forgiven in the event the Merger closes, and the Secured Notes will be due 90 days after the date that the Merger Agreement is terminated by any party for any reason, at which time an additional payment shall also be due to the Company and payable by Viking in an amount equal to (i) 115.5% of the original principal amount of the Secured Notes, minus (ii) the amount due to the Company pursuant to the terms of the Secured Notes upon repayment thereof (the “ Additional Payment ”) is due.

A required condition to the entry into the Merger was that the Company loan Viking $5 million, pursuant to the terms of a Securities Purchase Agreement, which was entered into on February 3, 2020 (the “ 1 st SPA ”).

On February 3, 2020, the Company and Discover Growth Fund, an institutional investor (“ Discover ”), entered into a Stock Purchase Agreement pursuant to which Discover purchased 525 shares of Series C Preferred Stock of the Company, for $5 million, at a 5% original issue discount to the $10,000 face value of such preferred stock.

Pursuant to the 1 st SPA, the Company made a $5 million loan to Viking (using funds raised from the sale of the Series C Preferred Stock shares to Discover), which was evidenced by a 10.5% Secured Promissory Note (the “ 1 st Secured Note ”).

On June 25, 2020, the Company advanced an additional $4.2 million to Viking in consideration for, among other things, an additional 10.5% Secured Promissory Note in the principal amount of $4.2 million (the “ 2 nd Secured Note ” and together with the 1 st Secured Note, the “ Secured Notes ”).

The Secured Notes accrue interest at the rate of 10.5% per annum, payable quarterly and are due and payable on February 3, 2022.

The notes include standard events of default, including certain defaults relating to the trading status of Viking’s common stock and change of control transactions involving Viking.

The Secured Notes can be prepaid at any time with prior notice as provided therein, and together with a pre-payment penalty equal to 10.5% of the original amount of the Secured Notes.

The Secured Notes are secured by a security interest, pari passu with the other investors in Viking’s Secured Note offering (subject to certain pre-requisites) in Viking’s 70% ownership of Elysium and 100% of Ichor Energy Holdings, LLC.

Additionally, pursuant to a separate Security and Pledge Agreement, Viking provided Camber a security interest in the membership, common stock and/or ownership interests of all of Viking’s existing and future, directly owned or majority owned subsidiaries, to secure the repayment of the Secured Notes.

The Secured Notes are convertible into common shares of Viking at a conversion price of $0.24 per share at any time after March 4, 2020, and before the 15 th day after Viking’s common stock has traded at an average daily price of at least $0.55 for 15 consecutive business days (at which point the Secured Notes are no longer convertible), provided that the Company is restricted from converting any portion of the Secured Notes into Viking’s common stock if upon such conversion the Company would beneficially own more than 4.99% of Viking’s common stock (which percentage may be increased or decreased, with 61 days prior written notice to Viking, provided that such percentage cannot under any circumstances be increased to greater than 9.99%).

On and effective June 22, 2020, the Company and Discover entered into a Stock Purchase Agreement (the “ June 2020 Purchase Agreement ”), pursuant to which Discover purchased 630 shares of 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 ”).

Provided that the Company has not materially breached the terms of the June 2020 Purchase Agreement, the Company may at any time, in its sole and absolute discretion, repurchase from Discover all, but not less than all, of the then outstanding shares of Series C Preferred Stock sold pursuant to the agreement by paying to Discover 110% of the aggregate face value of all such shares.

The Company agreed pursuant to the June 2020 Purchase Agreement that if the Merger does not close by the required date approved by the parties thereto (as such may be extended from time to time), the Company is required, at Discover’s option, in its sole and absolute discretion, to immediately repurchase from Discover all then outstanding Series C Preferred Stock shares acquired by Discover pursuant to the June 2020 Purchase Agreement, by paying to Discover 110% of the aggregate Face Value of all such shares (the “ Repurchase Requirement ”), which totals $6,930,000.

On June 22, 2020, the Company and Discover entered into an Amendment to Stock Purchase Agreement (the “ SPA Amendment ”), pursuant to which Discover agreed to terminate the obligation set forth in the February 2020 Stock Purchase Agreement previously entered into between the Company and Discover 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 Merger was terminated.

Investment in Unconsolidated Entity

The Company owns 30% of Elysium as of June 30, 2020 (25% from February 3, 2020 to June 25, 2020), as discussed above, and accounts for such ownership under the equity method of accounting.

The investment is adjusted accordingly for dividends or distributions it receives and its proportionate share of earnings or losses of the entity.

Elysium is involved in oil and gas exploration and production in the United States.

The balance sheet of Elysium at June 30, 2020 included current assets of $2.2 million, total assets of $32.4 million, total liabilities of $33.2 million and net assets of $(0.8) million.

The balance sheet of Elysium at March 31, 2020 included current assets of $4.0 million, total assets of $37.7 million, total liabilities of $34.0 million and net assets of $3.7 million.

Additionally, the income statement for Elysium for the three months ended June 30, 2020 included total revenues of $3.8 million and net loss of $4.3 million.

The carrying value of the notes receivable was reduced by $126,186 as the Company’s share of losses from Elysium for the three months ended June 30, 2020.

In accordance with ASC 323-10-35, the losses from Elysium exceeded the equity investment of the Company which was used to reduce the related notes receivable balance.

If the losses were to exceed the notes receivable balance, no additional losses would be recorded for the equity investment.

Table below shows the changes in the investment in unconsolidated entity for the three-month periods ended June 30, 2020 and 2019, respectively.

Carrying amount at beginning of period

Investment in Elysium

Equity change in net loss of unconsolidated entity applied to Long-Term Notes Receivable

Proportionate Share of Elysium Loss

Carrying amount at end of period

NOTE 7 – LONG-TERM NOTES RECEIVABLE

Long-term notes receivable as of June 30, 2020 and March 31, 2020 are comprised of:

June 30, 2020

March 31, 2020

Notes receivable from Viking Energy Group, Inc.

pursuant to 10.5% Secured Promissory Notes dated February 3, 2020 ($5,000,000) and June 25, 2020 ($4,200,000) in the original principal amount of $9,200,000, having an annual interest rate of 10.5%, with interest due quarterly beginning on May 1, 2020, maturing February 3, 2022.

Accrued and unpaid interest of $89,466 and $83,425 is included in accounts receivable at June 30, 2020 and March 31, 2020, respectively.

The Note is secured by secured interests in six Viking Energy Group, Inc.

subsidiaries.

See also “Note 6 – Plan of Merger and Investment In Unconsolidated Entity”.

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, with accrued and unpaid interest of $38,388 and $37,966 included in accounts receivable at June 30, 2020 and March 31, 2020, respectively.

See also “Note 1 – General” and “Note 12 – Lineal Merger Agreement and Divestiture”.

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, with accrued and unpaid interest of $15,956 and $15,781 included in accounts receivable at June 30, 2020 and March 31, 2020, respectively.

See also “Note 1 – General” and “Note 12 – Lineal Merger Agreement and Divestiture”.

Equity loss of unconsolidated entity applied to notes receivable.

See also “Note 6– Plan of Merger and Investment In Unconsolidated Entity”

current maturities

Carrying amount - ending

NOTE 7 – ASSET RETIREMENT OBLIGATIONS

The following table presents the reconciliation of the beginning and ending aggregate carrying amounts of long-term legal obligations associated with the future retirement of oil and natural gas properties for the three-month periods ended June 30, 2020 and 2019, respectively.

The following table presents the reconciliation of the beginning and ending aggregate carrying amounts of long-term legal obligations associated with the future retirement of oil and natural gas properties for the three months ended March 31, 2022 and the year ended December 31, 2021.

Three months ended March 31,

Year ended December 31,

Carrying amount at beginning of period

Revisions of previous estimates

Acquisition of Viking

Carrying amount at end of period

Camber has short-term obligations of $52,402 and $30,277 related to the plugging liabilities at June 30, 2020 and March 31, 2020, respectively.

NOTE 9 – DERIVATIVE LIABILITY

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 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 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.

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.

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 is higher, no true-up shares are issued.

Our accounting treatment of the Series C Stock is described below:

Prior to April 20, 2021

Issuance of the Series C Stock

Upon issuance we determined that the Series C Stock included an embedded derivative and, because the conversion was generally outside the control of the 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 determined the redemption value of the Series C Stock to be the fair value of the common shares issuable to satisfy the conversion of the Series C Stock.

To the extent that consideration paid for the Series C Stock was less than the redemption value plus 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.

NOTE 8 – LONG TERM DEBT

Long-term debt obligations of Camber Energy, Inc.:

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 and is secured by lien on substantially all of the Company’s assets.

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.

The Note is secured by lien on substantially all of the Company’s assets.

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.

The Note is secured by first lien on the Company’s ownership in Viking.

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.

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.

Principal value of debt

unamortized debt discount

( 15,312,248 )

Total long-term debt, net

Less current portion

The Company entered into a Loan Agreement on December 24, 2021 with the Discover pursuant to which the 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 representing a 5 % original issue discount of the loan face value of $26,315,79.

The Company granted the lender a first-priority security interest in Camber’s common shares of Viking and a first-priority security interest in Camber’s other assets.

The notes are convertible 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.

As an incentive to enter into the Note agreement, Camber granted the lender warrants to purchase 25,000,000 shares of Camber common stock at an exercise price of $ 10 .00 and 25,000,000 warrants with an exercise price of $ 20 .00.

The warrants expire on December 31, 2026.

The Company allocated the net proceeds received of $25,000,000 to the notes and the warrants based on relative fair value and recorded the loan proceeds allocated to the warrants as an additional debt discount of $ 14,763,393 .

The fair value of the warrants was determined based on a black-scholes model.

Debt discounts on the Note are amortized over the life of the Note using the interest method.

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.

Principal maturities of long-term debt for the next five years and thereafter are as follows:

Twelve-month period ended March 31,

The above notes were in default at various times, but have been resolved through settlement (see Note 15 Stockholders Deficit)

NOTE 9 – DERIVATIVE LIABILITIES

The Series C Preferred Stock contains an embedded derivative due to the potential conversion into a variable number of common shares.

Upon conversion of the Series C Preferred share into common shares, the Company has a potential obligation to issue additional common shares 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.

On April 20, 2021, the Company and the holder agreed to modify the COD to require all redemptions and conversions to be satisfied in common shares, which changed the accounting treatment for the embedded derivative.

Issuance of the Series C Stock (prior to April 20, 2021)

Conversion of the face value of the Series C preferred stock is fixed at 3.25 per common share and, because the conversion is generally outside the control of the Company, the face value of the Series C Stock is considered temporary equity and recorded at redemption value.

The Conversion Premium is convertible into common shares 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.

The Company determined the redemption value of the face value of the Series C Stock to be the fair value of the common shares issuable to satisfy the conversion of the face value of the Series C Stock.

The fair value of the Conversion Premium is determined to be the lesser of the amount of cash required to satisfy the Conversion Premium or the fair value of the shares required to satisfy the Conversion Premium since the Company has the option to satisfy the conversion of the Conversion Premium in cash or shares.

To the extent that consideration paid for the Series C Stock was less than the redemption value plus the fair value of the derivative liability, consideration was first allocated to the derivative liability.

The consideration received never exceeded the fair value of the derivative liability.

Consequently, no proceeds were allocated to the redemption value.

The derivative liability was recorded at fair value and a loss on derivative liability was recorded as the difference between the fair value of the derivative liability and the consideration received.

The redemption value was recorded as temporary equity and a deemed dividend.

The cash obligation required to satisfy the Conversion Premium, less cash received was recorded as a derivative liability.

Conversion of the Series C Stock

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Any difference between the current fair value of the common shares issued to satisfy the conversion premium and the originally recorded derivative liability was 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).

Temporary equity is also reduced by the fair value of 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.

1 unchanged sentence

If the VWAP calculation is higher, no True-Up shares are issued.

Management has determined that the potential obligation to issue “true-up” shares under the Conversion Premium creates an additional derivative liability.

The potential obligation to issue True-Up shares creates an additional derivative liability.

The determination of the number of True-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, the Measurement Period does not end until the Company is in compliance.

In addition, if the Company has not complied with certain provisions of the COD, the Measurement Period does not end until the Company is in compliance.

The potential obligation to issue True-Up shares after the conversion date is a derivative liability.

2 unchanged sentences

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.

At each reporting period the Company determined the fair value of the common shares required to satisfy the redemption of the face value of the outstanding Series C Stock and recorded an additional deemed dividend or an equity contribution for any differences between the recorded value and the period end fair value.

The redemption Conversion Premium was assumed to be settled in cash because cash settlement is more favorable to the Company.

7 unchanged sentences

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.

On April 20, 2021, the Company amended the Series C Stock 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 permanent equity with no further period end 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.

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.

We estimated the fair value of the derivative liability for the outstanding Series C Stock Conversion Premium generally 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.

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.

Historically, the Company’s 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.

Activities for Series C Shares derivative liability for the three-month periods ended June 30 , 2020 and 2019 were as follows:

Three months ended June 30,

Consequently, the closing price of the Company’s 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, such price was used for determining fair value in most cases and the Company only considered an alternative measure of fair value when the closing price of the Company’s common stock varied by more than 30 % from the five-day moving average immediately prior to the measurement date.

In such cases, an average closing price of the previous 30-day period was used as an estimate of fair value, adjusted for stock splits if applicable.

In addition, conversion of the Series C shares may require a significant number of common shares to be issued in relation to the total number of shares outstanding.

The market price of the Company’s common stock may not appropriately reflect 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) fair value of the embedded features was determined based on the historical market capitalization of the Company.

Activities for derivative Series C Preferred Stock derivative liability during the three months ended March 31, 2022 and the year ended December 31, 2021 were as follows:

Carrying amount at beginning of period

Issued Series C preferred shares

Change in Fair value

Settlement of Obligation (issuance of common shares)

Carrying amount at end of period

Activities for derivative warrant instruments during the three months ended June 30, 2020 and 2019 were as follows:

Carrying amount at beginning of period

Change in fair value

( 77,121,052 )

( 41,819,869 )

Carrying amount at end of period

The fair value of the derivative liability has been estimated using a binomial model and the historical volatility of the Company’s common stock as of the date of conversion.

NOTE 10 – 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’, at a rate of $ 20,000 per month commencing April 2021.

The Company’s CFO, Frank W.

Barker, Jr., renders professional services to the Company through FWB Consulting, Inc., an affiliate of Mr.

Barker’s., at a rate of $20,000 per month commencing April 2021.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Office Lease .

Information regarding the Company’s office space is disclosed in greater detail above under “Note 5 – Property and Equipment –Leases”, above.

Legal Proceedings .

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The Company has filed a denial to the claims and intends to vehemently defend itself against the allegations.

PetroGlobe Energy Holdings, LLC and Signal Drilling, LLC

In March 2019, PetroGlobe and Signal sued the Company in the 316 th Judicial District of Hutchinson County, Texas (Cause No.

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 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.

The parties filed a motion and order to dismiss the lawsuit with prejudice shortly after execution of the Settlement Agreement.

Apache Corporation

In December 2018, Apache Corporation (“ Apache ”) sued the Company, Sezar Energy, L.P., and Texokcan Energy Management Inc., in the 29 th 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 $586,438 in actual damages, exemplary damages, pre- and post-judgment interest, court costs and other amounts which it may be entitled.

The Company filed a general denial to the claims and asserted the affirmative defense of failure to mitigate.

Apache subsequently filed an amended petition on July 13, 2020.

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.

On September 12, 2019, N&B Energy filed a petition in the District Court for the 285 th 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 seeks amounts owed, pre- and post-judgment interest and attorney’s fees.

The Company denies N&B Energy’s claims, believes it is owed approximately $400,000 related to the Sale Agreement and intends to vehemently defend itself against the allegations and claims and seek counterclaims.

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.

The Company and Messrs.

Doris and Barker 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 three months ended June 30, 2020 and 2019, respectively:

Natural gas sales

Natural gas liquids sales

The following table disaggregates revenue by significant product type for the three months ended March 31, 2022 and 2021 respectively:

Three months ended March 31,

Natural gas sales and liquids

Total oil and gas revenue from customers

NOTE 12 – 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.

On December 31, 2019, the Company entered into, and closed the transactions contemplated by the a 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 cancelled through the redemption.

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.

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 June 30, 2020 and March 31, 2020, $54,344 and $53,747, respectively, of interest related to the December 2019 Lineal Note and Lineal Note No.

2 was accrued and included in the consolidated balance sheets in Accounts Receivable.

NOTE 13 – INCOME TAXES

The Company has estimated that its effective tax rate for U.S.

purposes will be zero percent for the 2020 and 2019 fiscal years as a result of net losses and a full valuation allowance against the net deferred tax assets.

Consequently, the Company has recorded no provision or benefit for income taxes for the three months ended June 30, 2020 and 2019, respectively.

The tax liability of $3,000 as shown on the balance sheet as of June 30, 2020, relates to the Company’s potential Oklahoma franchise tax liability and is not related to income tax.

NOTE 13 – STOCKHOLDERS’ DEFICIT

During the three months ended June 30, 2020, the Company issued 101,514 shares of restricted common stock to service providers in consideration for investor relations and marketing services.

The Company recognized $173,000, based on the grant date fair value of the Company’s common stock, in stock-based compensation expense in prior periods related to the issuance of these shares.

During the three months ended March 31, 2022, the Company issued 140,000 shares of restricted common stock to service providers in consideration for investor relations and marketing services.

The Company recognized $ 123,754 , based on the grant date fair value of the Company’s common stock, in share-based compensation expense.

Series A Convertible Preferred Stock

On August 31, 2020, the Board of Directors approved the designation of 28,092 shares of Series A Convertible Preferred Stock (the “ 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 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.

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 Preferred ”).

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 no right to vote on any matters, questions or proceedings of Camber except:

(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;

(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 March 31, 2022 and December 31, 2020, the Company had no Series A Convertible Preferred Stock issued or outstanding.

Series B Redeemable Convertible Preferred Stock

As of March 31, 2022 and December 31, 2021, the Company had no Series B Redeemable Convertible Preferred Stock issue and outstanding.

Effective on May 15, 2020, due to the fact that no shares of Series B Preferred Stock were outstanding, the Board of Directors approved, and the Company filed, a Certificate of Withdrawal 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 B Preferred Stock effective as of the same date.

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) were required to redeem the 525 shares of Series C Preferred Stock at a 110% premium, in an aggregate amount equal to $5,775,000.

In addition, certain provisions of the Series C Preferred Stock may require the Company to redeem the stock, including the requirement to redeem 525 shares of Series C Preferred Stock in the event the Merger Agreement is terminated, are outside the control of the Company, the Series C Preferred Stock is classified as temporary equity.

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 % 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, 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.

During the three months ended June 30, 2020, the Company sold 630 shares of Series C Preferred Stock to Discover in consideration for $6 million.

During the three months ended June 30, 2019, the Company sold no shares of Series C Preferred Stock.

During the three months ended June 30, 2020, Discover converted 498 shares of the Series C Preferred Stock with a face value of $4,980,000 (recorded value of $7,289,387, including accrued and unpaid dividends) and a total of 8,059,016 shares of common stock were issued, which includes additional shares for conversion premiums.

No conversion occurred during the three months ended June 30, 2019.

As of June 30, 2020 and March 31, 2020, the Company accrued common stock dividends on the Series C Preferred Stock based on the then 24.95% premium dividend rate.

The Company recognized a total charge to additional paid-in capital and Series C Preferred Stock of $1,680,756 and $1,453,718 related to the stock dividend declared but not issued for the three months ended June 30, 2020 and 2019, respectively.

Subsequent to June 30, 2020, the Company issued 4,794,192 shares of common stock (true- up shares) related to prior conversions of Series C Preferred Stock.

The Company did not meet the filing requirement.

As of June 30, 2020 and March 31, 2020, the Series C Preferred shares were convertible into a substantial number of the Company’s common shares which could result in significant dilution of the Company’s existing shareholders.

If the outstanding Series C Preferred were converted as of June 30, 2020 and March 31, 2020, the Company estimates that the following common shares would be required to be issued to satisfy the conversion of the Series C Preferred shares:

In addition, the Series C Preferred Stock contains an embedded derivative and an additional derivative upon conversion.

(See note 10)

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

As of March 31, 2022, Discover was not owed any common shares in connection with previous conversion notices as a result of the extension of the Measurement Period.

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.

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 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.

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 excluding any event that is not solely within the control 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 sufficient authorized and unissued shares.

Section I.G.7(e) of the Designations mistakenly referenced the incorrect Conversion Price.

Section I.G.9 of the Designations 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 Company, 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 Designations are to be interpreted so that net share settlement is within the control of the Company.

The corrections in the Certificates of Correction 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), 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.

The corrections corrected the designations to reflect the original intentions of the parties and to conform such designations to the way the Series C Preferred Stock had been accounted for in practice since its original designation/issuance.

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, 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).

The Securities Purchase Agreements (“SPAs”) between the Company and the Investors regarding the purchase and sale of the Series C Preferred Shares require the Company to, among other things, timely file all reports required to be filed by Company pursuant to requirements of the SEC, and to maintain sufficient reserves from its duly authorized Common Stock for issuance of all Conversion Shares.

On October 6, 2021, the Company received notice from the Investors that they believed the Company breached the SPAs for failing to comply with the foregoing two items, and the Notes 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 agreements (the “October Agreements”) with each of the First Series C Preferred Stock investors, pursuant to which the investors agreed to refrain from declaring defaults or bringing a breach of contract action under the SPAs, and one investor, a noteholder, agreed to refrain from declaring defaults or bringing a breach of contract action under the Notes, in each case provided the Company:

(ii) files by November 19, 2021 all reports required to be filed by the Company with the SEC;

and (iii) to implement and maintain, 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

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 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 24 th 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:

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

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);

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;

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.

As of March 31, 2022 and December 31, 2021, the Series C Preferred shares were convertible into a substantial number of the Company’s common shares which could result in significant dilution of the Company’s existing shareholders.

If the outstanding Series C Preferred were converted as of March 31, 2022 and December 31, 2021, the Company estimates that the following common shares would be required to be issued to satisfy the conversion of the Series C Preferred shares:

Estimated number of shares issuable for conversion at $3.25 per share

2 unchanged sentences

if the Series C preferred shares were converted on the above dates, the Company could be required to issue additional common shares (true-up shares).

As of June 30 , 2020, the Company had 25,000,000 authorized common shares and 13 , 161 ,000 common shares outstanding.

Under the terms of the Series C COD in effect as of that date, it did not clearly articulate the issue if there were an insufficient number of shares available for issuance.

However, the Company believed that it was under no obligation to satisfy the conversion option in anything other than common shares and had a verbal agreement with the holder of this understanding.

This understanding was later memorialized in the April 20, 2021 amendment which specifies that the Company is required to use its best efforts to obtain shareholder approval to increase the number of authorized shares to satisfy conversions.

The Company is under no obligation to satisfy any requested conversions if there is an insufficient number of unissued authorized shares available.

The Certificates of Designations with respect to the Company’s Series C Preferred Stock and Series G Preferred Stock (collectively, the “CODs”) and/or the Stock Purchase Agreements regarding the sale of such Series C Preferred Stock and Series G Preferred Stock (collectively, the “SPA’s”), contain covenants requiring the Company to timely file all reports required to be filed by the Company pursuant to the Exchange Act (the “Filing Requirement”).

4 unchanged sentences

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.

The following is a summary of the Company’s outstanding warrants at June 30, 2020:

Intrinsic Value at

June 30, 2020

April 26, 2021

Series E Redeemable Convertible Preferred Stock and Series F Convertible Preferred Stock

As described above in “ Note 1 – General ” and “ Note 14 – Merger Agreement and Divestiture ”, on the Closing Date, pursuant to the Lineal Plan of Merger, the Company acquired 100 % of the ownership of Lineal from the Lineal Members in consideration for 1,000,000 of the newly issued shares of Series E Preferred Stock and 16,750 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.

Effective on May 15, 2020, due to the fact that no shares of Series E Preferred Stock and Series F Preferred Stock were outstanding, 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 Stock

On or about December 30, 2021, the Company created a new class of preferred stock known as Series G redeemable convertible preferred stock (the “ Series G Preferred Stock ”), having a face value of $10,000 per share.

The rights, entitlements and other characteristics of the Series G Preferred Stock are set out in the Certificate of Designations of Preferences, Powers, Rights and Limitations of Series G Redeemable Convertible Preferred Stock filed by the Company with the State of Nevada on December 30, 2021 (the “ COD ”).

Pursuant to the COD, the 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 Limitations 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, 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 COD;

(b) upon conversion of such shares in accordance with the 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 common shares 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 MAC 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.

In the first quarter of 2022, pursuant to a stock purchase agreement (the “ Stock Purchase Agreement ”) between the Company and an accredited investor (the “Investor”) dated 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, 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.

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.

Partial Redemption of Series G Preferred Stock

On March 10, 2022, the Company paid the Investor $1,375,000 and redeemed the 2,636 shares of Series G Preferred Stock associated with the Note due March 31, 2022, thereby canceling such Note and reducing the number of shares of Series G Preferred Stock outstanding from 10,544 to 7,908.

As mentioned above, the Investor may not convert any of the remaining shares of 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 the Investor, and the Company may redeem the shares of Series G Preferred Stock associated with each Note by paying the Investor $ 1,375,000 as full consideration for such redemption.

On April 26, 2021, the Company issued warrants to Regal Consulting, LLC (“Regal”) entitling Regal to purchase 100,000 shares of common stock of the Company at an exercise price of $ 0.705 per share.

The company recognized an expense of $ 42,037 in connection with the warrants.

The warrants expire on April 25, 2022 .

The following is a summary of the Company’s outstanding warrants at March 31, 2022:

lntrinsic Value at

March 31, 2022

September 12, 2022

Warrants issued in connection with the sale of convertible notes.

The warrants were exercisable on the grant date (April 26, 2016) and remain exercisable until April 26, 2021.

December 30, 2026

April 25, 2025

December 31, 2026

Warrants issued in connection with funding.

3 unchanged sentences

The warrants were exercisable on the grant date (May 25, 2018) and remain exercisable until May 24, 2023.

NOTE 15 – SHARE-BASED COMPENSATION

Warrants issued in connection with the Series G Preferred Stock and remain exercisable until December 30, 2026

Warrants issued to a consultant for services and are exercisable until April 25, 2022.

Warrants issued in connection with the issuance of a $25,000,000 promissory note

NOTE 14 – STOCK-BASED COMPENSATION

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.

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 September 30, 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.

Stock Options

As of June 30, 2020 and March 31, 2020, the Company had 2 stock options outstanding with a weighted average exercise price of $40,429,700.

Of the Company’s outstanding options, no options were exercised or forfeited during the three months ended June 30, 2020.

Additionally, no stock options were granted during the three months ended June 30, 2020.

Compensation expense related to stock options during the three-month periods ended June 30, 2020 and 2019 was $0.

Options outstanding and exercisable at June 30, 2020 and March 31, 2020 had no intrinsic value.

The intrinsic value is based upon the difference between the market price of Camber’s common stock on the date of exercise and the grant price of the stock options.

As of June 30, 2020 and March 31, 2020, there was no remaining unrecognized share-based compensation expense related to all non-vested stock options.

Options outstanding and exercisable as of June 30, 2020:

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.

NOTE 15 – INCOME (LOSS) PER COMMON SHARE

The calculation of earnings (loss) per share for the three months ended June 30, 2020 and 2019 was as follows:

Three Months Ended

June 30, (as restated)

The calculation of earnings (loss) per share for the three months ended March 31, 2022 and 2021, was as follows:

T hree Months Ended

Income (loss)

$ ( 68,155,477

$ ( 44,777,693 )

Less preferred dividends

Net loss attributable to common stockholders

Weighted average share – basic

Dilutive effect of common stock equivalents

Options/warrants

( 6,676,994 )

Net income (loss) attributable to common stockholders

$ ( 68,155,477

$ ( 51,454,687 )

Denominator Weighted average share – basic

Dilutive effect of common stock equivalents Options/warrants

Preferred C shares

Total Weighted average shares – diluted

Income (loss) per share – basic

Continuing operations

Income (loss) per share – diluted

Continuing Operations

For the three months ended June 30, 2020 and 2019, the following share equivalents related to convertible debt and warrants 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.

Common Shares Issuable for:

Convertible Debt

Options and Warrants

Series C Preferred Shares (1)

(1) Based on the lowest possible conversion rate of the Series C Preferred Stock during the period for the conversion premium.

NOTE 17 – SUPPLEMENTAL CASH FLOW INFORMATION

Net cash paid for interest and income taxes was as follows for the three months ended June 30, 2020 and 2019:

Non-cash investing and financing activities included the following:

Three Months Ended

Issuance of Common Stock of Prior Conversions of Convertible Notes

Settlement of Common Stock Payable

Change in Estimate for Asset Retirement Obligations

Stock Dividends Distributable but not Issued

Issuance of Stock Dividends

NOTE 18 – FAIR VALUE MEASUREMENTS

When applying fair value principles in the valuation of assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs.

The Company has not changed its valuation techniques used in measuring the fair value of any financial assets or liabilities during the fiscal years presented.

The fair value estimates take into consideration the credit risk of both the Company and its counterparties.

When active market quotes are not available for financial assets and liabilities, the Company uses industry standard valuation models.

Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including credit risk, interest rate curves, foreign currency rates and forward and spot prices for currencies.

In circumstances where market-based observable inputs are not available, management judgment is used to develop assumptions to estimate fair value.

Generally, the fair value of our Level 3 instruments are estimated as the net present value of expected future cash flows based on internal and external inputs.

Fair Value Measurements

The liabilities carried at fair value as of June 30, 2020 and March 31, 2020 were as follows:

June 30, 2020

Derivative liability

Total liabilities at fair value

March 31, 2020

Derivative liability

Total liabilities at fair value

The derivative liabilities relating to the Series C Preferred Stock are considered level 3 because, under certain circumstances the closing price of the Company’s common stock as quoted on the NYSE American stock exchange may not represent fair value and require adjustment (see note 9 ).

There were no transfers in or out of Level 3 for the three-month periods ended June 30, 2020 or 2019.

Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

In addition to the financial instruments that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair value on a non-recurring basis as required by U.S.

Generally, assets are recorded at fair value on a non-recurring basis as a result of impairment charges or as part of a business combination.

There were no liabilities carried at fair value as of June 30, 2020 and March 31, 2020.

Denominator Total Weighted average shares – diluted

Income (loss) per share – basic Continuing operations

Income (loss) per share – diluted Continuing Operations

NOTE 16 – SUBSEQUENT EVENTS

Authorized Shares of Common Stock:

On April 16, 2020, pursuant to the authorization and approval provided by the stockholders of the Company at the special meeting of stockholders held on April 16, 2020, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to increase its authorized shares of common stock, $0.001 par value per share, from 5 million shares to 25 million shares, which filing became effective on the same date.

On February 23, 2021, pursuant to the authorization and approval provided by the stockholders of the Company at the special meeting of stockholders held on February 23, 2021, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to increase its authorized shares of common stock, $0.001 par value per share, from 25 million shares to 250 million shares, which filing became effective on the same date.

On December 30, 2021, pursuant to the authorization and approval provided by the stockholders of the Company at the special meeting of stockholders held on December 30, 2021, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to increase its authorized shares of common stock, $0.001 par value per share, from 250 million shares to 1 billion shares, which filing became effective on the same date.

Consulting Agreements:

On February 15, 2020, the Company entered into a letter agreement (“Sylva Agreement”) with Sylva International LLC d/b/a SylvaCap Media (“SylvaCap”), pursuant to which SylvaCap agreed to act as the Company’s non-exclusive digital marketing service provider in consideration for an aggregate of 100,000 shares of restricted common stock (the “SylvaCap Shares”), which are fully-earned upon their issuance, and $50,000 per month during the term of the agreement, which was to end on June 15, 2020.

On May 12, 2020, the Company entered into the first amendment to the Sylva Agreement.

Pursuant to the amendment, the Company and SylvaCap extended the term of the letter agreement to October 19, 2020.

The SylvaCap Shares were issued on May 15, 2020.

On January 6, 2021, the Company entered into a letter agreement SylvaCap (the “2021 Sylva Agreement”), pursuant to which SylvaCap agreed to act as the Company’s non-exclusive digital marketing service provider in consideration for an aggregate of 275,000 shares of restricted common stock, which are fully-earned upon their issuance, and $50,000 per month during the term of the agreement, which was to end on December 31, 2021.On or about January 1, 2022, the Company and SylvaCap extended the term of the 2021 Sylva Agreement to June 30, 2022, and the Company agreed to issue SylvaCap an additional 150,000 shares of restricted common stock.

The monthly cash fee remained the same.

On or about January 11, 2021, the Company entered into a consulting agreement with Agro Consulting, LLC (“Agro”) pursuant to which Agro agreed to provide services, including introductions to business development and acquisition opportunities, to the Company for a 4-month period ending May 11, 2021.

The Company agreed to pay Agro a consulting fee of $195,000, payable, at the Company’s option, in cash or shares of restricted common stock of the Company based on a share price equal to the closing price of the Company’s common stock on January 11, 2021.

The Company opted to pay $25,000 in cash and $170,000 in stock.

On or about February 25, 2021 the parties entered into an amending agreement to extend the term to November 15, 2021, in exchange for which the Company agreed to pay Agro a fee of $295,000, which the Company opted to pay $25,000 in cash and $270,000 in stock (based on the same stock price as per the original agreement).

On or about April 22, 2021 the parties entered into a second amending agreement to extend the term to March 15, 2022, in exchange for which the Company agreed to pay Agro a cash fee of $50,000 and issue to Agro 360,000 shares of restricted common stock.

On or about July 28, 2021 the parties entered into a third amending agreement to extend the term to August 31, 2022, in exchange for which the Company agreed to pay Agro a cash fee of $50,000 and issue to Agro 450,000 shares of restricted common stock.

On or about April 22, 2021, the Company entered into a letter agreement with Regal Consulting LLC (“ Regal ”), pursuant to which Regal agreed to provide the Company with strategic consulting and business advisory services in consideration for warrants entitling Regal to purchase 100,000 shares of common stock (the “ Regal Warrants ”), and $20,000 per month during the term of the agreement, which was to end on October 22, 2021.

The Regal Warrants have a one-year term and an exercise price equal to closing price of the Company’s common stock on April 22, 2021.

On October 14, 2021, the Company entered into an amendment to the agreement to extend the term to April 22, 2022.

Pursuant to the amendment, the Company and SylvaCap extended the term of the letter agreement to October 19, 2020, and the Company agreed to issue Regal 5,000 shares of restricted common stock per month during the extended term.

Shares of Series A, Series B, Series E and Series F Convertible Preferred Stock:

The Company previously designated (a) 2,000 shares of preferred stock as Series A Convertible Preferred Stock (November 2011);

(b) 600,000 shares of preferred stock as Series B Redeemable Convertible Preferred Stock (Amended and Restated on August 2016);

(d) 1,000,000 shares of preferred stock as Series E Redeemable Convertible Preferred Stock (July 2019);

and (e) 16,750 shares of preferred stock as Series F Redeemable Preferred Stock (July 2019).

Effective May 15, 2020, due to the fact that no shares of Series A Convertible Preferred Stock, Series B Redeemable Convertible Preferred Stock, Series D Convertible Preferred Stock, Series E Redeemable Convertible Preferred Stock or Series F Redeemable Preferred Stock were outstanding, the Board of Directors approved, and the Company filed, Certificate of Withdrawal of Certificate of Designations relating to such series of preferred stock with the Secretary of State of Nevada and terminated the designation of its Series A Convertible Preferred Stock, Series B Redeemable Convertible Preferred Stock, Series D Convertible Preferred Stock, Series E Redeemable Convertible Preferred Stock and Series F Redeemable Preferred Stock effective as of the same date.

As a result, the only preferred stock which is currently designated by the Company is the Company’s Series C Redeemable Convertible Preferred Stock.

Shares of Series C Preferred Stock:

Conversions of Series C Stock in 2020:

From April 1, 2020 through December 31, 2020, Discover converted 756 shares of Series C Preferred Stock into approximately 19,823,487 shares of common stock.

Sales of Series C Stock in 2020:

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.

Additionally, provided that the Company has not materially breached the terms of the June 2020 Purchase Agreement, the Company may at any time, in its sole and absolute discretion, repurchase from Discover all, but not less than all, of the then outstanding shares of Series C Preferred Stock sold pursuant to the agreement by paying to Discover 110% of the aggregate face value of all such shares.

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.

Finally, 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 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.

On June 22, 2020, the Company and Discover entered into an Amendment to Stock Purchase Agreement (the “ SPA Amendment ”), pursuant to which Discover agreed to terminate the obligation set forth in the Stock Purchase Agreement previously entered into between the Company and Discover 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 Merger was terminated.

On December 11, 2020, the Company entered into an Exchange Agreement (the “ Exchange Agreement ”) with Discover.

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, the Investor 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.

Sales of Series C Stock in 2021:

On January 8, 2021, the Company issued, effective December 31, 2020, 1,890 shares of Series C Stock to EMC Capital Partners, LLC, and received 16,153,846 shares of Viking common stock as consideration.

On or about July 9, 2021, Antilles Family Office, LLC purchased 1,575 shares of Series C Stock from the Company for $15 million.

True-Up Issuances in 2021:

Between February 23, 2021 and June 17, 2021, the Company issued Discover 43,970,077 shares of common stock in connection with the shares of Series C Stock converted by Discover in 2020.

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.

On September 1, 2021, the Company issued 10,360,076 shares of common stock to Discover in connection with a true-up notice from Discover.

The Company disputed the issuance but issued the shares on a without prejudice basis.

In October, 2021, as part of a forbearance arrangement entered into with Discover in connection with the Company not filing all reports required with the Securities and Exchange Commission, the Company acknowledged that all prior conversion notices issued by Discover were true and correct.

Conversions of Series C Stock in 2021:

From June 18, 2021 through December 31, 2021, Discover converted 1,575 shares of Series C Preferred Stock into approximately 174,218,536 shares of common stock.

From September 14, 2021 through December 31, 2021, EMC converted 97 shares of Series C Preferred Stock into approximately 12,443,320 shares of common stock.

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.

Share Issuances & Consulting Arrangements

Between September 14, 2021 and January 6, 2022, the Company issued 14,495,827 shares of common stock to EMC Capital Partners, LLC (“EMC”) in connection with the conversion by EMC of shares of the Company’s Series C Preferred Stock.

Series C Preferred Stock

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 of14,495,825 were issued on May 16, 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 on or about such date and 14,495,825 were issued on or about May 12, 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 35,834,791 shares of common stock.

On May 13, Discover converted 30 shares of Series C Preferred Stock into approximately 3,848,450 shares of common stock.

Outstanding Series C Stock

On May 16, 2022, Discover no longer holds any Series C Preferred Stock and Antilles holds 1,175 shares of Series C Preferred Stock.

Based on applicable conversion metrics and entitlements set out in the COD, the Company estimates the number of common shares issuable to Antilles on the conversion of such shares of Series C Preferred Stock to be as follows:

Common Shares Potentially Issuable to Discover:

Common Shares Potentially Issuable to Antilles:

Antilles Family Office - Est.

Common Share Calc.

Conversion Price for Preferred Stock

Camber Common Share Price

Price for Calculating Conversion Premium (i.e.

85% of VWAP less $0.10)

Series C Pref Shares

Face value per share

Annual Conversion Premium

Total conversion Premium (7 years guaranteed)

Underlying common shares for Face Value Portion

Underlying common shares for Conversion Premium

Total Potential Shares

Dealings with Viking Energy Group, Inc.

Amendments to and Termination of 2020 Merger Agreement:

On May 27, 2020, Viking and Camber entered into the First Amendment to Agreement and Plan of Merger (the “ First Amendment ”) to amend the Merger Agreement to (i) modify the Camber Percentage (as defined below) adjustment mechanism to cap the aggregate Camber Percentage Increase (as defined below) or Camber Percentage Decrease (as defined below) at 5%;

(ii) modify the events resulting in such adjustments;

(iii) correct a prior error with such calculation which discussed Camber being required to have $4 million in cash at closing;

and (iv) agree that neither party will raise capital from the other party’s existing shareholders without the prior written consent of the other party.

On June 15, 2020, Viking and the Company entered into a Second Amendment to Agreement and Plan of Merger (the “ Second Amendment ”) to amend the Merger Agreement to extend the date after which the Merger Agreement can be cancelled by either the Company or Viking, if not completed thereby, from June 30, 2020 to September 30, 2020.

On June 22, 2020, the Company and Discover entered into an Amendment to Stock Purchase Agreement (the “ SPA Amendment ”), pursuant to which Discover agreed to terminate the obligation set forth in the Stock Purchase Agreement previously entered into between the Company and Discover 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 Merger was terminated.

On June 25, 2020, the Company and Viking entered into a Third Amendment to Agreement and Plan of Merger, which (i) provided for the entry into the June 2020 SPA (defined below)

On June 25, 2020, the Company loaned Viking an additional $4.2 million, pursuant to the terms of a Securities Purchase Agreement, which was entered into on the same date (the “ June 2020 SPA ”).

The $4.2 million loan was evidenced by a 10.5% Secured Promissory Note (the “ June 2020 Secured Note ” and together with the February 2020 Secured Note, the “ Secured Notes ”), the repayment of which was secured by the terms of a Security and Pledge Agreement.

The June 2020 Secured Note has substantially similar terms as the February 3, 2020 10.5% Secured Note discussed under “Note 6 – Plan of Merger and Investment in Unconsolidated Entity“, and substantially similar security obligations of Viking in connection therewith.

As additional consideration for the Company making the loan to Viking, Viking assigned the Company an additional 5% of Elysium pursuant to the terms of an Assignment of Membership Interests dated June 25, 2020, which brings the Company’s current total ownership of Elysium up to 30%.

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”).

In connection with Camber’s Acquisition, 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 Acquisition, 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 Acquisition, 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, and EMC agreed to cancel and terminate in the EMC Note and all other liabilities, claims, amounts owing and other obligations under the Note.

February 2021 Merger Agreement with Viking:

On February 15, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Viking.

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share:

Each share of Camber Series A Preferred Stock will convert into 890 shares of common stock of Camber (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 the Company’s common stock), will be treated equally with the Company’s common stock with respect to dividends and liquidation, and will only have voting rights with respect to voting:

(a) on a proposal to increase or reduce the Company’s share capital;

(b) on a resolution to approve the terms of a buy-back agreement;

(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 of Viking Common Stock and Viking Preferred Stock will have any fractional shares of Camber common stock or preferred stock after the Merger rounded up to the nearest whole share.

The Merger Agreement provides, among other things, 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 Company 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 Issuances ”).

The completion of the Merger 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.

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”, 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.