What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-12 compared with 2022-05-20 · 45 added, 33 removed, 176 unchanged (31% of the section changed)

23 unchanged sentences

PLAN OF OPERATIONS

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.

The Company’s business plan is to engage in the acquisition, exploration, development of and production from oil and natural gas properties, both individually and through collaborative partnerships with other companies in this field of endeavor.

The Company has relationships with industry experts and formulated an acquisition strategy, with emphasis on acquiring under-valued, producing properties from distressed vendors or those deemed as non-core assets by larger sector participants.

The Company does not focus on speculative exploration programs, but rather targets oil and gas properties with current production and untapped reserves.

The Company’s growth strategy includes the following key initiatives:

Acquisition of under-valued producing oil and gas assets

Employ enhanced recovery techniques to maximize production:

Implement responsible, lower-risk drilling programs on existing assets

Aggressively pursue cost-efficiencies

Opportunistically explore strategic mergers and/or acquisitions

Actively hedge to mitigate commodity risk

Camber’s aim is to become a growth-oriented diversified energy company.

The Company owns minority, non-operated working interests in certain oil & gas wells in Texas and/or Louisiana, and through its investment in Viking, the organization provides custom energy & power solutions to commercial and industrial clients in North America.

Viking also holds an exclusive license in Canada to a patented carbon-capture system, and has a majority interest in:

(i) an entity with intellectual property rights to a fully developed, patent pending, ready-for-market proprietary Medical & Bio-Hazard Waste Treatment system using Ozone Technology;

and (ii) entities with the intellectual property rights to fully developed, patent pending, ready-for-market proprietary Electric Transmission and Distribution Open Conductor Detection Systems.

Pending Merger

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As of the date of filing this report, neither Viking or Camber has advised of its intention to terminate the Merger Agreement.

There is no guarantee that the merger will be completed.

The Merger has not been completed.

As of August 12, 2022, neither Viking nor Camber has advised of its intention to terminate the Merger Agreement.

However, given the lapse of time since the date of the Merger Agreement and the lack of progress during that period toward completing certain of the transaction requirements and satisfying certain of the conditions to the merger, we believe it is reasonably likely that certain terms, including economic terms of the merger would need to be modified by the parties in order for the parties to proceed with the merger.

While the parties have discussed this likelihood, neither party has determined the revised terms, if any, upon which it would be prepared to proceed with a revised merger agreement.

Any revisions to the terms and conditions of the merger agreement would be subject to the written agreement of the parties, and there is no assurance Viking and Camber will agree on any such proposed modifications or conditions.

Moreover, the satisfaction of conditions, whether existing or new, may be outside of Camber’s control.

Going Concern Qualification

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

The Company generated a net loss of $(44,777,693) for the three months ended March 31, 2021 as compared to a net loss of $8,004,946 for the three months ended March 31, 2020.

The Company generated a net loss of $63,560,442 for the six months ended June 30, 2022 as compared to a net income of $18,060,420 for the six months ended June 30, 2021.

The 2022 loss was comprised of, among other things, certain non-cash items with a total net impact of $59,737,024 including:

(i) Loss on derivative liability of $36,601,064 (ii) Loss in earnings of unconsolidated entity of $5,871,908 (iii) stock-based compensation of $1,120,792;

(i) a loss on derivative liability of $57,602,973 (ii) Loss in earnings of unconsolidated entity of $2,004,560 (iii) stock-based compensation of $123,754;

and (iv) Depreciation, depletion and accretion of $5,737.

As of March 31, 2021, the Company has a stockholders’ deficit of $(135,339,150) and total Long-Term Debt of $18,000,000.

As of March 31, 2021, the Company has a working capital deficiency of approximately $133.6 million.

The largest components of current liabilities creating this working capital deficiency include:

(i) a term loan agreement with a face value of approximately $18.0 million as of March 31, 2021 and a derivative liability of $132.2 million.

As of June 30, 2022, the Company has a stockholders’ deficit of $28,444,596 and total Long-Term Debt of $32,305,737, net of debt discount.

As of June 30, 2022, the Company has a working capital deficiency of approximately $38.5 million.

The largest component of current liabilities creating this working capital deficiency is a derivative liability of $34 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.

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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.

In April 2021, the Company borrowed $2.5 million from an institutional investor at 10% per annum maturing December 11, 2022, and in July 2021 the Company sold 1,575 shares of Series C Preferred Stock to an institutional investor in the amount of $15 million, both to facilitate working capital and new acquisitions.

RESULTS OF CONTINUING OPERATIONS

The following discussion of the financial condition and results of operation of the Company for the three months ended March 31, 2021 and 2020, should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-KT for the ended December 31, 2020.

The following discussion of the financial condition and results of operation of the Company for the three and six months ended June 30, 2022 and 2021, should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Liquidity and Capital Resources

As of March 31, 2021, and December 31, 2020, the Company had $342,373 and $868,548 in cash holdings, respectively.

Three months ended March 31, 2021 compared to the three months ended March 31, 2020

The Company had gross revenues of $65,653 for the three months ended March 31, 2021, as compared to $88,899 for the three months ended March 31, 2020, reflecting a decrease of $23,246.

This decrease in revenue is a result of a decrease in production realized by the Company in 2021

The Company’s operating expenses increased to $1,926,538 for the three-month period ended March 31, 2021, from $1,594,642 in the corresponding prior period.

Lease operating costs decreased by $70,311 to $28,104 for the three-month period ended March 31, 2021 as compared to $98,415 for the three-month period ended March 31, 2020, due to lower realized production levels.

DD&A expense was relatively unchanged at $5,043 for the three months ended March 31, 2021 as compared to $5,205 for the three months ended March 31, 2020.

General and administrative expenses and stock-based compensation combined reflected an increase of $402,369 to $1,893,391, when compared to $1,491,022 in the corresponding prior period.

As of June 30, 2022, and December 31, 2021, the Company had $2,199,578 and $5,854,382 in cash holdings, respectively.

Three months ended June 30, 2022 compared to the three months ended June 30, 2021

The Company had gross revenues of $171,651 for the three months ended June 30, 2022, as compared to $97,238 for the three months ended June 30, 2022, reflecting an increase of $74,413.

This increase in revenue is a result of an increase in oil and gas realized prices in 2022.

The Company’s operating expenses decreased to $1,140,859 for the three-month period ended June 30, 2022, from $1,321,493 in the corresponding prior period.

Lease operating costs increased by $9,990 to $41,365 for the three-month period ended June 30, 2022 as compared to $31,375 for the three-month period ended June 30, 2021, due to lower realized production levels.

DD&A expense was relatively unchanged at $2,870 for the three months ended June 30, 2022 as compared to $2,509 for the three months ended June 30, 2021.

General and administrative expenses and stock-based compensation combined reflected a decrease of $190,985 to $1,096,624, when compared to $1,287,609 in the corresponding prior period.

Income (loss) from Operations

The Company generated a loss from operations for the three months ended March 31, 2021 of $1,860,885, when compared to a loss from operations of $1,505,743 for the three months ended March 31, 2020.

The Company generated a loss from operations for the three months ended June 30, 2022 of $(969,208), when compared to a loss from operations of $(1,224,255) for the three months ended June 30, 2021.

Other Income (Expense)

The Company had other expense of $(42,916,808) for the three months ended March 31, 2021, as compared to other expense of $(6,499,203) for the three months ended March 31, 2020.

The Company had other income of $5,564,243 for the three months ended June 30, 2022, as compared to other income of $64,062,368 for the three months ended June 30, 2021.

This significant difference is primarily a result of the Company’s stock price and its impact on our derivatives.

Net Income (Loss)

The Company had net loss of $(44,777,693) during the three-month period ended March 31, 2021, compared with a net loss of $(8,004,946) for the three-month period ended March 31, 2020, a $36,772,747 difference primarily as a result of the items discussed above.

The Company had net income of $4,595,035 during the three-month period ended June 30, 2022, compared with a net income of $62,838,113 for the three-month period ended June 30, 2021, primarily as a result of the items discussed above.

Six months ended June 30, 2022 compared to the six months ended June 30, 2021

The Company had gross revenues of $308,508 for the six months ended June 30, 2022, as compared to $162,891 for the six months ended June 30, 2022, reflecting an increase of $145,167.

This increase in revenue is a result of an increase in oil and gas realized prices in 2022.

The Company’s operating expenses decreased to $2,294,835 for the six-month period ended June 30, 2022, from $3,248,031 in the corresponding prior period.

Lease operating costs increased by $31,251 to $90,730 for the six-month period ended June 30, 2022 as compared to $59,479 for the six-month period ended June 30, 2021, due to lower realized production levels.

DD&A expense was relatively unchanged at $5,737 for the six months ended June 30, 2022 as compared to $7,552 for the six months ended June 30, 2021.

General and administrative expenses and stock-based compensation combined reflected a decrease of $982,632 to $2,198,368, when compared to $3,181,000 in the corresponding prior period.

Income (loss) from Operations

The Company generated a loss from operations for the six months ended June 30, 2022 of $(1,986,777), when compared to a loss from operations of $(3,085,140) for the six months ended June 30, 2021.

Other Income (Expense)

The Company had other (expense) of $(61,573,665) for the six months ended June 30, 2022, as compared to other income of $21,145,560 for the six months ended June 30, 2021.

This significant difference is primarily a result of the Company’s stock price and its impact on our derivatives.

Net Income (Loss)

The Company had net loss of $(63,560,442) during the six-month period ended June 30, 2022, compared with a net income of $18,060,420 for the six-month period ended June 30, 2021, primarily as a result of the items discussed above.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

53 unchanged sentences

(See note 10)

The following tables present a range of estimates of the number of shares potentially issuable to settle future conversions of the Series C Preferred Stock outstanding at March 31, 2021, including the conversion premiums, reflecting consideration of all provisions that pertain to the computation of settlements as follows:

The following tables present a range of estimates of the number of shares potentially issuable to settle future conversions of the Series C Preferred Stock outstanding at June 30, 2022, including the conversion premiums, reflecting consideration of all provisions that pertain to the computation of settlements as follows:

Estimate of Common Shares Due to Series C Pref.

1 unchanged sentence

Series C Pref.

Shares Outstanding - March 31, 2021

Shares Outstanding - June 30, 2022

Assume Triggering Event

39 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis