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Item 8. Financial Statements and Supplementary Data

2023-03-17 compared with 2022-05-20 · 422 added, 553 removed, 602 unchanged (62% of the section changed)

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INDEX TO THE FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

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

Consolidated Balance Sheets as of December 31, 2022 and 202 1

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

Consolidated Statement of Changes in Stockholders’ Equity (Deficit) year ended December 31, 2021 and the Nine Months Ended December 31, 2020

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

Consolidated Statements of Operations for the years ended December 31, 2022 and 2021

Consolidated Statement of Changes in Stockholders’ Deficit for the years ended December 31, 2022 and 202 1

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021

Notes to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Board of Directors and Stockholders

Camber Energy, Inc

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We have audited the accompanying consolidated balance sheets of Camber Energy, Inc.

(the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the period from April 1, 2020 to December 31, 2020 and the year ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020 and the results of its operations and its cash flows for the period from April 1, 2020 to December 31, 2020 and for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 3, the Company has a significant working capital deficiency, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

as of December 31, 2022 and 2021, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of Camber Energy, Inc as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the entity will continue as a going concern.

As discussed in Note 3 to the financial statements, the entity has suffered recurring losses from operations, has a stockholder deficit and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 3.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

These financial statements are the responsibility of the entity’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to Camber Energy, Inc in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Camber Energy, Inc is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting.

Accordingly, we express no such opinion.

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We believe that our audits provide a reasonable basis for our opinion.

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

Accountants and Consultants

12700 Park Central Drive, Suite 1400

Dallas, Texas 75251

972-239-1660 ⁄ Facsimile:

turnerstone.com

Critical Audit Matters

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As discussed in Notes 4, 9 and 13, the Company issued a series of preferred stock that contained several features which derived value from sources unrelated to the host preferred stock instrument.

The Company determined certain of the features included in the Series C Preferred Stock designations, including the conversion, dividend and liquidation value, required that the preferred stock be reported as a component of temporary equity with the conversion and dividend components bifurcated and accounted for on a stand-alone basis as derivatives.

The determination of fair value of these derivatives as well as the value of the temporary equity involved using complex valuation methodologies and significant assumptions including volume weighted prices and the estimated valuation of the Company’s common stock taking into consideration the effect of these dilutive instruments.

The Company determined certain of the features included in the Series C Preferred Stock designations, including the conversion, dividend and liquidation value, required that the conversion and dividend components be bifurcated and accounted for on a stand-alone basis as derivatives.

The determination of fair value of these derivatives involved using complex valuation methodologies and significant assumptions including volume weighted prices and the estimated valuation of the Company’s common stock taking into consideration the effect of these dilutive instruments.

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

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Dallas, Texas

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

Accountants and Consultants

12700 Park Central Drive, Suite 1400

Dallas, Texas 75251

972-239-1660 ⁄ Facsimile:

turnerstone.com

INTERNATIONAL ASSOCIATION OF ACCOUNTANTS AND AUDITORS

March 17, 2023

CAMBER ENERGY, INC.

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Total oil and gas properties, net

Due from Viking Energy, Inc.

Due from Viking Energy Group, Inc.

Equity method investment

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Current taxes payable

Warrant liability

Derivative liability

Total current liabilities

Long-term debt - net of current portion

Long-term debt

Asset retirement obligation

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Commitments and contingencies (Note 11)

TEMPORARY EQUITY

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

STOCKHOLDERS' DEFICIT

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

Preferred Stock Series G, 25,000 authorized, $.001 par value, 10,544 issued and outstanding as of December 31, 2021, liquidation preference of $10,540,000

Common stock, 1,000,000,000 shares authorized of $0.001 par value, 257,132,026 and 25,000,000 shares issued and outstanding as of December 31, 2021 and 2022

Preferred Stock Series C, 5,200 shares authorized of $ 0.001 par value, 270 and 3,886 shares issued and outstanding as of December 31, 2022 and 2021, liquidation preference of $ 9,305,550 and $ 133,930,990 at December 31, 2022 and 2021, respectively.

Preferred Stock Series G, 25,000 authorized, $.001 par value, 5,272 and 10,544 issued and outstanding as of December 31, 2022 and 2021, respectively, liquidation preference of $ 0 as of December 31, 2022 and 2021, respectively

Common stock, 20,000,000 shares authorized of $ 0.001 par value, 18,092,663 and 5,142,641 shares issued and outstanding as of December 31, 2022 and 2021, respectively.

Additional paid-in-capital

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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

The accompanying notes are an integral part of these financial statements

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

CAMBER ENERGY, INC.

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Loss from operations

( 4,382,569 )

( 5,433,365 )

Other income (expense)

Interest expense

Equity (deficit) in earnings of uncolidated entities

( 4,705,624 )

( 1,979,290 )

Equity (deficit) in earnings of unconsolidated entity

( 9,461,874 )

( 9,430,946 )

Gain (loss) on derivative liability

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Interest and other income

Other expenses

Total other income (expense)

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( 164,241,804 )

Net income (loss) before income taxes

Net loss before income taxes

( 107,741,965 )

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Income tax benefit (expense)

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

Net loss attributable to Camber Energy, Inc.

( 107,741,965 )

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( 84,156,455 )

Net income (loss) attributable to common stockholders

Net loss attributable to common stockholders

$ ( 107,741,965 )

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CAMBER ENERGY, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

Preferred Stock

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Stockholders'

(Deficit) Equity

For the year ended December 31, 2022

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Issuance of Common Shares for Consulting Fees

Equity contribution

Redemption of Series C preferred stock for cash

( 18,849,998 )

Warrants issued for compensation

Issuance of Series G Stock for cash

Issuance of Common stock warrants for cash

Issuance of Series C Preferred Shares for Cash Proceeds

( 18,850,000 )

Redemption of Series G preferred stock

( 2,749,995 )

( 2,750,000 )

Series C fair value adjustment

Issuance of Series C Preferred Shares for Cash Proceeds

Transfer of Series C Preferred Stock to Permanent Equity

True-Up Derivative Settlement

Warrants issued for debt discount

Recognition of warrant liability

( 5,894,179 )

Adjustment for rounding on reverse

( 107,741,965 )

Balances December 31, 2022

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$ ( 17,123,633 )

For the nine months ended December 31, 2020

Balances, March 31, 2020

For the year ended December 31, 2021

Balances, December 31, 2020

$ 209,386,884

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Issuance of Common Shares for Consulting Fees

Equity contribution

( 11,208,840 )

Warrants issued for compensation

Issuance of Series G Stock for cash

Issuance of Common stock warrants for cash

Issuance of Series C Preferred Shares for Cash Proceeds

Series C Preferred Stock exchanged for debt

Change in fair value of Series C shares

( 6,164,308 )

Series C fair value adjustment

Issuance of Series C Preferred Shares for Cash Proceeds

Transfer of Series C Preferred Stock to Permanent Equity

( 1,414,206 )

( 169,675,169 )

Balances December 31, 2021

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$ ( 169,675,169 )

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

Adjustments to reconcile net loss to cash used by operating activities

Stock-based compensation

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Change in fair value of derivative liability

Bad debt expense

Amortization of debt discount

(Equity) deficit in earnings of unconsolidated entity

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Net cash used in operating activities

( 4,615,486 )

( 3,414,166 )

Cash flows from investing activities:

Loan to Viking prior to investment

Cash paid for Viking investment

Loans to Viking

( 4,922,300 )

( 4,100,000 )

Repayments received from Viking

Cash paid for Viking investment

( 11,000,000 )

Net cash provided (used) in investing activities

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Proceeds from issuance of Series G Preferred Stock

Redemption of Series C Preferred Stock

( 18,850,000 )

Redemption of Series G Preferred Stock

( 2,750,000 )

Proceeds from long-term debt

Repayment of long-term debt

( 1,000,000 )

Net cash provided by financing activities

Net increase in cash

Cash, beginning of period

Cash, end of period

Net increase (decrease) in cash

( 4,687,786 )

Cash, beginning of year

Cash, end of year

Supplemental Cash Flow Information

Cash paid for:

Supplemental Non-Cash Investing and Financing Activities

Conversion of Series C Preferred Stock

True-up derivative settlement

Adjustment for rounding on reverse stock split

Warrants issued for debt discount

Recognition of warrant liability

Issuance of Series C Preferred Stock as investment in Viking

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – RELATIONSHIP WITH AND INVESTMENT IN VIKING ENERGY GROUP, INC.

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 the Company acquired an additional interest in Viking resulting in the Company owning approximately 63% of the outstanding common shares of Viking.

The Company has determined that its ownership of the common shares of Viking gives the Company the ability to exercise significant influence over Viking, but not control and accounts for its investment in Viking under the equity method.

On January 8, 2021 and on July 29, 2021 the Company acquired additional interests in Viking resulting in the Company owning approximately 60.9 % of the outstanding common shares of Viking at December 31, 2022.

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 merger agreement signed between Camber and Viking 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 (“Camber’s Acquisition”) 26,274,510 shares of Viking common stock (“Camber’s Viking Shares”), which constituted 51% of the total outstanding common stock of Viking, in consideration of (i) Camber’s payment of $10,900,000 to Viking (the “Cash Purchase Price”), and (ii) cancellation of $9,200,000 in promissory notes issued by Viking to Camber (“Camber’s Viking Notes”).

Pursuant to the purchase agreement, Viking is obligated to issue additional shares of Viking common stock to Camber to ensure that Camber shall own at least 51% of the common stock of Viking through July 1, 2022.

In connection with Camber’s Investment, the Company and Viking terminated their previous merger agreement, dated August 31, 2020, as amended, and the Company assigned its membership interests in one of Viking’s subsidiaries, Elysium Energy Holdings, LLC, to Viking.

Also in connection with Camber’s Acquisition, effective December 23, 2020, the Company (i) borrowed $12,000,000 from an institutional investor;

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 was obligated to issue additional shares of Viking common stock to Camber, if necessary, to ensure Camber owned 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”);

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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.

At the closing, James Doris and Frank Barker, Jr., Viking’s CEO and CFO, respectively, at the time, 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

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”);

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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.

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”) would 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:

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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 “ 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.

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” 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.

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;

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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.

As of March 17, 2023, neither the Company nor Viking had advised of its intention to terminate the Merger Agreement.

However, given the lapse of time since the date of the Merger Agreement, the Company believes it is reasonably likely that certain terms would need to be modified by the parties in order for the parties to proceed with the Merger.

On or about March 14, 2023, the Company’s Board of Directors resolved to enter into negotiations with Viking to modify certain terms of the Merger and to re-engage a valuation firm in connection with securing a fairness opinion or any other valuation report, analyses or presentations that might be necessary or appropriate regarding the Merger.

As of March 17, 2023, the Company had not determined the revised terms upon which it would be prepared to proceed with the Merger.

Any modifications to the terms and conditions of the Merger Agreement would be subject to the written agreement of both the Company and Viking, and there is no assurance that the Company and Viking will agree on any such proposed modifications.

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

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

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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 acquisitions, the Company owns approximately 72% of the outstanding common stock of Viking.

Through the Company’s 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 collaborative partnerships with other companies in this field of endeavor.

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 the 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.

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, patented, proprietary Medical & Bio-Hazard Waste Treatment system using Ozone Technology;

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

NOTE 3 – LIQUIDITY AND GOING CONCERN CONSIDERATIONS

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

The Company generated a net loss of $169.7 million for the year ended December 31, 2021 (the “2021 Loss”) as compared to a net loss of $52.0 million for the nine-month period ended December 31, 2020.

The 2021 Loss was comprised of certain non-cash items with a net impact of $163.8 million including:

(i) a loss on changes in fair value of the derivative liability relating to the Series C Preferred Stock of $152.8 million;

(ii) equity in loss of unconsolidated entity of $9.4 million (iii) and share based compensation of $1.6 million.

As of December 31, 2021, the Company had stockholders’ deficit of $71.8 million and total long-term debt of $21.5 million.

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 $ 107,741,965 for the year ended December 31, 2022 as compared to a net loss of $253,831,624 for the year ended December 31, 2021.

The 2022 loss was comprised of, among other things, certain non-cash items with a total net impact of $ 99,122,826 including:

(i) a loss on derivative liability of $ 89,523,091 (ii) loss in earnings of unconsolidated entity of $ 9,461,874 (iii) stock-based compensation of $ 123,754 ;

and (iv) depreciation, depletion and accretion of $ 14,107 .

As of December 31, 2022, the Company has a stockholders’ deficit of $ 17,123,633 and total long-term debt of $ 33,927,760 , net of debt discount.

As of December 31, 2022, the Company has a working capital deficiency of approximately $ 16.6 million.

The largest components of current liabilities creating this working capital deficiency was a derivative liability associated with our Series C Preferred Stock of $93.1 million.

Management believes it will be able to continue to leverage the expertise and relationships of its operational and technical teams to enhance existing assets and identify new development, drilling and acquisition opportunities in order to improve the Company’s financial position.

The largest components of current liabilities creating this working capital deficiency are a derivative liability of $ 7.6 million and a warrant liability of $ 5.9 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.

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Negative impacts could include but are not limited to:

The Company’s ability to sell [its] oil and gas production, reduction in the selling price of the Company’s oil and gas, failure of a counterparty to make required hedge payments, possible disruption of production as a result of worker illness or mandated production shutdowns, the Company’s ability to maintain compliance with loan covenants and/or refinance existing indebtedness, and access to new capital and financing.

These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for the twelve months following the issuance of its financial statements for the year ended December 31, 2021.

The Company’s ability to continue as a going concern is dependent upon its ability to utilize the resources in place to generate future profitable operations, to develop additional acquisition opportunities, and to obtain the necessary financing to meet its debt obligations and repay its liabilities arising from business operations when they come due.

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;

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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.

During April 2021 the Company borrowed $2,500,000 from an Institutional Investor, and in July 2021 the Company sold 1,575 shares of Series C Preferred Stock to Antilles for s $15 million for working capital and new acquisitions.

Management believes it will be able to continue to service its debt obligations, and obtain the financial resources to accomplish these objectives through both debt and equity raises as evidenced by historical results as well as those achieved after the current balance sheet date.

Although the Company has been successful in obtaining the financial resources in the past, these conditions continue to raise substantial doubt regarding the Company’s ability to continue as a going concern.

Therefore, the Company believes it appropriate to continue to include a going concern qualification in its financial statements.

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 , 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.

NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Presentation

Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

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Accordingly, these consolidated financial statements include all of the disclosures required by generally accepted accounting principles for complete consolidated financial statements.

b) Basis of Consolidation

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 11 – Commitments and Contingencies ” – “ Le g al Proceedin gs.

All significant intercompany transactions and balances have been eliminated.

The Compnay’s investment in Viking is accounted for under the equity method.

c) 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 fair value of derivative liabilities, impairment of long-lived assets, fair value of commodity derivatives, stock-based compensation, asset retirement obligations, and the determination of expected tax rates for future income tax recoveries.

The Company’s investment in Viking is accounted for under the equity method.

Use of Estimates in the Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities.

Significant areas requiring the use of management estimates relate to the determination of 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.

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Actual results could differ from the estimates and assumptions utilized.

d) Financial Instruments

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.

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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 and significant to the fair value measurement.

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 December 31, 2022 and 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 year ended December 31, 2022 are classified below based on the three fair value hierarchy described above:

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Significant Unobservable

Total Gains (Losses)

Financial liabilities:

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$ ( 89,523,091 )

Derivative liability- Series G Preferred Stock

$ ( 89,523,091 )

e) Cash and Cash Equivalents

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

Identical Assets

Significant Unobservable

Total Gains (Losses)

Financial liabilities:

Derivative liability - Series C preferred Stock

$ ( 152,831,568 )

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 December 31, 2021 and 2020, the Company’s cash in excess of the federally insured limit was $5,604,382 and $618,548, respectively.

At December 31, 2022 and December 31, 2021, the Company’s cash in excess of the federally insured limit was $ 916,596 and $ 5,604,382 , respectively.

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

The Company had no cash equivalents at December 31, 2021 or 2020, respectively.

f) Accounts Receivable

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

Accounts Receivable

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

g) Notes Receivable

Notes receivable include amounts due to the Company pursuant to financial agreements stipulating interest rates, payment terms and maturity dates.

As of December 31, 2021 and 2020, Note’s receivable balances included two notes due from Lineal in the amounts of $1,539,719 and $800,000, respectively, net of reserves of $2,339,719, which amount was recognized as bad debt expense for the nine months ended December 31, 2020.

h) Investment in Unconsolidated Entities

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 and Elysium (until the Company’s Elysium interest was assigned to Viking on December 23, 2020) under the equity method.

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.

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If an investment is considered to be impaired and the decline in value is other than temporary, we record an appropriate write-down.

i) Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over their useful lives.

Amortization of the equipment under capital leases related to the Lineal operations was computed using the straight-line method over lives ranging from 3 to 5 years and is included in depreciation expense.

Costs of maintenance and repairs were charged to expense when incurred.

Long-lived assets including intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the assets carrying amount to determine if an impairment of such asset is necessary.

This evaluation, as well as an evaluation of our intangible assets, requires the Company to make long-term forecasts of the future revenues and costs related to the assets subject to review.

Forecasts require assumptions about demand for the Company’s services and future market conditions.

Estimating future cash flows requires significant judgment, and the Company’s projections may vary from the cash flows eventually realized.

Future events and unanticipated changes to assumptions could 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 year ended December 31, 2021 and the nine months ended December 31, 2020.

j) Acquisitions

Accounting Standards Update (ASU) 2017-01, Clarifying the Definition of a Business (ASU 2017-01) provides a screen test to determine when a set of assets and activities should not be considered a business.

Under ASU 2017-01, the Company will perform an initial screening test as of the acquisition date that, if met, results in the conclusion that the set is not a business.

If the initial screening test is not met, the Company evaluates whether the set is a business based on whether there are inputs and a substantive process in place.

The definition of a business impacts whether the Company consolidates an acquisition under business combination guidance or asset acquisition guidance.

k) Limitation on Capitalized Costs

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).

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The Ceiling is defined as the sum of:

(a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus

(b) the cost of properties not being amortized;

(d) 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 year ended December 31, 2021 and the nine months ended December 31, 2020.

l) Oil and Gas Properties

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 years ended December 31, 2022 and 2021.

Oil and Gas Properties

The Company uses the full cost method of accounting for its investment in oil and natural gas properties.

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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

m) Oil and Gas Reserves

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.

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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.

n) Income (loss) per Share

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.

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Common stock equivalents are excluded from the calculation when a loss is incurred as their effect would be anti-dilutive.

o) Revenue Recognition

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.

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In each case, the time between delivery and when payments are due is not significant.

p) Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.

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The Company’s policy is to include interest and penalties associated with income tax obligations in income tax expense.

q) Stock-Based Compensation

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.

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The dividend yield assumption is based on historical patterns and future expectations for the Company dividends.

r) Derivative Liabilities

Derivative Liabilities

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

815 - 40, “Derivatives and Hedging”.

The Series C Preferred Stock are convertible into shares of common stock at a fixed $ 3.25 conversion rate.

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If the Conversion Premium is paid in cash, the amount is fixed and not subject to adjustment.

If the Conversion Premium is paid in shares, the conversion ratio is based on a VWAP calculation based on the lowest stock price over the Measurement Period.

The Measurement Period is 30 days (or 60 days if there is a Triggering Event) prior to the conversion date and 30 days (or 60 days if there is a Triggering Event) after the conversion date.

The VWAP calculation is subject to adjustment if there is a Triggering Event and the Measurement Period is subject to adjustment in the event that the Company is in default of one or more Equity Conditions provided in the Certificate of Designation.

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 trading days (or 60 trading days if there is a Triggering Event) prior to the conversion date and 30 trading days (or 60 trading days if there is a Triggering Event) after the conversion date.

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.

At the conversion date, the number of shares due for the Conversion Premium is estimated based on the previous 30-day VWAP (or 60 trading days if there is a Triggering Event).

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.

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

The derivative liability at the end of each period includes a derivative liability for the outstanding Series C shares and a derivative liability for the potential obligation to issue True-Up Shares relating to Series C shares that have been converted and the Measurement Period has not expired, if applicable

The 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 low closing price of the Company’s stock subsequent to the conversion date.

and the historical volatility of the Company’s common stock.

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.

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As a result, the Series G Preferred Stock contains an embedded derivative that is required to be recorded at fair value.

The Company has determined that the fair value of the embedded derivative as of December 31, 2021 is negligible due to the restrictions on conversion.

The Company has determined that the fair value of the embedded derivative as of December 31, 2022 and 2021 is negligible due to the restrictions on conversion.

The embedded derivative associated with the Series G Stock is marked to market at each reporting date with changes in fair value recorded in income.

s) Impairment of Long-Lived Assets

The Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets.

Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets.

The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset.

If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value.

The estimation of fair value is generally determined by using the asset’s expected future discounted cash flows or market value.

The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary.

There is no impairment of long-lived assets during the year ended December 31, 2021 and the nine months ended December 31, 2020.

w) Accounting for Asset Retirement Obligations

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.

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The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties.

z) Subsequent events

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 December 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 year ended December 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, 2022.

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

Depletion and Adjustments

Proved developed producing oil and gas properties

United States cost center

Accumulated depreciation, depletion and amortization

( 78,364,432 )

( 78,370,049 )

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.

For the year ended December 31, 2021 and the nine months ended December 31, 2020, the Company recorded $0 and $0 of impairments of its oil and gas properties, respectively.

NOTE 6 – NOTES RECEIVABLE

Due to the impact of COVID-19 on its operations, Lineal notified the Company that it currently has insufficient liquidity to make scheduled interest payments due under the notes.

The Company is in negotiations with Lineal to restructure the notes receivable and an allowance has been applied to the full principal and accrued interest of these notes as of December 31, 2021 and 2020.

The following table summarizes the Lineal notes receivable as of December 31, 2021 and 2020:

Note receivable from Lineal Star Holdings, LLC pursuant to a Promissory Note dated effective December 31, 2019, in the original principal amount of $1,539,719, accruing annual interest of 10.5%, due quarterly beginning on March 31, 2020, maturing December 31, 2021.

The Company has ceased recording accrued but unpaid interest, and has reserved the full balance of the note as of December 31, 2021 and 2020.

See also “Note 13 – Lineal Merger Agreement and Divestiture”.

Note receivable from Lineal Star Holdings, LLC pursuant to a Promissory Note No.

2 dated effective December 31, 2019, in the original principal amount of $800,000, accruing annual interest of 8%, due quarterly beginning on March 31, 2020, maturing December 31, 2021.

The Company has ceased recording accrued but unpaid interest, and has reserved the full balance of the note as of December 31, 2021 and 2020.

See also “Note 13 – Lineal Merger Agreement and Divestiture”.

Total notes receivable

allowance for doubtful collection

Total notes receivable - net

NOTE 7– INVESTMENT IN UNCONSOLIDATED ENTITY’S

The Company accounts for its investments in Viking and Elysium (until the Company’s Elysium interest was assigned to Viking on December 23, 2020) under the equity method.

The Company owns 0% of Elysium as of December 31, 2021 and 2020, respectively (25% from February 3, 2020 to June 25, 2020, 30% from June 26, 2020 to December 23, 2020, and 0% upon the completion of the Company’s acquisition of 51% of Viking as explained in Note 1 – Relationship with and Ownership of Viking Energy Group, Inc.

Table below shows the changes in the investment in unconsolidated entities for the year ended December 31, 2020 and the nine months ended December 31, 2020, respectively:

Carrying amount at beginning of year

Investment in Elysium

Proportionate share of Elysium earnings (loss)

For the years ended December 31, 2022 and 2021, the Company did not record any impairments.

NOTE 6 – INVESTMENT IN UNCONSOLIDATED ENTITIES

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

The Company owns approximately 60.9 % of the outstanding common shares of Viking at December 31, 2022.

Table below shows the changes in the investments in unconsolidated entities for the years ended December 31, 2022 and 2021.

Carrying amount – beginning

Investment in Viking

Proportionate share of Viking earnings (loss)

Carrying amount at end of year

Proportionate share of (losses)

( 9,461,874 )

( 9,430,946 )

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 obligations associated with the future retirement of oil and natural gas properties for the year ended December 31, 2021 and the nine months ended December 31, 2020 respectively.

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 years ended December 31, 2022 and 2021.

Carrying amount at beginning of year

Carrying amount at end of year

NOTE 9 – LONG-TERM DEBT AND OTHER SHORT-TERM BORROWINGS

Long term debt and other short-term borrowings consisted of the following at December 31, 2021 and 2020:

Note payable to Discover Growth Fund, LLC pursuant to a 10.0% Secured Promissory Note dated December 11, 2020 in the original amount of $6,000,000 with interest and principal due at maturity on January 1, 2027.

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, LLC, pursuant to a 10.0% Secured Promissory Note dated December 22, 2020 in the original amount of $12,000,000 with interest and principal due at maturity on January 1, 2027.

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.

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The note was paid in full on January 4, 2022.

Total long-term debt associated with Camber Energy, Inc.

Principal value of debt

unamortized debt discount

( 12,888,029 )

Total long-term debt, net

Less current portion

The Company entered into a Loan Agreement on December 24, 2021 with Discover Growth Fund, LLC (“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 $ 26,315,790 .

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 500,000 shares of Camber common stock at an exercise price of $ 500.00 and 500,000 warrants with an exercise price of $ 1,000 .

The warrants expire on December 31, 2026 .

The Company allocated the net proceeds received of $ 500,000 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.

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

Twelve-month period ended December 31,

Interest expenses for the year ended December 31, 2021 and the nine months ended December 31, 2020 was $1,979,290 and $67,397, respectively.

Year ended December 31,

Interest expenses for the years ended December 31, 2022 and 2021 was $ 1,514,470 and $ 1,979,290 , respectively.

The above notes were in default at various times, but have been resolved through settlement (see Note 13 - Stockholders Deficit )

NOTE 9 – 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 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 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.

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.

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.

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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.

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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.

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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 derivative Series C Preferred Stock derivative liability during the year ended December 31, 2021 and the nine months ended December 31, 2020 were as follows:

Carrying amount at beginning of period

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 years ended December 31, 2022 and 2021 were as follows:

Carrying amount at beginning of year

Issued Series C preferred shares

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( 199,943,084 )

Carrying amount at end of period

Carrying amount at end of year

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.

The Series G Preferred Shares contain an embedded derivative similar to the Series C shares described above that is required to be recorded at fair value.

The Company has determined that the fair value of the embedded conversion feature associated with the Series G Shares is negligible at December 31, 2021

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

NOTE 11 – COMMITMENTS AND CONTINGENCIES

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Camber records reserves for contingencies when information available indicates that a loss is probable, and the amount of the loss can be reasonably estimated.

On October 29, 2021, a Class Action Complaint (i.e.

The Company was the target of a “short” report issued by Kerrisdale Capital in early October, 2021, and as a result of such short report, on October 29, 2021, a Class Action Complaint (i.e.

C.A.No.4:21-cv-03574) was filed against the Company, its CEO and CFO by Ronald E.

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District Court for the Southern District of Texas, Houston Division, pursuant to which the Plaintiffs are seeking to recover damages alleged to have been suffered by them as a result of the defendants’ violations of federal securities laws.

The defendants deny the allegations contained in the Class Action Complaint, and have engaged Baker Botts L.L.P.

to defend the action.

On or about June 30, 2022, the Company was made aware of a Shareholder Derivative Complaint filed in the U.S.

District Court for the Southern District of Texas, Houston Division (Case No.

4:22-cv-2167) against the Company, its current directors, and certain of its former directors (the “Houston Derivative Complaint” and, together with the Nevada Derivative Complaint, the “Derivative Complaints”).

The allegations contained in the Houston Derivative Complaint involve state-law claims for breach of fiduciary duty and unjust enrichment and a federal securities claim under Section 14(a) of the Securities Exchange Act of 1934.

The defendants deny the allegations contained in the Class Action Complaint and Houston Derivative Compliant and have engaged Baker Botts L.L.P.

to defend the actions.

On or about April 18, 2022, the Company was made aware of a Shareholder Derivative Complaint filed with the District Court in Clark County, Nevada (Case No.:

A-22-848486-B) against the Company and its directors, and on or about May 4, 2022 the Company was made aware of a second Shareholder Derivative Complaint filed with the District Court in Clark County, Nevada (Case No.

A-22-852069-B) against the Company and its directors.

On July 18, 2022, the shareholder plaintiff in Case No.

A-22-848486-B voluntarily dismissed his lawsuit, and on December 12, 2022 the shareholder plaintiff in Case No.

A-22-852069-B voluntarily dismissed his lawsuit.

Maranatha Oil Matter

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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 316th 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 A g reement ”) with PetroGlobe Energy Holdings, LLC (“ PetroGlobe ”), Signal Drilling, LLC (“ Si g nal ”), Petrolia Oil, LLC (“ Petrolia ”), Prairie Gas Company of Oklahoma, LLC (“ PGCO ”), and Canadian River Trading Company, LLC (“ CRTC ”).

Pursuant to the Settlement Agreement, the Company agreed to pay PetroGlobe $250,000, of which $100,000 was due upon execution of the Settlement Agreement, which payment has been made, and $150,000 was paid to an escrow account, which release was subject to approval by the Company upon the successful transfer of all wells and partnership interests of the Company’s current wholly-owned subsidiary CE to PetroGlobe, which occurred on July 16, 2020.

On July 16, 2020, the Company completed all of the requirements of the Settlement Agreement and assigned PetroGlobe all of its right, title, and interest in all wells, leases, royalties, minerals, equipment, and other tangible assets associated with specified wells and properties, located in Hutchinson County, Texas, the $150,000 held in escrow was released to PetroGlobe and the Settlement Agreement transactions closed.

As a result of the transfers, the Company no longer owns CE, and no longer has any interest in or any liabilities related to the Hutchinson County, Texas wells.

The Company recognized a net settlement cost of $204,842 included in general and administrative expenses on the statement of operations for the year ended March 31, 2020, in connection with the settlement.

All provisions of the settlement were finalized, and the $150,000, held in escrow pending final approvals, was released on July 16, 2020.

The Company released the parties to the Settlement Agreement, including Ian Acrey, individually, as well as their officers, directors, or members from any claims asserted in the lawsuit, and the parties to the Settlement Agreement along with Ian Acrey, individually, released the Company, its officers, directors, shareholders and affiliate corporations from any claims asserted in the lawsuit.

The Company did not release any claims or causes of action against N&B Energy, LLC, Sezar Energy, LLP related to Richard Azar, or any of their affiliates, or predecessors, or successors, and is currently evaluating its plans.

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

Apache Corporation

In December 2018, Apache Corporation (“ Apache ”) sued Camber, Sezar Energy, L.P., and Texokcan Energy Management Inc., in the 129th Judicial District Court of Harris County, Texas (Cause 2018-89515).

Apache alleged causes of action for Breach of Contract, Money Had & Received and Conversion, relating to amounts Apache alleged it was owed under a joint operating agreement.

Apache is seeking $656,908 in actual damages, exemplary damages, pre- and post-judgment interest, court costs, and other amounts to which it may be entitled.

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

On July 13, 2020, Apache filed a Second Amended Petition against Camber, Sezar, Texokcan, N&B Energy, LLC, and Richard N.

Azar, II alleging Breach of Contract, Defaults under a Joint Operating Agreement, Money Had & Received and Conversion, relating to amounts Apache allegedly overpaid Sezar and Azar and Unjust Enrichment.

On October 26, 2020, the Company entered into an agreement with Apache to obtain a release of all liability (both parties provided mutual releases) for $20,000 which the Company paid in October 2020, which is included in general and administrative expenses on the statement of operations for the nine months ended December 31, 2020.

The litigation was dismissed against the Company.

On October 21, 2020, litigation was settled through binding arbitration and an arbitration award in favor of N&B Energy was granted in the amount of approximately $52,000, which is included in general and administrative expenses on the statement of operations for the nine months ended December 31, 2020.

The Company paid all amounts due in December 2020 and the litigation was dismissed.

Litigation as a Result of “Short Report”

The Company was the target of a “short” report issued by Kerrisdale Capital in early October, 2021, and as a result of such short report there was an action commenced against the Company, James Doris and Frank Barker by or on behalf of certain shareholders of Camber in connection with losses alleged to have been suffered by the shareholders.

There were also derivative actions commenced against the Company and its directors.

The Company and its officers and directors have retained the firm of Baker Botts LLP to defend the action, and deny the allegations contained in the claim.

NOTE 12 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Oil and Gas Contracts

The following table disaggregates revenue by significant product type for the year ended December 31, 2021 and the nine months ended December 31, 2020 respectively:

The following table disaggregates revenue by significant product type for the years ended December 31, 2022 and 2021 respectively:

Natural gas sales and liquids

Total oil and gas revenue from customers

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of December 31, 2021 or 2020, respectively.

Revenue is generated from three customers, one of which represents in excess of 90% for both years.

NOTE 13 – LINEAL MERGER AGREEMENT AND DIVESTITURE

Mer g er Agreement

On July 8, 2019 (the “ Closin g 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 Preferred Stock Redemption Agreement (the “ Redemption A g reement ”), by and between the Company, Lineal, and the holders of the Company’s Series E Preferred Stock and Series F Preferred Stock (the “ Preferred Holders ”), pursuant to which, the Company redeemed the Company’s Series E and F Preferred Stock issued in connection with the Lineal Merger and ownership of 100% of Lineal was transferred back to the Preferred Holders, and all of the Series E Preferred Stock and Series F Preferred Stock of the Company outstanding were canceled through the redemption (the “ Lineal Divestiture ”).

The Redemption Agreement also provided for (a) the entry by Lineal and the Company into a new unsecured promissory note in the amount of $1,539,719, the outstanding amount of the July 2019 Lineal Note together with additional amounts loaned by Camber to Lineal through December 31, 2019 (the “December 2019 Lineal Note”);

(b) the unsecured loan by the Company to Lineal on December 31, 2019, of an additional $800,000, entered into by Lineal in favor of the Company on December 31, 2019 (“Lineal Note No.

and (c) the termination of the prior Lineal Plan of Merger and Funding Agreement entered into in connection therewith (pursuant to which all funds previously held in a segregated account for future Lineal acquisitions, less amounts loaned pursuant to Lineal Note No.

2, were released back to the Company).

The December 2019 Lineal Note and Lineal Note No.

2, accrue interest, payable quarterly in arrears, beginning on March 31, 2020, and continuing until December 31, 2021, when all interest and principal is due, at 8% and 10% per annum (18% upon the occurrence of an event of default), respectively.

As of December 31, 2021 and 2020 respectively, the notes are in default, and the full amount of principal and accrued interest has been fully reserved.

NOTE 14 – INCOME TAXES

The Company recorded no provision for income taxes for the year ended December 31, 2021 and for the nine months ended December 31, 2020.

The following is a reconciliation between actual tax expense (benefit) and income taxes computed by applying the U.S.

federal income tax rate of 21% to income from continuing operations before income taxes for the year ended December 31, 2021 and the nine months ended December 31.

Tax expense (benefit), computed at expected tax rates

$ (1,613,788 )

Nondeductible expenses

Change in valuation allowance

Tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred liabilities are presented below:

Deferred tax assets (liabilities):

Net operating tax loss carryforwards

Depreciation, depletion and amortization

(Income) loss from equity interests

Stock-based compensation

Bad debt reserve

Total deferred tax assets (liabilities)

valuation allowance

(13,770,162 )

(12,803,308 )

The above estimates are based on management’s decisions concerning certain elections which could change the relationship between net income and taxable income.

Management decisions are made annually and could cause the estimates to vary significantly.

The Company experienced an “ownership change” within the meaning of IRC Section 382 during the year ended March 31, 2017.

As a result, certain limitations apply to the annual amount of net operating losses that can be used to offset post ownership change taxable income.

The Company has estimated that $44.5 million of its pre-ownership change net operating loss could potentially be lost due to the IRC Section 382 limitation for the year ended March 31, 2017.

This amount may increase if the Company experiences another ownership change(s) since the last ownership change.

However, the income tax effect of those ownership change(s) should be nil as the Company had recorded a full valuation allowance against its deferred assets.

As of December 31, 2020, there have not been any additional ownership changes that the Company believes would lead to further IRC Section 382 limitations.

At December 31, 2021and 2020, the Company had estimated net operating loss carryforwards for federal income tax purposes of approximately $58.5 million and $52.1 million, respectively, adjusted for the ownership change limitation discussed above, which will begin to expire, if not previously used, beginning in the fiscal year 2028.

A valuation allowance has been established for the entire amount of the deferred tax assets for the year ended December 31, 2021 and for the nine months ended December 31, 2020.

On December 22, 2017, the U.S.

government enacted comprehensive tax legislation commonly referred to as the 2017 Tax Cuts and Jobs Act (“2017 Tax Reform”).

The 2017 Tax Reform significantly revised the future ongoing U.S.

corporate income tax by, among other things, lowering U.S.

corporate income tax rates and implementing a territorial tax system.

The Company has reasonably estimated the effects of the 2017 Tax Reform and recorded provisional amounts in the consolidated financial statements as of March 31, 2018.

This amount is primarily comprised of the re-measurement of federal net deferred tax liabilities resulting from the permanent reduction in the U.S.

statutory corporate tax rate to 21%, from 34%.

The Company will continue to monitor additional guidance issued by the U.S.

Treasury Department, the IRS, and other standard-setting bodies, so we may make adjustments to the provisional amounts (if any).

However, management’s opinion is that future adjustments due to the 2017 Tax Reform should not have a material impact on the Company’s provision for income taxes.

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security Act” (“CARES ACT”).

The CARES Act, among other things, includes provisions relating to net operating loss (“NOL”) carryback periods.

The Company is evaluating the impact, if any, that the CARES Act may have on the Company’s future operations, financial position, and liquidity in fiscal year 2021.

At this time, the Company does not expect to realize the benefits of the NOL carryback provisions.

The Company files income tax returns for federal and state purposes.

Management believes that with few exceptions, the Company is not subject to examination by United States tax authorities for periods prior to 2017.

NOTE 13 – STOCKHOLDERS’ DEFICIT

During the year ended December 31, 2021, the Company issued 1,500,094 shares of restricted common stock to service providers in consideration for investor relations and marketing services, and recognized $1,493,358, based on the grant date fair value of the Company’s common stock, in stock-based compensation expense corresponding to the issuance of these shares.

During the nine months ended December 31, 2020, the Company issued 176,514 shares of restricted common stock to service providers in consideration for investor relations and marketing services, and recognized $209,502, based on the grant date fair value of the Company’s common stock, with $36,502 being recorded in stock-based compensation expense and $173,000 in satisfaction of prior period common stock issuable.

Included in such 176,514 shares of common stock were 175,000 shares issued to Sylva International LLC d/b/a SylvaCap Media (“ S ylvaCap”).

On February 15, 2020, the Company entered into a letter agreement with SylvaCap, pursuant to which SylvaCap agreed to act as the Company’s non-exclusive digital marketing service provider in consideration for an aggregate of 100,000 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 June 15, 2020.

On May 19, 2020, the Company entered into a first amendment to the SylvaCap agreement.

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

The 100,000 shares were issued on May 15, 2020.

On August 31, 2020, the parties entered into a second amendment to the agreement.

Pursuant to the amendment, the parties agreed to amend the engagement agreement to increase the stock fee payable thereunder to 175,000 shares of common stock of the Company and to provide for the agreement to remain in place until the earlier of (a) October 19, 2020;

and (b) the closing of the Company’s currently contemplated merger with Viking.

During the year ended December 31, 2022, the Company issued 2,800 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

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Series B Redeemable Convertible Preferred Stock

As of December 31, 2020 and March 31, 2020, the Company had no Series B Redeemable Convertible Preferred Stock issued and outstanding.

As of December 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.

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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.

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 U.S.

GAAP, and is not mandatorily redeemable.

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

(See note 10)

On June 22, 2020, the Company sold 630 shares of Series C Preferred Stock to Discover in consideration for $6 million.

On December 11, 2020, the Company entered into an Exchange Agreement with Discover, the sole shareholder at the time, of the Company’s Series C Preferred Stock.

The transactions contemplated by the Exchange Agreement closed on December 11, 2020.

Pursuant to the Exchange Agreement, as an accommodation to the Company, and in order to reduce the potential dilutive impact of the Series C Preferred Stock, by reducing the number of outstanding shares of Series C Preferred Stock, Discover exchanged 600 shares of Series C Preferred Stock, which had an aggregate face value of $6,000,000 (600 shares each with a face value of $10,000 per share), for a $6,000,000 secured Promissory Note.

As this investment was appropriately classified as temporary equity prior to the exchange, and it had mandatory redemption options associated with certain contingencies that were outside the control of the issuer, the Company determined that the exchange should be accounted for similar to a debt extinguishment in exchanging the temporary equity instrument for a debt instrument at the same carrying value, and there should be no gain or loss recognized on the transaction.

On January 8, 2021, the Company issued 1,890 shares of Camber’s Series C Preferred Stock to EMC Capital Partners, LLC, one of Viking’s lenders, in full satisfaction of a secured promissory note previously issued by Viking to EMC, accrued interest and certain other liabilities totaling approximately $ 18,900,000 .

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The Company has not declared any dividends on the Series C Preferred stock, but recognized cumulative dividends as an adjustment to income available to common stockholders and an increase in the carrying value of the Series C Preferred Stock.

As of December 31, 2021, Discover is entitled to approximately 38,185,136 True-up shares relating to previously converted Series C Preferred Stock.

Such shares were issued subsequent to year end, but may be subject to further adjustment as the Measurement Period has not expired on such shares.

The Company estimates the liability associated with the obligation to issue True-Up shares and records the obligation as a derivative ‘liability based on estimated fair value using a binomial pricing model, the historical volatility of the Company’s common stock and the lesser of the conversion price or the lowest closing price subsequent to the conversion date.

The Company records a gain or loss on the change in fair value.

During the year ended December 31, 2021, the Company recorded a loss on the change in fair value of $152,831,568 and had a derivative liability of $93,108,568.

During the nine-month period ended December 31, 2020, the Company recorded a loss on the change in fair value of $41,878,821 and had a derivative liability of $93,981,234.

The Derivative Liability is reduced when True-Up shares are issued.

A Derivative Liability associated with a conversion of the Series C Preferred Stock is no longer recognized when the Measurement Period expires and the holder is no longer entitled to True-Up shares.

As of December 31, 2021 Discover and Antilles held 2,093 shares of Series C Preferred Stock (518 held by Discover and 1,575 held by Antilles).

Between January 1, 2022 and March 7, 2022 Discover converted 488 of such shares into 64,653,948 common shares, and on May 16, 2022 Discover converted 30 Series C Preferred Stock into 3,848,450 common shares, leaving a balance of 0 Series C Preferred Stock held by Discover.

If Camber’s stock price falls below $0.3475 per share prior to the Company being in compliance with all of the Equity Conditions set out in the Certificate of Designation, Discover may be entitled to additional True-Up Shares, i.e.

additional common shares, regarding shares of Series C Preferred Stock converted by Discover at a VWAP higher than $0.3475 since the Measurement Period in respect of those prior conversions has not expired given the Company is not at the moment in compliance with all of the Equity Conditions set out in the Certificate of Designation.

As of May 16, 2022, the only Series C Preferred Stock outstanding are the 1,175 shares held by Antilles.

Antilles is entitled to convert the face value of the 1,175 Series C Preferred Stock at a fixed conversion price of $3.25, and to convert the value of the associated Conversion Premium at a price equal to (A x B) – C whereas:

A equals the lowest volume weighted average price during the Measurement Period (the “VWAP”);

B equals 0.85;

and C equals $0.10.

Neither the Measurement Period nor VWAP are certain with respect to the 1,175 shares of Series C Preferred Stock held by Antilles but the VWAP is estimated to be $0.4503, and assuming:

(i) a Triggering Event has occurred (which is the case at the moment) and no waiver for same has been obtained;

and (ii) the highest possible dividend rate of 34.95%, the Company estimates that the 1,175 Series C Preferred Stock held by Antilles would convert into approximately 105,264,519 common shares of the Company, subject to the 9.99% ownership limitation set forth in the designation of the Series C Preferred Stock.

These Series C Preferred shares would convert into additional common shares of the Company if the VWAP during the Measurement Period falls below $0.4503.

On December 14, 2020, the Company, with the approval of the Board of Directors of the Company and the sole holder of the Company’s Series C Preferred Stock, filed a certificate of corrections with the Secretary of State of Nevada to correct the original designation of the Series C Preferred Stock and the first amended and restated designation thereof.

Also on December 14, 2020, the Company, with the approval of the Board of Directors of the Company and the sole holder of the Company’s Series C Preferred Stock, filed a second amended and restated designation of the Series C Preferred Stock with the Secretary of State of Nevada which was effective upon filing (the “ Second Amended and Restated Designation ”).

On April 15, 2021, the Company, with the approval of the Board of Directors and holders of the Company’s Series C Preferred Stock, filed certificate of corrections with the Secretary of State of Nevada to correct the original designation of the Company’s Series C Redeemable Convertible Preferred Stock and the subsequent amended and restated designations thereof, to correct certain errors which were identified in such designations, and to clearly state the original intent of the parties, as follows:

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.

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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 as a component of permanent equity.

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.

As a result of the third amended and restated designation of the Series C Preferred Stock the Company has determined that there are no provisions requiring redemption that are outside the control of the Company.

Subsequent to yearend, the Series C Preferred Shares were reclassified to permanent equity during the second quarter of 2021.

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).

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.

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

and (ii) (A) beginning on the Amendment Date and for the period through December 30, 2022, the Measuring Metric will be the higher of the amount provided in Section I.G.7.1(ii) of the COD and $0.20, and (B) beginning at market close on December 30, 2022 and thereafter, the Measuring Metric will be the volume weighted average trading price of the Common Stock on any day of trading following the date of first issuance of the Series C Preferred Stock.

As of December 31, 2022 and 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 December 31, 2022 and 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

Estimated number of shares issuable for conversion at $ 162.50 and $3.25 per share at December 31, 2022 and 2021 respectively

Estimated number of common shares required to satisfy Conversion Premium using VWAP at period end

Additionally.

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).

The Certificates of Designations with respect to the Company’s Series C Preferred Stock 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”).

The Company did not satisfy the Filing Requirement and, consequently, on or about March 9, 2022, the preferred stock holders, Discover and Antilles, filed a Verified Complaint against the Company (the “Discover/Antilles Complaint ”) as a result of the default by the Company under the CODs.

*based on 270 shares of Series C Convertible Preferred Stock outstanding as of such date and the estimated low VWAP as at such date

**based on 3,886 shares of Series C Convertible Preferred Stock outstanding as of such date and the estimated low VWAP as at such date

Additionally, even if the Series C preferred shares were converted on the above dates, the Company could, pursuant to terms out in the COD, be required to issue additional common shares (true-up shares).

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”).

Throughout 2021 and early 2022, the Company did not satisfy the Filing Requirement and, consequently, on or about March 9, 2022, the preferred stock holders, Discover and Antilles Family Office, LLC (“Antilles”), filed a Verified Complaint against the Company (the “Discover/Antilles Complaint”) as a result of the default by the Company under the CODs.

A default under the CODs and/or SPA’s is also considered an event of default under each of the Promissory Notes executed by the Company in favor of Discover (collectively, the “Discover Notes”) (see subsequent events), and upon an event of default under the Discover Notes, Discover may, at its option, declare the principal and any and all interest then accrued thereon, at once due and payable, and exercise any other rights under applicable agreements.

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If the Company fails to satisfy future Filing Requirements, it would be considered a default under the CODs and SPA’s, which in turn would constitute an event of default under the Discover Notes.

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

As described above in “ Note 1 – General ” and “ Note 13 – Lineal Mer g er 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.

Previously Converted Series C Preferred Stock

EMC converted certain shares of Series C Preferred Stock in 2021 and/or 2022 based on the low VWAP of the Company’s common stock being $ 0.3475 per share for the purpose of calculating the Conversion Premium.

Since the Measurement Period with respect to such conversions did not end until October 28, 2022 (as further explained below) and because the low VWAP subsequent to the conversions declined to approximately $0.1519 during such period, EMC received certain true-up shares in 2022.

As of December 31, 2022, EMC held zero shares of Series C Preferred Stock, but is entitled to 730,241 common shares in connection with prior conversions.

The Company anticipates issuing these common shares to EMC if the Company’s shareholders approve an increase in the Company’s authorized capital.

The majority of the Series C Preferred Stock previously converted into common shares by Antilles in 2022 were based on the low VWAP of the Company’s common stock being $0.4503 per share.

Since the Measurement Period with respect to the Antilles Conversions did not end until October 28, 2022 (as further explained below) and because the low VWAP subsequent to the conversions declined during such period, Antilles received certain true-up shares in 2022 based on an agreed upon low VWAP of $0.20 per share.

As of December 31, 2022, Antilles was not due any more True-Up shares.

October 2022 Agreements Regarding the Series C Preferred Stock

On October 28, 2022, the Company entered into two agreements (collectively, the “ Agreements ”) in relation to an amendment to the fifth amended and restated certificate of designations regarding the Company’s Series C Preferred Stock (the “ COD ”) as an accommodation to the Company and in order to help facilitate implementation of the Company’s business plans and continued trading on the NYSE American LLC, and in exchange for the release and indemnity as provided in the Agreements.

November 2022 Agreement with Discover Growth Fund, LLC

On November 3, 2022, the Company entered into an agreement (the “ Agreement ”) with Discover, pursuant to which Discover absolutely and unconditionally waived and released any and all rights to receive further or additional shares of the Company’s common stock (the “ Conversion Shares ”) with respect to any and all shares of Series C Preferred Stock previously converted by Discover including, but not limited to, the right to deliver additional notices for more Conversion Shares under the Fifth Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock filed by the Company with the Secretary of State of Nevada on November 8, 2021, as amended on October 28, 2022.

Discover also absolutely and unconditionally waived and released any and all rights to convert all or any part of any Promissory Notes previously executed by the Company in favor of Discover into shares of the Company’s common stock, and agreed not to convert or attempt to convert any portion of any Promissory Notes, at any particular price or at all.

Series G Redeemable Convertible Preferred Stock

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

Pursuant to the COD, the Series G Redeemable Convertible Preferred Stock (“ Series G Preferred Stock ”) may be converted into shares of common stock at any time at the option of the holder at a price per share of common stock equal to one cent above the closing price of the Company’s common stock on the date of the issuance of such shares of Series G Preferred Stock, or as otherwise specified in the Stock Purchase Agreement, subject to adjustment as otherwise provided in the COD.

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.

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(ii) and any shareholder proposals, including proposals initiated by any holder of shares of Series G Preferred Stock), in each instance on an as-converted basis, subject to the beneficial ownership limitation in the COD even if there are insufficient shares of authorized common stock to fully convert the shares of Series G Preferred Stock into common stock.

Commencing on the date of the issuance of any such shares of Series G Preferred Stock, each outstanding share of Series G Preferred Stock will accrue cumulative dividends at a rate equal to 10.0% per annum, subject to adjustment as provided in the COD (to a maximum of 30% per annum), of the Face Value.

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:

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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.

Sale of Shares of Series G Preferred Stock:

On December 30, 2021, the Company and an accredited institutional investor (the “ Investor ”) entered into a stock purchase agreement (the “ Stock Purchase Agreement ”) pursuant to which the Investor purchased from the Company 10,544 shares of newly designated Series G redeemable convertible preferred stock (the “ Series G Preferred Stock ”), having a face value of $10,000 per share, for an aggregate price of $100,000,000 (the “ Purchase Price ”), representing at a 5% original issue discount.

The Purchase Price was paid by the Investor via payment of $5,000,000 in cash on December 31, 2021, and the execution and delivery of four Promissory Notes (each a “ Note ” and collectively, the “ Notes ”) from the Investor in favor of Company, each in the amount of $23,750,000 and payable by the Investor to the Company on March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, respectively.

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.

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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.

On December 31, 2021, the Company also executed and delivered a Warrant Agreement (the “ Warrant Agreement ”) in favor of the Investor entitling the Investor to purchase up to 100,000,000 shares of common stock of the Company (the “ Warrant Shares ”) at an exercise price of $2.00 per share for the first 50,000,000 shares and an exercise price of $4.00 per share for the remaining 50,000,000 shares.

The Warrant Agreement has a term of five years.

The Company agreed to use its best efforts to file with the Securities and Exchange Commission as promptly as practicable, and in any event within 30 days after the date on which the Company files all reports required to be filed pursuant to the Securities Exchange Act of 1934 (the “Act”), a Registration Statement on Form S-3 registering the delayed and continuous resale of all Conversion Shares and Warrant Shares pursuant to Rule 415 under the Act, subject to any limitations imposed by applicable securities laws as to the number of Conversion Shares and/or Warrant Shares that are eligible for registration, and to use best efforts to cause such Registration Statement to be declared effective under the Act as promptly as practicable and in any event within 60 days after filing.

No Registration Statement will be declared effective unless the Investor pays for the particular tranche of shares of Series G Preferred Stock in full.

The net cash proceeds received of $5.0 million was allocated to the Series G Preferred Stock and the warrants based on relative fair value.

The fair value of the warrants was determined using a Black Scholes model and the Company’s stock price, volatility, risk free rate of return and the term of the warrants of five years.

The fair value of the Series G preferred Stock was based on the net redemption value.

The proceeds allocated to the Series G Stock was allocated to the embedded derivative up to the fair value of derivative liability, which the Company determined to be negligible due to inherent restrictions on conversion.

The Company recorded the fair value of the warrants in additional paid-in capital and recorded a deemed dividend for the fair value of the warrants less the proceeds allocated to the warrants.

The fair value of the warrants was determined to be $82,165,769 of which $77,749,461 was recorded as a deemed dividend.

Partial Redemption of Series G Preferred Stock

On March 10, 2022, the Company paid Antilles $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.

Antilles 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 Antilles, and the Company may redeem the shares of Series G Preferred Stock associated with each Note by paying Antilles $1,375,000 as full consideration for such redemption.

Partial Redemptions 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.

On June 15, 2022, the Company paid the Investor $ 1,375,000 and redeemed an additional 2,636 shares of Series G Preferred Stock associated with the Note due June 30, 2022, thereby canceling such Note and reducing the number of shares of Series G Preferred Stock outstanding from 7,908 to 5,272.

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 expired on April 25, 2022.

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

lntrinsic Value at

September 30, 2021

September 12, 2022

December 31, 2022

1,000,000 (2)

December 30, 2026

April 25, 2022

Warrants issued in connection with funding.

The warrants were exercisable on the grant date (September 12, 2017) and remain exercisable until September 12, 2022.

1,000,000 (2)

December 30, 2026

December 31, 2026

Warrants issued in connection with a Severance Agreement with Richard N.

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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.

NOTE 16 – SHARE-BASED COMPENSATION

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.

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Under the 2010 Incentive Plan, 58 shares of the Company’s common stock are authorized for initial issuance or grant, under the 2012 Incentive Plan, 96 shares of the Company’s common stock are authorized for initial issuance or grant, and under the 2014 Incentive Plan, as amended, 2,500,000 shares of the Company’s common stock are authorized for issuance or grant.

As of March 31, 2020, there was an aggregate of 1 share available for issuance or grant under the 2010 Incentive Plan, 5 shares were available for issuance or grant under the 2012 Incentive Plan and an aggregate of approximately 1,999 securities were available for issuance or grant under the 2014 Incentive Plan as amended for future issuances and grants, respectively.

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.

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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.

On February 23, 2021, the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation to increase the number of our authorized shares of common stock from 25,000,000 to 250,000,000 , which amendment was filed with the State of Nevada on February 23, 2021.

On December 30, 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 250,000,000 to 1,000,000,000 , which amendment was filed with the State of Nevada on December 30, 2021.

On December 14, 2022, the Company’s Board of Directors approved a 1 for 50 reverse stock split of the Company’s (a) authorized shares of common stock;

and (b) issued and outstanding shares of common stock.

The Company filed a Certificate of Change to decrease the number of our authorized shares of common stock from 1,000,000,000 to 20,000,000 , which certificate was filed with the State of Nevada on December 16, 2022.

NOTE 15 – INCOME TAXES

The Company recorded no provision for income taxes for the years ended December 31, 2022 and 2021.

The following is a reconciliation between actual tax expense (benefit) and income taxes computed by applying the U.S.

federal income tax rate of 21 % to income from continuing operations before income taxes for the years ended December 31, 2022 and 2021:

Tax expense (benefit), computed at expected tax rates

$ ( 3,825,964

$ ( 966,854 )

Nondeductible expenses / changes in prior estimates

( 2,675,301 )

Change in valuation allowance

Tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred liabilities are presented below:

Deferred tax assets (liabilities):

Net operating tax loss carryforwards

Depreciation, depletion and amortization

(Income) loss from equity interests

Stock-based compensation

Bad debt reserve

Total deferred tax assets (liabilities)

valuation allowance

( 13,770,162 )

The above estimates are based on management’s decisions concerning certain elections which could change the relationship between net income and taxable income.

Management decisions are made annually and could cause the estimates to vary significantly.

As of December 31, 2022, the Company revised the estimate of its deferred tax asset, and corresponding valuation allowance, for prior years in the amount of $ 2,675,301 .

The Company experienced an “ownership change” within the meaning of IRC Section 382 during the year ended March 31, 2017.

As a result, certain limitations apply to the annual amount of net operating losses that can be used to offset post ownership change taxable income.

The Company has estimated that $ 44.5 million of its pre-ownership change net operating loss could potentially be lost due to the IRC Section 382 limitation for the year ended March 31, 2017.

This amount may increase if the Company experiences another ownership change(s) since the last ownership change.

However, the income tax effect of those ownership change(s) should be nil as the Company had recorded a full valuation allowance against its deferred assets.

As of December 31, 2022, there have not been any additional ownership changes that the Company believes would lead to further IRC Section 382 limitations.

At December 31, 2022 and 2021, the Company had estimated net operating loss carryforwards for federal income tax purposes of approximately $ 67.1 million and $ 58.5 million, respectively, adjusted for the ownership change limitation discussed above, which will begin to expire, if not previously used, beginning in the fiscal year 2028.

A valuation allowance has been established for the entire amount of the deferred tax assets for the year ended December 31, 2022 and 2021.

On December 22, 2017, the U.S.

government enacted comprehensive tax legislation commonly referred to as the 2017 Tax Cuts and Jobs Act (“2017 Tax Reform”).

The 2017 Tax Reform significantly revised the future ongoing U.S.

corporate income tax by, among other things, lowering U.S.

corporate income tax rates and implementing a territorial tax system.

The Company has reasonably estimated the effects of the 2017 Tax Reform and recorded provisional amounts in the consolidated financial statements as of March 31, 2018.

This amount is primarily comprised of the re-measurement of federal net deferred tax liabilities resulting from the permanent reduction in the U.S.

statutory corporate tax rate to 21 %, from 34 %.