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Item 8. Financial Statements and Supplementary Data

2024-03-25 compared with 2023-03-17 · 1094 added, 679 removed, 345 unchanged (84% of the section changed)

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Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Board of Directors and Shareholders

Camber Energy, Inc.

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

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.

(the “Company”) as of December 31, 2023, and 2022, and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, 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.

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

As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise 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.

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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.

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.

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

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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.

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 entity's internal control over financial reporting.

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turnerstone.com

INTERNATIONAL ASSOCIATION OF ACCOUNTANTS AND AUDITORS

Critical Audit Matters

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment of Indefinite Life Intangible Assets:

The impairment evaluation of the Company’s indefinite life intangible assets is an assessment that begins with the Company’s monitoring of indicators of impairment on an individual asset basis, which the Company believes is the lowest level for which there are identifiable cash flows.

The Company reviews indefinite life intangible assets for impairment indicators on a quarterly basis or whenever events or changes in circumstances indicate the carrying amount of the assets may not be fully recoverable.

The Company performed a full quantitative impairment assessment as of December 31, 2023, for all indefinite life intangible assets.

When performing a quantitative impairment assessment, the Company estimates discounted cash flows at the asset level from continuing use through the remainder of the asset’s estimated useful life.

If the estimated discounted cash flows are not sufficient to recover an indefinite life intangible asset’s carrying value, the Company recognizes an impairment to reduce the carrying value to the estimated fair value.

The Company applies significant judgment in estimating the fair value of its intangible assets, based on expected revenues, industry, and business growth, and expected residual cash flows at net present value.

We identified the impairment of indefinite life intangible assets as a critical audit matter because of the significant judgment required by management to determine estimated expected revenues, growth, and discounted cash flows.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s judgements and estimates.

How the Critical Audit Matter was Addressed in the Audit:

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

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

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

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

Goodwill Impairment Assessment:

The Company assesses goodwill for impairment annually during the fourth quarter or more frequently when events or changes in circumstances indicate that impairment may exist.

Reporting units are tested for impairment by comparing the fair value of each reporting unit with its carrying amount.

Management uses a market capitalization approach to estimate the fair value of reporting unit.

During the third quarter of 2023, the Company identified a triggering event.

The Company performed an impairment test of the reporting unit as of September 30, 2023, and concluded the fair value of the reporting unit was less than the carrying amount.

The Company recognized an impairment charge of approximately $14,486,745 during the year ended December 31, 2023.

We identified the evaluation of the goodwill impairment assessment of the reporting unit as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate certain assumptions used in the Company’s estimate of the fair value of the reporting unit.

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

How the Critical Audit Matter was Addressed in the Audit:

Our audit procedures related to the impairment of goodwill included:

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

We assessed the analysis utilized to calculate the implied impairment.

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

Series C Preferred Stock:

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 issued a series of preferred stock that contained several features which derive value from sources unrelated to the host preferred stock instrument.

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

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

How We Addressed the Matter in Our Audit:

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

How the Critical Audit Matter was Addressed in the Audit:

Our audit procedures related to management’s fair value model for the bifurcated features of the Series C Preferred Stock included:

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

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

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

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

Estimation of Proved Oil and Gas Reserves:

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

This accounting method requires management to make estimates of proved oil and natural gas reserves and related future cash flows to compute and record depreciation, depletion, and amortization expense, as well as to assess potential impairment of oil and natural gas properties (the full cost ceiling test).

To estimate the volume of proved oil and natural gas reserves quantities, management makes significant estimates and assumptions including forecasting the production decline rate of producing properties.

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

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

How the Critical Audit Matter was Addressed in the Audit:

Our audit procedures related to the estimation of provided oil and gas reserves included:

The work of management's specialists was used in performing the procedures to evaluate the reasonableness of the proved developed oil and gas reserve volumes.

As a basis for using this work, the specialists' qualifications were understood and the Company’s relationship with the specialists was assessed.

Evaluated the methods and assumptions used by the specialists.

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

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

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CONSOLIDATED BALANCE SHEETS

At December 31,

Current assets:

Accounts receivable - oil and gas - net

Prepaid expenses

Accounts receivable, net

Inventory, net

Prepaids and other current assets

Total current assets

Oil and gas properties, full cost method

Proved developed producing oil and gas properties, net

Proved oil and gas properties, net

Total oil and gas properties, net

Due from Viking Energy Group, Inc.

Equity method investment

LIABILITIES AND STOCKHOLDERS DEFICIT

Fixed assets, net

Right of use assets, net

ESG Clean Energy license, net

Other intangibles - Simson Maxwell, net

Other intangibles - Variable Interest Entities

Due from related parties

Deposits and other assets

$ 101,711,947

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

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Accrued expenses and other current liabilities

Current taxes payable

Warrant liability

Customer deposits

Due to Parent

Undistributed revenues and royalties

Current portion of operating lease liability

Due to related parties

Current portion of notes payable - related parties

Bank indebtedness - credit facility

Derivative liability

Current portion of long-term debt - net of discount

Total current liabilities

Long-term debt

Long term debt - net of current portion and debt discount

Notes payable - related parties - net of current portion

Operating lease liability, net of current portion

Contingent obligations

Asset retirement obligation

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Commitments and contingencies (Note 14)

STOCKHOLDERS' DEFICIT

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.

STOCKHOLDERS’ EQUITY

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

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

Liquidation preference of $ 1,033,950 .

Preferred stock Series G, $ 0.001 par value, 25,000 authorized, 5,272 shares issued and outstanding as of December 31, 2023.

No liquidation preference.

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

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

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

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( 122,187,673 )

TOTAL STOCKHOLDERS' DEFICIT

( 17,123,633 )

Parent’s stockholders’ equity in Camber

Non-controlling interest

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 101,711,947

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

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

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CONSOLIDATED STATEMENTS OF OPERATIONS

Oil and gas sales

Year Ended December 31,

Power generation units and parts

Service and repairs

Total revenue

Operating expenses

Cost of goods sold

Lease operating costs

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Stock based compensation

Depreciation, depletion, amortization and accretion

Impairment of oil and gas properties

Impairment of intangible assets

Depreciation, depletion & amortization

Accretion - asset retirement obligation

Total operating expenses

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( 1,408,096 )

( 1,979,290 )

Equity (deficit) in earnings of unconsolidated entity

Amortization of debt discount

( 1,711,518 )

Change in fair value of derivative liability

( 9,150,459 )

Gain (loss) on derivative liability

(Loss) gain on disposal of membership interests and assets

( 7,747,347 )

Loss on extinguishment of debt

Goodwill impairment

( 14,486,745 )

Interest and other income

Total other income (expense)

Total other expense, net

( 26,027,447 )

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Income tax benefit (expense)

Net loss attributable to Camber Energy, Inc.

( 33,021,812 )

( 17,358,259 )

Less preferred dividends

Net loss attributable to non-controlling interest

( 1,930,930 )

Net loss attributable to common stockholders

Net loss attributable to Camber Energy, Inc.

$ ( 32,649,965 )

$ ( 15,427,329 )

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

Weighted average number of common shares outstanding

basic and diluted

Loss per common share, basic and diluted

Weighted average number of common shares outstanding, basic and diluted

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

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

Preferred Stock

Stockholders'

For the year ended December 31, 2022

Balances, December 31, 2021

$ 409,469,406

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Year Ended December 31,

$ ( 33,021,812 )

$ ( 17,358,259 )

Common Shares issued for:

Conversion of Series C preferred stock

True-Up Shares

Issuance of Common Shares for Consulting Fees

Redemption of Series C preferred stock for cash

Foreign currency translation adjustment

Total comprehensive loss

( 32,844,949 )

( 17,605,955 )

Redemption of Series G preferred stock

Less comprehensive loss attributable to non-controlling interest

Loss attributable to non-controlling interest

( 1,930,930 )

Foreign currency translation adjustment attributable to non-controlling interest

Comprehensive loss attributable to non-controlling interest

( 2,028,770 )

Series C fair value adjustment

True-Up Derivative Settlement

Warrants issued for debt discount

Recognition of warrant liability

Comprehensive loss attributable to Camber Energy, Inc.

$ ( 32,542,963 )

$ ( 15,577,185 )

Adjustment for rounding on reverse

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

CAMBER ENERGY, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

Preferred Stock

Comprehensive

Noncontrolling

Stockholders'

Balances at December 31, 2022

$ 127,757,269

$ ( 425,677 )

Balances December 31, 2022

$ ( 122,187,673 )

Common shares issued on exercise of warrants

Reverse merger adjustment

Common shares issued on conversion of debt

Common shares issued on conversion of Series H preferred stock

Common shares issued on conversion of Series C preferred stock

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

Foreign currency translation adjustment

( 32,649,965 )

( 33,021,812 )

For the year ended December 31, 2021

Balances, December 31, 2020

Balances at December 31, 2023

$ 169,460,183

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$ ( 154,837,638 )

Common Shares issued for:

Conversion of Series C Preferred Stock

True-Up Shares

Issuance of Common Shares for Consulting Fees

Equity contribution

Preferred Stock

Comprehensive

Noncontrolling

Stockholders'

Balances at December 31, 2021

$ 120,316,152

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

$ ( 177,981 )

$ ( 106,760,344 )

Series C fair value adjustment

Issuance of Series C Preferred Shares for Cash Proceeds

Transfer of Series C Preferred Stock to Permanent Equity

Rounding difference

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

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

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

Adjustment to acquisition of Simson-Maxwell

Warrants issued for services

Foreign currency translation adjustment

( 15,427,329 )

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( 17,358,259 )

Balances December 31, 2021

Balances at December 31, 2022

$ 127,757,269

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$ ( 17,358,259 )

Adjustments to reconcile net loss to cash used by operating activities

Stock-based compensation

Depreciation, depletion, amortization and accretion

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

Change in fair value of derivative liability

Stock-based compensation

Depreciation, depletion and amortization

Accretion – asset retirement obligation

Amortization of right-of-use assets

Loss on extinguishment of debt

Amortization of debt discount

(Equity) deficit in earnings of unconsolidated entity

Changes in operating assets and liabilities

Goodwill impairment

Impairment of intangible assets

Impairment of oil and gas assets

Loss (gain) on disposal of membership interests and assets

Bad debt expense

Foreign currency translation adjustment

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

Accounts receivable

Prepaid expenses and other assets

Accounts payable and accrued expenses

Net cash used in operating activities

( 3,476,409 )

( 3,414,166 )

Cash flows from investing activities:

Loans to Viking

Prepaid expenses and other assets

( 4,786,227 )

Accounts payable

( 4,420,222 )

Repayments received from Viking

Cash paid for Viking investment

Accrued expenses and other current liabilities

Related party payables

Customer deposits

( 2,677,539 )

Net cash provided (used) in investing activities

Operating lease liabilities

Undistributed revenues and royalties

Net cash used in operating activities

( 5,342,265 )

( 3,760,376 )

Cash flows from investing activities:

Proceeds from sale of oil and gas properties

Investment in and acquisition of oil and gas properties

Acquisition of fixed assets

Proceeds from sale of fixed assets

Cash acquired on Merger

Collection of notes receivable

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from issuance of Series C Preferred Stock

Proceeds from issuance of Series G Preferred Stock

Redemption of Series C Preferred Stock

Repayment of long-term debt

( 8,632,438 )

Redemption of Series G Preferred Stock

Proceeds on issuance of long-term debt

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

( 2,120,000 )

Proceeds from long-term debt

Repayment of long-term debt

Advances on Simson Maxwell bank credit facility

Net cash provided by (used in) financing activities

( 3,048,788 )

Net cash provided by financing activities

Net increase (decrease) in cash

Net decrease in cash

( 2,333,289 )

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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

Cash paid for interest

Cash paid for taxes

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Issuance of shares on conversion of debt

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

Addition of right-of-use asset and lease liability

Issuance of shares for purchase of VIE interests

Issuance of preferred shares for purchase of VIE interests

Contingent obligation associated with acquisition of VIE interests

Issuance of warrants for services

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 OWNERSHIP OF VIKING ENERGY GROUP, INC.

On December 23, 2020 Camber Energy, Inc.

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

On January 8, 2021 and on July 29, 2021 the Company acquired additional interests in Viking resulting in the Company owning approximately 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 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”);

(iii) granted the Investor a first-priority security interest in Camber’s Viking Shares and Camber’s other assets pursuant to a pledge agreement and a general security agreement, respectively;

and (iv) entered into an amendment to the Company’s $ 6,000,000 promissory note previously issued to the investor dated December 11, 2020 (the “Additional Camber Investor Note”), amending the acceleration provision of the note to provide that the note repayment obligations would not accelerate if the Company increased its authorized capital stock by March 11, 2021 (and the Company increased its authorized capital stock in February 2021 as required).

In order to close Camber’s Investment, effective December 23, 2020, Viking entered into a Guaranty Agreement, guaranteeing repayment of the Camber Investor Note and the Additional Camber Investor Note.

On December 23, 2020, the Camber Investor Note was funded, and the Company and Viking closed Camber’s Investment, with the Company paying the Cash Purchase Price to Viking and cancelling Camber’s Viking Notes, as additional consideration.

In exchange, Viking issued 26,274,510 shares of its common stock to Camber, representing 51 % of Viking’s total outstanding common shares, the Viking Shares.

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

Acquisition of Additional Viking Shares

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

and (ii) EMC considering the EMC Note paid in full and cancelled pursuant to the Cancellation Agreement described below.

Simultaneously, on January 8, 2021, Viking entered into a Cancellation Agreement with EMC (the “Cancellation Agreement”) pursuant to which Viking agreed to pay $ 325,000 to EMC, and EMC agreed to cancel and terminate in the EMC Note and all other liabilities, claims, amounts owing and other obligations under the Note.

At the same time, the Company entered into a purchase agreement with EMC pursuant to which (i) the Company agreed to issue 1,890 shares of Camber’s Series C Redeemable Convertible Preferred Stock to EMC, and (ii) EMC agreed to enter into the Cancellation Agreement with Viking to cancel the EMC Note.

February 2021 Merger Agreement with Viking

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

The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, a newly formed wholly-owned subsidiary of Camber (“Merger Sub”) 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:

(i) of common stock, of Viking (the “Viking Common Stock”) issued and outstanding immediately prior to the Effective Time, other than shares owned by Camber, Viking and Merger Sub, will be converted into the right to receive one share of common stock of the Company;

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

Each share of Camber Series A Preferred Stock will convert into 890 shares of common stock of Camber (subject to a beneficial ownership limitation preventing conversion into Camber common stock if the holder would be deemed to beneficially own more than 9.99% of the Company’s common stock), will be treated equally with the Company’s common stock with respect to dividends and liquidation, and will only have voting rights with respect to voting:

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

Merger with Viking Energy Group, Inc.

On August 1, 2023, Camber Energy, Inc.

(“Camber”, the “Company”, “we”, “us” or “our”) completed the previously announced merger (the “Merger”) with Viking Energy Group, Inc.

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

Upon the terms and conditions in the Merger Agreement, each share:

(i) of common stock, par value $0.001 per share, of Viking (the “Viking Common Stock”) issued and outstanding, other than shares owned by Camber, was converted into the right to receive one share of common stock of Camber (the “Camber Common Stock”);

(ii) of Series C Preferred Stock of Viking (the “Viking Series C Preferred Stock”) issued and outstanding was converted into the right to receive one share of Series A Convertible Preferred Stock of Camber (the “New Camber Series A Preferred Stock”) and (iii) of Series E Convertible Preferred Stock of Viking (the “Viking Series E Preferred Stock,” and, together with the Viking Series C Preferred Stock, the “Viking Preferred Stock”) issued and outstanding was converted into the right to receive one share of Series H Preferred Stock of Camber (the “New Camber Series H Preferred Stock,” and, together with the New Camber Series A Preferred Stock, the “New Camber Preferred”).

Each share of New Camber Series A Preferred Stock is convertible into 890 shares of Camber Common Stock (subject to a beneficial ownership limitation preventing conversion into Camber Common Stock if the holder would be deemed to beneficially own more than 9.99 % of Camber Common Stock), is treated equally with Camber Common Stock with respect to dividends and liquidation, and only has voting rights with respect to voting:

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

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

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and/or (g) with respect to a proposed merger or consolidation in which Camber is a party or a subsidiary of Camber is a party.

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

At the Effective Time, each outstanding Viking equity award, will be converted into the right to receive the merger consideration in respect of each share of Viking Common Stock underlying such equity award and, in the case of Viking stock options, be converted into vested Camber stock options based on the merger exchange ratio calculated as provided above (the “Exchange Ratio”).

The Merger Agreement provides, among other things, that effective as of the Effective Time, James A.

Doris, the current Chief Executive Officer of both the Company and Viking, shall continue to serve as President and Chief Executive Officer following the Effective Time.

The Merger Agreement provides that, as of the Effective Time, the Combined Company will have its headquarters in Houston, Texas.

The Merger Agreement also provides that, during the period from the date of the Merger Agreement until the Effective Time, each of Viking and the Company will be subject to certain restrictions on its ability to solicit alternative acquisition proposals from third parties, to provide non-public information to third parties and to engage in discussions with third parties regarding alternative acquisition proposals, subject to customary exceptions.

Viking is required to hold a meeting of its stockholders to vote upon the adoption of the Merger Agreement and, subject to certain exceptions, to recommend that its stockholders vote to adopt the Merger Agreement.

The Company is required to hold a meeting of its stockholders to approve the issuance of Viking Common Stock and Viking Preferred Stock in connection with the Merger (the “Share Issuance”).

The completion of the Merger is subject to customary conditions, including (i) adoption of the Merger Agreement by the Company’s stockholders and approval of the Share Issuance by the Company’s stockholders, (ii) receipt of required regulatory approvals, (iii) effectiveness of a registration statement on Form S-4 for the Company’s common stock to be issued in the Merger (the “Form S-4”), and (iv) the absence of any law, order, injunction, decree or other legal restraint preventing the completion of the Merger or making the completion of the Merger illegal.

Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (ii) subject to certain exceptions, performance by the other party of its obligations under the Merger Agreement and (iii) the absence of any material adverse effect on the other party, as defined in the Merger Agreement.

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

The Merger Agreement can be terminated (i) at any time with the mutual consent of the parties;

(ii) by either the Company or Viking if any governmental consent or approval required for closing is not obtained, or any governmental entity issues a final non-appealable order or similar decree preventing the Merger;

(iii) by either Company or Viking if the Merger shall not have been consummated on or before August 1, 2021;

(iv) by the Company or Viking, upon the breach by the other of a term of the Merger, which is not cured within 30 days of the date of written notice thereof by the other;

(v) by Company or Viking is unable to obtain the affirmative vote of its stockholders for approval of the Merger;

(vi) by Viking if Company is unable to obtain the affirmative vote of its stockholders required pursuant to the terms of the Merger Agreement;

and (vii) by Company or Viking if there is a willful breach of the Merger Agreement by the other party thereto.

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

As of 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

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

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

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

Doris does not own any shares of the Company but he owns or controls shares of Series C Preferred Stock of Viking with significant voting rights.

Such voting rights were suspended until July 1, 2022 or if Mr.

Doris were no longer the Chief Executive Officer of the Company.

The Company has determined that it has the ability to exercise significant influence over the operations and policies of Viking, but not control of Viking given the voting rights associated with Mr.

Doris’ Series C Preferred Stock.

Consequently, the Company accounts for the Viking Investment under the equity method.

NOTE 2 – ORGANIZATION AND OPERATIONS OF THE COMPANY

Camber’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

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

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

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

In connection with the Merger, Camber issued approximately 49,290,152 shares of Camber Common Stock, which represented approximately 59.99 % of the outstanding Camber Common Stock after giving effect to such issuance.

In addition, Camber reserved for issuance approximately 88,647,137 additional shares of Camber Common Stock in connection with the potential (1) conversion of the New Camber Series A Preferred Stock, (2) conversion of the New Camber Series H Preferred Stock, (3) exercise of the Adjusted Options and (4) conversion of the Adjusted Convertible Notes.

For accounting purposes, the Merger is deemed a reverse acquisition.

Consequently, Viking (the legal subsidiary) was treated as the acquiror of Camber (the legal parent).

Accordingly, these consolidated financial statements reflect the financial position, operating results, and cash flow of Viking up to the date of the Merger, and the combined financial position, operating results and cash flow of Viking and Camber from August 1, 2023 to December 31, 2023.

The prior year comparative financial information is that of Viking.

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

Company Overview and Operations

Camber is a growth-oriented diversified energy company.

Through our majority-owned subsidiaries we provide custom energy and power solutions to commercial and industrial clients in North America, and have a majority interest in:

(i) an entity with intellectual property rights to a fully developed, patented, proprietary Medical and Bio-Hazard Waste Treatment system using Ozone Technology;

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

Also, we hold a license to a patented clean energy and carbon-capture system with exclusivity in Canada and for multiple locations in the United States.

Various of our other subsidiaries own interests in oil properties in the United States.

The Company is also exploring other renewable energy-related opportunities and/or technologies, which are currently generating revenue, or have a reasonable prospect of generating revenue within a reasonable period of time.

Custom Energy and Power Solutions:

Simson-Maxwell Acquisition

On August 6, 2021, Viking, acquired approximately 60.5 % of the issued and outstanding shares of Simson-Maxwell Ltd.

(“Simson-Maxwell”), a Canadian federal corporation, for $ 7,958,159 in cash.

Simson-Maxwell manufactures and supplies power generation products, services and custom energy solutions.

Simson-Maxwell provides commercial and industrial clients with efficient, flexible, environmentally responsible and clean-tech energy systems involving a wide variety of products, including CHP (combined heat and power), tier 4 final diesel and natural gas industrial engines, solar, wind and storage.

Simson-Maxwell also designs and assembles a complete line of electrical control equipment including switch gear, synchronization and paralleling gear, distribution, Bi-Fuel and complete power generation production controls.

Operating for over 80 years, Simson-Maxwell’s seven branches assist with servicing a large number of existing maintenance arrangements and meeting the energy and power-solution demands of the Company’s other customers.

Clean Energy and Carbon-Capture System:

In August 2021, Viking entered into a license agreement with ESG Clean Energy, LLC (“ESG”), to utilize ESG’s patent rights and know-how related to stationary electric power generation and heat and carbon dioxide capture (the “ESG Clean Energy System”).

The intellectual property licensed by Viking includes certain patents and/or patent applications, including:

10,774,733, File date:

October 24, 2018, Issue date:

September 15, 2020, Titled:

“Bottoming Cycle Power System”;

17/661,382, Issue date:

August 8, 2023, Titled:

‘Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products’;

11624307, Issue date:

April 22, 2023, Titled:

‘Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power and Capturing Carbon Dioxide’ (iv) European (validated in the United Kingdom, France and Germany) Patent No.:

EP3728891, Issue date:

April 12, 2023, Titled:

“Bottoming Cycle Power System”;

Patent Application No.:

17/224,200, File date:

April 7, 2021, Titled:

“Bottoming Cycle Power System” (which was subsequently approved by the U.S.

Patent & Trademark Office in March, 2022 (No.

Patent Application No.:

17/358,197, File date:

June 25, 2021, Titled:

“Bottoming Cycle Power System”;

Patent Application No.:

17/448,943, File date:

September 27, 2021, Titled:

“Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power and Capturing Carbon Dioxide”;

and (viii) U.S.

Patent Application No.:

17/448,938, File date:

September 27, 2021, Titled:

“Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products .

The ESG Clean Energy System is designed to, among other things, generate clean electricity from internal combustion engines and utilize waste heat to capture approximately 100 % of the carbon dioxide (CO2) emitted from the engine without loss of efficiency, and in a manner to facilitate the production of certain commodities.

11,286,832, for example, covers the invention of an “exhaust-gas-to-exhaust-gas heat exchanger” that efficiently cools – and then reheats – exhaust from a primary power generator so greater energy output can be achieved by a secondary power source with safe ventilation.

Another key aspect of this patent is the development of a carbon dioxide capture system that utilizes the waste heat of the carbon dioxide pump to heat and regenerate the adsorber that enables carbon dioxide to be safely contained and packaged.

The Company intends to sell, lease and/or sub-license the ESG Clean Energy System to third parties using, among other things, Simson-Maxwell’s existing distribution channels.

The Company may also utilize the ESG Clean Energy System for its own account, whether in connection with its petroleum operations, Simson-Maxwell’s power generation operations, or otherwise.

Medical Waste Disposal System Using Ozone Technology:

In January 2022, Viking acquired a 51 % interest in Viking Ozone Technology, LLC (“Viking Ozone”), which owns the intellectual property rights to a patented (i.e., US Utility Patent No.

11,565,289), proprietary medical and biohazard waste treatment system using ozone technology.

Simson-Maxwell has been designated the exclusive worldwide manufacturer and vendor of this system.

The technology is designed to be a sustainable alternative to incineration, chemical, autoclave and heat treatment of bio-hazardous waste, and for the treated waste to be classified as renewable fuel for waste-to-energy (“WTE”) facilities in many locations around the world.

Open Conductor Detection Technologies:

In February 2022, Viking acquired a 51 % interest in two entities, Viking Sentinel Technology, LLC (“Viking Sentinel”) and Viking Protection Systems, LLC (“Viking Protection”), that own the intellectual property rights to patented (i.e.

utility patent 11,769,998 titled " Electric Transmission Line Ground Fault Prevention Systems Using Dual, High Sensitivity Monitoring Devices’) and patent pending (i.e., US Applications 16/974,086, and 17/693,504), proprietary electric transmission and distribution open conductor detection systems.

The systems are designed to detect a break in a transmission line, distribution line, or coupling failure, and to immediately terminate the power to the line before it reaches the ground.

The technology is intended to increase public safety and reduce the risk of causing an incendiary event, and to be an integral component within grid hardening and stability initiatives by electric utilities to improve the resiliency and reliability of existing infrastructure.

Oil and Gas Properties

Existing Assets:

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

Divestitures in 2023:

On November 5, 2023, Mid-Con Petroleum, LLC and Mid-Con Drilling, LLC, wholly owned subsidiaries of Viking, sold 100 % of their interest in oil and gas assets in Kansas, consisting of 168 producing wells, 90 injector wells and 34 non-producing wells, for gross proceeds of $ 515,000 .

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

The Company recorded a net gain on these two transactions in the amount of $ 854,465 , as follows:

Proceeds from sale (net of transaction costs)

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

( 1,049,229 )

ARO recovered

Cash bond recoverable (net of fees)

Gain on disposal

Following these transactions, Petrodome ceased to be the operator of any oil and gas properties and applied for the refund of a cash performance bond of $ 50,000 .

The refund, net of fees, is included in prepaids and other current assets at December 31, 2023 and was included in the determination of the gain on disposal.

Divestitures in 2022:

On July 8, 2022, four of the wholly owned subsidiaries of Petrodome Energy, LLC (“Petrodome”), a wholly owned subsidiary of the Company, entered into Purchase and Sale Agreements to sell all of their interests in the oil and gas assets owned by those Petrodome subsidiaries, including in the aggregate, interests in 8 producing wells, 8 shut-in wells, 2 saltwater disposal wells and 1 inactive well, to third parties for $ 3,590,000 in cash.

The proceeds from the sale were used to fully repay Petrodome’s indebtedness to CrossFirst Bank under the June 13, 2018 revolving line of credit loan.

This transaction resulted in the disposition of most of the Company’s total oil and gas reserves (see Note 6).

The Company recorded a loss on the transaction in the amount of $ 8,961,705 , as follows:

Proceeds from sale

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

( 12,791,680 )

ARO recovered

Loss on disposal

$ ( 8,961,705 )

Additionally, in July 2022, the Company received an unanticipated refund of a $ 1,200,000 performance bond as a result of Petrodome ceasing to operate certain assets in the State of Louisiana.

The gain from this refund was included in the “loss from the sale of oil and gas properties and fixed assets’ in the Consolidated Statement of Operations.

Going Concern

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

The Company generated a net loss of $( 33,021,812 ) for the year ended December 31, 2023, as compared to a net loss of $( 17,358,259 ) for the year ended December 31, 2022.

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 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.

Nonetheless, recent oil and gas price volatility as a result of geopolitical conditions and the global COVID-19 pandemic have already had and may continue to have a negative impact on the Company’s financial position and results of operations.

Negative impacts could include but are not limited to:

The Company’s ability to sell 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.

The loss for the year ended December 31, 2023, was comprised of, among other things, certain non-cash items, including:

(i) goodwill impairment of $ 14,486,745 ;

(ii) change in fair value of derivative liability of $ 9,150,459 ;

(iii) loss on extinguishment of debt of $ 605,507 ;

(iii) amortization of debt discount of $ 1,711,518 ;

(iv) depreciation, depletion and amortization of $ 1,002,562 ;

(v) impairment of oil and gas and intangible assets of $ 1,016,760 , and;

(vi) accretion of asset retirement obligation of $ 155,463 .

As of December 31, 2023, the Company had a stockholders’ equity of $ 24,297,733 , long-term debt, net of current, of $ 39,971,927 and a working capital deficiency of $ 12,142,644 .

The largest components of current liabilities creating this working capital deficiency is drawings by Simson-Maxwell against its bank credit facility of $ 3,365,995 , accrued interest on notes payable to Discover of $ 5,052,487 and a derivative liability of $ 3,863,321 .

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;

Management believes the Company may be able to continue to develop new opportunities and may be able to obtain additional funds through debt and / or equity financings to facilitate its business strategy;

however, there is no assurance of additional funding being available.

These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.

The Company entered into a Loan Agreement on December 24, 2021 with the investor named therein (the “ Investor ”) pursuant to which the Investor agreed to loan the Company $ 25,000,000 subject to, among other things, the Company having increased its authorized capital of common shares on or before December 31, 2021, which increase occurred on December 30, 2021.

On January 3, 2022 the Company received $ 25,000,000 (the “ Loan Proceeds ”) from the Investor, and in connection therewith executed and delivered the following in favor of the Investor:

(i) a promissory note dated on or about December 31, 2021 in the principal amount of $ 26,315,789 , 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

Basis of Presentation

Summary of Significant Accounting Policies

Recently issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes, which enhances the transparency of income tax disclosures by expanding annual disclosure requirements related to the rate reconciliation and income taxes paid.

The amendments are effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The amendments should be applied on a prospective basis.

Retrospective application is permitted.

The Company is currently evaluating this ASU to determine its impact on the Company's disclosures.

In November 2023, the FASB issued Accounting Standards Update 2023-07 (“ASU 2023-07”), Segment Reporting, which improves reportable segment disclosure requirements.

ASU 2023-07 primarily enhances disclosures about significant segment expenses by requiring that a public entity disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss.

This ASU also (i) requires that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment, and a description of its composition;

(ii) requires that all annual disclosures are provided in the interim periods;

(iii) clarifies that if the CODM uses more than one measure of profitability in assessing segment performance and deciding how to allocate resources, that one or more of those measures may be reported;

(iv) requires disclosure of the title and position of the CODM and a description of how the reported measures are used by the CODM in assessing segment performance and in deciding how to allocate resources;

(v) requires that an entity with a single segment provide all new required disclosures.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and requires retrospective application.

Early adoption is permitted.

The amendments under ASU 2023-07 relate to financial disclosures and its adoption will not have an impact on the Company’s results of operations, financial position or cash flows.

The Company will adopt ASU 2023-07 for the annual reporting period ending December 31, 2024 and for interim reporting periods thereafter.

Changes in Presentation and Reclassifications

The following items have been reclassified in the Consolidated Statement of Cash Flows for the year ended December 31, 2022 to conform to the current year presentation:

(i) amortization of right of use assets and change in operating lease liabilities have been separately disclosed, and;

(ii) bad debt expense has been separately disclosed.

These reclassifications had no effect on the Company’s consolidated operating results, financial condition or cash flows.

a) Basis of Presentation

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

1 unchanged sentence

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

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.

b) Basis of Consolidation

The consolidated financial statements presented herein reflect the consolidated financial results of the Company, its wholly owned subsidiaries, Viking Energy Group, Inc.

(“Viking”), Camber Permian LLC, CE Operating LLC and CE Operating LLC, the wholly owned subsidiaries of Viking (Mid-Con Petroleum, LLC, Mid-Con Drilling, LLC, Mid-Con Development, LLC, and Petrodome Energy, LLC.), and Simson-Maxwell (a majority owned subsidiary of Viking).

In January 2022, Viking acquired a 51 % ownership interest in Viking Ozone, and in February 2022, Viking acquired a 51 % ownership interest in both Viking Sentinel and Viking Protection.

These entities were formed to facilitate the monetization of acquired intellectual properties (see Note 7).

These entities are variable interest entities in which the Company owns a controlling financial interest;

consequently, these entities are also consolidated.

All significant intercompany transactions and balances have been eliminated.

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

Use of Estimates in the Preparation of Financial Statements

c) Foreign Currency

Foreign currency denominated assets and liabilities are translated into U.S.

dollars using the exchange rates in effect at the balance sheet date.

Results of operations and cash flows of businesses conducted in foreign currency are translated using the average exchange rates throughout the period.

The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of stockholders’ equity in accumulated other comprehensive income (loss).

Gains and losses from foreign currency transactions have been insignificant.

d) Use of Estimates in the Preparation of Consolidated Financial Statements

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

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

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

Significant areas requiring the use of management estimates relate to the determination of the fair value of the Company’s various series of preferred stock, impairment of long-lived assets, goodwill, fair value of commodity derivatives, stock-based compensation, asset retirement obligations, and the determination of expected tax rates for future income tax recoveries.

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.

2 unchanged sentences

Actual results could differ from the estimates and assumptions utilized.

Financial Instruments

e) Financial Instruments

Accounting Standards Codification, “ASC” Topic 820-10, “Fair Value Measurement” requires disclosure of the fair value of financial instruments held by the Company.

ASC Topic 820-10 defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measurement.

The carrying amounts reported in the consolidated balance sheets for deposits, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to director, and convertible notes each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, derivative liabilities, debt instruments and certain other assets and liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

The three levels of valuation hierarchy are defined as follows:

2 unchanged sentences

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.

As of December 31, 2023, the significant inputs to the Company’s derivative liability relative to the Company’s Series C Redeemable Convertible Preferred Stock (the “Series C Preferred Stock”) were Level 3 inputs.

Assets and liabilities measured at fair value as of and for the year ended December 31, 2023 are classified below based on the three fair value hierarchy described above:

Identical Assets

Significant Unobservable

Total Gains (Losses)

Financial liabilities:

1 unchanged sentence

$ ( 7,383,811 )

Derivative liability – Convertible Debt

( 1,766,648 )

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

$ ( 9,150,459 )

f) Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less.

Accounts at banks in the United States are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 , while accounts at banks in Canada are insured by the Canada Deposit Insurance Corporation (“CDIC”) up to CAD $ 100,000 .

The Company’s cash balances may at times exceed the FDIC or CDIC insured limits.

g) Accounts Receivable

Accounts receivable for the Company’s oil and gas operations consist of purchaser receivables and joint interest billing receivables.

The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected credit losses.

In establishing the required allowance, if any, management considers significant factors such as historical losses, current receivables aging, the debtors’ current ability to pay its obligation to the Company and existing industry and economic data.

At December 31, 2023 and December 31, 2022, the Company has not recorded an allowance for credit losses related to oil and gas.

The Company extends credit to its power generation customers in the normal course of business.

The Company performs ongoing credit evaluations and generally does not require collateral.

Payment terms are generally 30 days.

The Company carries its trade accounts receivable at invoice amount less an allowance for expected credit losses.

On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for expected credit losses based upon management’s estimates that include a review of the history of past write-offs and collections and an analysis of current credit conditions.

At December 31, 2023 and December 31, 2022, the Company had a reserve for expected credit losses on power generation accounts receivable of $ 36,678 and $ 19,330 , respectively.

The Company does not accrue interest on past due accounts receivable.

Inventories are stated at the lower of cost or net realizable value, and consist of parts, equipment and work in process.

Work-in-process and finished goods included the cost of materials, direct labor and overhead.

At the closing of each reporting period, the Company evaluates its inventory in order to adjust the inventory balance for obsolete and slow-moving items.

Inventory consisted of the following at December 31, 2023 and 2022:

Units and work in process

Reserve for obsolescence

( 1,224,931 )

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, 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, 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.

Investment in Unconsolidated Entities

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

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

Under the equity method, the investment is initially recorded at cost and the investment is reduced for dividends or distributions it receives and increased or decreased for its proportionate share of earnings or losses of the entity.

We assess the potential for other-than-temporary impairment of our equity method investments when impairment indicators are identified.

We consider all available information, including the recoverability of the investment, the earnings and near-term prospects of the affiliate, factors related to the industry, conditions of the affiliate, and our ability, if any, to influence the management of the affiliate.

We assess fair value based on valuation methodologies, as appropriate, including the present value of estimated future cash flows, estimates of sales proceeds, and external appraisals.

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

Limitation on Capitalized Costs

( 1,264,867 )

i) Oil and Gas Properties

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

Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized.

General and administrative costs related to production and general overhead are expensed as incurred.

All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves.

Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations.

Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs.

If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from operations before income taxes.

j) Limitation on Capitalized Costs

Under the full-cost method of accounting, we are required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the “Ceiling” test).

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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.

Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized.

General and administrative costs related to production and general overhead are expensed as incurred.

All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves.

Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs.

If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from operations before income taxes

Oil and Gas Reserves

k) Oil and Gas Reserves

Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure.

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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.

Income (loss) per Share

Basic and diluted income (loss) per share calculations are calculated on the basis of the weighted average number of shares of the Company’s common stock outstanding during the year.

Diluted earnings per share give effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.

The Company uses a third-party engineering firm to estimate its oil and gas reserves.

l) Accounting for Leases

The Company uses the right-of-use (“ROU”) model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date.

A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable.

The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment.

Lease payments include payments made before the commencement date and any residual value guarantees, if applicable.

When determining the lease term, the Company includes option periods that it is reasonably certain to exercise as failure to renew the lease would impose a significant economic detriment.

For operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms.

The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee.

Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months.

The Company elected the package of practical expedients permitted under the transition guidance for the revised lease standard, which allowed Viking to carry forward the historical lease classification, retain the initial direct costs for any leases that existed prior to the adoption of the standard and not reassess whether any contracts entered into prior to the adoption are leases.

The Company also elected to account for lease and non-lease components in lease agreements as a single lease component in determining lease assets and liabilities.

In addition, the Company elected not to recognize the right-of-use assets and liabilities for leases with lease terms of one year or less.

m) Business Combinations

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer lists, acquired technology, and trade names from a market participant perspective, useful lives and discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, which is one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination.

Goodwill is subject to impairment testing at least annually and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If, after completing the assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company will proceed to a quantitative test.

The Company may also elect to perform a quantitative test instead of a qualitative test for any or all of our reporting units.

The test compares the fair value of an entity’s reporting units to the carrying value of those reporting units.

This quantitative test requires various judgments and estimates.

The Company estimates the fair value of the reporting unit using a market approach in combination with a discounted operating cash flow approach.

Impairment of goodwill is measured as the excess of the carrying amount of goodwill over the fair values of recognized and unrecognized assets and liabilities of the reporting unit.

o) Intangible Assets

Intangible assets include amounts related to the Company’s license agreement with ESG Clean Energy, LLC, and its investments in Viking Ozone, LLC, Viking Protection Systems, LLC and Viking Sentinel, LLC.

Additionally, as part of the acquisition of Simson-Maxwell, Viking identified intangible assets consisting of Simson-Maxwell’s customer relationships and its brand.

These intangible assets are described in detail in Note 7.

The intangible assets related to the ESG Clean Energy license and the Simson-Maxwell customer relationships are being amortized on a straight-line basis over 16 years (the remaining life of the related patents) and 10 years, respectively.

The other intangible assets are not amortized.

The Company reviews these intangible assets, at least annually, for possible impairment when events or changes in circumstances that the assets carrying amount may not be recoverable.

In evaluating the future benefit of its intangible assets, the Company estimates the anticipated discounted future net cash flows of the intangible assets over the remaining estimated useful life.

If the carrying amount is not recoverable, an impairment loss is recorded for the excess of the carrying value of the asset over its fair value.

p) Income (Loss) per Share

Basic and diluted income (loss) per share calculations is calculated on the basis of the weighted average number of shares of the Company’s common stock outstanding during the year.

Diluted earnings per share give effect to all dilutive potential shares of common stock outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method.

In computing diluted earnings per share, the average stock price for the period is used to determine the number of shares assumed to be purchased from the exercise price of the options and warrants.

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

Revenue Recognition

For the years ended December 31, 2023 and 2022, there were approximately 15,998,576 and 17,204,020 common stock equivalents, respectively, that were omitted from the calculation of diluted income per share as they were anti-dilutive.

q) Revenue Recognition

Oil and Gas Revenues

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.

The following table disaggregates the Company’s oil and gas revenue by source for the years ended December 31, 2023 and 2022:

Natural gas and natural gas liquids

Well operations

Power Generation Revenues

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

Simson-Maxwell provides commercial and industrial clients with emergency power generation capabilities.

Simson Maxwell’s derives its revenues as follows:

Sale of power generation units .

Simson-Maxwell manufactures and assembles power generation solutions.

The solutions may consist of one or more units and are generally customized for each customer.

Contracts are required to be executed for each customized solution.

The contracts generally require customers to submit non-refundable progress payments for measurable milestones delineated in the contract.

The Company considers the completed unit or units to be a single performance obligation for purposes of revenue recognition and recognizes revenue when control of the product is transferred to the customer, which typically occurs upon shipment or delivery to the customer.

Sales, use, value add and other similar taxes assessed by governmental authorities and collected concurrent with revenue-producing activities are excluded from revenue.

Progress payments are recognized as contract liabilities until the completed unit is delivered.

Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for the transfer of the units, which is generally the price stated in the contract.

The Company does not allow returns because of the customized nature of the units and does not offer discounts, rebates, or other promotional incentives or allowances to customers.

Simson-Maxwell has elected to recognize the cost for freight activities when control of the product has transferred to the customer as an expense within cost of goods.

Parts revenue - Simson-Maxwell sells spare parts and replacement parts to its customers.

Simson-Maxwell is an authorized parts distributor for a number of national and international power generation manufacturers.

The Company considers the purchase orders for parts, which in some cases are governed by master sales agreements, to be the contracts with the customers.

For each contract, the Company considers the commitment to transfer products, each of which is distinct, to be the identified performance obligations.

Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for the transfer of product, which is generally the price stated in the contract specific for each item sold, adjusted for the value of expected returns.

Sales, use, value add and other similar taxes assessed by governmental authorities and collected concurrent with revenue-producing activities are excluded from revenue.

Simson-Maxwell has elected to recognize the cost for freight activities when control of the product has transferred to the customer as an expense within cost of goods sold in the consolidated statements of comprehensive income.

Parts revenues are recognized at the point in time when control of the product is transferred to the customer, which typically occurs upon shipment or delivery to the customer.

Service and repairs - Simson-Maxwell offers service and repair of various types of power generation systems.

Service and repairs are generally performed on customer owned equipment and billed based on labor hours incurred.

Each repair is considered a performance obligation.

As a result of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation.

Simson-Maxwell generally uses the cost-to-cost measure of progress for its service work because the customer controls the asset as it is being serviced.

Most service and repairs are completed within one or two days.

The following table disaggregates Simson-Maxwell’s revenue by source for the years ended December 31, 2023 and 2022:

Power generation units

Total units and parts

Service and repairs

r) Income Taxes

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

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The valuation allowance is then adjusted accordingly.

The Company recognizes the benefits, if any, of uncertain tax positions taken or expected to be taken in tax returns in the provision for income taxes only for those positions that are more likely than not to be realized.

The Company follows a two-step approach to recognizing and measuring uncertain tax positions.

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.

The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

The Company considers many factors when evaluating and estimating tax positions and tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes.

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

Stock-Based Compensation

s) Stock-Based Compensation

The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs.

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

Derivative Liabilities

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

t) Impairment of Long-lived Assets

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

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

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

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

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

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

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

u) Accounting for Asset Retirement Obligations

Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws.

The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation.

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

The following table describes the changes in the Company’s asset retirement obligations for the years ended December 31, 2023 and 2022:

Asset retirement obligation – beginning

ARO recovered on sale of assets

( 1,104,806 )

ARO acquired on the Merger

Accretion expense

Asset retirement obligation – ending

v) Derivative Liabilities

Convertible Preferred Shares

The Series C Preferred Stock and the Company’s Series G Redeemable Convertible Preferred Stock (the “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”.

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Upon conversion, the holder is entitled to dividends as if the shares had been held to maturity, which is referred to as the Conversion Premium.

The Conversion Premium may be paid in shares or cash, at the option of the Company.

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

If the Conversion Premium is paid in shares, the conversion ratio is based on a volume weighted average price (“VWAP”) calculation based on the lowest stock price over the Measurement Period.

The 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.

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 COD.

For example, the Measurement Period may be extended one day for every day the Company is not in compliance with one or more of the Equity Conditions.

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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.

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.

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

The fair value of the derivative liability relating to the Conversion Premium for any outstanding shares of Series C Preferred Stock is equal to the cash required to settle the Conversion Premium.

The fair value of the potential True-Up share obligation has been estimated using a binomial pricing mode and the lesser of the conversion price or the lowest closing price of the Company’s stock subsequent to the conversion date, and the historical volatility of the Company’s common stock.

The Series G Convertible Preferred stock is redeemable or convertible into a variable number of common shares, at the option of the Company.

The conversion rate is determined at the time of conversion using a VWAP calculation similar to the Series C Stock described above.

The Series G Convertible Preferred stock is redeemable or convertible into a variable number of shares of common stock, at the option of the Company.

The conversion rate is determined at the time of conversion using a VWAP calculation similar to the Series C Preferred Stock described above.

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

The Company has determined that the fair value of the embedded derivative 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.

Accounting for Asset Retirement Obligations

The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation.

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

Recently Adopted Accounting Pronouncements

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

Subsequent events

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

NOTE 5 – OIL AND GAS PROPERTIES

The Company has determined that the fair value of the embedded derivative is negligible due to the restrictions on conversion.

Capitalized terms used but not defined herein with respect to the Series C Preferred Stock or the Series G Preferred Stock have the meaning assigned to them in the Fifth Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock filed by the Company with the Secretary of State of Nevada on November 8, 2021, as amended on October 28, 2022 (as amended, the “Series C COD”) or the Certificate of Designations of Preferences, Powers, Rights and Limitations of Series G Redeemable Convertible Preferred Stock filed by the Company with the Secretary of State of Nevada on December 30, 2021 (the “Series G COD”), as applicable.

Convertible Debt

We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments.

In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense.

When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments.

The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value.

The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.

The Company has adopted a sequencing approach to allocating its authorized and unissued shares when the number of such shares is insufficient to satisfy all convertible instruments or option type contracts that may be settled in shares.

Specifically, the Company allocates it authorized and unissued shares based on the inception date of each instrument, with shares allocated first to those instruments with the earliest inception dates.

Instruments with later inception dates for which no shares remain to be allocated are reclassified to asset or liability.

w) Undistributed Revenues and Royalties

The Company records a liability for cash collected from oil and gas sales that have not been distributed.

The amounts are distributed in accordance with the working interests of the respective owners.

x) Subsequent events

The Company has evaluated all subsequent events from December 31, 2023 through the date of filing of this report (see Note 17).

Merger of Camber Energy, Inc.

and Viking Energy Group, Inc.

As discussed in Note 1, the Merger has been accounted for as a reverse acquisition with Viking treated as the acquiror of Camber for financial accounting purposes.

The transaction consideration transferred by the accounting acquirer for its interest in the accounting acquiree is based on the number of equity interests the legal subsidiary would have had to issue to give the owners of the legal parent the same percentage equity interest in the combined entity that results from the reverse acquisition.

This was determined as follows:

Number of Viking shares of common stock outstanding at merger date

Viking shareholder ownership interest in the merged entity

Grossed up number of shares

Number of shares theoretically issued to Camber shareholders

Viking share price at date of merger

Consideration transferred

The consideration transferred was allocated to the assets acquired and liabilities assumed of Camber based upon their estimated fair values as of the merger closing date, and any excess value of the consideration transferred over the net assets was recognized as goodwill, as follows:

Consideration transferred

Net Assets Acquired and Liabilities Assumed (Camber):

Oil and gas properties

Advances due from Viking

Investment in Viking

Total net assets acquired

Accounts payable

Accrued expenses and other current liabilities

Derivative liability

Long term debt

Asset retirement obligations

Total net liabilities assumed

Total Net Assets Acquired and Liabilities Assumed

At September 30, 2023, the Company concluded that the significant decline in the Company’s share price between the date of the Merger and September 30, 2023 was an indicator of impairment and therefore performed an impairment assessment at that date.

Based upon this assessment, the Company recorded an impairment charge of $ 14,486,745 during the year ended December 31, 2023.

Oil and Gas Properties

The following table summarizes the Company’s oil and gas activities by classification and geographical cost center for the year ended December 31, 2023:

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

$ ( 2,397,488 )

$ ( 347,050 )

Accumulated depreciation, depletion and amortization

( 2,803,375 )

Proved developed producing oil and gas properties, net

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

Costs to acquire mineral interests in oil and natural gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells including directly related overhead costs and related asset retirement costs are capitalized.

Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalized as oil and natural gas property costs on a country-by-country basis.

Costs not subject to amortization consist of unproved properties that are evaluated on a property-by-property basis.

Amortization of these unproved property costs begins when the properties become proved or their values become impaired.

Camber assesses overall values of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred.

Impairment of unproved properties is assessed based on management’s intention with regard to future development of individually significant properties and the ability of Camber to obtain funds to finance its programs.

If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.

Sales of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves.

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

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 (losses)

$ ( 347,050 )

Undeveloped and non-producing oil and gas properties

United States cost center

Accumulated depreciation, depletion and amortization

Undeveloped and non-producing oil and gas properties, net

$ ( 216,805 )

Carrying amount – ending

NOTE 7 – ASSET RETIREMENT OBLIGATIONS

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

Carrying amount at beginning of year

Carrying amount at end of year

NOTE 8 – LONG TERM DEBT

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

Total Oil and Gas Properties, Net

$ ( 347,050 )

During the year ended December 31, 2023, the Company recorded an addition to oil and gas properties of $ 1,475,000 related to the merger with Camber (see Note 5).

For the year ended December 31, 2023, the Company recorded a disposal of $ 1,049,229 ($ 1,285,918 less $ 236,689 of depletion expense) related to the sale of its assets in Kansas and Texas (see Note 2 – 2023 Divestitures) and an impairment charge of $ 347,050 related to its remaining oil and gas assets driven by a decrease in commodity prices.

Intangible Assets

ESG Clean Energy License

The Company’s intangible assets include costs associated with securing an Exclusive Intellectual Property License Agreement with ESG in August 2021, pursuant to which Viking received (i) an exclusive license to ESG’s patent rights and know-how related to stationary electric power generation (not in connection with vehicles), including methods to utilize heat and capture carbon dioxide in Canada, and (ii) a non-exclusive license to the intellectual property in up to 25 sites in the United States that are operated by the Company or its affiliates.

In consideration of the licenses, Viking paid an up-front royalty of $ 1,500,000 and Viking was obligated to make additional royalty payments as follows:

(i) an additional $ 1,500,000 on or before January 31, 2022, which may be paid in whole or in part in the form of Viking’s common stock based on the price of Viking’s common stock on August 18, 2021, at ESG’s election;

(ii) an additional $ 2,000,000 on or before April 20, 2022, which may be paid in whole or in part in the form of Viking’s common stock based on the price of Viking’s common stock on August 18, 2021, at ESG’s election;

and (iii) continuing royalties of not more than 15% of the Company’s net revenues generated using the intellectual property, with the continuing royalty percentage to be jointly determined by the parties collaboratively based on the parties’ development of realistic cashflow models resulting from initial projects utilizing the intellectual property, and with the parties utilizing mediation if they cannot jointly agree to the continuing royalty percentage.

With respect to the payments noted in (i) and (ii) above, totaling $3,500,000, on or about November 22, 2021, the Company paid $500,000 to or on behalf of ESG and ESG elected to accept $2,750,000 in shares of Viking’s common stock at the applicable conversion price, resulting in 6,942,691 shares, leaving a balance owing of $250,000 which was paid in January 2022.

The Company’s exclusivity with respect to Canada shall terminate if minimum continuing royalty payments to ESG are not at least equal to the following minimum payments based on the date that ESG first begins capturing carbon dioxide and selling for commercial purposes one or more commodities from a system installed and operated by ESG using the intellectual property (the “Trigger Date”):

Years from the Trigger Date:

Year nine and after

The Company’s management believes that the Trigger Date could occur as early as the second quarter of 2024 but there is no assurance that it will occur at that or any time.

If the continuing royalty percentage is adjusted jointly by the parties downward from the maximum of 15 %, then the minimum continuing royalty payments for any given year from the Trigger Date shall also be adjusted downward proportionally.

The Company recognized amortization expense of $ 308,694 for the year ended December 31, 2023.

The estimated future amortization expense for each of the next five years is $ 304,465 per year.

The ESG intangible asset consisted of the following at December 31, 2023 and December 31, 2022:

ESG Clean Energy License

Accumulated amortization

Other intangibles – Simson-Maxwell – Customer Relationships and Brand

The Company allocated a portion of the purchase price of Simson-Maxwell to Customer Relationships with a fair value of $ 1,677,453 and an estimated useful life of 10 years, and the Simson-Maxwell Brand with a fair value of $ 2,230,673 and an indefinite useful life.

The Company recognized amortization expense for the Customer Relationship intangible of $ 167,745 for the year ended December 31, 2023.

The estimated future amortization expense for each of the next five years is $ 167,745 per year.

The Company periodically reviews the fair value of the Customer Relationships and Brand to determine if an impairment charge should be recognized.

For the year ended December 31, 2023, the Company recorded an impairment charge of $ 311,837 related to the Simmax Brand and $ 357,873 related to Customer Relationships, driven by lower actual and forecast revenue growth as compared to the date of acquisition.

For the year ended December 31, 2022, the Company recorded an impairment charge of $ 367,907 and $ 83,865 , respectively, related to these assets for the same reason.

The Other intangibles – Simson-Maxwell consisted of the following at December 31, 2023 and 2022:

Customer Relationships

Impairment of intangible assets

( 1,121,482 )

Accumulated amortization

Intangible Assets - Variable Interest Entity Acquisitions (VIE’s)

Medical Waste Disposal System

On January 18, 2022, Viking entered into a Securities Purchase Agreement to purchase 51 units, representing 51%, of Viking Ozone, from Choppy Group LLC , a Wyoming limited liability company (“Choppy”), in consideration of the issuance of 8,333,333 shares of Viking common stock to Choppy, 3,333,333 of which shares were issued at closing, 3,333,333 of which shares are to be issued to Choppy after 5 units of the System (as defined below) have been sold, and 1,666,667 of which shares are to be issued to Choppy after 10 units of the System have been sold .

Viking Ozone was organized on or about January 14, 2022, for the purpose of developing and distributing a medical and biohazard waste treatment system using ozone technology (the “System”), and on or about January 14, 2022, Choppy was issued all 100 units of Viking Ozone in consideration of Choppy’s assignment to Viking Ozone of all of Choppy’s intellectual property and intangible assets, including patent rights, know-how, procedures, methodologies, and contract rights in connection with the System, and specifically the invention entitled “Multi-Chamber Medical Waste Ozone-Based Treatment Systems and Methods (Docket No.

RAS-101A) and related patent application.

On January 18, 2022 Viking acquired 51 units (51%) of Viking Ozone from Choppy with Choppy retaining the remaining 49 units (49%) of Viking Ozone, and Viking issued 3,333,333 shares of Viking common stock to Choppy.

Viking and Choppy then entered into an Operating Agreement on January 18, 2022 governing the operation of Viking Ozone.

Based on the closing price of the Company’s stock on January 18, 2022, the fair value was approximately $2,000,000.

The Company determined the acquisition of a 51 % interest in Viking Ozone was the acquisition of and initial consolidation of a VIE that is not a business.

The acquisition was recorded as follows:

Purchase Price:

Fair value of stock at closing

Fair value of contingent consideration

Total consideration

Purchase Price Allocation:

Intangible asset

Non-controlling interest

( 2,420,189 )

Camber ownership interest

Open Conductor Detection Technologies

On February 9, 2022, Viking entered into a Securities Purchase Agreement to purchase 51 units, representing 51% of Viking Sentinel, from Virga Systems LLC , a Wyoming limited liability company (“Virga”), in consideration of the issuance of 416,667 shares of Viking common stock to Virga.

Viking Sentinel was formed on or about January 31, 2022, and Virga was issued all 100 units of Viking Sentinel in consideration of Virga’s assignment to Viking Sentinel of all of Virga’s intellectual property and intangible assets, including patent rights, know-how, procedures, methodologies, and contract rights in connection with an end of line protection with trip signal engaging for distribution system, and related patent application(s).

On February 9, 2022 Viking acquired 51 units (51%) of Viking Sentinel from Virga with Virga retaining the remaining 49 units (49%) of Viking Sentinel, and Viking issued 416,667 shares of Viking common stock to Virga.

Viking and Virga then entered into an Operating Agreement on February 9, 2022 governing the operation of Viking Sentinel.

The Company determined the acquisition of a 51 % interest in Viking Sentinel was the acquisition and initial consolidation of a VIE that is not a business.

The acquisition was recorded as follows:

Purchase Price:

Fair value of stock at closing

Total consideration

Purchase Price Allocation:

Intangible asset

Non-controlling interest

Camber ownership interest

On February 9, 2022, Viking entered into a Securities Purchase Agreement to purchase (the “Purchase”) 51 units (the “Units”), representing a 51 % ownership interest in Viking Protection Systems, LLC (“Viking Protection”), from Jedda Holdings LLC (“Jedda”).

In consideration for the Units, Viking agreed to issue to Jedda, shares of a new class of Convertible Preferred Stock of Viking with a face value of $ 10,000 per share (the “Viking Series E Preferred Stock”), or pay cash to Jedda, if applicable, as follows:

Purchase Price *

Conversion Price

of Underlying Common Shares

Estimated Revenues if Sales Target Achieved**

Upon the sale of 10k units

Upon the sale of 20k units

Upon the sale of 30k units

Upon the sale of 50k units

Upon the sale of 100k units

The $ 5 million due on closing was payable solely in stock of Viking.

All other payments, if the subject sales targets are met, are payable in cash or in shares of convertible preferred stock of the Company, at the seller’s option.

These are estimates only.

There is no guarantee any sales targets will be reached.

Notwithstanding the above, the Company shall not effect any conversion of any shares of Viking Series E Preferred Stock, and Jedda shall not have the right to convert any shares of Viking Series E Preferred Stock, to the extent that after giving effect to the conversion, Jedda (together with Jedda’s affiliates, and any persons acting as a group together with Jedda or any of Jedda’s affiliates) would beneficially own in excess of 4.99% of the number of shares of the Camber Common Stock outstanding immediately after giving effect to the issuance of shares of Camber Common Stock issuable upon conversion of the shares of Viking Series E Preferred Stock by Jedda.

Jedda, upon not less than 61 days’ prior notice to Camber, may increase or decrease the beneficial ownership limitation, provided that the beneficial ownership limitation in no event exceeds 9.99% of the number of shares of Camber Common Stock outstanding immediately after giving effect to the issuance of shares of Camber Common Stock upon conversion of the Preferred Share(s) held by Jedda and the beneficial ownership limitation provisions of this Section shall continue to apply.

Any such increase or decrease will not be effective until the 61 st day after such notice is delivered to Camber.

Viking Protection was formed on or about January 31, 2022, and Jedda was issued all 100 units of Viking Protection in consideration of Jedda’s assignment to Viking Protection of all of Jedda’s intellectual property and intangible assets, including patent rights, know-how, procedures, methodologies, and contract rights in connection with an electric transmission ground fault prevention trip signal engaging system, and related patent application(s).

On February 9, 2022 Viking acquired 51 units (51%) of Viking Protection from Jedda with Jedda retaining the remaining 49 units (49%) of Viking Protection, and Viking issued the 475 shares of Viking Series E Preferred Stock to Jedda.

Viking and Jedda then entered into an Operating Agreement on February 9, 2022 governing the operation of Viking Protection.

The Company determined the acquisition of a 51% interest in Viking Protection was the acquisition and initial consolidation of a VIE that is not a business.

The acquisition was recorded as follows:

Purchase Price:

Fair value of stock at closing

Fair value of contingent consideration

Total consideration

Purchase Price Allocation:

Intangible asset

Non-controlling interest

( 4,686,542 )

Camber ownership interest

The Company consolidates any VIEs in which it holds a variable interest and is the primary beneficiary.

Generally, a VIE, is an entity with one or more of the following characteristics:

(a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support;

(b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity;

or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights.

The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company has determined that it is the primary beneficiary of three VIEs, Viking Ozone, Viking Sentinel and Viking Protection, and consolidates the financial results of these entities, as follows:

Intangible asset

Non-controlling interest

( 2,420,189 )

( 4,686,542 )

( 7,330,915 )

Camber ownership interest

Upon consummation of the Merger between Viking and Camber, all shares of Viking Series E Preferred Stock were exchanged for Camber Series H Preferred Stock, with substantially the same rights and terms with respect to Camber.

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.

During the years ended December 31, 2023 and 2022, the Company paid or accrued $ 460,000 and $ 360,000 , respectively, in fees to AGD Advisory Group, Inc.

As of December 31, 2023 and 2022, the total amount due to AGD Advisory Group, Inc.

was $ 600,000 and $ 370,000 , respectively, and is included in accounts payable.

The Company’s CFO, John McVicar, renders professional services to the Company through 1508586 Alberta Ltd., an affiliate of Mr.

During the years ended December 31, 2023 and 2022, the Company paid or accrued $ 280,000 and $ 140,000 , respectively, in fees to 1508586 Alberta Ltd.

The Company’s previous CFO, Frank W.

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

During the years ended December 31, 2023 and 2022, the Company paid or accrued $ 20,000 and $ 130,000 , respectively, in fees to FWB Consulting, Inc.

Due to Parent

In 2021 and 2022, prior to the Merger of Camber and Viking, Camber made various cash advances to the Viking.

The advances were non-interest bearing and stipulated no repayment terms or restrictions.

These balances have been eliminated upon consolidation at December 31, 2023.

As of December 31, 2022, the amount due to Camber from Viking was $ 6,572,300 .

Simson-Maxwell

At the time of acquisition, Simson-Maxwell had several amounts due to/due from related parties and notes payable to certain employees, officers, family members and entities owned or controlled by such individuals.

Viking assumed these balances and loan agreements in connection with the acquisition.

The balance of amounts due to and due from related parties as of December 31, 2023 and 2022 are as follows:

related party

December 31, 2023

& majority owner

$ ( 643,121 )

$ ( 308,684 )

Adco Power Ltd.

$ ( 643,121 )

$ ( 308,684 )

December 31, 2022

& majority owner

$ ( 629,073 )

$ ( 301,941 )

Adco Power Ltd.

$ ( 629,073 )

$ ( 301,941 )

owns a 17 % non-controlling interest in Simson-Maxwell and is majority owned by a Director of Simson-Maxwell.

Adco Power Ltd., an industrial, electrical and mechanical construction company, is a wholly owned subsidiary of Simmax Corp., and conducts business with Simson-Maxwell.

The notes payable to related parties as of December 31, 2023 and 2022 are as follows:

Total notes payable to related parties

Less current portion of notes payable - related parties

Notes payable - related parties, net of current portion

On June 1, 2023, Simson-Maxwell issued CAD$457,000 ($ 345,060 ) in promissory notes to related parties.

The notes bear interest at 12 % per annum, payable monthly, and mature on June 1, 2024 .

Noncontrolling Interests

The following discloses the effects of changes in the Company’s ownership interest in Simson-Maxwell, and on the Company’s equity for the year ended December 31, 2023:

Noncontrolling interest - January 1, 2023

Net loss attributable to noncontrolling interest

Noncontrolling interest – December 31, 2023

The following discloses the effects of the Company’s ownership interest in Viking Ozone, Viking Sentinel and Viking Protection in the aggregate, and on the Company’s equity for the year ended December 31, 2023:

Noncontrolling interest - January 1, 2023

Net loss attributable to noncontrolling interest

Noncontrolling interest – December 31, 2023

Long-Term Debt and Other Short-Term Borrowings

Long term debt and other short-term borrowings consisted of the following at December 31, 2023 and 2022:

Long-term debt:

Note payable to Discover Growth Fund, pursuant to a Secured Promissory Note dated December 24, 2021 and funded on January 3, 2022 in the original amount of $26,315,789 with interest and principal due at maturity on January 1, 2027.

The note bears interest at a rate equal to the Wall Street Journal Prime Rate and is secured by lien on substantially all of the Company’s assets.

The note bears interest at a rate equal to the Wall Street Journal Prime Rate (3.25%) as of the effective date and is secured by lien on substantially all of the Company’s assets.

The balance at December 31, 2023 is shown net of unamortized debt discount of $9,714,868.

Note payable to Discover Growth Fund, LLC pursuant to a 10.0% Secured Promissory Note dated April 23, 2021 in the original amount of $2,500,000 with interest and principal due at maturity on January 1, 2027.

Pursuant to an amendment dated December 24, 2021 the interest rate was adjusted to the Wall Street Journal Prime Rate (3.25%) as of the amendment date.

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

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 lien on substantially all of the Company’s assets.

Pursuant to an amendment dated December 24, 2021 the interest rate was adjusted to the Wall Street Journal Prime Rate (3.25%) as of the amendment date.

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

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 first lien on the Company’s ownership in Viking.

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

Note payable to Discover Growth Fund, LLC pursuant to a 10.0% Secured Promissory Note dated December 9, 2021 in the original amount of $1,000,000 with interest and principal due at maturity on March 8, 2022.

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

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

Principal value of debt

unamortized debt discount

( 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.

Pursuant to an amendment dated December 24, 2021 the interest rate was adjusted to the Wall Street Journal Prime Rate (3.25%) as of the amendment date.

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

Promissory note payable by Mid-Con Petroleum LLC, a wholly owned subsidiary, to Cornerstone Bank dated July 24, 2019 in the amount of $2,241,758, bearing interest at 6%, payable interest only through July 24, 2021, then on August 24, 2021, payable in monthly installments of principal and interest of $43,438, with a final payment due on a maturity date of July 24, 2025.

The note was secured by a first mortgage on all of the assets of Mid-Con Petroleum, LLC and a guarantee of payment by Viking.

On March 10, 2023, the promissory note was amended to include a conversion feature and to include Viking as an additional obligor.

In April 2023, Viking issued 588,235 shares of common stock to convert $200,000 of the outstanding principal balance.

On July 31, 2023, the outstanding principal balance was assigned by Cornerstone Bank to FK Venture LLC and in August 2023 the Company issued a total of 5,189,666 shares of common stock to convert the total outstanding principal balance owed by both Mid-Con Petroleum LLC and Mid-Con Drilling LLC.

The balance at December 31, 2022 is shown is net of unamortized discount of $12,224.

Promissory note payable by Mid-Con Drilling LLC, a wholly owned subsidiary, to Cornerstone Bank dated July 24, 2019 in the amount of $1,109,341, bearing interest at 6%, payable interest only through July 24, 2021, then on August 24, 2021, payable in monthly installments of principal and interest of $21,495, with a final payment due on a maturity date of July 24, 2025.

The note was secured by a first mortgage on all of the assets of Mid-Con Drilling, LLC and a guarantee of payment by Viking.

On March 10, 2023, the promissory note was amended to include a conversion feature and to include Viking as an additional obligor.

The balance at December 31, 2022 is shown is net of unamortized discount of $12,190.

On May 5, 2023, Viking signed a securities purchase agreement with FK Venture LLC under which FK Venture LLC agreed to purchase convertible promissory notes from the Company in the amount of $800,000 on the 5th day of each month commencing May 5, 2023 for 6 months, for a minimum commitment of $4,800,000.

FK Venture LLC has the right to purchase up to $9,600,000 of such notes.

The notes bear interest at 12% per annum.

The maturity date of the notes is the earlier of (i) July 1, 2025, or (ii) 90 days following the date that the Company completes a direct up-listing of its common stock to a national securities exchange (not including any merger or combination with Camber).

FK Venture LLC shall have the right to convert all or any part of the outstanding and unpaid principal balance into common stock of the Company.

The conversion price shall be the lesser of (i) $0.75, or (ii) if the Merger with Camber closes, 50% of the trading price of Camber Energy, Inc.’s common stock on the day prior to the closing of the Merger with Camber ($0.4158 per share).

At December 31, 2023, the Buyer had purchased six notes and converted two of these notes subsequent to the closing of the Merger in exchange for 3,848,004 shares of the Company’s common stock.

The Company recorded a loss on early extinguishment of $35,402 related to these conversions.

The balance at December 31, 2023 is shown is net of unamortized discount of $488,270.

Loan of $150,000 dated July 1, 2020 from the U.S.

Small Business Administration.

The loan bears interest at 3.75% and matures on July 28, 2050.

The loan is payable in monthly installments of $731 with the remaining principal and accrued interest due at maturity.

Installment payments were originally due to start 12 months from the date of the note but the date was extended to January 2023.

Accrued interest from the original installment due date to January 2023 was capitalized to the loan principal balance.

Total long-term debt

Less current portion and debt discount

Total long-term debt, net of current portion and debt discount

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

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 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.

Twelve-month period ended December 31,

Unamortized Discount

( 9,714,868 )

$ ( 10,203,138 )

Bank Credit Facility

Simson-Maxwell has an operating credit facility with TD Bank, secured by accounts receivable and inventory, bearing interest at prime plus 2.25% on Canadian funds up to CAD $5,000,000 and the bank’s US dollar base rate plus 2.25% on US funds, plus a monthly administration fee of CAD 500 .

The balance outstanding under this credit facility is CAD $4,457,947 ($ 3,365,995 ) and CAD $4,139,785 ($ 3,111,350 ) as of December 31, 2023 and 2022, respectively.

Derivative Liability

Series C Preferred Stock

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

Upon conversion of the Series C Preferred Stock into shares of common stock, the Company has a potential obligation to issue additional shares of common stock to satisfy the True-Up obligation.

Both the Conversion Premium and the True-Up obligation are derivatives and are required to be recorded at fair value.

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.

Conversion of the Series C Stock

The Company receives notice of conversion from the holder with a calculation of the number of common shares required to be issued to satisfy the redemption value plus the Conversion Premium.

The Company has never elected to satisfy the conversion premium in cash.

The Company then issues the number of common shares determined by the holder using a VWAP calculation for the Measurement Period before the conversion date.

Conversion of the face value of the Series C Preferred Stock is fixed at $ 162.50 per share of common stock.

The Conversion Premium is convertible into shares of common stock based on a variable that is not an input to fair value of a fixed-for-fixed option as defined in FASB ASC 815-40 and is a derivative liability and is recorded at fair value.

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

The fair value of the Conversion Premium is determined to be the fair value of the shares required to satisfy the Conversion Premium.

The Company receives notice of conversion from the holder with a calculation of the number of shares of common stock required to be issued to satisfy the redemption value plus the Conversion Premium.

The Company then issues the number of shares of common stock determined by the holder using a VWAP calculation for the Measurement Period before the conversion date.

The shares may be issued over time due to ownership limitations of the holder.

Upon conversion of the Series C Stock, the Company reduces the derivative liability by the amount that was originally recorded for the number of Series C Stock converted.

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

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.

Upon conversion of the Series C Preferred Stock, the Company reduces the derivative liability by the amount that was originally recorded for the number of Series C Preferred Stock converted.

Any difference between the current fair value of the common shares issued to satisfy the conversion premium and the originally recorded derivative liability is recorded as a loss on derivative liability.

The holder may be entitled to additional shares subsequent to the conversion date if the VWAP calculation for the portion of the Measurement Period following the date of conversion is lower than the VWAP for the portion of the Measurement Period prior to the date of conversion, referred to as True-Up shares.

4 unchanged sentences

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

The derivative liability for the True-Up Shares at the end of each period represents Series C Stock conversions in respect of which the Measurement Period had not expired as of the period end.

The derivative liability for the True-Up Shares at the end of each period represents Series C Preferred Stock conversions in respect of which the Measurement Period had not expired as of the period end.

The fair value of the derivative liability has been estimated using a binomial pricing model, the estimated remaining Measurement Period, the share price and the historical volatility of the Company’s common stock.

Adjustments to the Carrying value of the Series C Stock and the Derivative Liability

At each reporting period the Company determined the fair value of the common shares required to satisfy the redemption of the 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.

The fair value of the common shares required to satisfy the redemption of the Series C Stock was determined generally using the closing share price of the Company’s stock as of the reporting date.

The amount of cash required to settle the Conversion Premium was generally fixed at the time of issuance.

Consequently, the fair value of the derivative liability relating to the cash obligation to satisfy the Conversion Premium is generally unchanged until conversion.

The cash required to settle the conversion premium was unchanged until the dividend rate of 24.95 % was increased in accordance with the terms of the Series C Stock to 34.95 % due to covenant violations.

The increase in the conversion premium was recorded as an increase in the derivative liability and a loss on change in fair value of derivative liability.

The fair value of the derivative liability relating to the potential obligation to issue true-up shares is subject to adjustment as the Company’s stock price changes.

Such changes are recorded as changes in fair value of derivative liability.

April 20, 2021 Amendment to the Series C Stock COD

On April 20, 2021, the Company amended the Series C Stock 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

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 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, 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, 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:

Activities for Series C Preferred Stock derivative liability during the year ended December 31, 2023 was as follows:

Carrying amount at beginning of year

Issued Series C preferred shares

Derivative liability recognized on Merger

Change in fair value

Settlement of obligation (issuance of common shares)

( 175,038,915 )

Settlement of obligation (issuance of shares of common stock)

( 7,060,526 )

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.

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

Legal Proceedings .

From time to time suits and claims against Camber arise in the ordinary course of Camber’s business, including contract disputes and title disputes.

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

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

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

Coggins, Individually and on Behalf of All Others Similarly Situated v.

Camber Energy, Inc., et al .;

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.

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

In November 2015, Randy L.

Robinson, d/b/a Maranatha Oil Co.

sued the Company in Gonzales County, Texas (Cause No.

The plaintiff alleged that it assigned oil and gas leases to the Company in April 2010, retaining a 4 % overriding royalty interest and 50 % working interest and that the Company failed to pay such overriding royalty interest or royalty interest.

The interests relate to certain oil and gas properties which the Company subsequently sold to Nordic Oil USA in April 2013.

The petition alleges causes of actions for breach of contract, failure to pay royalties, non-payment of working interest, fraud, fraud in the inducement of contract, money had and received, constructive trust, violation of theft liability act, continuing tort and fraudulent concealment.

The suit seeks approximately $ 100,000 in amounts alleged owed, plus pre-and post-judgment interest.

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

NOTE 12 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Oil and Gas Contracts

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

NOTE 13 – STOCKHOLDERS’ DEFICIT

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

On August 31, 2020, the Board of Directors approved the designation of 28,092 shares of Series A Convertible Preferred Stock (the “ Series A Preferred Stock ”), which were designated with the Secretary of State of Nevada on August 31, 2020 (the “Series A Designation”) to have substantially similar rights as the Series C Preferred Stock of Viking (as amended), as adjusted for the exchange ratio of the Merger agreement at that time.

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

On February 15, 2021, the Company entered into a new Agreement and Plan of Merger with Viking.

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

Each share of Camber Series A Preferred Stock will be convertible into 890 shares of common stock of Camber subject to a 9.99 % beneficial ownership limitation, will be treated equally with the Company’s common shareholders with respect to dividends and liquidation, and will have no right to vote on any matters, questions or proceedings of Camber except:

Convertible Debt

On March 10, 2023, the terms of the promissory notes held by Mid-Con Petroleum, LLC and Mid-Con Drilling, LLC described in Note 11 were amended to include a conversion feature granting the holder of the note the option to convert the principal balance of the debt, in whole or in part, into common stock of Viking.

The conversion price is equal to the lesser of :

(i) the average of the 5 lowest individual daily volume weighted average prices (“VWAP”) of Viking common stock during the 30-day period prior to the date of the notice of conversion;

or (ii) one dollar ($1.00) per share.

All other terms of the promissory notes remained unchanged .

The modification to the terms of the promissory notes was treated as a debt extinguishment and the Company recorded a loss on the extinguishment of debt of $ 154,763 .

The fair value of the debt was determined as the total number of shares, equal to the face value of the debt on March 10, 2023 divided by the VWAP, multiplied by the closing share price on that day.

The value of the conversion option was based upon the fair value of Viking’s common stock.

As the option was convertible into a variable number of shares, it was considered to be a derivative to be continuously recognized at fair value, with changes to fair value recorded in the statement of operations.

The fair value of the conversion feature at the date of modification was determined to be $ 2,276,217 using a binomial option pricing model.

The derivative liability is classified as a Level 3 liability in the Fair Value Hierarchy.

At March 31, 2023, the fair value of the conversion feature was remeasured and determined to be $ 2,810,824 using a binomial option pricing model.

Consequently, the Company recorded a loss of $ 534,607 on the change in fair value of the derivative liability in the accompanying consolidated statement of operations.

On April 28, 2023, $ 200,000 of the promissory note was assigned and converted into 588,235 shares of common stock.

The Company recorded a reduction to the derivative of $ 330,823 related to the conversion and recognized a loss on early extinguishment of debt of $ 8,541 .

On June 30, 2023, the fair value of the conversion feature was remeasured and determined to be $ 1,762,648 using a binomial option pricing model, and the Company recorded a gain of $ 717,352 on the change in fair value of the derivative liability in the accompanying consolidated statement of operations.

On July 31, 2023, the fair value of the conversion feature was remeasured and determined to be $ 3,712,041 using a binomial option pricing model, and the Company recorded a loss of $ 1,949,393 on the change in fair value of the derivative liability in the accompanying consolidated statement of operations.

In August 2023, the balance of the promissory notes was assigned and converted into 5,189,666 shares of common stock of the Company.

The Company recorded a loss on early extinguishment of debt of $ 406,801 related to this conversion and reduced the value of the derivative liability to nil.

(a) Common Stock

The Company is authorized to issue 500,000,000 shares of Common Stock, par value $ 0.001 per share.

During the year ended December 31, 2023, the Company issued a total of 105,646,799 shares of common stock, as follows:

A total of 8,525,782 shares of common stock on the conversion of 240 shares of Series C Preferred Stock.

Of this total, 1,093,358 shares were issued subsequent to the Merger.

A total of 31,022,321 true-up shares related to prior conversions of Series C Preferred Stock as a result of the continuation of the Measurement Period (as defined in the Series C COD with respect to such Series C Preferred Stock) associated with such conversions and a decline in the price of the Company’s shares of common stock within the Measurement Period.

Of this total, 23,670,894 shares were issued subsequent to the Merger.

588,235 shares of common stock related to the assignment and conversion of $ 200,000 of promissory notes payable to Cornerstone Bank.

3,849,306 shares of common stock on the exercise of 3,888,889 warrants.

A total of 5,189,666 shares of common stock related to the assignment and conversion of $ 2,232,273 of promissory notes payable to Cornerstone Bank.

3,333,333 shares of common stock related to the conversion of 200 shares of Series H Preferred Stock.

A total of 3,848,004 shares of common stock related to the conversion of two promissory notes, each in the amount of $800,000 (for a total of $ 1,600,000 ), due to FK Venture, LLC.

A total of 49,290,152 shares of common stock to the former shareholders of Viking Energy Group, Inc.

as part of the Merger.

(b) Preferred Stock

The Company is authorized to issue 10,000,000 shares of Preferred Stock, par value $ 0.001 per share (the “Preferred Stock”).

(i) Series A Convertible Preferred Stock

On August 1, 2023, the Company issued 28,092 shares of new Series A Preferred Stock in exchange for 28,092 outstanding shares of old Series C Preferred Stock of Viking Energy Group Inc.

Pursuant to the COD for the Series A Preferred Stock (the “Series A COD”), each share of Series A Preferred Stock is convertible into 890 shares of Camber Common Stock (subject to a beneficial ownership limitation preventing conversion into Camber Common Stock if the holder would be deemed to beneficially own more than 9.99 % of Camber Common Stock), is treated equally with Camber Common Stock with respect to dividends and liquidation, and only has voting rights with respect to voting:

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

4 unchanged sentences

and/or (g) with respect to a proposed merger or consolidation in which Camber is a party or a subsidiary of Camber is a party.

As of December 31, 2022 and 2021, the Company had no Series A Convertible Preferred Stock issued or outstanding.

Series B Redeemable Convertible Preferred Stock

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.

Series C Redeemable Convertible Preferred Stock

On February 3, 2020, the Company sold 525 shares of Series C Preferred Stock for total proceeds of $ 5 million.

In the event the Merger Agreement entered into with Viking in February 2020 is terminated for any reason, we (until June 22, 2020, when such terms were amended) these shares were required to be redeemed at a 110% premium, in an aggregate amount equal to $ 5,775,000 .

Because of the previous redemption requirement and due to certain redemption features, which are outside the control of the Company, the Series C Preferred Stock is classified as temporary equity on the March 31, 2021 and December 31, 2020 balance sheets.

Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with 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.

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

The issuance was recorded as an additional investment by the Company in Viking.

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

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

Section I.D.2(e) of the prior Certificates of Designation implicitly excluded as a “Deemed Liquidation Event”, an event or proposal that was initiated by or voted upon by the holder of the Series C Preferred Stock, and the Designations have been clarified to expressly exclude such occurrence.

Section I.F.4 of the Designations failed to include language to clarify that the Company is not obligated to redeem the Preferred Shares for cash for any reason that is not solely within the control of the Company.

Section I.G.1 of the Designations mistakenly included two subsection b.’s where only one was intended, and the unintended subsection b.

has been removed.

Section I.G.1(e) of the Designations failed to include language to clarify that the Company not having sufficient authorized but unissued shares, solely within the control of the Company and excluding any event that is not solely within the control of the Company, is not a reason that would otherwise trigger the obligations in such section.

Sections I.G.1(f) and (g) of the Designations failed to include language to clarify the particular obligations apply only if the Company has sufficient authorized and unissued shares.

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

Section I.G.9 of the Designations failed to include language to clarify the maximum number of common shares that could be potentially issuable with respect to all conversions and other events that are not solely within the control of the Company, that the Dividend Maturity Date is to be indefinitely extended and suspended until sufficient authorized and unissued shares become available, the number of shares required to settle the excess obligation is fixed on the date that net share settlement occurs and that all provisions of the Designations are to be interpreted so that net share settlement is within the control of the Company.

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

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

On April 20, 2021, the Company with the approval of the Board of Directors of the Company, and the holders of the Company’s Series C Preferred Stock, filed a third amended and restated designation of the Series C Preferred Stock with the Secretary of State of Nevada, which amended the Designations to state that dividends and conversion premiums will only be paid in shares of Company common stock, and state that redemption amounts will only be paid in shares of Company common stock.

On July 10, 2021, the Company, with the approval of the Board of Directors of the Company and the holders of the Company’s Series C Preferred Stock, filed an amendment to its designation of its Series C Preferred Stock with the Secretary of State of Nevada (the “ Fourth Amended and Restated Designation ”), solely to increase the number of preferred shares designated as Series C Preferred Stock from 5,000 to 5,200 .

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

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 $ 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

*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.

Discover did not exercise its right to declare the amount owing under the Discover Notes immediately due and payable, but Failure by Discover to exercise such right does not constitute a waiver of the right to exercise the same in the event of any subsequent default.

As of April 18, 2022, Discover, Antilles and the Company entered into a Settlement Agreement to settle the Discover/Antilles Complaint, and the Settlement Agreement was approved by the Court on or about May 12, 2022.

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

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.

(ii) Series C Redeemable Convertible Preferred Stock

Holders of the Series C Preferred Stock are entitled to cumulative dividends in the amount of 24.95 % per annum (adjustable up to 34.95% if a Trigger Event, as described in the Series C COD occurs), payable upon redemption, conversion, or maturity, and when, as and if declared by our board of directors in its discretion, provided that upon any redemption, conversion, or maturity, seven years of dividends are due and payable on such redeemed, converted or matured stock.

The Series C Preferred Stock ranks senior to the common stock.

Except as prohibited by applicable law or as set forth herein, the holders of shares of Series C Preferred Stock have the right to vote together with holders of Common Stock on all matters other than:

(i) the election of directors;

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

The Series C Preferred Stock may be converted into shares of our common stock at any time at the option of the holder, or at Camber’s option if certain equity conditions (as defined in the Series C COD), are met.

Upon conversion, Camber will pay the holders of the Series C Preferred Stock being converted through the issuance of common stock, in an amount equal to the dividends that such shares would have otherwise earned if they had been held through the maturity date (i.e., seven years), and issue to the holders such number of shares of common stock equal to $ 10,000 per share of Series C Preferred Stock (the “Face Value”) multiplied by the number of such shares of Series C Preferred Stock divided by the applicable conversion price of $ 162.50 (after adjustment following the December 21, 2022 reverse stock split) adjusted for any future forward or reverse splits.

The conversion premium under the Series C Preferred Stock is payable and the dividend rate under the Series C Preferred Stock is adjustable.

Specifically, the conversion rate of such premiums and dividends equals 95% of the average of the lowest 5 individual daily volume weighted average prices during the Measuring Period (as defined below), not to exceed 100% of the lowest sales prices on the last day of the Measuring Period, less $0.05 per share of common stock, unless a trigger event has occurred, in which case the conversion rate equals 85% of the lowest daily volume weighted average price during the Measuring Period, less $0.10 per share of common stock not to exceed 85% of the lowest sales prices on the last day of such the Measuring Period, less $0.10 per share .

The “Measuring Period” is the period beginning, if no trigger event has occurred, 30 trading days, and if a trigger event has occurred, 60 trading days, before the applicable notice has been provided regarding the exercise or conversion of the applicable security, and ending, if no trigger event has occurred, 30 trading days, and if a trigger event has occurred, 60 trading days, after the applicable number of shares stated in the initial exercise/conversion notice have actually been received into the holder’s designated brokerage account in electronic form and fully cleared for trading.

Trigger Events are described in the designation of the Series C Preferred Stock, but include items which would typically be events of default under a debt security, including filing of reports late with the SEC.

The Series C Preferred Stock has a maturity date that is seven years after the date of issuance and, if the Series C Preferred Stock has not been wholly converted into shares of common stock prior to such date, all remaining outstanding Series C Preferred Stock will automatically be converted into shares of common stock, to the extent Camber has sufficient authorized but unissued shares of common stock available for issuance upon conversion.

Notwithstanding any other provision of this designation, available authorized and unissued shares of common stock will be a limit and cap on the maximum number of shares of common stock that could be potentially issuable with respect to all conversions and other events that are not solely within the control of Camber.

Camber will at all times use its best efforts to authorize sufficient shares.

The number of shares required to settle the excess obligation is fixed on the date that net share settlement occurs.

The Dividend Maturity Date will be indefinitely extended and suspended until sufficient authorized and unissued shares become available.

100 % of the Face Value, plus an amount equal to any accrued but unpaid dividends thereon, automatically becomes payable in the event of a liquidation, dissolution or winding up by Camber.

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

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

Pursuant to the Series C COD, holders of the Series C Preferred Stock are permitted to vote together with holders of common stock on all matters other than election of directors and shareholder proposals (including proposals initiated by any holders of preferred shares), on an as-if converted basis, subject to the beneficial ownership limitation in the Series C COD, even if there are insufficient shares of authorized common stock to fully convert the Series C Preferred Stock.

Also pursuant to certain agreements entered into with the holders of the Series C Preferred Stock in October 2021, due to the occurrence of a Trigger Event, Camber no longer has the right to conduct an early redemption of the Series C Preferred Stock as provided for in the Series C COD unless the Company’s indebtedness to Discover is paid in full.

On October 31, 2022, Camber filed with the Secretary of State of Nevada an amendment to the Series C COD (the “Series C Amendment”), dated as of October 28, 2022 (the “Series C Amendment Date”), pursuant to agreements between Camber and each of Discover and Antilles signed on October 28, 2022, which amended the Series C COD such that (i) beginning on the Series C Amendment Date and thereafter, when determining the conversion rate for each share of Series C Preferred Stock based on the trading price of Camber’s common stock over a 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 Series C COD), even if the volume weighted average trading price (“Measuring Metric”) is not at least $ 1.50 and each holder of Series C Preferred Stock waived the right to receive any additional shares of common stock that might otherwise be due if such Equity Condition were to apply after the Series C Amendment Date, including with respect to any pending Measurement Period;

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

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.

On November 3, 2022, the Company entered into an 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 Series C COD.

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 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.

As of December 31, 2023, Antilles held 30 shares of Series C Preferred Stock.

The Series C Preferred Stock was convertible into a substantial number of the Company’s shares of common stock which could result in significant dilution of the Company’s existing shareholders.

If the outstanding Series C Preferred Stock were converted as of December 31, 2023, the Company estimates that the following shares of common stock would be required to be issued to satisfy the conversion of shares of the Series C Preferred Stock:

Estimated number of shares issuable for conversion at $ 162.50 per share at September 30, 2023

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

*based on 30 shares of Series C Convertible Preferred Stock outstanding as of such date and an estimated low VWAP as at such date

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

As of December 31, 2023, Antilles was entitled to approximately 34,488,937 true-up shares in connection with the prior conversion by Antilles of 240 shares of Series C Preferred Stock throughout 2023 as a result of:

(i) the Measurement Period in connection with such conversions continuing to extend as a result of the Company’s previously announced outstanding deficiency with the New York Stock Exchange regarding continued listing standard(s) concerning minimum stockholders’ equity requirements;

and (ii) the Company’s stock price declining following the initial conversion(s) of the 240 shares of Series C Preferred Stock.

(iii) Series G Redeemable Convertible Preferred Stock

On or about December 30, 2021, the Company created a new class of 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 Series G COD.

Pursuant to the Series G 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.

1 unchanged sentence

(a) senior to the Company’s common stock;

(b) junior to the Series C Redeemable Convertible Preferred Stock, (c) senior to the Series E Redeemable Convertible Preferred Stock and Series F Redeemable Convertible Preferred Stock, as such may be designated as of the date of this Designation, or which may be designated by the Company after the date of this Designation;

(d) senior, pari passu or junior with respect to any other series of Preferred Stock, as set forth in the Certificate of Designations of Preferences, Powers, Rights and Limitations with respect to such Preferred Stock;

(b) junior to the Series C Preferred Stock, (c) senior to the Series E Redeemable Convertible Preferred Stock and Series F Redeemable Convertible Preferred Stock, as such may be designated as of the date of this Designation, or which may be designated by the Company after the date of this Designation;

(d) senior, pari passu or junior with respect to any other series of Preferred Stock, as set forth in the COD with respect to such Preferred Stock;

and (d) junior to all existing and future indebtedness of the Company.

4 unchanged sentences

Dividends will be payable with respect to any shares of Series G Preferred Stock upon any of the following:

(a) upon redemption of such shares in accordance with the COD;

(b) upon conversion of such shares in accordance with the COD;

(a) upon redemption of such shares in accordance with the Series G COD;

(b) upon conversion of such shares in accordance with the Series G COD;

and (c) when, as and if otherwise declared by the board of directors of the Corporation.

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

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

On the Dividend Maturity Date, the Corporation may redeem any or all shares of Series G Preferred Stock by paying Holder, in registered or unregistered shares of common stock valued at an amount per share equal to 100% of the Liquidation Value for the shares redeemed, and the Corporation will use its best efforts to register such shares .

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.

In the first quarter of 2022, pursuant to a 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 Preferred Stock, having a face value of $ 10,000 per share, for an aggregate price of $ 100,000,000 (the “ Purchase Price ”), representing at a 5 % original issue discount.

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

There are 2,636 shares of Series G Preferred Stock associated with each Note, and the Investor may not convert the shares of preferred stock associated with each Note into shares of common stock or sell any of the underlying shares of common stock (the “ Conversion Shares ”) unless that Note is paid in full by the Investor.

The Company may in its sole discretion redeem the 2,636 shares of Series G Preferred Stock associated with each Note by paying the Investor $ 1,375,000 as full consideration for such redemption.

Also, the Investor may offset the then outstanding balance of each Note against the 2,636 shares of Series G Preferred Stock associated with that Note by electing to cancel the 2,636 shares as full consideration for cancellation of the Note in the event of a breach or default of any of the transaction documents by the Company.

Partial 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

December 31, 2022

In 2022, the Company paid the Investor $ 2,750,000 and redeemed 5,272 shares of Series G Preferred Stock associated with the Notes due March 31, 2022 and June 30, 2022, thereby canceling such Notes and reducing the number of shares of Series G Preferred Stock outstanding from 10,544 to 5,272 .

The Investor may not convert any of the remaining shares of Series G Preferred Stock associated with any remaining Note into shares of common stock or sell any of the underlying shares of common stock unless that Note is paid in full by 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.

As of December 31, 2023, none of the outstanding Notes had been paid in full and thus the underlying shares were not convertible.

(iv) Series H Convertible Preferred Stock

On August 1, 2023, the Company issued 475 shares of new Series H Preferred Stock in exchange for 475 outstanding shares of old Series E Preferred Stock of Viking Energy Group inc.

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

On or about August 9, 2023, Jedda Holdings converted 200 of the 475 shares of Series H Preferred Stock into 3,333,333 shares of common stock, leaving a balance of 200 shares of Series H Preferred Stock outstanding as at December 31, 2023.

The following table represents stock warrant activity as of and for the year ended December 31, 2023:

Contractual Life

Warrants Outstanding – December 31, 2022

Forfeited/expired/cancelled

Warrants Outstanding – December 31, 2023

Outstanding Exercisable – December 31, 2023

Commitments and Contingencies

Office lease – Petrodome

In April 2018, the Company’s subsidiary, Petrodome entered into a 66-month lease for 4,147 square feet of office space for its corporate office in Houston, Texas.

The annual base rent commenced at $22.00 per square foot and escalates at $0.50 per foot each year through expiration of the lease term.

Operating lease expense is recognized on a straight-line basis over the lease term .

Operating lease expense was $ 80,318 and $ 96,382 for the years ended December 31, 2023 and 2022, respectively.

The lease expired on November 30, 2023 and the Company has moved to new premises rented on a month-to-month basis.

Building, vehicle and equipment leases – Simson-Maxwell

The Company has right-of-use assets and operating lease liabilities associated with various operating lease agreements of Simson-Maxwell pertaining to seven business locations, for the premises, vehicles and equipment used in operations in the amount of $ 6,947,307 .

These values were determined using a present value discount rate of 3.45 % for the premises, and 7.5 % for vehicles and equipment.

The leases have varying terms, payment schedules and maturities.

Operating lease expense is recognized on a straight-line base over each of the lease terms.

Payments due in each of the next five years and thereafter at December 31, 2023 under these leases are as follows:

Vehicle and Equipment

2028 and thereafter

Less imputed interest

Present value of remaining lease payments

Operating lease expense for these leases was $ 1,586,879 and $ 1,474,960 for the years ended December 31, 2023 and 2022, respectively.

Legal matters

Legal Proceedings .

From time-to-time suits and claims against Camber arise in the ordinary course of Camber’s business, including contract disputes and title disputes.

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

Merger-Related Litigation

On February 9, 2024, plaintiff Lawrence Rowe, on behalf of himself and all other similarly situated former public minority shareholders of Viking, filed against the Company and its CEO a putative Class Action Complaint (i.e.

No.4:24-cv-00489) styled Lawrence Rowe, Individually and on Behalf of All Others Similarly Situated v.

Doris and Camber Energy, Inc.

, in the U.S.

District Court for the Southern District of Texas, Houston Division.

The Complaint alleges breaches of fiduciary duty in connection with the merger between Viking and the Company and seek to recover damages for the alleged breaches.

The defendants deny the allegations and intend to move to dismiss the case.

Shareholder-Related Litigation

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

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

Coggins, Individually and on Behalf of All Others Similarly Situated v.

Camber Energy, Inc., et al .;

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

The Company and the other Defendants filed a Motion to Dismiss (“MTD”) the Class Action Complaint, and on September 22, 2023, the Court granted the MTD in full.

On October 25, 2023, the Court signed a joint stipulation submitted by the parties, dismissing the case with prejudice.

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

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

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

On January 20, 2023, the U.S.

District Court held that certain claims brought by the plaintiff relating to director actions and statements made in proxy statements prior to June 30, 2019, were time barred, but did not dismiss certain claims brought by plaintiff relating to director actions and statements made in proxy statements after June 30, 2019.

Pursuant to Article 6 of the Amended and Restated Bylaws, on February 15, 2023, the Company’s Board of Directors (the “Board”) formed a Committee of the Board (the “Special Litigation Committee”) to investigate, analyze, and evaluate the remaining allegations in the Houston Derivative Complaint.

The Special Litigation Committee completed its investigation and found no basis to conclude that any Camber officer’s or director’s conduct “involved intentional misconduct, fraud or a knowing violation of law,” which would be required under applicable Nevada law to prevail on any claims for breach of fiduciary duty or federal proxy violations;

and, on November 17, 2023, filed with the U.S.

District Court a Motion to Terminate or, in the alternative, schedule an evidentiary hearing on the Motion.

Briefing on the Motion was completed on January 12, 2024, and it remains pending.

The defendants deny the allegations contained in the Houston Derivative Complaint.

Maranatha Oil Matter

In November 2015, Randy L.

Robinson, d/b/a Maranatha Oil Co.

sued the Company in Gonzales County, Texas (Cause No.

The plaintiff alleged that it assigned oil and gas leases to the Company in April 2010, retaining a 4% overriding royalty interest and 50% working interest and that the Company failed to pay such overriding royalty interest or royalty interest.

The interests relate to certain oil and gas properties which the Company subsequently sold to Nordic Oil USA in April 2013.

The suit seeks approximately $ 100,000 in amounts alleged owed, plus pre-and post-judgment interest.

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

Petrodome Matter

In or about late 2011 or early 2012, Petrodome Operating, LLC (“Petrodome Operating”), a wholly-owned subsidiary of Petrodome Energy, LLC (which in or about December, 2017 become a wholly owned subsidiary of Viking), on behalf of various working interest owners, including Petrodome East Creole, LLC, another subsidiary of Petrodome Energy, LLC, coordinated the drilling of an approx.

13,000 foot well in the Kings Bayou Field in Cameron Parish, LA.

Petrodome Operating engaged a third party to complete the drilling work.

The subject well produced hydrocarbons from 2012 until approximately June 2016, at which time production ceased, after which Petrodome Operating arranged for the well to be plugged in accordance with State guidelines.

During the time the well was producing hydrocarbons, royalty and/or over-riding royalty payments were made to various mineral and/or land/owners (collectively, “Mineral Owners”).

In or about October, 2019 the Mineral Owners commenced an action against Petrodome Operating, Petrodome East Creole, LLC and others claiming the Mineral Owners suffered damages (i.e.

a loss of royalty and/or over-riding royalty payments) as a result of the subject well not, according to the Mineral Owners, being drilled and/or completed properly.

Petrodome Operating, Petrodome East Creole, LLC and the other defendants denied the Mineral Owners’ claims and engaged counsel to defend the action.

In or about November, 2023, the parties, without the subject Petrodome entities admitting liability, agreed to fully and completely settle the matter and pay the Mineral Owners a total sum of $ 6.5 million, of which Petrodome is liable for $ 4.15 million.

Payment of Petrodome’s portion of the settlement is fully covered by insurance.

At December 31, 2023, the Company recorded an accrued liability in respect of this settlement and a receivable related to the insurance proceeds in the amount of $ 4.15 million.

In or about February, 2024, the action commenced by the Mineral Owners was dismissed with prejudice.

The Company files income tax returns in the United States and Canada federal jurisdictions.

At December 31, 2023, the Company had estimated net operating loss carry forwards realized subsequent to the date of the Merger of approximately $ 4.4 million.

At December 31, 2023 and 2022, Camber Energy, Inc.

had pre-Merger operating loss carryforwards of approximately $ 71.9 million and $ 67.1 million, respectively, which can be applied only to the future taxable income of Camber Energy Inc.

The Company has estimated that $ 44.5 million of this net operating loss could potentially be lost due to the IRC Section 382 limitation as a result of an ownership change that occurred during the year ended March 31, 2017.

At December 31, 2023 and 2022, Viking Energy, Inc.

had pre-Merger operating loss carryforwards of approximately $ 49.2 million and $ 48.0 million, respectively, which can be applied only to the future taxable income of Viking Energy Inc.

In addition, the Company, through its subsidiary Simson-Maxwell, has estimated foreign loss carryforwards of approximately $ 6.8 million and $ 6.3 million as of December 31, 2023 and 2022, respectively, which expire between 2038 and 2043 .

The potential benefit of these net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years.

The current and deferred income tax expense (benefit) consists of the following for the years ended December 31, 2023 and 2022:

For the Years Ended

$ ( 2,019,576 )

December 30, 2026

( 1,606,355 )

December 30, 2026

December 31, 2026

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

Azar II, the Company’s former Chief Executive Officer.

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

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

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

NOTE 14 – STOCK-BASED COMPENSATION

The Company stockholders approved the 2014 Stock Incentive Plan (as amended to date, the “ 2014 Plan ”) at the annual stockholder meeting held on February 13, 2014.

The 2014 Plan provides the Company with the ability to offer up to 2.5 million (i) incentive stock options (to eligible employees only);

(ii) nonqualified stock options;

(iii) restricted stock;

(iv) stock awards;

(v) shares in performance of services;

or (vi) any combination of the foregoing, to employees, consultants and contractors as provided in the 2014 Plan.

The Company stockholders approved the Lucas Energy, Inc.

2012 Stock Incentive Plan (“ 2012 Incentive Plan ”) at the annual stockholder meeting held on December 16, 2011.

The 2012 Incentive Plan provides the Company with the ability to offer (i) incentive stock options (to eligible employees only);

(ii) nonqualified stock options;

(iii) restricted stock;

(iv) stock awards;

(v) shares in performance of services;

or (vi) any combination of the foregoing, to employees, consultants and contractors as provided in the 2012 Incentive Plan.

The Company stockholders approved the Lucas Energy, Inc.

2010 Long Term Incentive Plan (“ 2010 Incentive Plan ” or “ 2010 Plan ”) at the annual stockholder meeting held on March 30, 2010.

The 2010 Incentive Plan provides the Company with the ability to offer (1) incentive stock options, (2) non-qualified stock options, and (3) restricted shares (i.e., shares subject to such restrictions, if any, as determined by the Compensation Committee or the Board) to employees, consultants and contractors as performance incentives.

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

As of September 30, 2020, there was an aggregate of 1 share available for issuance or grant under the 2010 Incentive Plan, 5 shares were available for issuance or grant under the 2012 Incentive Plan and an aggregate of approximately 1,999 securities were available for issuance or grant under the 2014 Incentive Plan as amended for future issuances and grants, respectively.

The number of securities available under the 2010, 2012 and 2014 Plans is reduced one for one for each security delivered pursuant to an award under the Plans.

Any issued or granted security that becomes available due to expiration, forfeiture, surrender, cancellation, termination or settlement in cash of an award under the Incentive Plans may be requested and used as part of a new award under the Plans.

The Plans are administered by the Compensation Committee and/or the Board in its discretion (the “ Committee ”).

The Committee interprets the Plans and has broad discretion to select the eligible persons to whom awards will be granted, as well as the type, size and terms and conditions of each award, including the exercise price of stock options, the number of shares subject to awards, the expiration date of awards, and the vesting schedule or other restrictions applicable to awards.

Camber measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award over the vesting period.

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

Total current tax benefit

$ ( 3,625,931 )

Deferred tax timing differences

$ ( 3,642,729 )

Nondeductible expenses / changes in prior estimates

$ ( 703,407 )

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)

Total deferred tax timing differences

$ ( 3,816,576 )

$ ( 703,407 )

Increase in valuation allowance

Income tax expense (benefit)

As a result of the Merger, the Company acquired approximately $ 20.3 million of deferred tax timing differences against which a valuation allowance of approximately $ 20.3 million had been recorded.

The components of deferred tax assets and liabilities as of December 31, 2023, and 2022 is as follows (2022 figures have been revised to reflect final tax filing):

Deferred tax assets:

NOL carry forwards

Bad debt reserves

Impairment of oil and gas assets

Unrealized loss

Derivative losses

Book tax depletion difference

Loss on financing settlements

Share based compensation

Intangible drilling costs

Loss from equity interests

Total deferred tax assets

Deferred tax liabilities:

Derivative gains

$ ( 121,947 )

Bargain purchase and other gains

( 10,836,356 )

( 9,760,490 )

Total deferred tax liabilities

( 10,958,303 )

( 9,882,437 )

Deferred tax assets - before valuation allowance

Less valuation allowance

( 51,475,560 )

( 27,387,557 )

Deferred tax asset (liability) - net

A reconciliation of the federal and state statutory income tax rates to the Company’s effective income tax rate applicable to income before income tax benefit from continuing operations is as follows for the years ended December 31, 2023 and 2022:

For the Years Ended

Continuing operations

Expected provision at US statutory rate

State income tax net of federal benefit

Higher tax rate on foreign source income

Other items effecting timing differences

Valuation allowance

Effective income tax rate

The Company files income tax returns in the United States and Canada federal jurisdictions.

As of December 31, 2023, the U.S.

and Canadian tax returns for the Company for the years ending 2018 through 2022 remain open to examination by the respective tax authorities.

The Company and its subsidiaries are not currently under examination for any period.

No material change in the reserve for uncertain tax positions is expected in the next 12 months.

As a result of Viking becoming a majority-owned subsidiary of Camber as discussed in Note 1, Viking has undergone an ownership change as defined in Section 382 of the Internal Revenue Code, and its tax net operating loss carry forwards generated prior to the ownership change will be subject to an annual limitation, which could reduce or defer the utilization of these losses.

The Company intends to complete a Section 382 analysis before any net operating loss carryforwards are utilized.

Business Segment Information and Geographic Data

The Company has two reportable segments:

Power Generation and Oil and Gas Exploration.

The power generation segment provides custom energy and power solutions to commercial and industrial clients in North America and the oil and gas segment is involved in exploration and production with properties in central and southern United States.

We evaluate segment performance based on revenue and operating income (loss).

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

Year Ended December 31, 2023

Power Generation

Loss from Operations is as follows:

Operating expenses

Cost of goods

Lease operating costs

General and administrative

Impairment of oil and gas and intangible assets

Depreciation, depletion and amortization

Accretion - ARO

Total operating expenses

Loss from operations

$ ( 5,578,677 )

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 %.

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 2018.

NOTE 16– INCOME (LOSS) PER COMMON SHARE

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

$ ( 1,415,688 )

$ ( 6,994,365 )

Less preferred dividends

Segment assets

Corporate and unallocated assets

Total Consolidated Assets

$ 101,711,947

Net loss attributable to common stockholders

Year Ended December 31, 2022

Power Generation

Loss from Operations is as follows:

Operating expenses

Cost of goods

Lease operating costs

General and administrative

Stock based compensation

Impairment of intangible assets

Depreciation, depletion and amortization

Accretion - ARO

Total operating expenses

Loss from operations

$ ( 4,669,172 )

$ ( 5,005,000 )

Weighted average share – basic

Dilutive effect of common stock equivalents options/warrants

Preferred C shares

Total Weighted average common shares – diluted

Income (loss) per common share - basic

Income (loss) per common share - diluted

NOTE 17 – SUBSEQUENT EVENTS

$ ( 9,674,172 )

Segment assets

Corporate and unallocated assets

Total Consolidated Assets

Subsequent Events

Series C Preferred Stock:

Conversion of Series C Preferred Stock in 2023:

During January 2023, Antilles Family Office, LLC converted 32 shares of Series C Preferred Stock into 571,194 shares of common stock.

Issuance of True Up Shares for prior Conversions of Series C Preferred Stock:

From January 1, 2023 through February 17, 2023, the Company issued a total of approximately 1,336,143 common shares as True Up shares associated with prior conversions of Series C Preferred Stock as a result of the continuation of the Measurement Period (as defined in the Certificate of Designation with respect to such Series C Preferred Stock) associated with such conversions and a decline in the price of the Company’s common shares within the Measurement Period.

Outstanding Series C Preferred Stock

As of February 17, 2023, Antilles holds 238 shares of Series C Preferred Stock.

Antilles may convert such Series C Preferred Stock into common shares of the Company pursuant to the terms of the Sixth Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock filed by the Company with the Secretary of State of Nevada on November 8, 2021, as amended on October 28, 2022 (as further described herein) (collectively, the “COD”), and applicable agreements between the Company and Antilles.

The Company estimates the 238 shares of Series C Preferred Stock would convert into approximately 5.9 million common shares based on a Low VWAP of approximately $ 1.2813 for the purposes of calculating the conversion premium associated with such conversion(s).

In addition, the Company estimates Antilles is entitled to approximately 222,283 common shares in connection with the conversion by Antilles of 32 shares of common stock earlier in 2023 as a result of the low VWAP with respect to such conversion(s) decreased from $ 1.7124 at the time of conversion to approximately $ 1.2813 within 60 Trading Days subsequent to the date of such conversion(s).

If the Low VWAP falls below $ 1.2813 , the underlying common share entitlement(s) would increase in accordance with the terms of the COD.

Other Agreements

Potential Acquisition of a Facility Designed to Produce Renewable Diesel:

As disclosed in a Current Report filed by the Company on Form 8-K with the SEC on or about January, 23, 2023, the Company, on January 20, 2023, entered into a Membership Interest Purchase Agreement (the “ MIPA ”) with RESC Renewables Holdings, LLC (the “ Seller ”) to acquire all of the membership interests (the “ Acquired Interests ”) of New Rise Renewables, LLC (“ New Rise ”).

New Rise owns all of membership interests in New Rise Renewables Reno, LLC (“ New Rise Reno ” and, together with New Rise, the “ Acquired Companies ”).

The Acquired Companies are in the process of constructing and bringing into commercial operations a processing plant located near Reno, Nevada, that is designed to produce renewable diesel.

Each party’s obligation to complete the transactions contemplated by the MIPA is subject to certain conditions.

Some of these conditions provide the Company with significant discretion.

Other conditions require compliance by third parties that are outside of the control of the Company and Seller.

Accordingly, the transactions described herein are subject to substantial risk of completion.

In the event the transaction is not completed, it may result in a material adverse effect to price of the Company’s common shares.

On or about February 14, 2024 the low VWAP of the Company’s stock for the purpose of calculating the Conversion Premium associated with its Series C Preferred Stock was approximately $ 0.158 .

Consequently, as of March 20, 2024, the Company estimates there to be:

(i) approximately 21.4 million underlying shares of common stock associated with the potential conversion of the 30 shares of Series C Preferred Stock outstanding;

and (ii) approximately 105.6 million true-up shares of common stock due to Antilles in connection with its prior conversion of 240 shares of Series C Preferred Stock throughout 2023.

On or about February 15, 2024, the Company and Antilles entered into the February 2024 Antilles Agreement in relation to an amendment to the fifth amended and restated certificate of designations regarding its Series C Preferred Stock, as amended (the “ COD ”).

Particularly, in exchange for the release and indemnity as provided for in the Agreement, Antilles agreed to certain amendments to the COD.

On February 21, 2024, the Company filed with the Secretary of State of Nevada an amendment to the COD (the “ Amendment ), dated as of February 21, 2024 (the “ Amendment Date ”), pursuant to the Agreement, which amended the COD to (i) establish a floor price in connection with determining the Conversion Premium (as defined in the COD) associated with conversions of Series C Preferred Stock, (ii) confirm that the Company may make an early redemption of any outstanding Series C Preferred Stock provided that outstanding promissory notes in favor of the Investor or its affiliates (collectively, the “ Notes ”) are paid in full, and (iii) confirm that no additional conversion shares will be owed to the Investor if the Notes are paid in full and all then outstanding shares of Series C Preferred Stock have been redeemed.

Specifically, the Amendment provides that (i) beginning on the Amendment Date and thereafter, the Measuring Metric will be the higher of (x) the volume weighted average price of the Common Stock on any Trading Day following the Issuance Date of the Series C Preferred Stock and (y) $0.15, (ii) notwithstanding any other provision of the COD or any other document or agreement between the parties, the Company may make an early redemption pursuant to Section I.F.2 of the COD even though multiple Trigger Events (as defined in the COD) have occurred, subject to full repayment of any outstanding Notes, and (iii) if all outstanding Notes are paid in full and all then outstanding shares of Series C Preferred Stock are redeemed, the Investor will not thereafter deliver any Additional Notices (as defined in the COD) with respect to then already-converted shares of Series C Preferred Stock, and no additional Conversion Shares (as defined in the COD) will be owed to Antilles.

In addition, pursuant to the Agreement, (i) beginning on February 15, 2024 and thereafter, the Company agreed to pay at least fifty percent of the net proceeds received by the Company in connection with any registered or unregistered offering of equity or debt securities of the Company toward repayment of any outstanding Notes, and (ii) Antilles rescinded its prior notice to increase the beneficial ownership limitation to 9.99%, such that the limitation is restored to 4.99% effective five Business Days from the date of the Agreement .

On February 1, 2024, the Company sold its non-operated working interest in properties producing from the Cline and Wolfberry formations in Texas for proceeds of $ 205,000 .

SUPPLEMENTAL INFORMATION ON OIL AND GAS PRODUCING ACTIVITIES (unaudited)

The following supplemental unaudited information regarding Camber’s oil and gas activities is presented pursuant to the disclosure requirements of ASC 932.

Camber’s oil and gas activities are all located in the United States.

Results of Operations – year ended December 31, 2022 and 2021

The following supplemental unaudited information regarding the Company’s oil and gas activities is presented pursuant to the disclosure requirements of ASC 932, “Extractive Activities – Oil and Gas”.

Camber’s oil and gas activities are located in the United States.

On November 5, 2023, Mid-Con Petroleum, LLC and Mid-Con Drilling, LLC, wholly owned subsidiaries of Viking, sold 100% of their interest in oil and gas assets in Kansas, consisting of 168 producing wells, 90 injector wells and 34 non-producing wells.

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

These two dispositions represented 100% of the reserves owned by Viking and its subsidiaries.

The Company’s remaining reserves at December 31, 2023 consist solely of the reserves acquired on the merger with Camber.

Results of Operations

Oil and Gas Sales by geographic area for the years ended December 31, 2023 and 2022:

United States

Lease operating costs

Net operating income

Depletion, accretion and impairment

Reserve Quantity Information

2 unchanged sentences

Accordingly, significant changes to these estimates can be expected as future information becomes available.

Proved reserves are those estimated reserves of crude oil (including condensate and natural gas liquids) and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.

Proved developed reserves are those expected to be recovered through existing wells, equipment, and operating methods.

Estimated Quantities of Proved Reserves

Under SEC reporting requirements, proved undeveloped reserves include only those reserves in which the Company has current plans to develop, generally within five years.

During 2023 and 2022, the Company made several strategic dispositions which has modified its capital expenditure plans.

The Company currently has no firm commitments to drill or otherwise develop its proved undeveloped reserves.

As of December 31, 2022, the Company has reclassified all of its proved undeveloped properties to unproved reserves.

Estimated Quantities of Proved Reserves (BOE)

United States

Years Ended December 31,

Proved Developed, Producing

4 unchanged sentences

Reserves are estimated remaining quantities of oil and natural gas and related substances, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible - from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations - prior to the time at which contracts providing the right to operate expire.

All of the Company’s reserves are located in the United States.

The following tables sets forth the changes in Camber’s net proved reserves (including developed and undeveloped reserves) for years ended December 31, 2022 and 2021.

The following table sets forth Camber’s proved developed and undeveloped reserves at December 31, 2022 and 2021.

Proved Developed Producing Reserves

Crude Oil (Bbls)

Natural Gas (Mcf)

Oil Equivalents (Boe)

Proved Developed Non-Producing Reserves

Crude Oil (Bbls)

Natural Gas (Mcf)

Oil Equivalents (Boe)

Proved Undeveloped Reserves

Crude Oil (Bbls)

Natural Gas (Mcf)

Oil Equivalents (Boe)

Proved Reserves

Crude Oil (Bbls)

Natural Gas (Mcf)

Oil Equivalents (Boe)

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Reserves

The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves and the changes in standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves were prepared in accordance with provisions of ASC 932 - Extractive Activities - Oil and Gas .

Future cash inflows at December 31, 2023 and 2022 were computed by applying the unweighted, arithmetic average of the closing price on the first day of each month for the 12-month period prior to December 31, 2023 and 2022 to estimated future production.

6 unchanged sentences

United States

Years Ended December 31,

Future cash inflows

Future production costs

( 2,617,830 )

( 1,638,400 )

Future development costs

2 unchanged sentences

10% annual discount for estimated timing of cash flows

( 1,692,970 )

Standardized measure of DFNCF

2 unchanged sentences

United States

Years Ended December 31,

Balance - beginning

5 unchanged sentences

Sales of reserves

(12,334,224 )

Revisions of previous quantity estimates

3 unchanged sentences

Balance - ending

In accordance with SEC requirements, the pricing used in the Company’s standardized measure of future net revenues is based on the 12-month un-weighted arithmetic average of the first-day-of-the-month price for the period January through December for each period presented and adjusted by lease for transportation fees and regional price differentials.

In accordance with SEC requirements, the pricing used in the Company’s standardized measure of future net revenues is based on the 12-month unweighted arithmetic average of the first day-of-the-month price for the period January through December for each period presented and adjusted by lease for transportation fees and regional price differentials.

The use of SEC pricing rules may not be indicative of actual prices realized by the Company in the future.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On September 16, 2021, the Audit Committee of the Board of Directors (the “Audit Committee”) of Camber Energy, Inc, Inc.

(the “Company”), dismissed Marcum LLP (“Marcum”) as its independent registered public accounting firm, effective as of such date.

The report of Marcum on the Company’s consolidated financial statements as of March 31, 2020 and March 31, 2019 and for the years then ended did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting principles, other than an explanatory paragraph relating to the Company’s ability to continue as a going concern.

The consolidated financial statements as of March 31, 2020 and March 31, 2019, and for the years then ended were the most current audited financial statements of the Company, the Company changed its fiscal year to December 31 st on February 4, 2021, and on September 11, 2021, the Company determined that those audited financial statements should not be relied on, and filed a Current Report on Form 8-K with the Securities and Exchange Commission on or about September 16, 2021, regarding that non-reliance.

During the Company’s fiscal year ended December 31, 2021, the transition period ended December 31, 2020, and through May 6, 2022, there were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to the matter in its report on the consolidated financial statements for such year.

On September 17, 2021, the Audit Committee approved the appointment of Turner, Stone & Company, L.L.P.

(“Turner Stone”) as the Company’s independent registered public accounting firm, and such engagement was formalized on September 21, 2021.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data