−Removed: Camber Energy, Inc., a Nevada corporation, is based in Houston, Texas.
−Removed: We are currently primarily engaged in the acquisition, development and sale of crude oil, natural gas and natural gas liquids from various known productive geological formations, including the Cline shale and upper Wolfberry shale in Glasscock County, Texas.
−Removed: Incorporated in Nevada in December 2003 under the name Panorama Investments Corp., the Company changed its name to Lucas Energy, Inc., effective June 9, 2006, and effective January 4, 2017, the Company changed its name to Camber Energy, Inc.
−Removed: After the divestiture of our South Texas properties during fiscal 2019, as discussed in further detail below under “Mid-Continent Acquisition and Divestiture“, we initiated discussions with several potential acquisition and merger candidates to diversify our operations.
−Removed: Pursuant to those discussions on July 8, 2019, we acquired Lineal Star Holdings, LLC (“ Lineal ”) pursuant to the terms of an Agreement and Plan of Merger dated as of the same date (the “ Lineal Plan of Merger ” and the merger contemplated therein, the “ Lineal Merger ” or the “ Lineal Acquisition ”), by and between Lineal, Camber, Camber Energy Merger Sub 2, Inc., Camber’s wholly-owned subsidiary (“ Merger Sub ”), and the Members of Lineal (the “ Lineal Members ”).
−Removed: Lineal is a specialty construction and oil and gas services enterprise providing services to the energy industry.
−Removed: Pursuant to the Lineal Plan of Merger, Camber acquired 100% of the ownership of Lineal from the Lineal Members in consideration for newly issued shares of Series E Redeemable Convertible Preferred Stock (“ Series E Preferred Stock ”) and Series F Redeemable Preferred Stock (“ Series F Preferred Stock ”), as discussed in greater detail below under “Lineal Acquisition and Divestiture“.
−Removed: On December 31, 2019, the Company entered into, and closed the transactions contemplated by a Preferred Stock Redemption Agreement, by and between the Company, Lineal and the holders of the Company’s Series E Preferred Stock and Series F Preferred Stock (the “ Preferred Holders ”).
−Removed: Pursuant to the Redemption Agreement, effective as of December 31, 2019, each holder of Series E Preferred Stock transferred such Series E Preferred Stock to Camber in consideration for their pro rata share (except as discussed below in connection with the Series F Preferred Stock holder, who was also a holder of Series E Preferred Stock) of 100% of the Common Shares of Lineal and the holder of the Series F Preferred Stock transferred such Series F Preferred Stock (and such Series E Preferred Stock shares held by such holder) to Camber in consideration for 100% of the Preferred Shares of Lineal and as a result, ownership of 100% of Lineal was transferred back to the Preferred Holders, the original owners of Lineal prior to the Lineal Merger.
−Removed: Additionally, all of the Series E Preferred Stock and Series F Preferred Stock of the Company were automatically cancelled and deemed redeemed by the Company and the Series F Holder waived and forgave any and all accrued dividends on the Series F Preferred Stock.
−Removed: See also “Lineal Acquisition and Divestiture“ below.
−Removed: On February 3, 2020, the Company entered into an Agreement and Plan of Merger (as amended to date, the “ Merger Agreement ”) with Viking Energy Group, Inc.
−Removed: (“ Viking ”).
−Removed: The Merger Agreement provides that a newly-formed wholly-owned subsidiary of the Company (“ Merger Sub ”) will merge with and into Viking (the “ Merger ”), with Viking surviving the Merger as a wholly-owned subsidiary of the Company, as described in greater detail below under “Viking Plan of Merger“.
−Removed: Moving forward, the Company plans to complete the Merger with Viking and then focus on growing through the development of Viking’s properties while also seeking new acquisitions to grow its oil and gas production and revenues through the combined entity.
−Removed: The Company anticipates raising additional financing to complete acquisitions following the closing of the Merger, which may be through the sale of debt or equity.
−Removed: As described below, the Merger is subject to various closing conditions which may not be met pursuant to the contemplated timeline, if at all.
−Removed: Mid-Continent Acquisition and Divestiture
−Removed: On December 30, 2015, the Company entered into an Asset Purchase Agreement (as amended from time to time, the “ Asset Purchase Agreement ”) to acquire, from twenty-three different entities and individuals (the “ Sellers ”), working interests in producing properties and undeveloped acreage (the “ Acquisition ”), which acquisition transaction was completed on August 25, 2016.
−Removed: The assets acquired include varied interests in two largely contiguous acreage blocks in the liquids-rich Mid-Continent region.
−Removed: In connection with the closing of the acquisition, we assumed approximately $30.6 million of commercial bank debt, issued 417 shares of common stock to certain of the Sellers, issued 552,000 shares of Series B Preferred Stock to one of the Sellers and its affiliate, and paid $4,975,000 in cash to certain of the Sellers.
−Removed: The effective date of the Acquisition was April 1, 2016.
−Removed: On July 12, 2018, the Company entered into an Asset Purchase Agreement (as amended, the “ Sale Agreement ”), as seller, with N&B Energy, LLC (“ N&B Energy ”) as purchaser, which entity is affiliated with Richard N.
−Removed: Azar II, the Company’s former Chief Executive Officer and former director, and Donnie B.
−Removed: Seay, the Company’s former director (each of which were Sellers).
−Removed: Pursuant to the Sale Agreement, which closed September 26, 2018, effective August 1, 2018, the Company sold to N&B Energy a substantial portion of its assets, including all of the assets acquired pursuant to the Acquisition and certain other assets, other than the production payment and overriding royalty interests discussed below (the “ Disposed Assets ”).
−Removed: In consideration for the Disposed Assets, N&B Energy agreed to pay the Company $100 in cash, to assume the Company’s liabilities and contractual obligations in connection with the Disposed Assets (including lease and bonus payments), to assume all of the Company’s obligations and debt owed under its outstanding loan agreement with International Bank of Commerce (“ IBC Bank ”), which had a then outstanding principal balance of approximately $36.9 million and the other parties agreed to enter into a settlement agreement.
−Removed: On September 26, 2018, the Company entered into an Assumption Agreement (the “ Assumption Agreement ”) with IBC Bank;
−Removed: CE Operating, LLC, the Company’s wholly-owned subsidiary (“ CE Operating ”), which became a party to the Sale Agreement pursuant to the second amendment thereto;
−Removed: RAD2 Minerals, Ltd., an entity owned and controlled by Mr.
−Removed: Azar (“ RAD2 ”);
−Removed: and DBS Investments, Ltd., an entity owned and controlled by Mr.
−Removed: Seay (“ DBS ”).
−Removed: Azar, Seay, RAD2, and DBS are collectively referred to as the “ Guarantors ”.
−Removed: Pursuant to the Assumption Agreement, N&B Energy agreed to assume all of the Company’s liabilities and obligations owed to IBC Bank and IBC Bank approved the transactions contemplated by the Sale Agreement and the assumption by N&B Energy of all of the amounts and liabilities which the Company owed to IBC Bank (collectively, the “ IBC Obligations ”).
−Removed: Finally, pursuant to the Assumption Agreement, IBC Bank released and forever discharged the Company and CE Operating and each of their current and former officers, directors, and stockholders, from all covenants, agreements, obligations, claims and demands of any kind, whether in law or at equity, which IBC Bank then had, arising out of or related to the amounts which the Company owed to IBC Bank under the Loan Agreement or mortgages and/or under such documents or agreements, and further agreed to release the lien which IBC Bank then held on certain of the Company’s properties located in west Texas.
−Removed: On September 26, 2018, the transactions contemplated by the Sale Agreement closed and N&B Energy assumed all of the IBC Obligations (pursuant to the Assumption Agreement) and paid the Company $100 in cash, and the Company transferred ownership of the Disposed Assets to N&B Energy.
−Removed: Notwithstanding the sale of the Disposed Assets, the Company retained its assets in Glasscock and Hutchinson Counties, Texas and also retained a 12.5% production payment (effective until a total of $2.5 million has been received, of which no funds have been received to date) and a 3% overriding royalty interest, in its then existing Okfuskee County, Oklahoma asset;
−Removed: and retained an overriding royalty interest on certain other undeveloped leasehold interests, pursuant to an Assignment of Production Payment and Assignment of Overriding Royalty Interests.
−Removed: The effective date of the Sale Agreement was August 1, 2018.
−Removed: The Assets were assigned “ as is ” with all faults.
−Removed: As a result of the Assumption Agreement and the Sale Agreement, the Company reduced its liabilities by $37.9 million and its assets by approximately $12.1 million.
−Removed: Lineal Acquisition and Divestiture
−Removed: In connection with the Lineal Plan of Merger, the Company entered into several other agreements, including (a) a Security Exchange Agreement dated July 8, 2019 (the “ Exchange Agreement ”), by and between the Company and an accredited institutional investor, Discover Growth Fund LLC, who has funded the Company over the past several years (“ Discover ”);
−Removed: (b) a Termination Agreement dated July 8, 2019, by and between the Company and Discover Growth Fund, which purchased shares of Series C Preferred Stock from us in December 2018 (“ Discover Growth ”, which subsequently transferred all of its shares of Series C Preferred Stock to Discover);
−Removed: and (c) a Funding and Loan Agreement dated July 8, 2019, by and among the Company, Lineal, and certain of the Lineal Members who also acquired shares of the Company’s preferred stock as a result of the Lineal Merger (the “ Funding Agreement ”), which provided for the Company to loan $1,050,000 to Lineal, which loan was evidenced by a Promissory Note entered into by Lineal, as borrower, in favor of the Company, as lender, dated July 8, 2019 (the “ July 2019 Lineal Note ”).
−Removed: Also as part of the Lineal Merger, the Company designated three new series of preferred stock, (1) Series D Convertible Preferred Stock (the “ Series D Preferred Stock ” and the certificate of designations setting forth the rights thereof, the “ Series D Designation ”);
−Removed: (2) Series E Redeemable Convertible Preferred Stock (the “ Series E Preferred Stock ” and the certificate of designation setting forth the rights thereof (the “ Series E Designation ”);
−Removed: and (3) Series F Redeemable Preferred Stock (the “ Series F Preferred Stock ” and the certificate of designation setting forth the rights thereof, the “ Series F Designation ”, and the Series E Preferred Stock and the Series F Preferred Stock, collectively, the “ Series E and F Preferred Stock ”).
−Removed: Additionally, with the approval of the holders thereof, the Company amended and restated the designation of its Series C Redeemable Convertible Preferred Stock (the “ Series C Preferred Stock ” and the amended and restated designation setting forth the rights thereof, the “ Series C Designation ”).
−Removed: The Lineal Plan of Merger, Series D Designation and Series E Designation, provided that, effective upon the date that the stockholders of the Company had approved the Lineal Plan of Merger and issuance of shares in connection therewith (the “ Stockholder Approval ” and such date of Stockholder Approval, the “ Stockholder Approval Date ”), and subject to certain closing conditions, (a) the common stock holders of the Company were to hold between 6% and 6.67% of the Company’s fully-diluted capitalization (depending on certain factors);
−Removed: (b) Discover was to hold Series D Preferred Stock convertible into 26.67% of the Company’s fully-diluted capitalization, subject to the terms of the Series D Preferred Stock;
−Removed: and (c) the Lineal Members, who held the Series E Preferred Stock, were to have the right to convert such Series E Preferred Stock, subject to the terms thereof, as discussed above, into 66.67% of the Company’s fully-diluted capitalization, or 70%, subject to certain factors.
−Removed: Pursuant to the Lineal Plan of Merger, Merger Sub merged with and into Lineal, with Lineal continuing as the surviving entity in the Lineal Merger and as a wholly-owned subsidiary of the Company.
−Removed: On October 8, 2019, Lineal acquired an 80% interest in Evercon Energy LLC (“ Evercon ”).
−Removed: The acquisition required Lineal to assume certain liabilities and provide working capital for a period of six months in an amount of $50,000 per month to Evercon.
−Removed: As part of the Lineal Divestiture, described below, Evercon was divested effective December 31, 2019.
−Removed: The Funding Agreement required the Company to fund $1,050,000 in immediately available funds to Lineal (the “ Loan ”).
−Removed: The Loan was documented by the July 2019 Lineal Note and the Loan was made on July 9, 2019.
−Removed: Subsequent to the closing date of the Lineal Plan of Merger, for various reasons, the parties to such Lineal Plan of Merger were unable to complete a further acquisition or combination which would allow the post-Merger combined company to meet the initial listing standards of the NYSE American.
−Removed: This was a requirement to the Company having to seek shareholder approval for the terms of the Series E Preferred Stock (including the voting rights (i.e., the right, together with the Series F Preferred Stock, to vote 80% of the Company’s voting shares) and conversion rights (i.e., the right to convert into between 67-70% of the Company’s post-shareholder approval capitalization) associated therewith).
−Removed: Consequently, and because no definitive timeline was able to be established for when the Company believed it would meet the NYSE American initial listing standards and consequently, when shareholder approval would be sought or received for the terms of the Series E Preferred Stock and Series F Preferred Stock, the Preferred Holders and the Company determined it was in their mutual best interests to unwind the Lineal Merger.
−Removed: In order to affect such unwinding, on December 31, 2019, we, Lineal (and its subsidiaries) and the Preferred Holders entered into, and closed the transactions contemplated by, a Preferred Stock Redemption Agreement (the “ Redemption Agreement ” and the redemption contemplated thereby, the “ Redemption ” or the “ Lineal Divestiture ”).
−Removed: Pursuant to the Redemption Agreement, the parties thereto mutually agreed to unwind the Lineal Merger and allow for the redemption in full of Lineal by the Preferred Holders.
−Removed: In connection therewith, the Company redeemed the Company’s Series E and F Preferred Stock issued in connection with the Lineal Merger and ownership of 100% of Lineal was transferred back to the Preferred Holders, and all of the Series E Preferred Stock and Series F Preferred Stock of the Company outstanding were cancelled through the redemption.
−Removed: The Redemption Agreement also provided for (a) the entry by Lineal and the Company into a new unsecured promissory note in the amount of $1,539,719, the outstanding amount of the July 2019 Lineal Note together with additional amounts loaned by Camber to Lineal through December 31, 2019 (the “ December 2019 Lineal Note ”);
−Removed: (b) the unsecured loan by the Company to Lineal on December 31, 2019 of an additional $800,000, entered into by Lineal in favor of the Company on December 31, 2019 (“ Lineal Note No.
−Removed: and (c) the termination of the prior Lineal Plan of Merger and Funding Agreement entered into in connection therewith (pursuant to which all funds previously held in a segregated account for future Lineal acquisitions, less amounts loaned pursuant to Lineal Note No.
−Removed: 2, were released back to the Company).
−Removed: The December 2019 Lineal Note and Lineal Note No.
−Removed: 2, accrue interest, payable quarterly in arrears, beginning on March 31, 2020 and continuing until December 31, 2021, when all interest and principal is due, at 8% and 10% per annum (18% upon the occurrence of an event of default), respectively.
−Removed: The divestiture resulting from the Redemption Agreement qualifies as a discontinued operation in accordance with U.S.
−Removed: generally accepted accounting principles (“ GAAP ”).
−Removed: As a result, operating results and cash flows related to the Lineal operations have been reflected as discontinued operations in the Company’s consolidated statements of operations and consolidated statements of cash flows for the periods presented.
−Removed: Viking Plan of Merger
−Removed: On February 3, 2020, the Company and Viking entered into the Merger Agreement.
−Removed: Pursuant to the Merger Agreement, at the effective time of the Merger (the “ Effective Time ”), each share of common stock of Viking (the “ Viking Common Stock ”) issued and outstanding, other than certain shares owned by the Company, Viking and Merger Sub, will be converted into the right to receive the pro rata share of 80% of the Company’s post-closing capitalization, subject to certain adjustment mechanisms discussed in the Merger Agreement (and excluding shares issuable upon conversion of the Series C Preferred Stock of the Company).
−Removed: Holders of Viking Common Stock will have any fractional shares of Company common stock after the Merger rounded up to the nearest whole share.
−Removed: The completion of the Merger is subject to certain closing conditions.
−Removed: Specifically, the percentage of shares retained by Camber shareholders (initially 80%, the “ Camber Percentage ”) is adjusted as follows:
−Removed: (i) for each (A) $500,000 in Camber unencumbered cash (without any associated debt) available for use by the combined company (the “ Combined Company ”) after the Effective Time, with a permitted use being to, among other things, pay debt obligations of Viking outside of Viking’s Ichor division or Elysium division, which comes from equity sold by Camber for cash from February 3, 2020, through the Effective Time, which is not contingent or conditional upon the closing of the Merger (the “ Camber Surplus Cash ”), or (B) $500,000 in other unencumbered assets acquired by Camber after February 3, 2020 and prior to closing without increasing Camber’s liabilities (the “ Other Camber Surplus Assets ”), the Camber Percentage will increase by an incremental 0.5% (a “ Camber Percentage Increase ”);
−Removed: and (ii) for each additional $500,000 in Viking unencumbered cash (without any associated debt) for use by the Combined Company after the Effective Time which is not contingent or conditional upon the closing of the Plan of Merger, with a permitted use being to, among other things, pay debt obligations of Viking outside of Viking’s Ichor division or Elysium division in excess of $500,000 at Closing, which comes from equity sold by Viking for cash from February 3, 2020 through the Effective Time, the Camber Percentage will decrease by an incremental 0.5% (a “ Camber Percentage Decrease ”).
−Removed: The aggregate Camber Percentage Increase or Camber Percentage Decrease shall not exceed 5% pursuant to this particular section of the Merger Agreement, and neither party will raise capital from the other party’s existing shareholders without the prior written consent of such other party.
−Removed: The Merger Agreement can be terminated (i) at any time with the mutual consent of the parties;
−Removed: (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;
−Removed: (iii) by either Viking or the Company if the Merger shall not have been consummated on or before September 30, 2020, provided that the Company or Viking shall have the right to extend such date from time to time, until up to December 31, 2020, in the event that the Company has not fully resolved SEC comments on the Form S-4 (a preliminary draft of which has previously been filed) or other SEC filings related to the Merger, and Camber is responding to such comments in a reasonable fashion, subject to certain exceptions;
−Removed: (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;
−Removed: (v) by the Company if Viking is unable to obtain the affirmative vote of its stockholders for approval of the Merger;
−Removed: (vi) by Viking if the Company is unable to obtain the affirmative vote of its stockholders required pursuant to the terms of the Merger Agreement;
−Removed: and (vii) by Viking or the Company if the other party’s directors change their recommendation to their stockholders to approve the Merger, subject to certain exceptions set forth in the Merger Agreement, or if there is a willful breach of the Merger Agreement by the other party thereto.
−Removed: A further requirement to the closing of the Merger was that the Company was required to have acquired 25% of Viking’s subsidiary Elysium Energy, LLC (“ Elysium ”) as part of a $5,000,000 investment in Viking’s Rule 506(c) offering, which transaction was completed on February 3, 2020, as discussed below and have acquired an additional 5% of Elysium as part of a subsequent $4,200,000 investment in Viking’s Rule 506(c) offering, which transaction was completed on June 25, 2020, as discussed below.
−Removed: In the event of termination of the Merger Agreement, we are required, under certain circumstances described below, to return a portion of the Elysium interests to Viking:
−Removed: Reason for Termination
−Removed: Percentage of Elysium
−Removed: Retained by Camber
−Removed: The reasonable likelihood that the combined company will not meet the initial listing requirements of the NYSE American, required regulatory approvals will not be obtained, or the registration statement on Form S-4 will not be declared effective, through no fault of Camber or Viking
−Removed: Termination of the Merger Agreement by either party, through no fault of Camber
−Removed: Termination of the Merger Agreement due to a material breach of the Merger Agreement by Camber or its disclosure schedules
−Removed: Termination of the Merger Agreement for any reason and in the event the Secured Notes (defined below) are not repaid within 90 days of the date of termination and the Additional Payment (defined below) is not made.
−Removed: *Assumes the payment of Secured Notes within 90 days of the date of termination of the Merger Agreement and the Additional Payment (defined below) is made.
−Removed: The Merger Agreement provides that the Secured Notes (defined below) will be forgiven in the event the Merger closes, and the Secured Notes will be due 90 days after the date that the Merger Agreement is terminated by any party for any reason, at which time an additional payment equal to (i) 115.5% of the original principal amount of the Secured Notes, minus (ii) the amount due to the Company pursuant to the terms of the Secured Notes upon repayment thereof (the “ Additional Payment ”) is due.
−Removed: A required condition to the entry into the Merger was that the Company loan Viking $5 million, pursuant to the terms of a Securities Purchase Agreement, which was entered into on February 3, 2020 (the “ SPA ”).
−Removed: On February 3, 2020, the Company and Discover entered into a Stock Purchase Agreement pursuant to which Discover purchased 525 shares of Series C Preferred Stock (described in greater detail below under “Item 5.
−Removed: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Description of Capital Stock- Preferred Stock - Series C Redeemable Convertible Preferred Stock“), for $5 million, at a 5% original issue discount to the $10,000 face value of such preferred stock.
−Removed: Pursuant to the SPA, the Company made a $5 million loan to Viking (using funds raised from the sale of the Series C Preferred Stock shares to Discover), which was evidenced by a 10.5% Secured Promissory Note (the “ February 2020 Secured Note ”).
−Removed: The February 2020 Secured Note is secured by a security interest, para passu with the other investors in Viking’s Secured Note offering (subject to certain pre-requisites) in Viking’s 70% ownership of Elysium and 100% of Ichor Energy Holdings, LLC, Viking’s 100% subsidiary.
−Removed: Additionally, pursuant to a separate Security and Pledge Agreement entered into on February 3, 2020, Viking provided the Company a security interest in the membership, common stock and/or ownership interests of all of Viking’s existing and future, directly owned or majority owned subsidiaries, to secure the repayment of the February 2020 Secured Note.
−Removed: The February 2020 Secured Note is convertible into common shares of Viking at a conversion price of $0.24 per share at any time after March 4, 2020, and before the 15 th day after Viking’s common stock has traded at an average daily price of at least $0.55 for 15 consecutive business days (at which point the February 2020 Secured Note is no longer convertible), provided that the Company is restricted from converting any portion of the February 2020 Secured Note into Viking’s common stock if upon such conversion the Company would beneficially own more than 4.99% of Viking’s common stock (which percentage may be increased or decreased, with 61 days prior written notice to Viking, provided that such percentage cannot under any circumstances be increased to greater than 9.99%).
−Removed: As additional consideration for the Company making the loan to Viking, Viking assigned the Company a 25% interest in Elysium pursuant to the terms of an Assignment of Membership Interests dated February 3, 2020.
−Removed: Elysium holds certain working interests and over-riding royalty interests in oil and gas properties in Texas (approximately 71 wells in 11 counties) and Louisiana (approximately 52 wells in 6 parishes), along with associated wells and equipment, and was producing an average of approximately 2,700 Boe per day in March 2020.
−Removed: The Merger Agreement was amended by:
−Removed: (1) a First Amendment thereto entered into by the parties on May 27, 2020, which (i) modified the Camber Percentage adjustment mechanism to cap the aggregate Camber Percentage Increase or Camber Percentage Decrease at 5%;
−Removed: (ii) modify the events resulting in such adjustments;
−Removed: (iii) correct a prior error with such calculation which discussed Camber being required to have $4 million in cash at closing;
−Removed: and (iv) provided that neither party will raise capital from the other party’s existing shareholders without the prior written consent of the other party;
−Removed: (2) a Second Amendment thereto entered into by the parties on June 15, 2020, which extended the date after which the Merger Agreement can be cancelled by either the Company or Viking, if not completed thereby, from June 30, 2020 to September 30, 2020, provided that either the Company or Viking have the right to further extend such date from time to time, until up to December 31, 2020, in the event that the Company has not fully resolved SEC comments on Registration Statement on Form S-4 which the Company filed in connection with the Merger, or other SEC filings related to the Merger, and the Company is responding to such comments in a reasonable fashion, subject to certain exceptions;
−Removed: (3) a Third Amendment thereto entered into by the parties on June 25, 2020, which (i) provided for the entry into the June 2020 SPA and the loan of the $4.2 million evidenced by the June 2020 Secured Note (discussed below);
−Removed: (ii) provided for the requirement to pay the Additional Payment as a break-up fee, in the event the Merger is terminated prior to closing;
−Removed: (iii) updated the percentages of Elysium which are required to be returned to Viking upon termination of the Merger (as updated in the table above);
−Removed: (iv) confirm that none of the funds loaned by the Company to Viking will affect the merger ratios set forth in the Merger Agreement;
−Removed: and (v) allow for the Company’s Board of Directors to authorize the payment to the officers and directors of the Company, of consideration of up to $150,000 each ($600,000 in aggregate), for past services rendered and services to be rendered by such individuals through the closing date of the Merger, which compensation has not been formally authorized by the Board of Directors to date, but which is expected to be authorized and documented in the coming weeks.
−Removed: The discussion of the Merger Agreement included throughout this Report (including under this “ Viking Plan of Merger ” section) has been updated to take into effect the amendments affected by the First Amendment, Second Amendment and Third Amendment.
−Removed: On June 25, 2020, the Company loaned Viking an additional $4.2 million, pursuant to the terms of a Securities Purchase Agreement, which was entered into on the same date.
−Removed: The $4.2 million loan was evidenced by a 10.5% Secured Promissory Note (the “ June 2020 Secured Note ” and together with the February 2020 Secured Note, the “ Secured Notes ”), the repayment of which was secured by the terms of a Security and Pledge Agreement.
−Removed: The June 2020 Secured Note has substantially similar terms as the February 3, 2020 10.5% Secured Note discussed above, and substantially similar security rights in Viking in connection therewith.
−Removed: As additional consideration for the Company making the loan to Viking, Viking assigned the Company an additional 5% of Elysium pursuant to the terms of an Assignment of Membership Interests dated June 25, 2020, which brings the Company’s current total ownership of Elysium up to 30%.
−Removed: June 2020 Stock Purchase Agreement
−Removed: On and effective June 22, 2020, the Company and Discover entered into a Stock Purchase Agreement (the “ June 2020 Purchase Agreement ”), pursuant to which Discover purchased 630 shares of Series C Preferred Stock for $6 million, at a 5% original issue discount to the $10,000 face value of such preferred stock (the “ Face Value ”).
−Removed: Pursuant to the June 2020 Purchase Agreement, as long as Discover holds any shares of Series C Preferred Stock, the Company agreed that, except as contemplated in connection with the Merger, the Company would not issue or enter into or amend an agreement pursuant to which the Company may issue any shares of common stock, other than (a) for restricted securities with no registration rights, (b) in connection with a strategic acquisition, (c) in an underwritten public offering, or (d) at a fixed price.
−Removed: The Company also agreed that it would not issue or amend any debt or equity securities convertible into, exchangeable or exercisable for, or including the right to receive, shares of common stock (i) at a conversion price, exercise price or exchange rate or other price that is based upon or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of the security or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of the security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the common stock.
−Removed: Additionally, provided that the Company has not materially breached the terms of the June 2020 Purchase Agreement, the Company may at any time, in its sole and absolute discretion, repurchase from Discover all, but not less than all, of the then outstanding shares of Series C Preferred Stock sold pursuant to the agreement by paying to Discover 110% of the aggregate face value of all such shares.
−Removed: The Company also agreed to provide Discover a right of first offer to match any offer for financing the Company receives from any person while the shares of Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement are outstanding, except for debt financings not convertible into common stock, which are excluded from such right to match.
−Removed: Finally, the Company agreed that if it issues any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Discover, then the Company would notify Discover of such additional or more favorable term and such term, at Discover’s option, may become a part of the transaction documents with Discover.
−Removed: The Company agreed pursuant to the June 2020 Purchase Agreement that if the Merger does not close by the required date approved by the parties thereto (as such may be extended from time to time), the Company is required, at Discover’s option, in its sole and absolute discretion, to immediately repurchase from Discover all then outstanding Series C Preferred Stock shares acquired by Discover pursuant to the June 2020 Purchase Agreement, by paying to Discover 110% of the aggregate Face Value of all such shares (the “ Repurchase Requirement ”), which totals $6,930,000.
−Removed: Finally, the Company agreed to include proposals relating to the approval of the June 2020 Purchase Agreement and the issuance of the shares of common stock upon conversion of the Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement, as well as an increase in authorized common stock to fulfill the Company’s obligations to issue such shares, at the meeting held to approve the Merger or a separate meeting in the event the Merger is terminated prior to shareholder approval, and to use commercially reasonable best efforts to obtain such approvals as soon as possible and in any event prior to December 31, 2020.
−Removed: Due to the certain redemption provisions of the Series C Preferred Stock that were deemed to be outside the control of the Company, the Series C Redeemable Preferred stock was recorded as temporary equity.
−Removed: The Company loaned $4.2 million of the funds provided by the June 2020 Purchase Agreement to Viking in connection with the purchase of the June 2020 Secured Note.
−Removed: Amendment to February 2020 Stock Purchase Agreement
−Removed: On June 22, 2020, the Company and Discover entered into an Amendment to Stock Purchase Agreement (the “ SPA Amendment ”), pursuant to which Discover agreed to terminate the obligation set forth in the Stock Purchase Agreement previously entered into between the Company and Discover on February 3, 2020, which contained a Repurchase Requirement substantially similar to the one contained in the June 2020 Purchase Agreement (as to the 525 shares of Series C Preferred Stock sold to Discover on February 3, 2020), which would have required that the Company pay Discover an aggregate of $5,775,000 in connection with the redemption of the 525 shares of Series C Preferred Stock the Company sold to Discover in the event the Merger was terminated.
−Removed: Current Operations and Business Information
−Removed: Our website address is http://www.camber.energy.
−Removed: Our fiscal year ends on the last day of March of each year.
−Removed: The information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered a part of this Report.
−Removed: We refer to the twelve-month periods ended March 31, 2020 and March 31, 2019 as our 2020 Fiscal Year and 2019 Fiscal Year, respectively.
−Removed: As of March 31, 2020, the Company had leasehold interests (working interests) covering approximately 221 / 3,500 (net / gross) acres, producing from the Cline and Wolfberry formations.
−Removed: The remaining Texas acreage consists of leasehold covering approximately 555 / 638 (net / gross) acres and wellbores located in the Panhandle in Hutchinson County, Texas, which was acquired by the Company in March 2018, and which will be transferred as part of the PetroGlobe settlement discussed below.
−Removed: On May 30, 2019, the Company received a Severance Order from the Texas Railroad Commission (the “ TRC ”) for noncompliance with TRC rules, suspending the Company’s ability to produce or sell oil and gas from its Panhandle leases in Hutchinson County, Texas, until certain well performance criteria are met.
−Removed: Since that time, the Company followed TRC procedures in order to regain TRC compliance for the Panhandle wells.
−Removed: Additionally, as a result of a notice from its working interest partner, PetroGlobe Energy Holdings, LLC (“ PetroGlobe ”), and related litigation, all prior production on the Panhandle wells was held in suspense.
−Removed: The Company cured its prior issues with the TRC and plans to close the transactions contemplated by its Settlement Agreement with PetroGlobe shortly after the filing of this Report, as discussed below under “Item 3.
−Removed: Legal Proceedings“;
−Removed: which will provide for among other things, the Company’s transfer of its ownership of its Hutchinson County, Texas properties and wells to PetroGlobe, which transaction and transfer is anticipated to close shortly after the filing of this Report.
−Removed: As of March 31, 2020, Camber was producing an average of approximately 35.8 net barrels of oil equivalent per day (“ Boepd ”) from 25 active well bores.
−Removed: The ratio between the gross and net production varies due to varied working interests and net revenue interests in each well.
−Removed: Our production sales totaled 13,084 Boe, net to our interest, for the year ended March 31, 2020.
−Removed: At March 31, 2020, Camber’s total estimated proved producing reserves were 133,442 Boe, of which 98,600 Bbls were crude oil and NGL reserves, and 207,823 Mcf were natural gas reserves.
−Removed: None of these reserves relate to the Company’s Panhandle properties.
−Removed: The Hutchinson County, Texas, acquisition in March 2018 included interests in 48 gross non-producing well bores, 5 saltwater disposal wells, and the required infrastructure and equipment necessary to support future hydrocarbon production as well as approximately 555 net leasehold acres in Hutchinson County, Texas.
−Removed: Camber holds an interest in 25 producing wells in Glascock County and the Company previously restored 11 wells in Hutchinson County to production, which are not currently producing and are plugged.
−Removed: As of March 31, 2020 and through the date of this Report was filed;
−Removed: Camber had curtailed the majority of its production from its wells in Hutchinson County, Texas, because of the Severance Order issued by 2019 as discussed above.
−Removed: As part of the settlement discussed below under “Item 3.
−Removed: Legal Proceedings“, the Hutchinson County, Texas wells were plugged and such wells will be transferred to PetroGlobe shortly after the filing of this Report.
−Removed: At March 31, 2019, Camber’s total estimated proved reserves were 203,406 Boe, of which 124,520 Bbls were crude oil reserves, 44,100 Bbls were natural gas liquids and 208,710 Mcf were natural gas reserves.
−Removed: Approximately 76% of the Boe was proved producing.
−Removed: As of March 31, 2020, Camber had no employees, and utilized independent contractors on an as-needed basis.
−Removed: Moving forward, the Company plans to complete the Merger with Viking and then focus on growing through the development of Viking’s properties while also seeking new acquisitions to grow its oil and gas production and revenues through the combined entity.
−Removed: The Company anticipates raising additional financing to complete acquisitions following the closing of the Merger, which may be accomplished through the sale of debt or equity.
−Removed: As described above, the Merger is subject to various closing conditions which may not be met pursuant to the contemplated timeline, if at all.
−Removed: Recent Reverse Stock Splits and Amendments to Articles
−Removed: On March 1, 2018, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to affect a 1-for-25 reverse stock split of all outstanding common stock shares of the Company which was effective on March 5, 2018.
−Removed: On December 20, 2018, the Company filed a Certificate of Change with the Secretary of State of Nevada to affect another 1-for-25 reverse stock split of the Company’s (a) authorized shares of common stock (from 500,000,000 shares to 20,000,000 shares);
−Removed: and (b) issued and outstanding shares of common stock, which was effective on December 24, 2018.
−Removed: Effective on April 10, 2019, the Company amended its Articles of Incorporation to increase the number of the Company’s authorized shares of common stock, $0.001 per value per share, from 20,000,000 shares to 250,000,000 shares.
−Removed: On July 3, 2019, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation with the Secretary of State of Nevada to affect another 1-for-25 reverse stock split of all outstanding common stock shares of the Company, which was effective on July 8, 2019.
−Removed: On October 28, 2019, the Company filed a Certificate of Change with the Secretary of State of Nevada to affect a 1-for-50 reverse stock split of the Company’s (a) authorized shares of common stock (from 250,000,000 shares to 5,000,000 shares);
−Removed: and (b) issued and outstanding shares of common stock.
−Removed: The reverse stock split was effective on October 29, 2019.
−Removed: The effect of the reverse stock split was to combine every 50 shares of outstanding common stock into one new share, with a proportionate 1-for-50 reduction in the Company’s authorized shares of common stock, but with no change in the par value per share of the common stock.
−Removed: The result of the reverse stock split was to reduce the number of common stock shares outstanding on the effective date of the reverse, from approximately 74.5 million shares to approximately 1.5 million shares (prior to rounding).
−Removed: Effective on April 16, 2020, with the approval of the Company’s stockholders at its April 16, 2020 special meeting of stockholders, the Company filed a Certificate of Amendment to its Articles of Incorporation to increase its authorized shares of common stock to 25 million shares of common stock, which filing was effective the same date.
−Removed: All issued and outstanding shares of common stock, conversion terms of preferred stock, options and warrants to purchase common stock and per share amounts contained herein have been retroactively adjusted to reflect the reverse splits for all periods presented.
+Added: Camber Energy, Inc.
+Added: (“Camber”, the “Company”, “we”, “us” or “our”) is a growth-oriented diversified energy company.
+Added: 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:
+Added: (i) an entity with intellectual property rights to a fully developed, patented, proprietary Medical and Bio-Hazard Waste Treatment system using Ozone Technology;
+Added: and (ii) entities with the intellectual property rights to fully developed, patented and patent pending, proprietary Electric Transmission and Distribution Open Conductor Detection Systems.
+Added: 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.
+Added: Various of our other subsidiaries own interests in oil properties in the United States.
+Added: 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.
+Added: Custom Energy and Power Solutions:
+Added: Simson-Maxwell Acquisition
+Added: On August 6, 2021, Viking acquired approximately 60.5% of the issued and outstanding shares of Simson-Maxwell Ltd.
+Added: (“Simson-Maxwell”), a Canadian federal corporation, for $7,958,159 in cash.
+Added: Simson-Maxwell manufactures and supplies power generation products, services and custom energy solutions.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Clean Energy and Carbon-Capture System:
+Added: 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”).
+Added: The intellectual property licensed by Viking includes certain patents and/or patent applications, including:
+Added: 10,774,733, File date:
+Added: October 24, 2018, Issue date:
+Added: September 15, 2020, Titled:
+Added: “Bottoming Cycle Power System”;
+Added: 17/661,382, Issue date:
+Added: August 8, 2023, Titled:
+Added: ‘Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products’ ;
+Added: 11624307, Issue date:
+Added: April 22, 2023, Titled:
+Added: ‘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.:
+Added: EP3728891, Issue date:
+Added: April 12, 2023, Titled:
+Added: “Bottoming Cycle Power System”;
+Added: Patent Application No.:
+Added: 17/224,200, File date:
+Added: April 7, 2021, Titled:
+Added: “Bottoming Cycle Power System” (which was subsequently approved by the U.S.
+Added: Patent & Trademark Office in March, 2022 (No.
+Added: Patent Application No.:
+Added: 17/358,197, File date:
+Added: June 25, 2021, Titled:
+Added: “Bottoming Cycle Power System”;
+Added: Patent Application No.:
+Added: 17/448,943, File date:
+Added: September 27, 2021, Titled:
+Added: “Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power and Capturing Carbon Dioxide”;
+Added: and (viii) U.S.
+Added: Patent Application No.:
+Added: 17/448,938, File date:
+Added: September 27, 2021, Titled:
+Added: “Systems and Methods Associated With Bottoming Cycle Power Systems for Generating Power, Capturing Carbon Dioxide and Producing Products.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Medical Waste Disposal System Using Ozone Technology:
+Added: 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.
+Added: 11,565,289), proprietary medical and biohazard waste treatment system using ozone technology.
+Added: Simson-Maxwell has been designated the exclusive worldwide manufacturer and vendor of this system.
+Added: 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.
+Added: Open Conductor Detection Technologies:
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Oil and Gas Properties
+Added: Existing Assets:
+Added: As of December 31, 2023, the Company owns leasehold interests (working interests) in properties producing from the Cline and Wolfberry formations in Texas.
+Added: Divestitures in 2023:
+Added: 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.
+Added: 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.
+Added: The Company recorded a net gain on these two transactions in the amount of $854,465, as follows:
+Added: Proceeds from sale (net of transaction costs)
+Added: Reduction in oil and gas full cost pool (based on % of reserves disposed)
+Added: ARO recovered
+Added: Cash bond recoverable (net of fees)
+Added: Gain on disposal
+Added: 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.
+Added: 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.
+Added: Divestitures in 2022:
+Added: 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.
+Added: 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.
+Added: This transaction resulted in the disposition of most of the Company’s total oil and gas reserves (see Note 6).
+Added: The Company recorded a loss on the transaction in the amount of $8,961,705, as follows:
+Added: Proceeds from sale
+Added: Reduction in oil and gas full cost pool (based on % of reserves disposed)
+Added: (12,791,680 )
+Added: ARO recovered
+Added: Loss on disposal
+Added: $ (8,961,705 )
+Added: 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.
+Added: 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.
+Added: Merger with Viking Energy Group, Inc.
+Added: On August 1, 2023, Camber completed the previously announced merger (the “Merger”) with Viking Energy Group, Inc.
+Added: (“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.
+Added: Upon the terms and conditions in the Merger Agreement, each share:
+Added: (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”);
+Added: (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”).
+Added: 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:
+Added: (a) on a proposal to increase or reduce Camber’s share capital;
+Added: (b) on a resolution to approve the terms of a buy-back agreement;
+Added: (c) on a proposal to wind up Camber;
+Added: (d) on a proposal for the disposal of all or substantially all of Camber’s property, business and undertaking;
+Added: (f) during the winding-up of Camber;
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: For accounting purposes, the Merger is deemed a reverse acquisition.
+Added: Consequently, Viking (the legal subsidiary) was treated as the acquiror of Camber (the legal parent).
+Added: 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 September 30, 2023.
+Added: The prior year comparative financial information is that of Viking.
+Added: 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.
+Added: Preferred Stock Financing Transactions
+Added: Effective as of July 9, 2021, the Company and Antilles Family Office, LLC (“ Antilles ”), an affiliate of Discover, entered into a Stock Purchase Agreement (the “ July 2021 Purchase Agreement ”), pursuant to which Antilles purchased 1,575 shares of Series C Preferred Stock for $15 million, at a 5% original issue discount to the $10,000 face value of each share of preferred stock.
+Added: Between May 17 and December 31, 2022, Antilles converted 1,305 shares of Series C Preferred Stock into 393,305,736 shares of common stock (equivalent to approximately 7,866,115 common shares on a post-reverse stock split basis) pursuant to the terms and conditions of the Certificate of Designation(s), as amended, associated with the Series C Preferred Stock.
+Added: In 2023, Antilles converted 240 shares of Series C Preferred Stock (the “ 2023 Series C Conversions ”) into shares of common stock, with 221 of such shares of Series C Preferred Stock having been converted prior to the Merger and 19 of such shares of Series C Preferred Stock having been converted subsequent to the Merger.
+Added: With respect to the 2023 Series C Conversions, pursuant to the terms and conditions of the Certificate of Designation(s), as amended, associated with the Series C Preferred Stock (the “ COD ”):
+Added: (i) a total of 8,525,782 shares of common stock were issued to Antilles on the initial conversion(s) (of this total, 1,093,358 shares were issued subsequent to the Merger);
+Added: (ii) approximately 28,955,938 shares of common stock (“ True-Up Shares ”) were issued to Antilles subsequent to the date(s) of the initial conversion(s) as a result of the continuation of the Measurement Period (as defined in the COD) and decline in the low volume weighted average price (“Low VWAP”) of the Company’s common stock following the date of the initial conversion(s);
+Added: and (iii) as of December 31, 2023, Antilles was entitled to receive, subject to a 9.99% beneficial ownership limitation, approximately 34,488,937 additional True-Up Shares (the “ Outstanding True-Up Entitlement ”) based on the then Low VWAP of approximately $0.2136.
+Added: The Low VWAP fell to approximately $0.158 on or about February 14, 2024, which increased the Outstanding True-Up Entitlement, as at December 31, 2023, from 34,488,937 to 133,716,728.
+Added: Based on shares of common stock issued to Antilles between January 1, 2024 and March 12, 2024, the Outstanding True-Up Entitlement as at March 20, 2024, was approximately 105,578,350.
+Added: On or about February 15, 2024, the Company and Antilles entered into an agreement (the “ February 2024 Antilles Agreement ”) which, among other things, confirmed that if the Company pays in full amounts owing under all outstanding promissory notes in favor of Antilles or its affiliates, and redeems all then outstanding shares of Series C Preferred Stock, Antilles will not thereafter deliver any Additional Notices (as defined in the COD) requesting further True-Up Shares with respect to the 2023 Series C Conversions or other already-converted shares of Series C Preferred Stock, and no as of then undelivered True-Up Shares will be owed to Antilles.
+Added: Pursuant to the July 2021 Purchase Agreement, as long as Antilles holds any shares of Series C Preferred Stock, we agreed that, except as contemplated in connection with the Merger, we would not issue or enter into or amend an agreement pursuant to which we may issue any shares of common stock, other than (a) for restricted securities with no registration rights, (b) in connection with a strategic acquisition, (c) in an underwritten public offering, or (d) at a fixed price.
+Added: We also agreed that we would not issue or amend any debt or equity securities convertible into, exchangeable or exercisable for, or including the right to receive, shares of common stock (i) at a conversion price, exercise price or exchange rate or other price that is based upon or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of the security or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of the security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the common stock.
+Added: We also agreed that if we issue any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Antilles, then we would notify Antilles of such additional or more favorable term and such term, at the Investor’s option, may become a part of the transaction documents with the Investor.
+Added: As at December 31, 2023, Antilles held 30 shares of Series C Preferred Stock.
+Added: The Company estimated these shares would convert into approximately 9.0 million common shares pursuant to the conversion formula set out in the Certificate of Designation(s), as amended, associated with the Series C Preferred Stock, using approximately $0.2136 as the then low volume weighted average price (“Low VWAP”) of the Company’s common stock for the purposes of calculating the Conversion Premium due upon conversion.
+Added: The Low VWAP fell to approximately $0.158 on or about February 14, 2024, which increased the underlying common share estimate from 9.0 million to 21.4 million common shares.
+Added: The February 2024 Antilles Agreement established a floor price for the Low VWAP at $0.15.
+Added: If the Low VWAP during the Measurement Period (as defined in the COD) falls to $0.15, the underlying common share estimate would further increase to 26.7 million common shares .
+Added: Pursuant to the February 2024 Antilles Agreement, if the Company pays in full amounts owing under all outstanding promissory notes in favor of Antilles or its affiliates, the Company may redeem for cash any outstanding shares of Series C Preferred Stock for an amount equal to the Early Redemption Price (as defined in the COD).
+Added: Promissory Notes and Security Agreement:
+Added: Between December 11 th , 2020 and December 24, 2021, the Company executed and delivered the following Secured Promissory Notes in favor of Discover:
+Added: Promissory Note dated December 11, 2020 in the original amount of $6,000,000 (the “ December 11 th Investor Note ”), which was issued in connection with the Exchange Agreement described above;
+Added: Promissory Note dated December 22, 2020 in the original amount of $12,000,000 (the “ December 22 nd Investor Note ”);
+Added: Promissory Note dated April 23, 2021 in the original amount of $2,500,000 (the “ April 23 rd Investor Note ”);
+Added: Promissory Note dated December 9, 2021 in the original amount of $1,000,000 (the “ December 9, 2021 Investor Note ”);
+Added: Promissory Note dated December 24, 2021 with a face value of $26,315,789 (the “ December 24, 2021 Investor Note ”), in respect of which $25,000,000 was funded on January 3, 2022.
+Added: The December 9, 2021 Investor Note was paid in full on January 4, 2022.
+Added: All other Promissory Notes remain outstanding and have a maturity date of January 1, 2027 (collectively, the “ Outstanding Notes ”).
+Added: Commencing December 24, 2021, pursuant to Amendments signed on or about such date and the satisfaction of the condition stated therein which related to the Company increasing its authorized capital prior to December 31, 2021, each of the Outstanding Notes bear interest at a rate per annum equal to the Wall Street Journal Prime Rate on the amendment date, being 3.25%, with interest payable at maturity.
+Added: Prior to December 24, 2021, the interest rate on applicable Outstanding Notes was 10% per annum.
+Added: All Outstanding Notes are secured by a first-ranking security interest against all of the Company’s assets, including the shares of Viking owned by the Company.
+Added: Viking has also guaranteed the Company’s obligations under the Outstanding Notes.
+Added: Discover previously had the right to convert all or a portion of the amounts owing under the Outstanding Notes into shares of common stock of the Company at a fixed conversion price, but pursuant to an Agreement signed by Discover and the Company on or about November 3, 2022, Discover waived all of such conversion entitlements.
+Added: Further Particulars of Promissory Notes & Security Agreements
+Added: Further particulars regarding the various Promissory Notes and associated Security Agreements are set out below.
+Added: Prior to December 24, 2021, all applicable Outstanding Notes accrued interest at the rate of 10% per annum after which the interest rate was reduced to 3.25% per annum pursuant to applicable amending agreements signed on December 24, 2021 between the Company and Discover regarding each Outstanding Note;
+Added: however the interest rate increases to the highest non-usurious rate of interest allowed under applicable law upon the occurrence of an event of default, which interest is due on the maturity date, which maturity date is the earlier of (a) January 1, 2027;
+Added: and (b) the date a change of control of the Company occurs, which includes any person becoming the beneficial owner of more than 50% of the combined voting power of the Company (a “ Change in Ownership ”), or the approval of (1) a plan of complete liquidation, (2) an agreement for the sale or disposition of all or substantially all the Company’s assets, or (3) a merger (other than a merger for purposes of redomiciling the Company), consolidation, or reorganization of the Company, which would result in a Change in Ownership, provided that the closing of the Merger will not trigger a change of control (or Change in Ownership).
+Added: All Outstanding Notes include customary events of default.
+Added: Upon the occurrence of an event of default, Discover has the right to accelerate the full amount of the Outstanding Notes and all interest thereon, to enforce its rights under the applicable Security Agreements (defined below), and take other actions allowed under applicable law.
+Added: Payment of the Outstanding Notes and performance of the Company’s obligations thereunder is required to be guaranteed by all subsidiaries or entities controlled or owned by the Company, or which may be owned after the date of the Outstanding Notes.
+Added: The Outstanding Notes may be assigned by Discover subject to compliance with applicable securities laws.
+Added: The Company may prepay the Outstanding Notes at any time.
+Added: The payment of amounts due under the December 11 th Investor Note is secured by the terms of the following agreements entered into by the Company in favor of Discover on December 11, 2020:
+Added: (i) a Security Agreement;
+Added: and (ii) a Security & Pledge Agreement.
+Added: The payment of amounts due under the December 22 nd Investor Note is secured by the terms of the following agreements entered into by the Company in favor of Discover on December 22, 2020:
+Added: (i) a Security Agreement;
+Added: and (ii) a Security & Pledge Agreement.
+Added: The payment of amounts due under the April 23 rd Investor Note is secured by the terms of the following agreements entered into by the Company in favor of Discover on April 23, 2021:
+Added: (i) a Security Agreement;
+Added: and (ii) a Security & Pledge Agreement.
+Added: The payment of amounts due under the December 24, 2021 Investor Note is secured by the terms of the following agreements entered into by the Company in favor of Discover on December 24, 2021:
+Added: (i) a Security Agreement;
+Added: and (ii) a Security & Pledge Agreement.
+Added: Each of the above-noted Security Agreements provides Discover a first priority security interest in substantially all of the Company’s assets, and if an event of default occurs under any of the Outstanding Notes Discover can enforce its rights under any or all of the Security Agreements and foreclose on our assets in order to satisfy amounts owed thereunder.
+Added: Pursuant to the above-noted Security & Pledge Agreements, the Company granted Discover a first-priority security interest in the shares of common stock of Viking owned by the Company and the Company’s other assets.
+Added: Promissory Notes in Favor of FK Venture, LLC
+Added: The Company has outstanding unsecured, convertible promissory notes, in the aggregate principal amount of $3.2 million, in favor of FK Venture, LLC.
+Added: The FK Notes bear interest at a rate of 12% per annum, have a maturity date of June 30, 2025, and are convertible into shares of the Company’s common stock at a conversion price of $0.4185 per share.
+Added: Other Agreements with Discover and/or Antilles:
+Added: 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”).
+Added: Throughout 2021 and early 2022, the Company did not satisfy the Filing Requirement and, consequently, on or about March 9, 2022, the preferred stockholders, Discover and Antilles, filed a Verified Complaint against the Company (the “Discover/Antilles Complaint”) as a result of the default by the Company under the CODs.
+Added: A default under the CODs and/or SPA’s is also considered an event of default under each of the Outstanding Notes, and upon an event of default under the Outstanding Notes, Discover may, at its option, declare the principal and any and all interest then accrued thereon, at once due and payable, and exercise any other rights under applicable agreements.
+Added: Discover did not exercise its right to declare the amount owing under the Outstanding 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.
+Added: 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.
+Added: If the Company fails to satisfy future Filing Requirements, it would be considered a default under the CODs and SPA’s, which in turn would constitute an event of default under the Outstanding Notes.
+Added: On October 28, 2022, the Company entered into two agreements (collectively, the “ Agreements ”), one with Discover and the other with Antilles, in relation to an amendment to the fifth amended and restated certificate of designations regarding the Company’s Series C Preferred Stock (the “ 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.
+Added: 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;
+Added: 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.
+Added: November 2022
+Added: 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.
+Added: Discover also absolutely and unconditionally waived and released any and all rights to convert all or any part of any Outstanding Notes previously executed by the Company in favor of Discover into shares of the Company’s common stock and agreed not to convert or attempt to convert any portion of any Outstanding Notes, at any particular price or at all.
+Added: On April 25, 2023, the Company entered into a warrant termination agreement (the “ Warrant Termination Agreements ”), with Antilles Family Office, LLC and Discovery Growth Fund, LLC, respectively (each, an “ Investor ” and collectively, the “ Investors ”), pursuant to which each Investor agreed to cancel and terminate, effective as of April 25, 2023 (the “ Termination ”) all warrants to purchase Camber’s common stock outstanding under (i) that certain Warrant Agreement, dated as of December 30, 2021, by and between the Company and the Investor named therein, and (ii) that certain Warrant Agreement, dated as of December 31, 2021, by and between the Company and the Investor named therein.
+Added: The Warrant Termination Agreements are identical as to their terms.
+Added: The Investors entered into the Warrant Termination Agreements in order to help facilitate implementation of the Company’s business plans and continued trading on the NYSE American LLC, and, in exchange for the Termination, the Company agreed to the release and indemnity as provided in each Warrant Termination Agreement.
+Added: Pursuant to the Warrant Termination Agreement, the Investor also agreed that the Company may make an Early Redemption of any remaining shares of Series C Redeemable Convertible Preferred Stock held by the Investor provided that all Promissory Notes executed by the Company in favor of the Investor or any of its affiliates have been paid in full.
+Added: The term “Early Redemption” has the meaning given to it in the Fifth Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock filed by the Company with the State of Nevada regarding such class of preferred stock.
+Added: February 2024
+Added: On February 15, 2024, the Company entered into an agreement (the “Measuring Metric Floor Agreement”) with the holder of our Series C Preferred Stock pursuant to which, in exchange for the release and indemnity as provided for in the Measuring Metric Floor Agreement, the Company and such holder agreed that (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 promissory notes of the Company in favor of the holder of the Series C Preferred Stock or its affiliates and (ii) such holder rescinded its prior notice to increase the beneficial ownership limitation to 9.99%, such that the limitation is restored to 4.99% effective as of February 22, 2024.
+Added: The Company and such holder also agreed to file an amendment to the COD, which was filed on February 21, 2024, (i) establishing a floor price of $0.15 in connection with determining the Conversion Premium (as defined in the COD) associated with conversions of Series C Preferred Stock, (ii) confirming that the Company may make an early redemption of any outstanding Series C Preferred Stock provided that outstanding promissory notes in favor of the holder of the Series C Preferred Stock or its affiliates are paid in full, and (iii) confirming that no additional conversion shares will be owed to such holder if the Company’s notes in favor of it and its affiliates are paid in full and all then outstanding shares of Series C Preferred Stock have been redeemed.
+Added: Reverse Stock Split and Amendments to Articles regarding Common Shares
+Added: On December 14, 2022, the Board of Directors approved a one-for-fifty (1-for-50) reverse stock split of the Company’s (a) authorized shares of common stock;
+Added: and (b) issued and outstanding shares of common stock (the “Reverse Stock Split”).
+Added: The Reverse Stock Split became effective at 12:01 a.m.
+Added: Central Standard Time on December 21, 2022, and was reflected with the NYSE American and in the marketplace at the open of business on December 21, 2022 (the “Effective Date”).
+Added: As a result of the Reverse Stock Split, each of the holders of the Company’s Common Stock received one (1) new share of Common Stock for every fifty (50) shares such shareholder held immediately prior.
+Added: No fractional shares were issued as a result of the Reverse Stock Split.
+Added: Any fractional shares that would have otherwise resulted from the Reverse Stock Split will be rounded up to the next whole number of shares.
+Added: The Reverse Stock Split decreased the number of authorized shares of common stock from 1,000,000,000 to 20,000,000.
+Added: The Reverse Stock Split also affected the Company’s outstanding stock options, warrants and other exercisable or convertible instruments and resulted in the shares underlying such instruments being reduced and the exercise price being increased proportionately to the Reverse Stock Split ratio.
+Added: All share and per share data have been retroactively restated in the accompanying consolidated financial statements and footnotes for all periods presented to reflect the effects of the Reverse Stock Split as if it had taken place as of the beginning of the earliest period presented.
+Added: On April 26, 2023, the Company held a special meeting of stockholders at which the stockholders approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of Common Stock from 20,000,000 to 500,000,000.
Industry Segments
−Removed: Our operations during the year ended March 31, 2019 were all crude oil and natural gas exploration and production related.
−Removed: For the year ended March 31, 2020, our operations were all crude oil and natural gas exploration and production related, except that from July 8, 2019 to December 31, 2019, we also owned and operated Lineal, which operated as an oil and gas service company and generated oil and gas service revenues.
−Removed: As described above under “Lineal Acquisition and Divestiture“, on December 31, 2019, we divested our entire interest in Lineal.
−Removed: In conjunction with the Lineal Divestiture, all contract revenue (oil and gas service revenue) has been included in “ Loss from Discontinued Operations ” for the year ended March 31, 2020, on the statement of operations.
−Removed: Operations and Oil and Gas Properties
−Removed: We operate and invest in areas that are known to be productive, with a reasonably established production history, in order to decrease geological and exploratory risk.
−Removed: The Company has certain interests in wells producing from the Wolfberry and Cline formations in Glasscock County, Texas.
−Removed: In March 2018, we completed the acquisition of working interests in certain leases, wells and equipment located in the Texas panhandle and a 37.5% interest in one partnership that owned certain leases, wells and equipment in the same fields, for a total purchase price of $250,000, payable in three tranches, from an entity which is controlled by Ian Acrey, who served as the operating manager of our operations through a different entity.
−Removed: The acquisition included 49 non-producing well bores, 5 saltwater disposal wells and the required infrastructure and equipment necessary to support future hydrocarbon production as well as approximately 555 net leasehold acres in Hutchinson County, Texas.
−Removed: As a result of the May 30, 2019 Severance Order from the TRC discussed above, the Company was effectively blocked from selling oil and gas from its 11 Panhandle wells located in Hutchinson County, Texas, and as a result of the PetroGlobe lawsuit discussed below under “Item 3.
−Removed: Legal Proceedings“, a total of approximately 1,000 barrels of oil were held in suspension pending the outcome of the lawsuit.
−Removed: As discussed below under “Item 3.
−Removed: Legal Proceedings“;
−Removed: on January 27, 2020, the Company entered into a Compromise Settlement Agreement (the “ Settlement Agreement ”) with PetroGlobe, Signal Drilling, LLC (“ Signal ”), Petrolia Oil, LLC (“ Petrolia ”), Prairie Gas Company of Oklahoma, LLC (“ PGCO ”), and Canadian River Trading Company, LLC (“ CRTC ”).
−Removed: Pursuant to the Settlement Agreement, the Company agreed to pay PetroGlobe $250,000, of which $100,000 was due upon execution of the Settlement Agreement, which payment has been made, and $150,000 was paid to an escrow account, which payment will be released in connection with the successful transfer of all wells and partnership interests of the Company’s prior wholly-owned subsidiary C E Energy, LLC (“ CE ”) to PetroGlobe, which is anticipated to occur shortly after the filing of this Report.
−Removed: CE operates all of our former producing wells and leases located in Hutchinson County, Texas, which as discussed above are being transferred to PetroGlobe.
−Removed: On September 26, 2018, the transactions contemplated by the Sale Agreement (described above under “Mid-Continent Acquisition and Divestiture“) closed and N&B Energy assumed all of the IBC Obligations (pursuant to the Assumption Agreement described above) and paid the Company $100 in cash, and the Company transferred ownership of the Disposed Assets (defined above, constituting a substantial portion of its assets) to N&B Energy.
−Removed: Notwithstanding the sale of the Disposed Assets which included approximately 18,000 net acres, the Company retained its assets in Glasscock County and Hutchinson Counties, Texas and also retained a 12.5% production payment (effective until a total of $2.5 million has been received – of which none has been received as of the filing date) and a 3% overriding royalty interest, in its then existing Okfuskee County, Oklahoma assets;
−Removed: and retained an overriding royalty interest on certain other undeveloped leasehold interests.
−Removed: As of the date of this filing, we operate exclusively in the onshore United States oil and natural gas industry.
−Removed: Our crude oil and natural gas production sales are to gatherers and marketers with national reputations.
−Removed: Our sales are made on a month-to-month basis, and title transfer occurs when the oil is loaded onto the purchaser’s truck.
−Removed: Crude oil prices realized from production sales are indexed to published posted refinery prices, and to published crude indexes with adjustments on a contract basis.
−Removed: We generally sell a significant portion of our oil and gas production to a relatively small number of customers.
−Removed: For the year ended March 31, 2020, our consolidated revenues were from the sale of oil, gas and natural gas liquids under marketing contracts primarily with Apache Corporation.
−Removed: We are not dependent upon any one purchaser and have alternative purchasers available at competitive market prices if there is disruption in services or other events that cause us to search for other ways to sell our production.
−Removed: During the year ended March 31, 2020, one customer accounted for 92% of our total revenues and during the year ended March 31, 2019, three customers accounted for 84% of our total revenues.
−Removed: We do not believe the loss of any customer will have a material effect on the Company because alternative customers are readily available.
−Removed: We are in direct competition for properties with numerous oil and natural gas companies and partnerships exploring various areas of Texas, Oklahoma and elsewhere.
−Removed: Many competitors are large, well-known oil and natural gas and/or energy companies, although no single entity dominates the industry.
−Removed: Many of our competitors possess greater financial and personnel resources, enabling them to identify and acquire more economically desirable energy producing properties and drilling prospects than us.
−Removed: Additionally, there is competition from other fuel choices to supply the energy needs of consumers and industry.
−Removed: Our operations are subject to various types of regulation at the federal, state and local levels.
−Removed: These regulations include requiring permits for the drilling of wells;
−Removed: maintaining hazard prevention, health and safety plans;
−Removed: submitting notification and receiving permits related to the presence, use and release of certain materials incidental to oil and natural gas operations;
−Removed: and regulating the location of wells, the method of drilling and casing wells, the use, transportation, storage and disposal of fluids and materials used in connection with drilling and production activities, surface plugging and abandonment of wells and the transporting of production.
−Removed: Our operations are also subject to various conservation matters, including the number of wells which may be drilled in a unit and the unitization or pooling of oil and natural gas properties.
−Removed: In this regard, some states allow the forced pooling or integration of tracts to facilitate exploration, while other states rely on voluntary pooling of lands and leases, which may make it more difficult to develop oil and gas properties.
−Removed: In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally limiting the venting or flaring of natural gas, and impose certain requirements regarding the ratable purchase of production.
−Removed: The effect of these regulations is to possibly limit the amounts of oil and natural gas we can produce from our wells and to limit the number of wells or the locations at which we can drill.
−Removed: In the United States, legislation affecting the oil and natural gas industry has been pervasive and is under constant review for amendment or expansion.
−Removed: Pursuant to such legislation, numerous federal, state and local departments and agencies issue recommended new and extensive rules and regulations binding on the oil and natural gas industry, some of which carry substantial penalties for failure to comply.
−Removed: These laws and regulations have a significant impact on oil and natural gas drilling, natural gas processing plants and production activities, increasing the cost of doing business and, consequently, affect profitability.
−Removed: Insomuch as new legislation affecting the oil and natural gas industry is common-place and existing laws and regulations are frequently amended or reinterpreted, we may be unable to predict the future cost or impact of complying with these laws and regulations.
−Removed: We consider the cost of environmental protection a necessary and manageable part of our business.
−Removed: We have historically been able to plan for and comply with new environmental initiatives without materially altering our operating strategies.
−Removed: Insurance Matters
−Removed: We maintain insurance coverage which we believe is reasonable per the standards of the oil and natural gas industry.
−Removed: It is common for companies in these industries to not insure fully against all risks associated with their operations either because such insurance is unavailable or because premium costs are considered prohibitive.
−Removed: A material loss not fully covered by insurance could have an adverse effect on our financial position, results of operations or cash flows.
−Removed: We maintain insurance at industry customary levels to limit our financial exposure in the event of a substantial environmental claim resulting from sudden, unanticipated and accidental discharges of certain prohibited substances into the environment.
−Removed: Such insurance might not cover the complete amount of such a claim and would not cover fines or penalties for a violation of an environmental law.
−Removed: Other Matters
−Removed: Environmental .
−Removed: Our exploration, development, and production of oil and natural gas, including our operation of saltwater injection and disposal wells, are subject to various federal, state and local environmental laws and regulations.
−Removed: Such laws and regulations can increase the costs of planning, designing, installing and operating oil, natural gas, and disposal wells.
−Removed: Our domestic activities are subject to a variety of environmental laws and regulations, including but not limited to, the Oil Pollution Act of 1990 (“ OPA ”), the Clean Water Act (“ CWA ”), the Comprehensive Environmental Response, Compensation and Liability Act (“ CERCLA ”), the Resource Conservation and Recovery Act (“ RCRA ”), the Clean Air Act (“ CAA ”), and the Safe Drinking Water Act (“ SDWA ”), as well as state regulations promulgated under comparable state statutes.
−Removed: We are also subject to regulations governing the handling, transportation, storage, and disposal of naturally occurring radioactive materials that are found in our oil and gas operations.
−Removed: Civil and criminal fines and penalties may be imposed for non-compliance with these environmental laws and regulations.
−Removed: Additionally, these laws and regulations require the acquisition of permits or other governmental authorizations before undertaking certain activities, limit or prohibit other activities because of protected areas or species, and impose substantial liabilities for cleanup of pollution.
−Removed: Under the OPA, a release of oil into water or other areas designated by the statute could result in us being held responsible for the costs of remediating such a release, certain OPA specified damages, and natural resource damages.
−Removed: The extent of that liability could be extensive, as set forth in the statute, depending on the nature of the release.
−Removed: A release of oil in harmful quantities or other materials into water or other specified areas could also result in us being held responsible under the CWA for the costs of remediation, and civil and criminal fines and penalties.
−Removed: CERCLA and comparable state statutes, also known as “ Superfund ” laws, can impose joint and several and retroactive liability, without regard to fault or the legality of the original conduct, on certain classes of persons for the release of a “ hazardous substance ” into the environment.
−Removed: In practice, cleanup costs are usually allocated among various responsible parties.
−Removed: Potentially liable parties include site owners or operators, past owners or operators under certain conditions, and entities that arrange for the disposal or treatment of, or transport hazardous substances found at the site.
−Removed: Although CERCLA, as amended, currently exempts petroleum, including but not limited to, crude oil, natural gas and natural gas liquids, from the definition of hazardous substance, our operations may involve the use or handling of other materials that may be classified as hazardous substances under CERCLA.
−Removed: Furthermore, the exemption may not be preserved in future amendments of the act, if any.
−Removed: RCRA and comparable state and local requirements impose standards for the management, including treatment, storage, and disposal, of both hazardous and non-hazardous solid wastes.
−Removed: We generate hazardous and non-hazardous solid waste in connection with our routine operations.
−Removed: From time to time, proposals have been made that would reclassify certain oil and natural gas wastes, including wastes generated during drilling, production and pipeline operations, as “ hazardous wastes ” under RCRA, which would make such solid wastes subject to much more stringent handling, transportation, storage, disposal, and clean-up requirements.
−Removed: This development could have a significant impact on our operating costs.
−Removed: While state laws vary on this issue, state initiatives to further regulate oil and natural gas wastes could have a similar impact.
−Removed: Because oil and natural gas exploration and production, and possibly other activities, have been conducted at some of our properties by previous owners and operators, materials from these operations remain on some of the properties and in some instances, require remediation.
−Removed: In addition, in certain instances, we have agreed to indemnify sellers of producing properties from which we have acquired reserves against certain liabilities for environmental claims associated with such properties.
−Removed: While we do not believe that costs to be incurred by us for compliance and remediating previously or currently owned or operated properties will be material, there can be no guarantee that such costs will not result in material expenditures.
−Removed: Additionally, in the course of our routine oil and natural gas operations, surface spills and leaks, including casing leaks, of oil or other materials occur, and we incur costs for waste handling and environmental compliance.
−Removed: Moreover, we are able to control directly the operations of only those wells for which we act as the operator.
−Removed: Management believes that we are in substantial compliance with applicable environmental laws and regulations.
−Removed: In response to liabilities associated with these activities, accruals are established when reasonable estimates are possible.
−Removed: Such accruals would primarily include estimated costs associated with remediation.
−Removed: We have used discounting to present value in determining our accrued liabilities for environmental remediation or well closure, but no material claims for possible recovery from third party insurers or other parties related to environmental costs have been recognized in our financial statements.
−Removed: We adjust the accruals when new remediation responsibilities are discovered and probable costs become estimable, or when current remediation estimates must be adjusted to reflect new information.
−Removed: We do not anticipate being required in the near future to expend amounts that are material in relation to our total capital expenditures program by reason of environmental laws and regulations, but inasmuch as such laws and regulations are frequently changed, we are unable to predict the ultimate cost of compliance.
−Removed: More stringent laws and regulations protecting the environment may be adopted in the future and we may incur material expenses in connection with environmental laws and regulations in the future.
−Removed: Occupational Health and Safety.
−Removed: We are also subject to laws and regulations concerning occupational safety and health.
−Removed: Due to the continued changes in these laws and regulations, and the judicial construction of many of them, we are unable to predict with any reasonable degree of certainty our future costs of complying with these laws and regulations.
−Removed: We consider the cost of safety and health compliance a necessary and manageable part of our business.
−Removed: We have been able to plan for and comply with new initiatives without materially altering our operating strategies.
−Removed: Hydraulic Fracturing.
−Removed: Vast quantities of natural gas, natural gas liquids and oil deposits exist in deep shale and other unconventional formations.
−Removed: It is customary in our industry to recover these resources through the use of hydraulic fracturing, combined with horizontal drilling.
−Removed: Hydraulic fracturing is the process of creating or expanding cracks, or fractures, in deep underground formations using water, sand and other additives pumped under high pressure into the formation.
−Removed: As with the rest of the industry, we use hydraulic fracturing as a means to increase the productivity of almost every well that we drill and complete.
−Removed: These formations are generally geologically separated and isolated from fresh ground water supplies by thousands of feet of impermeable rock layers.
−Removed: We follow applicable legal requirements for groundwater protection in our operations that are subject to supervision by state and federal regulators (including the Bureau of Land Management (“ BLM ”) on federal acreage).
−Removed: Furthermore, our well construction practices require the installation of multiple layers of protective steel casing surrounded by cement that are specifically designed and installed to protect freshwater aquifers by preventing the migration of fracturing fluids into aquifers.
−Removed: Injection rates and pressures are required to be monitored in real time at the surface during our hydraulic fracturing operations.
−Removed: Pressure is required to be monitored on both the injection string and the immediate annulus to the injection string.
−Removed: Hydraulic fracturing operations are required to be shut down if an abrupt change occurs to the injection pressure or annular pressure.
−Removed: These aspects of hydraulic fracturing operations are designed to prevent a pathway for the fracturing fluid to contact any aquifers during the hydraulic fracturing operations.
−Removed: Hydraulic fracture stimulation requires the use of water.
−Removed: We use fresh water or recycled produced water in our fracturing treatments in accordance with applicable water management plans and laws.
−Removed: Several proposals have previously been presented to the U.S.
−Removed: Congress that, if implemented, would either prohibit or restrict the practice of hydraulic fracturing or subject the process to regulation under the Safe Drinking Water Act.
−Removed: Several states have previously considered, or are currently considering, legislation to regulate hydraulic fracturing practices that could impose more stringent permitting, transparency, and well construction requirements on hydraulic-fracturing operations or otherwise seek to ban fracturing activities altogether.
−Removed: Hydraulic fracturing of wells and subsurface water disposal are also under public and governmental scrutiny due to potential environmental and physical impacts, including possible contamination of groundwater and drinking water and possible links to earthquakes.
−Removed: In addition, some municipalities have significantly limited or prohibited drilling activities and/or hydraulic fracturing, or are considering doing so.
−Removed: Restrictions on hydraulic fracturing could make it prohibitive to conduct our operations, and also reduce the amount of oil, natural gas liquids and natural gas that we are ultimately able to produce in commercial quantities from our properties.
−Removed: The Endangered Species Act.
−Removed: The Endangered Species Act (“ ESA ”) restricts activities that may affect areas that contain endangered or threatened species or their habitats.
−Removed: While some of our assets and lease acreage may be located in areas that are designated as habitats for endangered or threatened species, we believe that we are in substantial compliance with the ESA.
−Removed: However, the designation of previously unidentified endangered or threatened species in areas where we intend to conduct construction activity could materially limit or delay our plans.
−Removed: Global Warming and Climate Change.
−Removed: Various state governments and regional organizations are considering enacting new legislation and promulgating new regulations governing or restricting the emission of greenhouse gases from stationary sources such as our equipment and operations.
−Removed: Legislative and regulatory proposals for restricting greenhouse gas emissions or otherwise addressing climate change could require us to incur additional operating costs and could adversely affect demand for the natural gas and oil that we sell.
−Removed: The potential increase in our operating costs could include new or increased costs to obtain permits, operate and maintain our equipment and facilities, install new emission controls on our equipment and facilities, acquire allowances to authorize our greenhouse gas emissions, pay taxes related to our greenhouse gas emissions and administer and manage a greenhouse gas emissions program.
−Removed: Our operations, as is the case in the petroleum industry generally, are significantly affected by federal tax laws.
−Removed: Federal, as well as state, tax laws have many provisions applicable to corporations which could affect our future tax liabilities.
−Removed: Commitments and Contingencies.
−Removed: We are liable for future restoration and abandonment costs associated with our oil and gas properties.
−Removed: These costs include future site restoration, post closure and other environmental exit costs.
−Removed: The costs of future restoration and well abandonment have not been determined in detail.
−Removed: State regulations require operators to post bonds that assure that well sites will be properly plugged and abandoned.
−Removed: We currently operate only in Texas, which requires a security bond based on the number of wells we operate.
−Removed: Management views this as a necessary requirement for operations and does not believe that these costs will have a material adverse effect on our financial position as a result of this requirement.
+Added: The Company reports its operations in two industry segments:
+Added: Oil & Gas and Power.
+Added: The Company has 2 full-time employees.
+Added: The Company continues to retain outside consultants as needed to support the operation of the business, including the Chief Executive Officer and Chief Financial Officer.
+Added: Through Simson-Maxwell, the Company has approximately 127 employees in 7 locations in Canada.
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.