What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-21 · 58 added, 66 removed, 246 unchanged (34% of the section changed)

38 unchanged sentences

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.

On April 1, 2025, Viking entered into a Share Subscription Agreement (the “SSA”) with T&T Power Group Inc.

(“T&T”), Remora EQ LP (“Remora”), Simmax Corp.

(“Simmax”), and Simson-Maxwell.

The SSA relates to a restructuring of the ownership of Simson-Maxwell that resulted in Camber ceasing to have a controlling interest in Simson-Maxwell.

Under the SSA, T&T agreed to (i) subscribe for 952 Class A Common Shares of Simson-Maxwell (the “Subscription Shares”) for an aggregate subscription price of approximately CAD$2.28 million;

(ii) purchase 903 Class A Common Shares from Remora (the “Remora Shares”) for an agreed purchase price;

and (iii) purchase 681 Class A Common Shares from Simmax (the “Simmax Shares”) for an agreed purchase price.

T&T also agreed to provide up to CAD $3.0 million in additional working capital to Simson-Maxwell on closing or at such time as is reasonably required to meet the cash requirements of Simson-Maxwell, and to repay on or within a reasonable period following the closing amounts owing under Simson-Maxwell’s then outstanding senior secured credit facilities.

T&T acquired the Subscription Shares by paying the subscription price in cash.

T&T acquired the Remora Shares by paying approximately 3.5% of the purchase price in cash and issuing a promissory note for the remaining balance, maturing on December 1, 2025.

T&T acquired the Simmax Shares by issuing a promissory note to Simmax, also maturing on December 1, 2025.

Following the closing of the transactions described above (collectively, the “Simson Share Transactions”), T&T and Viking are the only remaining shareholders of Simson-Maxwell.

T&T owns 51% of Simson-Maxwell’s issued and outstanding Class A Common Shares, and Viking owns the remaining 49%.

Viking did not sell or purchase any shares in connection with the Simson Share Transactions;

however, Viking’s ownership decreased from approximately 60.5% to 49%.

As a result of the reduction in Viking’s ownership interest and ceasing to have control over Simson-Maxwell, Camber will no longer consolidate Simson-Maxwell’s financial results in its consolidated financial statements, beginning April 1, 2025.

The Company will instead account for its investment in Simson-Maxwell under the equity method of accounting.

Viking also entered into a Unanimous Shareholders Agreement (the “USA”) on April 1, 2025 with T&T and Simson-Maxwell.

The USA governs the ownership and management of Simson-Maxwell and provides that T&T is entitled to nominate two members to Simson-Maxwell’s board of directors, and Viking is entitled to nominate one member.

The USA also contains a call and a put option.

Under the call option, T&T has the option, exercisable at any time within the first 36 months, to purchase Viking’s 49% ownership interest for CAD 5.75 million (approximately $4.2 million).

Under the put option, Viking has the option, exercisable at any time after 36 months, to require T&T to purchase Viking’s 49% ownership interest for CAD 7.75 million (approximately $5.7 million).

Clean Energy and Carbon-Capture System:

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Electric Transmission Line Ground Fault Prevention Methods Using Multi-Parameter High Sensitivity Monitoring

Oil and Gas Properties:

As of March 31, 2025, the Company did not hold any interest in producing oil and gas properties.

Divestitures in 2024:

On February 1, 2024, the Company sold its working interest in oil and gas properties producing from the Cline and Wolfberry formations in Texas for gross proceeds of $205,000.

The Company recorded a net loss on this transaction, as follows:

Proceeds from sale (net of transaction costs)

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

ARO recovered

Loss on disposal

Merger with Viking Energy Group, Inc.

On August 1, 2023, Camber Energy, Inc.

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

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.

On August 1, 2023, Camber completed the previously announced merger (the “Merger”) with Viking pursuant to the terms and conditions of the Agreement and Plan of Merger between Camber and Viking dated February 15, 2021, which was amended on April 18, 2023 (as amended, the “Merger Agreement”), with Viking surviving the Merger as a wholly-owned subsidiary of Camber.

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

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

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.

Going Concern Qualification

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

The Company generated a net loss of $(3,191,653) for the three months ended March 31, 2025, as compared to a net loss of $(26,618,215) for the three months ended March 31, 2024.

The loss for the three months ended March 31, 2025, was comprised of, among other things, certain non-cash items, including:

(i) amortization of debt discount of $793,381;

(ii) change in fair value of derivative liability of $266,891;

and (iii) depreciation, depletion and amortization of $136,847.

As of March 31, 2025, the Company had stockholders’ deficit of $(40,927,038), long-term debt, net of current, of $41,276,474 and a working capital deficiency of $(19,821,650).

The largest components of current liabilities creating this working capital deficiency are accrued interest on notes payable to Discover Growth Fund, LLC (“Discover”) of $6,953,336, drawings by Simson-Maxwell against its bank credit facility of $3,782,332, an advance from FK Venture, LLC of $1,200,000 and amounts due to AGD Advisory Group, Inc., a related party, of $1,110,000.

The Company generated net income of $1,182,837 for the six months ended June 30, 2025, as compared to a net loss of $(30,097,506) for the six months ended June 30, 2024.

As of June 30, 2025, the Company had stockholders’ deficit of $(36,859,363), long-term debt, net of current, of $43,277,908 and a working capital deficiency of $(13,142,496).

The largest components of current liabilities creating this working capital deficiency are accrued interest on notes payable to Discover Growth Fund, LLC (“Discover”) of $7,332,673, undistributed revenues and royalties of $1,637,251 and amounts due to AGD Advisory Group, Inc., a related party, of $1,245,000.

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

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RESULTS OF CONTINUING OPERATIONS

The following discussion of the financial condition and results of operation of the Company for the three months ended March 31, 2025 and 2024, should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 12, 2025.

The following discussion of the financial condition and results of operation of the Company for the three and six months ended June 30, 2025 and 2024, should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 12, 2025.

Liquidity and Capital Resources

Working Capital:

Three Months Ended March 31,

Six Months Ended

Current assets

3 unchanged sentences

$ (15,906,241 )

Three Months Ended March 31,

Net Cash Provided by (Used in) Operating Activities

Six Months Ended

Net Cash Provided Used in Operating Activities

$ (1,989,306 )

Net Cash Provided by (Used in) Investing Activities

Net Cash Provided by (Used in) Financing Activities

Increase (decrease) in Cash during the Period

$ (1,409,813 )

Net Cash Provided by Investing Activities

Net Cash Provided by Financing Activities

Decrease in Cash during the Period

Cash and Cash Equivalents, beginning of period

Cash and Cash Equivalents, end of Period

Net cash provided by (used in) in operating activities was $241,960 during the three months ended March 31, 2025, as compared to $(1,185,014) in the comparable period in 2024.

This increase is primarily the result of a higher net working capital deficit, plus a reduced cash operating loss.

Net cash flows from investing activities decreased to $(16,136) during the three months ended March 31, 2025, as compared to $162,596 in the comparable period in 2024.

The increase is due primarily to proceeds of $205,000 from the sale of oil and gas properties in 2024 and lower investment in fixed asset additions.

Net cash flows from financing activities decreased to $(171,548) during the three months ended March 31, 2025, as compared to $524,063 in the comparable period in 2024.

This decrease is mainly due to a reduction in advances on the bank credit facility as compared to the prior year.

Three months ended March 31, 2025, compared to the three months ended March 31, 2024

The Company had gross revenues of $6,229,335 for the three months ended March 31, 2025, as compared to $6,690,880 for the three months ended March 31, 2024, a decrease of $461,545 or 7%.

Power generation units and parts, and service and repairs, both decreased as compared to the prior period.

The Company’s operating expenses decreased by $939,334 to $8,010,107 for the three-month period ended March 31, 2025, from $8,949,441 in the corresponding prior year three-month period.

Cost of goods sold for the three months ended March 31, 2025 were $4,648,824, as compared to $4,572,757 for the three-month period ended March 31, 2024 due to lower margins.

General and administrative expenses decreased by $595,565 to $3,224,436 compared to $3,820,001 in the corresponding prior period.

Depreciation, depletion and amortization (“DD&A”) expense decreased to $136,847 as compared to $228,799 in the prior period.

Net cash used in in operating activities was $(1,989,306) during the six months ended June 30, 2025, as compared to $(1,409,813) in the comparable period in 2024.

The decrease of $(579,493) was due to a decrease of $(1,573,695) in cash flows from changes in operating assets and liabilities, partially offset by a decrease of $994,202 in cash operating losses.

Net cash flows from investing activities decreased to $21,296 during the six months ended June 30, 2025, as compared to $158,984 in the comparable period in 2024.

The decrease is due primarily to proceeds of $205,000 from the sale of oil and gas properties in 2024.

Net cash flows from financing activities increased to $1,927,744 during the six months ended June 30, 2025, as compared to $952,802 in the comparable period in 2024.

This increase is mainly due to a issuance of long-term debt and advances received from a related party, partially offset by a reduction in advances from bank credit facility.

as compared to the prior year.

Three months ended June 30, 2025, compared to the three months ended June 30, 2024

The Company had no revenues for the three months ended June 30, 2025, as compared to $9,507,150 for the three months ended June 30, 2024 due to the change in the Company’s method of accounting for Simson-Maxwell on April 1, 2025.

The Company’s operating expenses decreased to $1,300,837 for the three-month period ended June 30, 2025, from $11,694,498 in the corresponding prior year three-month period primarily due to the change in accounting for Simson-Maxwell and an overall reduction in general and administrative expenses at Camber.

Loss from Operations

The Company generated a loss from operations for the three months ended March 31, 2025 of $(1,780,772), compared to $(2,258,561) for the three months ended March 31, 2024.

The Company generated a loss from operations for the three months ended June 30, 2025 of $(1,300,837), compared to $(2,187,348) for the three months ended June 30, 2024.

Other Income (Expense)

The Company had other expense, net, of $(1,410,881) for the three months ended March 31, 2025, as compared to other expense, net of $(24,359,654) for the three months ended March 31, 2024.

The lower expense was due primarily to a decrease of $21,850,116 in expense related to the change in the fair value of derivatives as compared to the prior year.

The Company had a net loss of $(3,191,653) during the three-month period ended March 31, 2025, compared with a net loss of $(26,618,215) for the three-month period ended March 31, 2024.

The Company had other income, net, of $5,675,327 for the three months ended June 30, 2025, as compared to other expense, net of $(1,291,943) for the three months ended June 30, 2024.

The increase was due primarily to a gain of $6,169,824 recognized on the change in method of accounting for Simson-Maxwell.

The Company had net income of $4,374,490 during the three-month period ended June 30, 2025, compared with a net loss of $(3,479,291) for the three-month period ended June 30, 2024.

Six months ended June 30, 2025, compared to the six months ended June 30, 2024

The Company had gross revenues of $6,229,335 for the six months ended June 30, 2025, as compared to $16,198,030 for the six months ended June 30, 2024.

The decrease compared to the prior year is due primarily to the change in the Company’s method of accounting for Simson-Maxwell on April 1, 2025.

The Company’s operating expenses decreased to $9,310,944 for the six-month period ended June 30, 2025, from $20,643,939 in the corresponding prior year six-month period primarily due to the change in accounting for Simson-Maxwell on April 1, 2025 and an overall reduction in general and administrative expenses at Camber.

Loss from Operations

The Company generated a loss from operations for the six months ended June 30, 2025, of $(3,081,609), compared to $(4,445,909) for the six months ended June 30, 2024.

Other Income (Expense)

The Company had other income, net, of $4,264,446 for the six months ended June 30, 2025, as compared to other expense of $(25,651,597) for the six months ended June 30, 2024.

The increase was due primarily to the net of a gain of $6,169,824 recognized on the change in method of accounting for Simson-Maxwell in the six-month period ended June 30, 2025 and the expense recorded in the six-month period ended June 30, 2024 related to the change in fair value of derivative liability of $21,242,198

The Company had net income of $1,182,837 during the six-month period ended June 30, 2025, compared with a net loss of $(30,097,506) for the six-month period ended June 30, 2024.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

17 unchanged sentences

The Company consolidates the financial results of a VIE when it is determined that the Company is the primary beneficiary of the VIE.

Revenue Recognition

Power Generation Revenues

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

Sale of Power Generation Units

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

Commissioning of the unit is considered to be a separate performance obligation for which revenue is recognized when the commissioning is completed.

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

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

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

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

Parts Revenue

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

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

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

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

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

Service and Repairs

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

Each repair is considered a performance obligation.

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

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

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

Intangible Assets

28 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis