Camber Energy(CEI) - 2023 Q3 - Quarterly Report

Revenue and Financial Performance - Revenue from power generation units and parts increased to $6,742,182 for Q3 2023, up from $3,278,966 in Q3 2022, representing a 106% growth[30] - Total revenue for the nine months ended September 30, 2023, was $24,407,583, compared to $18,666,268 in the same period of 2022, a 31% increase[30] - Revenue from power generation units and parts for the nine months ended September 30, 2023, was $14,502,388, compared to $6,913,093 for the same period in 2022[30] - Service and repairs revenue for the nine months ended September 30, 2023, was $9,199,965, compared to $8,086,449 for the same period in 2022[30] - Oil and gas sales revenue for the nine months ended September 30, 2023, was $705,230, compared to $3,666,726 for the same period in 2022[30] - Simson-Maxwell's revenue from power generation units for the three months ended September 30, 2023, was $4,849,415, a significant increase from $2,082,218 in the same period in 2022[83] - Simson-Maxwell's total revenue from units and parts for the nine months ended September 30, 2023, was $14,502,388, compared to $6,913,093 in the same period in 2022[83] - Simson-Maxwell's service and repairs revenue for the nine months ended September 30, 2023, was $9,199,965, up from $8,086,449 in the same period in 2022[83] - The company's total revenue for the nine months ended September 30, 2023, was $23,702,353, compared to $14,999,542 in the same period in 2022[83] - Oil revenues for September 2023 were $213,609, a decrease from $337,665 in September 2022, while total oil revenues for 2023 reached $604,870 compared to $1,956,461 in 2022[107] - Natural gas and natural gas liquids revenues for September 2023 were $14,615, a significant improvement from a loss of $235,479 in September 2022, with total revenues for 2023 at $978,971[107] - Well operations revenues for September 2023 were $5,600, down from $15,668 in September 2022, but total revenues for 2023 increased to $731,294[107] - Total power generation revenues for September 2023 were $233,824, up from $117,854 in September 2022, with total revenues for 2023 reaching $3,666,726[107] - The Company's total revenue for the nine months ended September 30, 2023 was $18,666,268, with $14,999,542 from the Power Generation segment and $3,666,726 from the Oil and Gas segment[168] Operating Expenses and Costs - Total operating expenses for Q3 2023 were $10,131,070, compared to $6,160,706 in Q3 2022, a 64% increase[30] - Cost of goods sold for the nine months ended September 30, 2023, was $16,256,686, up from $9,871,239 in the same period of 2022, a 65% increase[30] - General and administrative expenses for the nine months ended September 30, 2023, were $10,064,707, compared to $11,208,417 in the same period of 2022, a 10% decrease[30] - Operating expenses for the nine months ended September 30, 2023, were $24,407,583, compared to $18,666,268 for the same period in 2022[30] - Lease operating costs for the nine months ended September 30, 2023, were $534,123, compared to $1,429,847 for the same period in 2022[30] - Total operating expenses for the nine months ended September 30, 2023, were $27,621,176, compared to $25,558,367 for the same period in 2022[43] - The Company's total operating expenses for the nine months ended September 30, 2023 were $25,558,367, resulting in a loss from operations of $6,892,099[168] Net Loss and Comprehensive Loss - Net loss for the nine months ended September 30, 2023, was $25,272,428, compared to a net loss of $25,206,073 in the same period of 2022[32] - The Merger resulted in a net loss of $22,364,088 for the three months ended September 30, 2023[43] - Total comprehensive loss for the three months ended September 30, 2023, was $22,352,701[43] - The company recorded a net loss of $25,272,428 for the nine months ended September 30, 2023, compared to a net loss of $14,695,711 for the same period in 2022[52] - Net loss for the period was $(25,272,428)[32] - Net loss for the nine months ended September 30, 2023, was $25,272,428, compared to $14,695,711 for the same period in 2022[43] - The company reported a loss from operations of $3,213,593 for the period, with total operating expenses of $27,621,176[141] Cash Flow and Financing Activities - Net cash provided by financing activities for the nine months ended September 30, 2023, was $3,012,047, compared to a net cash used of $2,760,347 in the same period of 2022[32] - Cash and cash equivalents at the end of Q3 2023 were $1,432,599, down from $4,902,157 at the end of Q3 2022[32] - Net cash provided by financing activities was $3,012,047, compared to a net cash used in financing activities of $(2,760,347) in the previous period[32] - Cash, end of period decreased to $1,432,599 from $4,902,157 in the previous period[32] - Issuance of shares on conversion of debt amounted to $3,832,273[32] - Net cash used in operating activities for the nine months ended September 30, 2023, was $4,961,874, compared to $2,108,542 for the same period in 2022[43] - Cash paid for interest was $421,754[32] Stockholders' Equity and Debt - Total stockholders' equity as of September 30, 2023, was $29,189,192, compared to $15,365,315 as of December 31, 2022[32] - The company issued $3,832,273 worth of shares on conversion of debt during the nine months ended September 30, 2023[32] - As of September 30, 2023, the company had stockholders' equity of $29,189,192 and long-term debt of $38,849,855[52] - The company's working capital deficiency as of September 30, 2023, was $9,451,778, primarily due to Simson-Maxwell's bank credit facility drawings of $4,324,791[52] - The company's long-term debt includes a $26,315,789 note payable to Discover Growth Fund, with an interest rate of 3.25%[124] - The total long-term debt, net of current portion and debt discount, was $38,849,855 as of September 30, 2023[102] - Principal maturities of long-term debt for 2027 amount to $46,818,858, with a net value of $36,292,978 after unamortized discount[102] Mergers and Acquisitions - The Merger was completed on August 1, 2023, with Viking surviving as a wholly owned subsidiary of Camber[45] - Camber issued approximately 49,290,152 shares of Camber Common Stock, representing 59.99% of the outstanding shares post-Merger[35] - Camber reserved approximately 88,647,137 additional shares for potential conversions and exercises related to preferred stock and convertible notes[35] - The Merger is treated as a reverse acquisition, with Viking as the acquirer, and consolidated financial statements reflect Viking's results up to the Merger date and combined results from August 1, 2023, to September 30, 2023[175] - Viking acquired 60.5% of Simson-Maxwell Ltd. for $7,958,159 in cash on August 6, 2021[48] - Viking acquired a 51% ownership interest in Viking Ozone, Viking Sentinel, and Viking Protection in early 2022[53] - Viking acquired 51% of Viking Ozone for 8,333,333 shares of common stock, with a fair value of approximately $2,000,000[118] - Viking acquired 51% of Viking Sentinel for 416,667 shares of common stock, with a total consideration of $233,334[118] - The total consideration for the acquisition of Viking Sentinel was $5,373,223, including $4,433,334 in stock and $939,889 in contingent consideration[119] - Camber Energy completed the merger with Viking Energy Group, Inc. on August 1, 2023, with Viking surviving as a wholly owned subsidiary[45] - Camber Energy holds a majority interest in entities with intellectual property rights to proprietary Medical and Bio-Hazard Waste Treatment systems and Electric Transmission and Distribution Open Conductor Detection Systems[47] Goodwill and Intangible Assets - Goodwill impairment for the nine months ended September 30, 2023, amounted to $14,486,745[43] - The company's goodwill impairment for the nine months ended September 30, 2023, was $14,486,745[52] - The company's intangible assets related to the ESG Clean Energy license and Simson-Maxwell customer relationships are being amortized over 16 and 10 years, respectively[60] - The ESG Clean Energy License intangible asset was valued at $5,000,000 as of September 30, 2023, with accumulated amortization of $653,755[94] - The company paid $500,000 and issued 6,942,691 shares of common stock to ESG as part of the royalty payments for the ESG Clean Energy License[92] - The company's intangible assets include customer relationships and brand from Simson-Maxwell, though specific values were not disclosed[94] - The company recognized amortization expense of $230,886 for the nine months ended September 30, 2023, with estimated future amortization expense of $304,465 per year for the next five years[23] - The company allocated $1,677,453 to Customer Relationships and $2,230,673 to the Simson-Maxwell Brand as part of the purchase price of Simson-Maxwell[23] Derivative Liabilities and Stock Issuance - The company's derivative liabilities for Series C Preferred Stock and Convertible Debt resulted in total losses of $5,803,791 for the nine months ended September 30, 2023[55] - The company recorded a derivative liability of $3,319,210 as of September 30, 2023[127] - The Series C Preferred Stock has a beneficial ownership limitation preventing any holder from converting into common stock if it would result in owning more than 9.99% of the company's outstanding common stock[132] - The company issued a total of 93,876,128 shares of common stock during the nine months ended September 30, 2023, including 8,525,782 shares from the conversion of Series C Preferred Stock and 19,251,650 true-up shares related to prior conversions of Series C Preferred Stock[129] - The Series C Preferred Stock contains an embedded derivative liability related to the Conversion Premium and potential True-Up shares, with fair value estimated using a binomial pricing model[184] - The fair value of the Series C Preferred Stock derivative liability is estimated using a binomial pricing model, considering the remaining Measurement Period, share price, and historical volatility of the company's common stock[151] - As of September 30, 2023, the company estimates that 6,701,867 shares of common stock would be required to satisfy the conversion of 30 outstanding shares of Series C Preferred Stock, based on an estimated low VWAP[159] - The company could be required to issue an additional 27,913,399 true-up shares as of September 30, 2023, due to the extended Measurement Period and declining stock price following prior conversions of 240 shares of Series C Preferred Stock[159] - The Series C Preferred Stock holders are entitled to cumulative dividends of 24.95% per annum, adjustable up to 34.95% if a Trigger Event occurs, with seven years of dividends due upon redemption, conversion, or maturity[155] - The Series G Preferred Stock, created on December 30, 2021, has a face value of $10,000 per share and accrues cumulative dividends at a rate of 10.0% per annum, payable upon redemption, conversion, or as declared by the board of directors[159] - The Series G Preferred Stock ranks senior to the company's common stock but junior to the Series C Preferred Stock and all existing and future indebtedness of the company[159] - The company issued 28,092 shares of new Series A Preferred Stock on August 1, 2023, in exchange for 28,092 outstanding shares of old Series C Preferred Stock, with each share convertible into 890 shares of Camber Common Stock[154] - The Company issued 475 shares of new Series H Preferred Stock in exchange for 475 outstanding shares of old Series E Preferred Stock, with each share having a face value of $10,000[161] - The Company redeemed 5,272 shares of Series G Preferred Stock in 2022, reducing the outstanding shares from 10,544 to 5,272[160] Legal and Regulatory Matters - The company faced a Class Action Complaint related to a short report, which was dismissed with prejudice on October 25, 2023[16] - A Shareholder Derivative Complaint remains pending, with a Special Litigation Committee formed to investigate allegations, and the outcome remains uncertain[16] - The Company does not currently maintain controls and procedures to ensure timely disclosure of required information under the Exchange Act[15] Inventory and Asset Management - The company's inventory as of September 30, 2023, was valued at $9,533,284, down from $10,276,662 at the end of 2022[56] - The company's inventory valuation method includes adjusting for obsolete and slow-moving items at the end of each reporting period[77] - The company sold oil and gas assets for $3,590,000 in cash, resulting in a loss of $8,961,705[50][51] - The company recorded a loss on disposal of oil and gas properties of $8,961,705 in 2022[72] - The company added $1,475,000 to oil and gas properties during the three months ended September 30, 2023, related to the merger with Camber[92] - The company's proved reserve estimates are based on U.S. SEC guidelines, with future net cash flows calculated using the unweighted arithmetic average of the prior 12-month commodity prices[180] - Proved developed producing oil and gas properties, net, increased to $2,409,745 as of September 30, 2023, from $1,069,113 at December 31, 2022[114] - Undeveloped and non-producing oil and gas properties, net, decreased to $186,102 as of September 30, 2023, from $216,805 at December 31, 2022[114] Leases and Operating Expenses - Total lease payments due over the next five years amount to $1,201,563 for 2024, $749,506 for 2025, $431,130 for 2026, $412,047 for 2027, and $990,426 for 2028 and thereafter[139] - Operating lease expense for Simson-Maxwell was $918,655 for the nine months ended September 30, 2023, down from $1,106,220 in the same period in 2022[164] - The Company's subsidiary, Petrodome, entered into a 66-month lease for 4,147 square feet of office space in Houston, Texas, with an annual base rent of $22.00 per square foot, escalating by $0.50 per foot each year[163] - The Company's operating lease expense for Petrodome's office space was $72,287 for the nine months ended September 30, 2023[163] - The Company's right-of-use assets and operating lease liabilities for Simson-Maxwell were $5,845,810, with a present value discount rate of 3.45% for premises and 7.5% for vehicles and equipment[163] Related Party Transactions - The Company's total notes payable to related parties as of September 30, 2023, was $975,744[123] - The Company's net due to related parties as of September 30, 2023, was $(300,948), compared to $(301,941) as of December 31, 2022[146] - The Company paid $310,000 in fees to AGD Advisory Group, Inc. for professional services during the nine months ended September 30, 2023[121] - The Company paid $190,000 in fees to 1508586 Alberta Ltd. for professional services during the nine months ended September 30, 2023[121] Other Financial Metrics - The company's change in fair value of derivative liability was $5.80 million for the nine months ended September 30, 2023[52] - The company's loss on extinguishment of debt was $605,507 for the nine months ended September 30, 2023[52] - The company's amortization of debt discount was $873,776 for the nine months ended September 30, 2023[52] - The company's depreciation, depletion, and amortization was $698,061 for the nine months ended September 30, 2023[52] - The company recorded a loss on the extinguishment of debt of $154,763 during the three-month period ended