Camber Energy(CEI) - 2023 Q4 - Annual Report

Acquisition and Mergers - Camber Energy, Inc. acquired approximately 60.5% of Simson-Maxwell for $7,958,159, enhancing its custom energy solutions capabilities[9] - The acquisition of Viking Ozone Technology, LLC provides a patented medical and biohazard waste treatment system using ozone technology, aimed at sustainable waste management[29] - On August 1, 2023, the company completed a merger with Viking Energy Group, Inc., with Viking becoming a wholly owned subsidiary[49] - Each share of Viking Common Stock was converted into one share of Camber Common Stock, and Series C and E Preferred Stocks were converted into new preferred stocks of Camber[49] - Approximately 49,290,152 shares of Camber Common Stock were issued in connection with the Merger, representing about 59.99% of the outstanding shares post-issuance[48] Financial Performance - Total revenue for the year ended December 31, 2023, was $32,054,323, an increase of 33.4% compared to $24,038,160 in 2022[278] - The company reported a net loss of $(33,021,812) for the year ending December 31, 2023[291] - The net loss attributable to Camber Energy, Inc. for the year was $32,649,965, compared to a net loss of $15,427,329 in 2022[278] - Operating expenses totaled $39,048,688, an increase of 15.7% from $33,712,332 in 2022[278] - The accumulated deficit increased to $(154,837,638) in 2023 from $(122,187,673) in 2022, reflecting a rise of approximately 26.7%[291] Stock and Equity - The company has reserved approximately 88,647,137 additional shares for potential conversions and exercises related to preferred stock and options[48] - The company is authorized to issue up to 500,000,000 shares of common stock and 10,000,000 shares of preferred stock, which may cause substantial dilution to existing stockholders[136] - Common stock issued and outstanding rose significantly from 44,852,611 shares in 2022 to 119,301,921 shares in 2023, an increase of about 166%[291] - The Series C Preferred Stock has an initial dividend rate of 24.95% per annum, adjustable up to a maximum of 34.95% per annum, which may lead to significant dilution upon conversion[143] - The Series C Preferred Stock has a liquidation preference of $1,033,950 as of December 31, 2023[291] Debt and Liabilities - The Company has outstanding unsecured, convertible promissory notes totaling $3.2 million, with a conversion price of $0.4185 per share[15] - The Company has outstanding notes secured by a first-ranking security interest against all assets, with a maturity date of January 1, 2027, or upon a change of control[33] - The company currently has long-term debt of $39,971,927 as of December 31, 2023[304] - The total liabilities and stockholders' equity amounted to $101,711,947 as of December 31, 2023, compared to $49,912,689 in 2022, indicating a substantial increase of approximately 103.6%[291] Operational Challenges - The Company faces challenges in obtaining raw materials, with significant fluctuations in prices impacting profitability[12] - The Company operates in a highly competitive market, facing pressure from larger competitors with greater financial resources[13] - The company is subject to various risks, including economic conditions affecting demand for products and potential liabilities from product claims[56][59] - The company may face challenges in obtaining necessary licenses and permits, which could impact revenue generation[67] - The company is adversely impacted by a global reduction in consumer demand for oil and gas, leading to potential declines in operational results[88] Goodwill and Impairment - The company recognized a goodwill impairment charge of approximately $14,486,745 during the year ended December 31, 2023[276] - The company assessed goodwill for impairment annually and identified a triggering event in the third quarter of 2023[276] - The company performed a full quantitative impairment assessment for indefinite life intangible assets as of December 31, 2023[275] Compliance and Regulatory Issues - The company submitted a Continued Listing Compliance Plan to the NYSE to remedy its equity deficiency, which was accepted on June 21, 2023[134] - The company may face challenges in maintaining compliance with NYSE American continued listing standards, which could lead to delisting[134] - The company is subject to increasing complexities in data privacy and security laws, which could expose it to litigation and significant penalties[129] Future Outlook and Strategy - The Company is exploring renewable energy-related opportunities that are expected to generate revenue in the near term[9] - The company anticipates retaining all future earnings to finance growth and does not intend to pay cash dividends in the foreseeable future[107] - The company may incur significant additional indebtedness, which could reduce financial flexibility and increase interest expenses[104] Risks and Liabilities - The Company faces risks related to product liability claims, which could adversely affect financial condition and operations[79] - The company currently has no insurance to cover potential liabilities from operational hazards, which could materially affect financial condition[110] - The company is subject to customary events of default on Outstanding Notes, allowing Discover to accelerate payment upon default[73] Employee and Management - The company has 2 full-time employees and approximately 127 employees through Simson-Maxwell in Canada[55] - The company relies heavily on its CEO, James Doris, for day-to-day operations, and his departure could disrupt operations[127] Market Conditions - The market price of the company's common stock may be volatile, influenced by substantial sales or the perception of such sales[160] - The market price of the company's common stock may be negatively impacted by short sales and the exercise of options or warrants[137] - The trading price of the company's common stock may be negatively impacted by fluctuations in oil and natural gas prices, as well as changes in market valuations of similar companies[138]