UNITED
STATES



SECURITIES
AND EXCHANGE COMMISSION



Washington,
D.C. 20549



FORM
10-Q





☒   
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended September
30, 2020



☐   
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Commission File Number: 001-32508



CAMBER
ENERGY, INC.



(Exact name of registrant as specified in
its charter)



|Nevada                                                         | 20-2660243                           
|-------------------------------------------------------------- | -------------------------------------
|(State or other jurisdiction of
incorporation or organization) | (I.R.S. Employer 
Identification No.)



1415 Louisiana, Suite 3500, Houston,
Texas 77002



(Address of principal executive offices) (Zip
Code)



(210) 998-4035



(Registrant’s telephone number, including
area code)



Securities registered pursuant to Section 12(b) of the
Act:



|Title of each class                      | Trading Symbol(s) | Name of each exchange on which registered
|---------------------------------------- | ----------------- | -----------------------------------------
|Common Stock, $0.001 Par Value Per Share | CEI               | NYSE American                            



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes ☒  No ☐



Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒  No ☐



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



|Large accelerated filer ☐ | Accelerated filer ☐        
|------------------------- | ---------------------------
|Non-accelerated filer ☒   | Smaller reporting company ☒
|Emerging growth ☐         |                            



If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒



Indicate the number of shares outstanding
of each of the issuer’s classes of common stock, as of the latest practicable date.



|                                         | Title of each class |                                      |  |  | Number of Shares | 
|---------------------------------------- | ------------------- | ------------------------------------ |  |  | ---------------- | 
|Common Stock, par value
$0.001 per share |                     | 25,000,000
(as of December 17, 2020)









Table of Contents






CAMBER ENERGY, INC.



TABLE OF CONTENTS



|PART 1. FINANCIAL INFORMATION                                                                 
|----------------------------------------------------------------------------------------------
|                                                                                              
|ITEM 1.  FINANCIAL STATEMENTS                                                                 
|                                                                                              
|CONSOLIDATED BALANCE SHEETS (UNAUDITED)                                                       
|CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)                                             
|CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)              
|CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)                                             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)                                        
|                                                                                              
|ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|                                                                                              
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                           
|                                                                                              
|ITEM 4. CONTROLS AND PROCEDURES.                                                              
|                                                                                              
|PART II – OTHER INFORMATION                                                                   
|                                                                                              
|ITEM 1. LEGAL PROCEEDINGS.                                                                    
|                                                                                              
|ITEM 1A. RISK FACTORS.                                                                        
|                                                                                              
|ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.                          
|                                                                                              
|ITEM 3. DEFAULTS UPON SENIOR SECURITIES.                                                      
|                                                                                              
|ITEM 4. MINE SAFETY DISCLOSURES.                                                              
|                                                                                              
|ITEM 5. OTHER INFORMATION.                                                                    
|                                                                                              
|ITEM 6. EXHIBITS.                                                                             








Table of Contents




PART
1. FINANCIAL INFORMATION



ITEM
1.  FINANCIAL STATEMENTS



CAMBER
ENERGY, INC.

CONSOLIDATED
BALANCE SHEETS

(Unaudited)



|                                                                                                                                                            |  | September 30, 2020 |              |   | March 31, 
2020 |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------------ | - | --------------- | -
|ASSETS                                                                                                                                                      |  |                    |              |   |                 |  
|Current Assets                                                                                                                                              |  |                    |              |   |                 |  
|Cash                                                                                                                                                        |  | $                  | 1,112,965    |   |                 | $
|Accounts Receivable, Net of Allowance                                                                                                                       |  |                    | 145,362      |   |                 |  
|Other Current Assets                                                                                                                                        |  |                    | 220,682      |   |                 |  
|Total Current Assets                                                                                                                                        |  |                    | 1,479,009    |   |                 |  
|                                                                                                                                                            |  |                    |              |   |                 |  
|Property and Equipment                                                                                                                                      |  |                    |              |   |                 |  
|Oil and Gas Properties - Subject to Amortization                                                                                                            |  |                    | 50,413,792   |   |                 |  
|Oil and Gas Properties - Not Subject to Amortization                                                                                                        |  |                    | 28,016,989   |   |                 |  
|Other Property and Equipment                                                                                                                                |  |                    | 1,570        |   |                 |  
|Total Property and Equipment                                                                                                                                |  |                    | 78,432,351   |   |                 |  
|Accumulated Depletion, Depreciation, Amortization and Impairment                                                                                            |  |                    | (78,356,957  | ) |                 |  
|Total Property and Equipment, Net                                                                                                                           |  |                    | 75,394       |   |                 |  
|Equity Method Investment – Elysium Energy, LLC                                                                                                              |  |                    | —            |   |                 |  
|Notes Receivable                                                                                                                                            |  |                    | 10,241,048   |   |                 |  
|Other Assets                                                                                                                                                |  |                    | —            |   |                 |  
|Total Assets                                                                                                                                                |  | $                  | 11,795,451   |   |                 | $
|LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                        |  |                    |              |   |                 |  
|Current Liabilities                                                                                                                                         |  |                    |              |   |                 |  
|Accounts Payable                                                                                                                                            |  | $                  | 1,455,898    |   |                 | $
|Common Stock Payable                                                                                                                                        |  |                    | —            |   |                 |  
|Accrued Expenses                                                                                                                                            |  |                    | 107,621      |   |                 |  
|Current Asset Retirement Obligation                                                                                                                         |  |                    | 25,766       |   |                 |  
|Current Income Taxes Payable                                                                                                                                |  |                    | 3,000        |   |                 |  
|Total Current Liabilities                                                                                                                                   |  |                    | 1,592,285    |   |                 |  
|                                                                                                                                                            |  |                    |              |   |                 |  
|Asset Retirement Obligation                                                                                                                                 |  |                    | 20,017       |   |                 |  
|Total Liabilities                                                                                                                                           |  |                    | 1,612,302    |   |                 |  
|                                                                                                                                                            |  |                    |              |   |                 |  
|Commitments and Contingencies (see Note 9)                                                                                                                  |  |                    |              |   |                 |  
|Temporary Equity                                                                                                                                            |  |                    |              |   |                 |  
|Preferred Stock Series C, 630 and 525 Issued and Outstanding Respectively, Liquidation Preference of $6,300,000 and $5,250,000, respectively                |  |                    | 6,000,000    |   |                 |  
|                                                                                                                                                            |  |                    |              |   |                 |  
|Stockholders’ Equity                                                                                                                                        |  |                    |              |   |                 |  
|Preferred Stock Series A, 2,000 Shares Authorized of $0.001 Par Value, -0- Shares issued and Outstanding                                                    |  |                    | —            |   |                 |  
|Preferred Stock Series B, 600,000 Shares Authorized of $0.001 Par Value, 0 and 0 Shares issued and Outstanding, respectively                                |  |                    | —            |   |                 |  
|Preferred Stock Series C, 5,000 Shares Authorized of $0.001 Par Value, 2,063 and 2,294 Shares issued and Outstanding, Liquidation Preference of $56,660,295 |  |                    | 2            |   |                 |  
|Common Stock, 25,000,000 shares Authorized of $0.001 Par Value, 25,000,000 and 5,000,000 Shares Issued and Outstanding, respectively                        |  |                    | 25,000       |   |                 |  
|Additional Paid-in Capital                                                                                                                                  |  |                    | 146,673,154  |   |                 |  
|Stock Dividends Distributable                                                                                                                               |  |                    | 19,210,901   |   |                 |  
|Accumulated Deficit                                                                                                                                         |  |                    | (161,725,908 | ) |                 |  
|Total Stockholders’ Equity                                                                                                                                  |  |                    | 4,183,149    |   |                 |  
|Total Liabilities and Stockholders’ Equity                                                                                                                  |  | $                  | 11,795,451   |   |                 | $



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



1


Table of Contents




CAMBER ENERGY, INC.

CONSOLIDATED
STATEMENTS OF OPERATIONS



(Unaudited)



|                                                     |  | Three Months Ended  September 30, |            |   | Six Months Ended  September 30, |  
|---------------------------------------------------- |  | --------------------------------- | ---------- | - | ------------------------------- | -
|                                                     |  | 2020                              |            |   | 2019                            |  
|Operating Revenues                                   |  |                                   |            |   |                                 |  
|Crude Oil                                            |  | $                                 | 45,846     |   |                                 | $
|Natural Gas                                          |  |                                   | 4,643      |   |                                 |  
|Natural Gas Liquids                                  |  |                                   | 6,969      |   |                                 |  
|Total Revenues                                       |  |                                   | 57,458     |   |                                 |  
|                                                     |  |                                   |            |   |                                 |  
|Operating Expenses                                   |  |                                   |            |   |                                 |  
|Lease Operating Expenses                             |  |                                   | 27,222     |   |                                 |  
|Severance and Property Taxes                         |  |                                   | 2,126      |   |                                 |  
|Depreciation, Depletion, Amortization, and Accretion |  |                                   | 2,837      |   |                                 |  
|General and Administrative                           |  |                                   | 852,915    |   |                                 |  
|Total Operating Expenses                             |  |                                   | 885,100    |   |                                 |  
|Operating Loss                                       |  |                                   | (827,642   | ) |                                 |  
|                                                     |  |                                   |            |   |                                 |  
|Other Expense (Income)                               |  |                                   |            |   |                                 |  
|Interest Expense                                     |  |                                   | —          |   |                                 |  
|Loss from Unconsolidated Entity                      |  |                                   | 1,056,766  |   |                                 |  
|Other Expense (Income), Net                          |  |                                   | 172,100    |   |                                 |  
|Total Other Expenses                                 |  |                                   | 1,228,866  |   |                                 |  
|                                                     |  |                                   |            |   |                                 |  
|Net Loss Before Discontinued Operations              |  |                                   | (2,056,508 | ) |                                 |  
|Income from Discontinued Operations                  |  |                                   | —          |   |                                 |  
|Net Loss                                             |  | $                                 | (2,056,508 | ) |                                 | $
|                                                     |  |                                   |            |   |                                 |  
|Net Loss Per Common Share                            |  |                                   |            |   |                                 |  
|Basic                                                |  |                                   |            |   |                                 |  
|Continuing Operations                                |  | $                                 | (0.19      | ) |                                 | $
|Discontinued Operations                              |  |                                   | —          |   |                                 |  
|Total                                                |  | $                                 | (0.19      | ) |                                 | $
|Diluted                                              |  |                                   |            |   |                                 |  
|Continuing Operations                                |  | $                                 | (0.19      | ) |                                 | $
|Discontinued Operations                              |  |                                   | —          |   |                                 |  
|Total                                                |  | $                                 | (0.19      | ) |                                 | $
|                                                     |  |                                   |            |   |                                 |  
|Weighted Average Number of Common Shares Outstanding |  |                                   |            |   |                                 |  
|Basic                                                |  |                                   | 19,815,872 |   |                                 |  
|Diluted                                              |  |                                   | 19,815,872 |   |                                 |  



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



2


Table of Contents




CAMBER ENERGY, INC.

CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER
30, 2020 AND 2019

(Unaudited)



|                                                                  | Series
    CPreferred Stock |      | Series
    EPreferred Stock |   | Series
    FPreferred Stock |   |        | Series
    BPreferred Stock |                 | Series
    CPreferred Stock |            | Common
    Stock |  |                 |  |        |           |                 |  |        |         |                 |   |       
|----------------------------------------------------------------- | --------------------------- | ---- | --------------------------- | - | --------------------------- | - | ------ | --------------------------- | --------------- | --------------------------- | ---------- | ---------------- |  | --------------- |  | ------ | --------- | --------------- |  | ------ | ------- | --------------- | - | ------
|                                                                  | Numberof Shares             |      | Amount                      |   | Numberof Shares             |   | Amount |                             | Numberof Shares |                             | Amount     |                  |  | Numberof Shares |  | Amount |           | Numberof Shares |  | Amount |         | Numberof Shares |   | Amount
|                                                                  |                             |      |                             |   |                             |   |        |                             |                 |                             |            |                  |  |                 |  |        |           |                 |  |        |         |                 |   |       
|Balances,
    March 31, 2019                                      |                             | —    |                             | $ | —                           |   |        | —                           |                 | $                           | —          |                  |  | —               |  | $      | —         |                 |  |        | 44,000  |                 | $ | 44    
|Common
    Shares issued for:                                     |                             |      |                             |   |                             |   |        |                             |                 |                             |            |                  |  |                 |  |        |           |                 |  |        |         |                 |   |       
|Conversion
    of Series B Preferred Stock                        |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | (44,000 | )               |   | (44   
|Payment
    of Series B Dividend                                  |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Conversion
    of Debenture - Abeyance                            |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Payment
    for Consulting Fees                                   |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Rounding
    Adjustment for Split                                 |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Stock
    Dividends to be Issued                                  |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Net
    Loss                                                      |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Balances,
    June 30, 2019                                       |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Common
    Shares issued for:                                     |                             |      |                             |   |                             |   |        |                             |                 |                             |            |                  |  |                 |  |        |           |                 |  |        |         |                 |   |       
|Conversion
    of Series C Preferred Stock                        |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Conversion
    of Debenture - Abeyance                            |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Payment
    for Consulting Fees                                   |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Rounding
    Adjustment for Reverse Stock Split                   |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Cash
    Paid for Settlement of series B Preferred Stock Warrants |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Issuance
    of Series E and F Preferred Stock                    |                             | —    |                             |   | —                           |   |        | 1,000,000                   |                 |                             | 18,701,000 |                  |  | 16,750          |  |        | 1,417,000 |                 |  |        | —       |                 |   | —     
|Stock
    Dividends to be Issued                                  |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Net
    Loss                                                      |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Balances,
    September 30, 2019                                  |                             | —    |                             | $ | —                           |   |        | 1,000,000                   |                 | $                           | 18,701,000 |                  |  | 16,750          |  | $      | 1,417,000 |                 |  |        | —       |                 | $ | —     
|                                                                  |                             |      |                             |   |                             |   |        |                             |                 |                             |            |                  |  |                 |  |        |           |                 |  |        |         |                 |   |       
|Balances,
    March 31, 2020                                      |                             | 525  |                             | $ | 5,000,000                   |   |        | —                           |                 | $                           | —          |                  |  | —               |  | $      | —         |                 |  |        | —       |                 | $ | —     
|Common
    Shares issued for:                                     |                             |      |                             |   |                             |   |        |                             |                 |                             |            |                  |  |                 |  |        |           |                 |  |        |         |                 |   |       
|Conversion
    of Series C Preferred Stock                        |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Payment
    of Consulting Fees                                    |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Issuance
    of Series C Preferred Stock                          |                             | 630  |                             |   | 6,000,000                   |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Reclassification
    of Series C Preferred Stock                  |                             | (525 | )                           |   | (5,000,000                  | ) |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Stock
    Dividends to be Issued                                  |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Net
    Loss                                                      |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Balances,
    June 30, 2020                                       |                             | 630  |                             |   | 6,000,000                   |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Common
    Shares issued for:                                     |                             |      |                             |   |                             |   |        |                             |                 |                             |            |                  |  |                 |  |        |           |                 |  |        |         |                 |   |       
|Conversion
    of Series C Preferred Stock                        |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Payment
    of Consulting Fees                                    |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Reclassification
    of Series C Preferred Stock                  |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Stock
    Dividends to be Issued                                  |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Payment
    of Consulting Fees                                    |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Net
    Loss                                                      |                             | —    |                             |   | —                           |   |        | —                           |                 |                             | —          |                  |  | —               |  |        | —         |                 |  |        | —       |                 |   | —     
|Balances,
    September 30, 2020                                  |                             | 630  |                             | $ | 6,000,000                   |   |        | —                           |                 | $                           | —          |                  |  | —               |  | $      | —         |                 |  |        | —       |                 | $ | —     



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



3


Table of Contents




CAMBER ENERGY, INC.

CONSOLIDATED
STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                               |  | Six Months Ended
September 30,
|------------------------------------------------------------------------------ |  | ------------------------------
|                                                                               |  | 2020                          
|Cash Flows from Operating Activities                                           |  |                               
|Net Loss                                                                       |  | $                             
|Net Income from Discontinued Operations                                        |  |                               
|Net Loss from Continuing Operations                                            |  |                               
|Adjustments to reconcile net loss to net cash used in operating activities:    |  |                               
|Depreciation, Depletion, Amortization, and Accretion                           |  |                               
|Bad debt Expense                                                               |  |                               
|Share-Based Compensation                                                       |  |                               
|Loss from Equity Method Investment                                             |  |                               
|Change in Fair Value of Derivative Liability                                   |  |                               
|Changes in Components of Working Capital and Other Assets:                     |  |                               
|Accounts Receivable                                                            |  |                               
|Other Current Assets                                                           |  |                               
|Accounts Payable and Accrued Expenses                                          |  |                               
|Net Cash Used in Operating Activities from Continuing Operations               |  |                               
|Net Cash Used in Operating Activities from Discontinued Operations             |  |                               
|Net Cash Used in Operating Activities                                          |  |                               
|                                                                               |  |                               
|Investing Cash Flows                                                           |  |                               
|Cash Paid for Subsidiary                                                       |  |                               
|Cash Paid for Issuance of Notes Receivable                                     |  |                               
|Cash Received for Deposits                                                     |  |                               
|Net Cash Used in Investing Activities from Continuing Operations               |  |                               
|Net Cash Used in Investing Activities from Discontinued Operations             |  |                               
|Net Cash Used in Investing Activities                                          |  |                               
|                                                                               |  |                               
|Financing Cash Flows                                                           |  |                               
|Cash Paid for Settlement of Series B Preferred Stock Warrants                  |  |                               
|Proceeds from Issuance of Series C Preferred Stock                             |  |                               
|Net Cash Provided by (Used in) Financing Activities from Continuing Operations |  |                               
|Net Cash Provided by Financing Activities from Discontinued Operations         |  |                               
|Net Cash Provided by Financing Activities                                      |  |                               
|                                                                               |  |                               
|Increase (Decrease) in Cash                                                    |  |                               
|Cash at Beginning of the Period                                                |  |                               
|Cash at End of the Period                                                      |  | $                             



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



4


Table of Contents




CAMBER ENERGY, INC.

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE
1 – GENERAL



Camber Energy, Inc.
(“Camber” or the “Company”) is an independent oil and natural gas company engaged in
the acquisition, development, and sale of crude oil, natural gas, and natural gas liquids from various known productive geological
formations in Louisiana and Texas. Additionally, from the July 8, 2019 acquisition of Lineal Star Holdings, LLC (“Lineal”),
until the divestiture of Lineal effective on December 31, 2019, each as discussed below, the Company, through Lineal, was
involved in the oil and gas services industry.



On July 8, 2019, the
Company acquired 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, and the Members of Lineal
(the “Lineal Members”). Lineal is a specialty construction and oil and gas services enterprise providing services
to the energy industry. 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”). See also “Note
11 – Lineal Merger Agreement and Divestiture”. On October 8, 2019, Lineal acquired an 80% interest in Evercon Energy
LLC (“Evercon”). The acquisition required Lineal to assume certain liabilities and provide working capital for
six months in the amount of $50,000 per month to Evercon. As part of the Lineal Divestiture, described below, Evercon was divested
effective December 31, 2019.



On December 31, 2019,
the Company entered into a Preferred Stock Redemption Agreement (the “Redemption Agreement”) by and between
the Company and the prior owners of Lineal, whereby the Company redeemed the Company’s Series E and F Preferred Stock (the
holders of such preferred stock, collectively, the “Preferred Holders”) issued in connection with the Lineal
Merger. Pursuant to the Redemption Agreement, effective as of December 31, 2019, 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
canceled through the redemption (the “Lineal Divestiture”). See also “Note 11 –
Lineal Merger Agreement and Divestiture”.



Prior to the acquisition
of Lineal, the Company sold a significant portion of its oil and gas production assets in Oklahoma to N&B Energy, LLC (“N&B
Energy”) effective August 1, 2018. As part of the sale of its assets to N&B Energy, the Company also retained
a 12.5% production payment (effective until a total of $2.5 million has been received) and a 3% overriding royalty interest,
in its then existing Okfuskee County, Oklahoma assets; and an overriding royalty interest on certain other undeveloped leasehold
interests, pursuant to an Assignment of Production Payment and Assignments of Overriding Royalty Interests. No payments were received
in regard to any of the retained items noted above through September 30, 2020, and the filing date of these financial statements.



Camber retained its
assets in Glasscock County and operated wells in Hutchinson County, Texas following the N&B Energy transaction until completion
of the Settlement Agreement discussed below.



On January
31, 2020, the Company entered into a Compromise Settlement Agreement (the “Settlement Agreement”) with
PetroGlobe Energy Holdings, LLC (“PetroGlobe”), Signal Drilling, LLC (“Signal”), Petrolia
Oil, LLC (“Petrolia”), Prairie Gas Company of Oklahoma, LLC (“PGCO”), and Canadian River
Trading Company, LLC (“CRTC”). 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 was released by the Company upon 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 was completed on July 16, 2020.
CE operates all of the wells and leases which we held prior to such transfer which are located in Hutchinson County, Texas. See
also “Note 9 – Commitments and Contingencies” – “Legal
Proceedings”.





5


Table of Contents




On
February 3, 2020, the Company entered into an Agreement and Plan of Merger with Viking Energy Group, Inc. (“Viking”),
which was amended and restated by an Amended and Restated Agreement and Plan of Merger entered into with Viking on August 31, 2020
(as amended to date, the “Merger Agreement”, and the merger contemplated therein, the “Merger”). Pursuant
to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), (a) each share of
common stock of Viking (the “Viking Common Stock”)  issued and outstanding, other than certain shares owned
by the Company, Viking and the subsidiary of the Company formed as part of the Merger (“Merger Sub”), will be
converted into the right to receive the pro rata share(when including the Viking preferred stock conversion rights (defined
below)) of 80% of the Company’s post-closing (excluding shares issuable upon conversion
of the Series C Preferred Stock of the Company)(the “exchange ratio”); and (b) each share of Viking
preferred stock outstanding immediately prior to the effective time will be converted into one share of Camber Series A Preferred
Stock, which preferred stock will have the right to vote, and convert into, that number of shares of Camber common stock that its
holder would have received in the Merger, had such holder fully converted the Viking preferred stock into Viking common stock immediately
prior to the Effective Time (the “Viking preferred stock conversion rights”).



Holders
of Viking Common Stock will have any fractional shares of Company common stock after the Merger rounded up to the nearest whole
share. The completion of the Merger is subject to certain closing conditions. A further requirement to the closing
of the Merger was that the Company was required to have acquired 30% of Viking’s subsidiary Elysium Energy Holdings, LLC
(“Elysium”) as part of a $9,200,000 investment in Viking’s Rule 506(c) offering, which transaction
was completed on February 3, 2020 (25% and a $5 million investment) and June 22, 2020 (5% and a $4.2 million investment). See
also “Note 5 – Plan of Merger and Investment In Unconsolidated
Entity”.



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 effect a 1-for-25 reverse stock split of all outstanding common stock shares of the Company. The reverse stock split was effective
on March 5, 2018. The effect of the reverse stock split was to combine every 25 shares of outstanding common stock into one new
share, with no change in authorized shares or par value per share. On December 20, 2018, the Company filed a Certificate of Change
with the Secretary of State of Nevada to effect 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); and (b) issued and outstanding shares of common stock.
The reverse stock split was effective on December 24, 2018. The effect of the reverse stock split was to combine every 25 shares
of outstanding common stock into one new share, with a proportionate 1-for-25 reduction in the Company’s authorized shares
of common stock, but no change in the par value per share of the common stock. Effective on April 10, 2019, the Company filed,
with the Secretary of State of Nevada, a Certificate of Amendment to the Company’s Articles of Incorporation to increase
the number of the Company’s authorized shares of common stock, $0.001 par value per share, from 20,000,000 shares to 250,000,000
shares. 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 effect another 1-for-25 reverse stock split of all outstanding common stock shares of the Company.
The reverse stock split was effective on July 8, 2019. The effect of the reverse stock split was to combine every 25 shares of
outstanding common stock into one new share, with no change in authorized shares (250,000,000 shares of common stock) or par
value per share. On October 28, 2019, the Company filed a Certificate of Change with the Secretary of State of Nevada to effect
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); and (b) issued and outstanding shares of common stock. The reverse stock split was effective on October 29, 2019.
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. The result of the reverse stock split was to reduce, as of the effective date of the reverse stock split, the number
of common stock shares outstanding from approximately 74.5 million shares to approximately 1.5 million shares (before rounding).
Effective on April 16, 2020, Camber 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.







6


Table of Contents




Proportional adjustments
were made to the conversion and exercise prices of the Company’s outstanding convertible preferred stock, warrants, and stock
options, and to the number of shares issued and issuable under the Company’s stock incentive plans in connection with each
of the reverse splits described above. The reverse stock splits did not affect any stockholder’s ownership percentage of
the Company’s common stock, except to the limited extent that the reverse stock splits resulted in any stockholder owning
a fractional share. Fractional shares of common stock were rounded up to the nearest whole share based on each holder’s aggregate
ownership of the Company. 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 in the financial statements, in accordance with Staff Accounting Bulletin
(SAB) TOPIC 4C, have been retroactively adjusted to reflect the reverse splits for all periods presented.



A novel strain of coronavirus
(“COVID-19”) was first identified in December 2019, and subsequently declared a global pandemic by the
World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their
operations, workforce and markets served, including a significant reduction in the demand for petroleum-based products. The market
for the Company’s oil and gas assets began being adversely impacted by the effects of COVID-19 in March of 2020 when circumstances
surrounding, and responses to, the pandemic, including stay-at-home orders, began to materialize in North America. Due to the Company’s
limited oil and gas production and the fact that all of the Company’s current properties are non-operated, the Company has
yet to experience a significant adverse impact from COVID-19. However, the full extent of the COVID-19 outbreak and changes in
demand for oil and the impact on the Company’s operations is uncertain. A prolonged disruption could have a material adverse
impact on the financial results, assets (including requiring write-downs or impairments), and business operations of the Company.



NOTE
2 – LIQUIDITY AND GOING CONCERN CONSIDERATIONS



At September 30, 2020,
the Company’s total current assets of $1.5 million were less than its total current liabilities of approximately $1.6 million,
resulting in a working capital deficit of $0.1 million, while at March 31, 2020, the Company’s total current assets of $1.1
million were less than its total current liabilities of approximately $2.0 million, resulting in a working capital deficit of $0.9
million. The decrease in working capital deficit of $0.8 million is the result of the sale of the Series C Preferred Stock shares
in June 2020.



Recent oil and gas
price volatility as a result of geopolitical conditions and the global COVID-19 pandemic may have a negative impact on the Company’s
financial position and results of operations. Negative impacts could include, but are not limited to, the Company’s inability
to sell its oil and gas production, reduction in the selling price of the Company’s oil and gas, failure of a counterparty
to make required payments, possible disruption of production as a result of worker illness or mandated production shutdowns or
‘stay-at-home’ orders, and access to new capital and financing.



The factors above raise substantial doubt about the Company’s
ability to continue to operate as a going concern for the twelve months following the issuance of these financial statements. The
Company believes that it may not have sufficient liquidity to meet its operating costs unless it can raise new funding, which may
be through the sale of debt or equity or unless it closes the Viking Merger, which is the Company’s current plan, which Merger
is anticipated to close in the first calendar quarter of 2021, and which required closing date is currently December 31, 2020.
There is no guarantee though that the Viking Merger will be completed or other sources of funding will be available. The financial
statements do not include any adjustments that might result from the outcome of this uncertainty.



NOTE 3 –
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



The Company has provided
a discussion of significant accounting policies, estimates, and judgments in its March 31, 2020, Annual Report on Form 10-K. There
have been no changes to the Company’s significant accounting policies since March 31, 2020, which are expected to have a
material impact on the Company’s financial position, operations, or cash flows.





7


Table of Contents




Principles of Consolidation



The consolidated financial
statements include the accounts of Camber and all of its wholly-owned and majority-owned subsidiaries. All material intercompany
accounts and transactions have been eliminated in consolidation.



Accounts Receivable



Accounts receivable, net, include amounts due for oil and gas revenues
from prior month production, accrued interest on the notes receivable due from Lineal and Viking and an estimate of amounts due
from N&B Energy related to the September 2018 Asset Purchase Agreement entered into with N&B Energy. The allowance for
doubtful accounts is the Company’s best estimate of the probable amount of credit losses in the Company’s existing
accounts receivable. At September 30, 2020, and March 31, 2020, there were allowances for doubtful accounts of approximately $171,000
and $208,000, included in accounts receivable, and there were bad debts of $170,660 and $17,694, recognized for the six months
ended September 30, 2020, and 2019, respectively.



Notes Receivable



Notes receivable includes
the $9,200,000, excluding adjustment for excess loss from equity method investment of $1,182,952, of notes from Viking as described
in “Note 6 – Long-Term Notes Receivable” and “Note
5 – Plan of Merger and Investment In Unconsolidated Entity”, and two notes due from Lineal in the amounts of $1,539,719
and $800,000, respectively, net of reserves of $115,719 as more fully discussed in “Note 6 –
Long-Term Notes Receivable” and “Note 11 – Lineal Merger Agreement and Divestiture”.



Property and Equipment



Property and equipment
are recorded at cost and depreciated using the straight-line method over their useful lives. Amortization of the equipment under
capital leases related to the Lineal operations was computed using the straight-line method over lives ranging from 3 to 5 years
and is included in depreciation expense. Costs of maintenance and repairs were charged to expense when incurred.



Long-lived assets including
intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. If an evaluation is required, the estimated future undiscounted cash flows associated with the
asset are compared to the assets carrying amount to determine if an impairment of such asset is necessary. This evaluation, as
well as an evaluation of our intangible assets, requires the Company to make long-term forecasts of the future revenues and costs
related to the assets subject to review. Forecasts require assumptions about demand for the Company’s services and future
market conditions. Estimating future cash flows requires significant judgment, and the Company’s projections may vary from
the cash flows eventually realized. Future events and unanticipated changes to assumptions could require a provision for impairment
in a future period. The effect of any impairment would be to expense the difference between the fair value (less selling costs) of
such asset and its carrying value. Such an expense would be reflected in earnings. No impairments were deemed necessary for the
three and six months ended September 30, 2020, and 2019, respectively.



Investment in Unconsolidated
Entities



The Company accounts
for its investment in unconsolidated entities under the equity method of accounting when it owns less than 50% of a controlling
interest and cannot exercise significant influence over the operating and financial policies of the entity. The investment is adjusted
accordingly for dividends or distributions it receives and its proportionate share of earnings or losses of the entity. The current
investment in unconsolidated entities is a 30% (25% from February 3, 2020, to June 25, 2020) interest in Elysium Energy Holdings,
LLC, which, through its wholly-owned subsidiary, Elysium Energy, LLC, is involved in oil and gas exploration and production in
the United States. The balance sheet of Elysium Holdings, LLC at September 30, 2020, included current assets of $2.3 million, total
assets of $30.8 million, total liabilities of $34.9 million, and net liabilities of $(4.1) million. The balance sheet of Elysium
Energy Holdings, LLC at March 31, 2020, included current assets of $4.0 million, total assets of $37.7 million, total liabilities
of $34.0 million, and net assets of $3.7 million. The income statement of Elysium Energy Holdings, LLC for the three and six months
ended September 30, 2020, included total revenues of $4.0 million and $7.8 million and a net loss of $3.2 million and $7.5 million,
respectively. See also “Note 5 – Plan of Merger and Investment
In Unconsolidated Entity”.





8


Table of Contents




Revenue Recognition



Exploration and Production Revenue



The Company’s
revenue for its exploration and production operations are comprised entirely of revenue from exploration and production activities.
The Company’s oil is sold primarily to marketers, gatherers, and refiners. Natural gas is sold primarily to interstate and
intrastate natural gas pipelines, direct end-users, industrial users, local distribution companies, and natural gas marketers.
Natural gas liquids (“NGLs”) are sold primarily to direct end-users, refiners, and marketers. Payment is
generally received from the customer in the month following delivery.



Contracts with customers
have varying terms, including month-to-month contracts, and contracts with a finite term. The Company recognizes sales revenues
for oil, natural gas, and NGLs based on the amount of each product sold to a customer when control transfers to the customer. Generally,
control transfers at the time of delivery to the customer at a pipeline interconnect, the tailgate of a processing facility, or
as a tanker lifting is completed. Revenue is measured based on the contract price, which may be index-based or fixed, and may include
adjustments for market differentials and downstream costs incurred by the customer, including gathering, transportation, and fuel
costs.



Revenues are recognized
for the sale of the Company’s net share of production volumes. Sales on behalf of other working interest owners and royalty
interest owners are not recognized as revenues.



Fair Value of Financial Instruments



Accounting Standards
Codification (“ASC”) 820 defines fair value, establishes a framework for measuring fair value, and enhances
disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires
an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard
describes three levels of inputs that may be used to measure fair value:



| | ● | Level 1 – Quoted prices in active markets for identical assets or liabilities.
| | - | ------------------------------------------------------------------------------





9


Table of Contents




| | ● | Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable. Valuations may be obtained from or corroborated by, third-party pricing services.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Level 3 – Unobservable inputs to measure the fair value of assets and liabilities for which there is little, if any market activity at the measurement date, using reasonable inputs and assumptions based upon the best information at the time, to the extent that inputs are available without undue cost and effort.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of September 30,
2020, and March 31, 2020, the significant inputs to the Company’s derivative liability and mezzanine equity calculations
were Level 3 inputs.



Recently Issued Accounting Pronouncements



The Company does not
believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have
a material effect on the accompanying consolidated financial statements.



Subsequent Events



The Company has evaluated
all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.



NOTE
4 – PROPERTY AND EQUIPMENT



Oil and Gas Properties



Camber uses the full
cost method of accounting for oil and natural gas producing activities. Costs to acquire mineral interests in oil and natural gas
properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells including
directly related overhead costs and related asset retirement costs are capitalized.



Under this method,
all costs, including internal costs directly related to acquisition, exploration, and development activities are capitalized as
oil and natural gas property costs on a country-by-country basis. Costs not subject to amortization consist of unproved properties
that are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become
proved or their values become impaired. Camber assesses overall values of unproved properties, if any, on at least an annual basis
or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed
based on management’s intention with regard to the future development of individually significant properties and the ability
of Camber to obtain funds to finance its programs. If the results of an assessment indicate that the properties are impaired, the
amount of the impairment is added to the capitalized costs to be amortized.



Sales of oil and natural
gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized unless the adjustment
would significantly alter the relationship between capitalized costs and proved reserves. If it is determined that the relationship
is significantly altered, the corresponding gain or loss will be recognized in the statements of operations.



Costs of oil and natural
gas properties are amortized using the units of production method. Amortization expense calculated per equivalent physical unit
of production amounted to $0.57 and $0.95 per barrel of oil equivalent for the six months ended September 30, 2020, and 2019, respectively.



10


Table of Contents




All of Camber’s
oil and natural gas properties are located in the United States. Costs being amortized at September 30, 2020, and March 31, 2020,
are as follows:



|                                                    |  | September 30, 2020 |             |   | March 31, 2020 |  
|--------------------------------------------------- |  | ------------------ | ----------- | - | -------------- | -
|Oil and gas properties subject to amortization      |  | $                  | 50,413,792  |   |                | $
|Oil and gas properties not subject to amortization  |  |                    | 28,016,989  |   |                |  
|Capitalized asset retirement costs                  |  |                    | 1,570       |   |                |  
|Total oil & natural gas properties                  |  |                    | 78,432,351  |   |                |  
|Accumulated depreciation, depletion, and impairment |  |                    | (78,356,957 | ) |                |  
|Net Capitalized Costs                               |  | $                  | 75,394      |   |                | $



Impairments



For the three and six
month periods ended September 30, 2020, and 2019, the Company recorded no impairment.



Additions and Depletion



During the six months ended September 30, 2020, and 2019, the Company
incurred no costs for technical and other capital enhancements to extend the lives of the Company’s wells. Additionally,
the Company recorded $4,871 and $6,572 of depletion for the six months ended September 30, 2020, and 2019, respectively. The Company
recorded $2,164 and $2,572 of depletion for the three months ended September 30, 2020, and 2019, respectively.



Leases



As part of the Lineal
Acquisition, the Company acquired various operating and finance leases for sales and administrative offices, motor vehicles, and
machinery and equipment. Due to the Redemption Agreement discussed in – “Note 1 – General”
and below in “Note 11 – Lineal Merger Agreement and Divestiture”, the
Company no longer owns the operating and finance leases that it had acquired in connection with the Lineal Acquisition.



Effective August 1,
2018, the Company entered into a month-to-month lease at 1415 Louisiana, Suite 3500, Houston, Texas 77002. The entity providing
use of the space without charge is affiliated with the Company’s Chief Financial Officer.



NOTE
5 – PLAN OF MERGER AND INVESTMENT IN UNCONSOLIDATED ENTITY



Viking Plan of Merger and Related Transactions



On February 3, 2020,
the Company and Viking entered into a Merger Agreement, which was amended and restated by an Amended and Restated Agreement and
Plan of Merger entered into with Viking on August 31, 2020 (the Merger Agreement). Pursuant to the Merger Agreement, at the effective
time of the Merger, (a)each share of common stock of Viking issued and outstanding, other
than certain shares owned by the Company, Viking and the Company’s merger sub which will be merged with and into Viking,
with Viking being the surviving entity in the merger (“Merger Sub”), will be converted into the right to receive
the pro-rata share (when including the Viking preferred stock conversion rights) of 80% of the Company’s post-closing
capitalization (excluding shares issuable upon conversion of the Series C Preferred Stock of the Company); and (b) each share
of Viking preferred stock outstanding immediately prior to the effective time will be converted into one share of Camber Series
A Preferred Stock, which preferred stock will have the right to vote, and convert into, that number of shares of Camber common
stock that its holder would have received in the Merger, had such holder fully converted the Viking preferred stock into Viking
common stock immediately prior to the Effective Time. Holders of Viking common stock will have any fractional shares of Company
common stock after the Merger rounded up to the nearest whole share. The Merger Agreement can be terminated under certain circumstances,
including by either Viking or the Company if the Merger has not been consummated on or before December 31, 2020, subject to certain
exceptions.





11


Table of Contents




A further requirement
to the closing of the Merger was that the Company was required to have acquired 30% of Elysium as part of a $9,200,000 investment
in Viking’s Rule 506(c) offering, which transaction was completed on February 3, 2020 (25% of Elysium and $5 million
investment) and June 25, 2020 (5% of Elysium and $4.2 million investment), as discussed below. In the event of termination
of the Merger Agreement, Camber is required, under certain circumstances described below, to return a portion of the Elysium interests
to Viking:



|Reason for Termination                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Percentage of Elysium Retained by Camber |   
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | --
|Termination of the Merger Agreement by mutual agreement of the parties because the conditions to closing the Merger relating to the receipt of exchange listing and regulatory approvals and the Registration Statement on Form S-4, being declared effective, have a reasonable likelihood of not being satisfied through no fault of Camber or Viking                                                                                                                                                                                                         |  |                                          | 20
|Termination of the Merger Agreement due to either (i) Camber’s determination not to proceed with the Merger even though Viking has substantially performed its obligations pursuant to the Merger Agreement (except as discussed below), or (ii) a matter raised in Camber’s Merger Agreement disclosure schedule which was (A) not disclosed by Camber in its SEC reports, (B) could reasonably result in a material adverse effect on Camber in excess of $500,000, and (c) which Viking objected to within 5 business days of disclosure by Camber to Viking |  |                                          | 0 
|Termination of the Merger Agreement due to the failure of Camber’s shareholders to approve the terms of the Merger                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |                                          | 15
|Termination of the Merger Agreement by either party due to any other reason not set forth above through no fault of Camber                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                          | 25
|In the event the Secured Notes are not repaid within 90 days of the date of termination and the Additional Payment (defined above) is not made                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                          | 30



*Assumes
the payment of Secured Notes (defined below) within 90 days of the date of termination of the Merger Agreement and the Additional
Payment (defined below) is made.



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 shall also be due to the Company and payable by Viking in an amount 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.



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 “1st SPA”). On February 3, 2020, the Company and
Discover Growth Fund, an institutional investor (“Discover”), entered into a Stock Purchase Agreement pursuant
to which Discover purchased 525 shares of Series C Preferred Stock of the Company, for $5 million, at a 5% original issue discount
to the $10,000 face value of such preferred stock. Pursuant to the 1st 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 “1st Secured Note”). On June 25, 2020, the Company advanced an additional $4.2 million
to Viking in consideration for, among other things, an additional 10.5% Secured Promissory Note in the principal amount of $4.2
million (the “2nd Secured Note” and together with the 1st Secured Note, the “Secured
Notes”).





12


Table of Contents




The Secured Notes accrue
interest at the rate of 10.5% per annum, payable quarterly, and are due and payable on February 3, 2022. The notes include standard
events of default, including certain defaults relating to the trading status of Viking’s common stock and change of control
transactions involving Viking. The Secured Notes can be prepaid at any time with prior notice as provided therein, and together
with a pre-payment penalty equal to 10.5% of the original amount of the Secured Notes. The Secured Notes are secured by a security
interest, pari 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. Additionally, pursuant to a separate Security and
Pledge Agreement, Viking provided Camber 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 Secured Notes.



The Secured Notes are
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
15th 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 Secured Notes are no longer convertible), provided that the Company is restricted from converting any portion
of the Secured Notes 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%).



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”). 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.



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. The Repurchase Requirement was terminated in connection with the parties’ entry into the Exchange Agreement in
December 2020, discussed below under “Note 18—Subsequent Events”.



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 February 2020 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.



Investment in Unconsolidated Entity



The Company accounts
for its investment in unconsolidated entities under the equity method of accounting when it owns less than 50% of a controlling
interest and does not have the ability to exercise significant influence over the operating and financial policies of the entity.
The Company owns 30% of Elysium as of September 30, 2020 (25% from February 3, 2020, to June 25, 2020), as discussed above, and
accounts for such ownership under the equity method of accounting. The investment is adjusted accordingly for dividends or distributions
it receives and its proportionate share of earnings or losses of the entity. Elysium is involved in oil and gas exploration and
production in the United States. The balance sheet of Elysium at September 30, 2020, included current assets of $2.3 million, total
assets of $30.8 million, total liabilities of $34.9 million, and net liabilities of $(4.1) million. The balance sheet of Elysium
at March 31, 2020, included current assets of $4.0 million, total assets of $37.7 million, total liabilities of $34.0 million,
and net assets of $3.7 million. Additionally, the income statement for Elysium for the three and six months ended September 30,
2020, included total revenues of $4.0 million and $7.8 million and a net loss of $3.2 million and $7.5 million, respectively.





13


Table of Contents




The carrying value
of the notes receivable was reduced by $1,182,952, as the Company’s share of losses from Elysium for the six months ended
September 30, 2020. In accordance with ASC 323-10-35, the losses from Elysium exceeded the equity investment of the Company which
was used to reduce the related notes receivable balance. If the losses were to exceed the notes receivable balance, no additional
losses would be recorded for the equity investment.



The table below shows
the changes in the investment in the unconsolidated entity for the six-month periods ended September 30, 2020 and 2019, respectively.



|                                                                                         |  | 2020 |            |   | 2019 |  
|---------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|Carrying amount at beginning of period                                                   |  | $    | 957,169    |   |      | $
|Investment in Elysium                                                                    |  |      | —          |   |      |  
|Equity change in net loss of unconsolidated entity applied to Long-Term Notes Receivable |  |      | 1,182,952  |   |      |  
|Proportionate Share of Elysium Loss                                                      |  |      | (2,140,121 | ) |      |  
|Carrying amount at end of period                                                         |  | $    | —          |   |      | $



NOTE
6 – LONG-TERM NOTES RECEIVABLE



Long-term notes receivable as of September
30, 2020, and March 31, 2020, are comprised of:



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | September 30, 
2020 |             |  | March 31, 
2020 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------- | ----------- |  | --------------- | -
|Notes receivable from Viking Energy Group, Inc. pursuant to 10.5% Secured Promissory Notes dated February 3, 2020 ($5,000,000) and June 25, 2020 ($4,200,000) in the original principal amount of $9,200,000, having an annual interest rate of 10.5%, with interest due quarterly beginning on May 1, 2020, maturing February 3, 2022. Accrued and unpaid interest of $132,329 and $83,425 is included in accounts receivable at September 30, 2020, and March 31, 2020, respectively. The Note is secured by secured interests in six Viking Energy Group, Inc. subsidiaries. See also “Note 5 – Plan of Merger and Investment In Unconsolidated Entity”.  |  | $                   | 9,200,000   |  |                 | $
|Note receivable from Lineal Star Holdings, LLC pursuant to a Promissory Note dated effective December 31, 2019, in the original principal amount of $1,539,719, accruing annual interest of 10.5%, due quarterly beginning on March 31, 2020, maturing December 31, 2021, with accrued and unpaid interest of $16,132 and $37,966 included in accounts receivable at September 30, 2020, and March 31, 2020, respectively. The Company recognized a partial allowance of $76,152 and the related accrued interest has been fully reserved as of September 30, 2020.  See also “Note 1 – General” and “Note 11 – Lineal Merger Agreement and Divestiture”.    |  |                     | 1,539,719   |  |                 |  
|Note receivable from Lineal Star Holdings, LLC pursuant to a Promissory Note No. 2 dated effective December 31, 2019, in the original principal amount of $800,000, accruing annual interest of 8%, due quarterly beginning on March 31, 2020, maturing December 31, 2021, with accrued and unpaid interest of $38,809 and $15,781 included in accounts receivable at September 30, 2020, and March 31, 2020, respectively.   The Company recognized a partial allowance of $39,567 and the related accrued interest has been fully reserved as of September 30, 2020.  See also “Note 1 – General” and “Note 11 – Lineal Merger Agreement and Divestiture”. |  |                     | 800,000     |  |                 |  
|Equity loss of unconsolidated entity applied to notes receivable. See also “Note 5 – Plan of Merger and Investment In Unconsolidated Entity”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                     | (1,182,952) |  |                 |  
|Less allowance for notes receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                     | (115,719)   |  |                 |  
|Less: current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                     | —           |  |                 |  
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | $                   | 10,241,048  |  |                 | $





14


Table of Contents




As discussed in
Note 11, the Lineal notes are unsecured. Due to the impact of COVID-19 on its operations, Lineal notified the Company that it currently
has insufficient liquidity to make scheduled interest payments due under the notes. The Company is in negotiations with Lineal
to restructure the notes receivable and an allowance has been applied to the principle and accrued interest of these notes (discussed
further below) subject to completion of the negotiations. The Company performed an analysis of Lineal notes to estimate their value
as of September 30, 2020. The Company analyzed information received from Lineal including Lineal’s financial statements,
which calculated the value of the notes and discounted the expected future payments due thereunder using a standard discounted
cash flow model for the principal and accrued interest to the maturity date from September 30, 2020. The Company applied a discount
of 15% based on factors in the Lineal notes to determine a valuation as of September 30, 2020.

Based on this analysis,
the Company recorded a total allowance of $170,660 to reduce the reported value of the Lineal notes and accrued interest, fully
reserving the current interest due of $54,941 with the remainder of $115,719 applied as an allowance to the principal value of
the notes as of September 30, 2020.



NOTE
7 – ASSET RETIREMENT OBLIGATIONS



The following table
presents the reconciliation of the beginning and ending aggregate carrying amounts of long-term legal obligations associated with
the future retirement of oil and natural gas properties for the six-month periods ended September 30, 2020, and 2019, respectively.



|                                       |  | 2020 |         |   | 2019 |  
|-------------------------------------- |  | ---- | ------- | - | ---- | -
|Carrying amount at beginning of period |  | $    | 71,750  |   |      | $
|Panhandle Settlement                   |  |      | (30,227 | ) |      |  
|Payments                               |  |      | —       |   |      |  
|Accretion                              |  |      | —       |   |      |  
|Revisions of previous estimates        |  |      | 4,260   |   |      |  
|Carrying amount at end of period       |  | $    | 45,783  |   |      | $



Camber has short-term obligations of $25,766
and $30,277 related to the plugging liabilities at September 30, 2020, and March 31, 2020, respectively.



NOTE
8 – DERIVATIVE LIABILITY



The Company has determined
that certain warrants the Company has issued contain provisions that protect holders from future issuances of the Company’s
common stock at prices below such warrants’ respective exercise prices and these provisions could result in modification
of the warrants’ exercise price based on a variable that is not an input to the fair value of a “fixed-for-fixed”
option as defined under FASB ASC Topic No. 815 - 40. The warrants granted to Ironman PI Fund II, LP contain anti-dilution provisions
that provide for a reduction in the exercise price of such warrants in the event that future common stock (or securities convertible
into or exercisable for common stock) is issued (or becomes contractually issuable) at a price per share (a “Lower
Price”) that is less than the exercise price of such warrant at the time. The amount of any such adjustment is determined
in accordance with the provisions of the warrant agreement and depends upon the number of shares of common stock issued (or deemed
issued) at the Lower Price and the extent to which the Lower Price is less than the exercise price of the warrant at the time.
The warrants expired on April 21, 2019.





15


Table of Contents




Activities for derivative
warrant instruments during the six months ended September 30, 2020, and 2019 were as follows:



|                                       |  | 2020 |   |  | 2019 |  
|-------------------------------------- |  | ---- | - |  | ---- | -
|Carrying amount at beginning of period |  | $    | — |  |      | $
|Change in fair value                   |  |      | — |  |      |  
|Carrying amount at end of period       |  | $    | — |  |      | $



As of September 30, 2020, the Company had 2,693 shares of Series
C Preferred Stock issued and outstanding, which shares of preferred stock are convertible into common stock of the Company pursuant
to their terms. Such preferred stock is convertible into more shares of common stock than the Company currently has authorized.
Typically this would require the common stock equivalents to be considered tainted derivative instruments, and the Company to record
a derivative liability for the aggregate fair value of the tainted securities; However, the Series C Preferred Stock designation
provides that the Company will not be required to settle any conversion in cash, and requires the company to use its best efforts
to obtain shareholder approval to increase the authorized common shares to a sufficient number to allow for share settlement of
the conversion. If the Company is unable to obtain shareholder approval to increase the authorized common shares, the Series C
Preferred Stockholder would be required to wait until approval is obtained and has no other recourse under the terms of the corrected
designation. See “Note 13 – Stockholders’ Equity (Deficit)” for further discussion.



Additionally, as
of September 30, 2020, the Company had 2 outstanding stock options and warrants to purchase 36 shares outstanding which were
exercisable for shares of the Company’s commons stock. As of September 30, 2020, the Company did not have sufficient
authorized shares of common stock to satisfy any exercise requests and the common stock equivalents are considered to be
tainted derivative instruments. The Company evaluated the fair value of these tainted options and warrants and noted that the
related fair values are de minimus based, primarily, on the exercise prices.



NOTE
9 – COMMITMENTS AND CONTINGENCIES



Office Lease.
Information regarding the Company’s office space is disclosed in greater detail above under “Note
4 - Property and Equipment –Leases”, above.



Lineal (which as of
December 31, 2019, has been completely divested in connection with the Lineal Divestiture discussed in “Note
1 – General” and “Note 11 – Lineal Merger Agreement and Divestiture”) has
the usual liability of contractors for the completion of contracts and the warranty of its work. In addition, Lineal acts as the
prime contractor on a majority of the projects it undertakes and is normally responsible for the performance of the entire project,
including subcontract work. Management is not aware of any material exposure related thereto which has not been provided for in
the accompanying consolidated financial statements.



Legal
Proceedings. From time to time suits and claims against Camber arise in the ordinary course of Camber’s business,
including contract disputes and title disputes. Camber records reserves for contingencies when information available indicates
that a loss is probable, and the amount of the loss can be reasonably estimated.



Maranatha Oil Matter



In November 2015, Randy
L. Robinson, d/b/a Maranatha Oil Co. sued the Company in Gonzales County, Texas (Cause No. 26160). The plaintiff alleged that it
assigned oil and gas leases to the Company in April 2010, retaining a 4% overriding royalty interest and 50% working interest and
that the Company failed to pay such overriding royalty interest or royalty interest. The interests relate to certain oil and gas
properties which the Company subsequently sold to Nordic Oil USA in April 2013. The petition alleges causes of actions for breach
of contract, failure to pay royalties, non-payment of working interest, fraud, fraud in the inducement of contract, money had and
received, constructive trust, violation of theft liability act, continuing tort, and fraudulent concealment. The suit seeks approximately
$100,000 in amounts alleged owed, plus pre-and post-judgment interest. The Company has filed a denial to the claims and intends
to vehemently defend itself against the allegations.





16


Table of Contents




PetroGlobe Energy
Holdings, LLC and Signal Drilling, LLC



In March 2019, PetroGlobe
and Signal sued the Company in the 316th Judicial District of Hutchinson County, Texas (Cause No. 43781). The plaintiffs
alleged causes of action relating to negligent misrepresentation; fraud and willful misconduct; gross negligence; statutory fraud;
breach of contract; and specific performance, in connection with a purchase and sale agreement entered into between the parties
in March 2018, relating to the purchase by plaintiffs of certain oil and gas assets from the Company, and a related joint venture
agreement. The lawsuit seeks in excess of $600,000 in damages, as well as pre- and post-judgment interest, court costs and attorneys’
fees, and punitive and exemplary damages. Additionally, a portion of the revenues from the properties in contention are being held
in suspense as a result of the lawsuit. On October 31, 2019, the Company brought counterclaims against PetroGlobe and Signal, and
Petrolia Oil, LLC, and Ian Acrey, including bringing claims for causes of actions including declaratory judgment (that PetroGlobe
and certain other plaintiffs represented that a lease and related wells were free of all agreements and rights in favor of third
parties and provided a special warranty of title pursuant to the purchase and sale agreement); breach of contract (in connection
with the purchase and sale agreement); statutory fraud; common law fraud (against Mr. Acrey and other plaintiffs); fraud by non-disclosure
(against Mr. Acrey and other plaintiffs); negligent misrepresentation (against Mr. Acrey and other plaintiffs); breach of fiduciary
duty (against Mr. Acrey and other plaintiffs) and seeking attorney’s fees and pre- and post-judgment interest.



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 were met. Subsequent to that date, the Company followed TRC procedures in order
to regain TRC compliance for the Panhandle wells.



On January 31, 2020,
the Company entered into a Compromise Settlement Agreement (the “Settlement Agreement”) with PetroGlobe
Energy Holdings, LLC (“PetroGlobe”), Signal Drilling, LLC (“Signal”), Petrolia Oil, LLC (“Petrolia”),
Prairie Gas Company of Oklahoma, LLC (“PGCO”), and Canadian River Trading Company, LLC (“CRTC”).
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 release was subject to
approval by the Company upon the successful transfer of all wells and partnership interests of the Company’s current wholly-owned
subsidiary CE to PetroGlobe, which occurred on July 16, 2020.



On July 16, 2020, the
Company completed all of the requirements of the Settlement Agreement and assigned PetroGlobe all of its right, title, and interest
in all wells, leases, royalties, minerals, equipment, and other tangible assets associated with specified wells and properties,
located in Hutchinson County, Texas, the $150,000 held in escrow was released to PetroGlobe and the Settlement Agreement transactions
closed. As a result of the transfers, the Company no longer owns CE, and no longer has any interest in or any liabilities related
to the Hutchinson County, Texas wells.



The Company recognized
a net settlement cost of $204,842 included on the statement of operations for the year ended March 31, 2020, in connection with
the settlement. All provisions of the settlement were finalized, and the $150,000, held in escrow pending final approvals, was
released on July 16, 2020.



The Company released
the parties to the Settlement Agreement, including Ian Acrey, individually, as well as their officers, directors, or members from
any claims asserted in the lawsuit, and the parties to the Settlement Agreement along with Ian Acrey, individually, released the
Company, its officers, directors, shareholders and affiliate corporations from any claims asserted in the lawsuit. The Company
did not release any claims or causes of action against N&B Energy, LLC, Sezar Energy, LLP related to Richard Azar, or any of
their affiliates, or predecessors, or successors.



The parties filed a
motion and order to dismiss the lawsuit with prejudice shortly after the execution of the Settlement Agreement.





17


Table of Contents




Apache Corporation



In December 2018, Apache
Corporation (“Apache”) sued Camber, Sezar Energy, L.P., and Texokcan Energy Management Inc., in the 129th
Judicial District Court of Harris County, Texas (Cause 2018-89515). Apache alleged causes of action for Breach of Contract, Money
Had & Received and Conversion, relating to amounts Apache alleged it was owed under a joint operating agreement. Apache is
seeking $656,908 in actual damages, exemplary damages, pre- and post-judgment interest, court costs, and other amounts to which
it may be entitled. Camber filed a general denial to the claims and asserted the affirmative defense of failure to mitigate. On
July 13, 2020, Apache filed a Second Amended Petition against Camber, Sezar, Texokcan, N&B Energy, LLC, and Richard N. Azar,
II alleging Breach of Contract, Defaults under a Joint Operating Agreement, Money Had & Received and Conversion, relating to
amounts Apache allegedly overpaid Sezar and Azar and Unjust Enrichment. On October 26, 2020, the Company entered into an agreement
with Apache to obtain a release of all liability (both parties provided mutual releases) for $20,000 and dismissed the litigation
against the Company, which was recorded in accrued liabilities as of September 30, 2020.



N&B Energy



On September 12, 2019,
N&B Energy filed a petition in the District Court for the 285th Judicial District of Bexar County, Texas (Case
#2019CI11816). Pursuant to the petition, N&B Energy raises claims against the Company for breach of contract, unjust enrichment,
money had and received and disgorgement, in connection with $706,000 which it alleges it is owed under the July 2018 Asset Purchase
Agreement between the Company and N&B Energy (the “Sale Agreement”), for true-ups and post-closing adjustments
associated therewith. The petition seeks amounts owed, pre- and post-judgment interest, and attorney’s fees. On October 21,
2020, the arbitrator issued an Interim Stage II Order granting an award that acknowledged the claims of both parties that resulted
in an arbitration award in favor of N&B Energy of approximately $52,000, which was recorded in accrued liabilities as of September
30, 2020.



Service Agreements



In connection with
the entry into the Amended and Restated Agreement and Plan of Merger with Viking, on August 31, 2020, the Company’s Board
of Directors entered into Past Service Payment and Success Bonus Agreements with each non-executive member of the Board of Directors,
and each of Louis G. Schott, our Interim Chief Executive Officer and Robert Schleizer, our Chief Financial Officer (collectively,
the “Merger Compensation Agreements”). Pursuant to such agreements: each non-executive director, and each officer,
of the Company, is to receive, contingent upon closing the Merger, a payment of $100,000 in consideration for past services provided
to the Company through the date of the Merger as a member of the Board of Directors/officer, and $50,000 as a success bonus for
the Company’s successful completion of the Merger, contingent on such non-executive director/officer’s, continued service
to the Company at the same level of service he is currently performing, through the effective date of the Merger.



Additionally on August
31, 2020, the Company entered into first amendments to the letter agreements the Company had previously entered into with Fides
Energy LLC, an entity owned and controlled by Mr. Schott (“Fides”) and BlackBriar Advisors LLC, an entity
owned and controlled by Mr. Schleizer (“BlackBriar”), to provide that (a) Mr. Schott, through Fides, will
continue to provide services to the Company for a period of six months following the closing of the Merger, on similar terms as
set forth in such original letter agreement, except in a non-executive capacity and that the Company will reimburse Mr. Schott
for the costs of his and his family’s health insurance through such six month term; and (b) Mr. Schleizer, through BlackBriar,
will continue to provide services to the Company for a period of three months following the closing of the Merger, on similar terms
as set forth in such original letter agreement, except in a non-executive capacity and for total consideration of $30,000 per month
(compared to $40,000 per month currently).





18


Table of Contents




NOTE
10 – REVENUE FROM CONTRACTS WITH CUSTOMERS



Disaggregation of Revenue from Contracts with Customers



Oil and Gas Contracts



The following table
disaggregates revenue by significant product type for the three and six months ended September 30, 2020, and 2019, respectively:



|                                         |  | Three Months Ended |        |  | Six Months Ended |  
|---------------------------------------- |  | ------------------ | ------ |  | ---------------- | -
|                                         |  | September 30,      |        |  | September 30,    |  
|                                         |  | 2020               |        |  | 2019             |  
|                                         |  |                    |        |  |                  |  
|Oil sales                                |  | $                  | 45,846 |  |                  | $
|Natural gas sales                        |  |                    | 4,643  |  |                  |  
|Natural gas liquids sales                |  |                    | 6,969  |  |                  |  
|Total oil and gas revenue from customers |  | $                  | 57,458 |  |                  | $



NOTE
11 – LINEAL MERGER AGREEMENT AND DIVESTITURE



Merger Agreement



On July 8, 2019 (the
“Closing Date”), the Company entered into and closed the transactions contemplated by, the Lineal Plan of Merger,
by and between the Company, Camber Energy Merger Sub 2, Inc., the Company’s then newly formed wholly-owned subsidiary, Lineal,
and the Lineal Members. Pursuant to the Lineal Plan of Merger, the Company acquired 100% of the ownership of Lineal from the Lineal
Members in consideration for newly issued shares of Series E Redeemable Convertible Preferred Stock and Series F Redeemable Preferred
Stock.



Divestiture



On December 31, 2019,
the Company entered into and closed the transactions contemplated by the Preferred Stock Redemption Agreement (the “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”), pursuant to which, 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
canceled through the redemption (the “Lineal Divestiture”).



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”); (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. 2”); 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. 2, were released back to the Company). The December 2019 Lineal Note and Lineal Note No. 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. As of September 30,
2020, and March 31, 2020, $54,941 and $53,747, respectively, of interest related to the December 2019 Lineal Note and Lineal Note
No. 2 was accrued and included in the consolidated balance sheets in Accounts Receivable. The $54,941 of accrued interest has been
fully reserved as of September 30, 2020.





19


Table of Contents




The divestiture resulting
from the Redemption Agreement qualified as a discontinued operation in accordance with U.S. generally accepted accounting principles
(“GAAP”). 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 three and six months ended September 30, 2019.



The net consideration
received for the divestiture was as follows:



|Return of Series E Preferred Shares |  | $ | 14,666,000 | 
|----------------------------------- |  | - | ---------- | 
|Return of Series F Preferred Shares |  |   | 2,434,000  | 
|Total net consideration             |  | $ | 17,100,000 | 



The fair value of the
instruments immediately prior to the divestiture was determined using an income valuation approach to estimate cash flows of the
acquired business, analysis of the terms and rights of each class of equity instrument issued by the Company, and an assessment
of the probability of the various scenarios that could occur depending on the outcome of the required stockholder vote to approve
the Lineal Merger, which did not move forward, and the impact each scenario would have on the capital structure of the Company.
Immediately prior to the Lineal Disposition, the Company recognized a gain on the change in fair value of the Series E and F Preferred
Shares of $3,018,000, included within net loss from discontinued operations.



The following table
summarizes the assets and liabilities of Lineal which were transferred from the Company to the Preferred Holders, together with
Lineal, as part of the Redemption agreement:



|Cash                                  |  | $ | 2,101,879  |  
|------------------------------------- |  | - | ---------- | -
|Accounts receivable                   |  |   | 1,673,538  |  
|Deferred tax assets                   |  |   | 34,000     |  
|Cost in excess of billings            |  |   | 497,340    |  
|Property and equipment                |  |   | 1,996,229  |  
|Right of use asset – operating leases |  |   | 710,898    |  
|Other current assets and deposits     |  |   | 49,275     |  
|Goodwill                              |  |   | 18,314,222 |  
|Accounts payable – trade              |  |   | (260,882   | )
|Accrued and other liabilities         |  |   | (369,448   | )
|Billings in excess of costs           |  |   | (445,759   | )
|Operating lease liabilities           |  |   | (710,898   | )
|Finance lease liabilities             |  |   | (237,925   | )
|Notes payable                         |  |   | (3,545,841 | )
|Net assets divested                   |  | $ | 19,806,628 |  



As a result of the
above, the Company recognized a loss on the disposal of the Lineal operations of $2,706,628 included within net loss from discontinued
operations.





20


Table of Contents




Components of amounts
reflected in the Company’s consolidated statements of operations related to discontinued operations are presented in the
following table for the three and six months ended September 30, 2019.



|                                        |  | Three Months Ended |            |   | Six Months Ended   |  
|--------------------------------------- |  | ------------------ | ---------- | - | ------------------ | -
|                                        |  | September 30, 2019 |            |   | September 30, 2019 |  
|Contract revenue                        |  | $                  | 6,285,535  |   |                    | $
|Contract costs                          |  |                    | (4,897,196 | ) |                    |  
|Depreciation and amortization           |  |                    | (64,868    | ) |                    |  
|Selling, general and administrative     |  |                    | (791,312   | ) |                    |  
|Operating income                        |  |                    | 532,159    |   |                    |  
|Other income                            |  |                    | 263,113    |   |                    |  
|Interest expense                        |  |                    | (33,504    | ) |                    |  
|Net income from discontinued operations |  | $                  | 761,768    |   |                    | $



NOTE 12 -
INCOME TAXES



The
Company has estimated that its effective tax rate for U.S. purposes will be zero percent for the 2020 and 2019 fiscal years as
a result of net losses and a full valuation allowance against the net deferred tax assets. Consequently, the Company has recorded
no provision or benefit for income taxes for the three and six months ended September 30, 2020, and 2019, respectively. The tax
liability of $3,000 as shown on the balance sheet as of September 30, 2020, relates to the Company’s potential Oklahoma franchise
tax liability and is not related to income tax.



NOTE
13 – STOCKHOLDERS’ EQUITY (DEFICIT)



Common Stock



During the six months
ended September 30, 2020, the Company issued 176,514 shares of restricted common stock to service providers in consideration for
investor relations and marketing services. The Company recognized $209,502, based on the grant date fair value of the Company’s
common stock, in share-based compensation expense in current and prior periods corresponding to the issuance of these shares, of
which $36,502, was recognized during the three and six months ended September 30, 2020.



Included in such 176,514
shares of common stock were 175,000 shares issued to Sylva International LLC d/b/a SylvaCap Media (“SylvaCap”).
On February 15, 2020, the Company entered into a letter agreement with SylvaCap, pursuant to which SylvaCap agreed to act as the
Company’s non-exclusive digital marketing service provider in consideration for an aggregate of 100,000 shares of restricted
common stock, which are fully-earned upon their issuance, and $50,000 per month during the term of the agreement, which was to
end on June 15, 2020. On May 19, 2020, the Company entered into a first amendment to the SylvaCap agreement. Pursuant to the amendment,
the Company and SylvaCap extended the term of the letter agreement to October 19, 2020. The 100,000 shares were issued on May 15,
2020. On August 31, 2020, the parties entered into a second amendment to the agreement. Pursuant to the amendment, the parties
agreed to amend the engagement agreement to increase the stock fee payable thereunder to 175,000 shares of common stock of the
Company and to provide for the agreement to remain in place until the earlier of (a) October 19, 2020; and (b) the closing
of the Company’s currently contemplated merger with Viking. SylvaCap also made representations regarding its financial condition
and investing knowledge pursuant to the amendment in order for the Company to confirm that an exemption from registration exists
for the issuance of the shares.



Series A Convertible Preferred Stock



On August 31, 2020,
the Board of Directors approved the designation of 28,092 shares of Series A Convertible Preferred Stock (the “Series
A Preferred Stock”), which were designated with the Secretary of State of Nevada on August 31, 2020 (the “Series
A Designation”).





21


Table of Contents




The Series A Preferred
Stock has substantially similar rights as the Series C Preferred Stock of Viking (as amended), as adjusted for the exchange ratio
of the Merger. Specifically, each outstanding share of Series A Preferred Stock will vote an aggregate of (a) 4,900 voting
shares, multiplied by (b) the exchange ratio of the Merger, on all stockholder matters, voting together with the Company’s
common stock as a single class (which voting rights will equal the same voting rights that would have applied had the Series C
Preferred Stock of Viking been fully converted into Viking common stock immediately prior to the effective time of the Merger)(described
herein as the “voting shares”); will receive, upon the occurrence of a liquidation of the Company, the same
amount of consideration that would have been due if such shares of Series A Preferred Stock had been converted into common stock
of the Company immediately prior to such liquidation; and provide rights for such shares of Series A Preferred Stock to convert,
at the option of the holder thereof, into a number of shares of Company common stock equal to (a) 4,900 shares, multiplied
by (b) the exchange ratio of the Merger (which will equal the number of shares of Company common stock which would have been
issuable to the holders of the Series C Preferred Stock of Viking in the Merger, had such Series C Preferred Stock been converted
into common stock of Viking immediately prior to the effective time of the Merger)(described herein as the “conversion
shares”).



Such Series A Preferred
Stock does not have any redemption rights and shares equally in any dividends authorized by the Board of Directors for distribution
to common stockholders, on an as-converted basis.



The Series A Designation
also provides that such number of voting shares and conversion shares as calculated as discussed above, shall be updated by the
Company following the Merger, without any required approval of the holders of such Series A Preferred Stock, to include the actual
numerical value of such voting shares and conversion shares, upon closing of the Merger.



No shares of Series
A Preferred Stock will be issued by the Company until or unless the Merger closes.



Series C Redeemable Convertible Preferred
Stock



On February 3, 2020,
the Company sold 525 shares of Series C Preferred Stock for total proceeds of $5 million. In the event the Merger Agreement entered
into with Viking in February 2020 is terminated for any reason, we (until June 22, 2020, when such terms were amended) were
required to redeem the 525 shares of Series C Preferred Stock at a 110% premium, in an aggregate amount equal to $5,775,000. Because
of the requirement to redeem such 525 shares of Series C Preferred Stock in the event the Merger Agreement is terminated, which
termination is partially outside the control of the Company, such 525 shares of Series C Preferred Stock is classified as temporary
equity on the March 31, 2020 balance sheet. Temporary equity is a security with redemption features that are outside the control
of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable. Subsequent
to March 31, 2020, on June 22, 2020, the Company and Discover terminated the obligation for Camber to redeem the 525 shares of
Series C Preferred Stock upon termination of the Merger Agreement; and provided that a new obligation exists in connection with
the required redemption of 630 shares of Series C Preferred Stock sold on June 22, 2020, for total proceeds of $6 million, which
have a redemption value of $6,930,000. As such, while the prior redemption obligation for the 525 Series C Preferred Stock shares
in connection with the February 2020 sale of Series C Preferred Stock was removed from temporary equity on the September 30, 2020
balance sheet, the $6,000,000 of total proceeds received on June 22, 2020, in connection with the sale of the 630 shares of Series
C Preferred Stock, is included in temporary equity on the September 30, 2020 balance sheet.



During the six months
ended September 30, 2020, the Company sold 630 shares of Series C Preferred Stock to Discover in consideration for $6 million.
During the six months ended September 30, 2019, the Company sold no shares of Series C Preferred Stock.





22


Table of Contents




During the six months
ended September 30, 2020, Discover converted 756 shares of the Series C Preferred Stock with a face value of $7,560,000, and a
total of 19,823,486 shares of common stock were issued, which includes additional shares for conversion premiums and true-ups in
connection with those conversions through September 30, 2020. During the six months ended September 30, 2019, Discover converted
2 shares of the Series C Preferred Stock and Discover Growth Fund LLC, which purchased shares of Series C Preferred Stock from
the Company in December 2018 and subsequently transferred all its remaining shares to Discover who also converted 1 share of Series
C Preferred Stock, with an aggregate face value of $30,000, and a total of 1,472,517 shares of common stock were issued, which
includes additional shares for conversion premiums and true-ups in connection with those conversions through September 30, 2019.



As of September 30,
2020, and March 31, 2020, the Company accrued common stock dividends on the Series C Preferred Stock based on the then 24.95% premium
dividend rate. The Company recognized a total charge to additional paid-in capital and stock dividends distributable but not issued
of $3,331,975 and $3,771,941 related to the stock dividend declared but not issued for the six months ended September 30, 2020,
and 2019, respectively.



As of September 30,
2020, a total of 15,348 shares of common stock related to prior conversions of Series C Preferred Stock are held in abeyance subject
to the Company increasing its authorized and unissued shares of common stock.





On
December 14, 2020, the Company, with the approval of the Board of Directors of the Company, and the sole holder of the
Company’s Series C Preferred Stock, filed certificate of corrections with the Secretary of State of Nevada to correct
the original designation of the Series C Preferred Stock and the first amended and restated designation thereof, to correct
certain errors which were identified in such designations, which failed to clarify, in error, that (A) the failure of any
holder of Series C Preferred Stock to receive the number of shares of common stock due upon conversion of Series C Preferred
Stock within five trading days of any conversion notice, and any halt or suspension of trading of the Company’s common
stock on its then applicable trading market or by any U.S. governmental agency, for 10 or more consecutive trading days,
should not have been ‘deemed liquidation events’ under the Series C Preferred Stock designation, unless such
events were due to the occurrence of an event that is solely within the control of the Company; (B) the Company was not
required to redeem any shares of Series C Preferred Stock for cash solely because the Company does not have sufficient
authorized but unissued shares of common stock to issue upon receipt of a notice of conversion or upon a maturity conversion
(where the remaining shares of Series C Preferred Stock convert into common stock of the Company automatically on the seven
year anniversary date of the Series C Preferred Stock)(a “Maturity Conversion”); and (C) that a Maturity
Conversion is only required to occur to the extent that the Company has sufficient authorized but unissued shares of common
stock available for issuance upon conversion in connection therewith. The corrections were made solely to match the
agreements to the original intent of the parties. The parties determined the corrections were needed because without such
corrections, under ASC480-10- S99-3A5 and ASC 480-10-S99-3A3(f), the non-corrected designations could have required the
Series C Preferred Stock to be classified as temporary equity due to the foregoing events being outside the Company’s
control. The embedded conversion meets the requirements to be considered permanent equity as stipulated under ASC 815-40-25,
under an assessment of the option as a freestanding instrument, as the option requires net share settlement and the issuer
has the choice to settle in cash if it wishes.



The
corrections were effective as of the original filing dates with the Secretary of State of Nevada of the Company’s original
Series C Preferred Stock designation (August 25, 2016) and the Company’s first amended and restated Series C Preferred Stock
designation (July 8, 2019), subject to certain exceptions set forth in the Nevada Revised Statutes. The corrections corrected
the designations to reflect the original intentions of the parties and to conform such designations to the way the Series C Preferred
Stock had been accounted for in practice since its original designation/issuance.



Also
on December 14, 2020, the Company, with the approval of the Board of Directors of the Company, and the sole holder of the Company’s
Series C Preferred Stock, filed a second amended and restated designation of the Series C Preferred Stock with the Secretary of
State of Nevada, which was effective upon filing (the “Second Amended and Restated Designation”), which amended
the first amended and restated designation of the Series C Preferred Stock (as corrected), to include the right of the Company
to redeem all (but not less than all) of the outstanding shares of Series C Preferred Stock at a redemption price equal to 110%
of the face value of such preferred stock ($10,000 per share), at the Company’s option, at any time, in the event the Company
is not in default of any of the terms of any Stock Purchase Agreement pursuant to which such applicable shares of Series C Preferred
Stock were sold; (b) update the conversion price of the face amount ($10,000 per share) of the Series C Preferred Stock in connection
with the Company’s prior 1-for-50 reverse stock split (i.e., to confirm the change in such conversion price from $3.25 per
share to $165.50 per share), which had no effect on the conversion rate of conversion premiums due under the terms of the Series
C Preferred Stock, and which conversion price was already being reflected in prior conversion notices after the date of such reverse
split; (c) formally amend the measurement period for the calculation of the conversion of conversion premiums due under the terms
of the Series C Preferred Stock to begin on the later of February 3, 2020 or, if no trigger event (as described in the designation
of the Series C Preferred Stock) has occurred, 30 trading days, and if a trigger event has occurred 60 trading days, before the
date of an applicable conversion notice, which had previously been agreed to contractually by the parties (i.e., the beginning
of each future measurement period for conversions made after February 3, 2020, will extend back to February 3, 2020); and (d)
update the references in the designation to the “Merger” which had previously referred to the Company’s
combination with Lineal Star Holdings, LLC, which transaction was rescinded and terminated effective December 31, 2019, to refer
to the planned merger with Viking Energy Group, Inc., which has the effect of the Viking merger being approved by the holder of
the Series C Preferred Stock and not being a ‘deemed liquidation event’ under the Second Amended and Restated Designation.



23


Table of Contents




Warrants



The following is a summary of the Company’s
outstanding warrants at September 30, 2020:



|Warrants    |     |  | Exercise     |  |  |  | Expiration         |  |  |   | Intrinsic Value at | 
|----------- | --- |  | ------------ |  |  |  | ------------------ |  |  | - | ------------------ | 
|Outstanding |     |  | Price ($)    |  |  |  | Date               |  |  |   | September 30, 2020 | 
|1           | (1) |  | 1,171,875.00 |  |  |  | April 26, 2021     |  |  | $ | —                  | 
|3           | (2) |  | 195,312.50   |  |  |  | September 12, 2022 |  |  |   | —                  | 
|32          | (3) |  | 12,187.50    |  |  |  | May 24, 2023       |  |  |   | —                  | 
|36          |     |  |              |  |  |  |                    |  |  | $ | —                  | 



|(1) | Warrants issued in connection with the sale of convertible notes. The warrants were exercisable on the grant date (April 26, 2016) and remain exercisable until April 26, 2021.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Warrants issued in connection with funding. The warrants were exercisable on the grant date (September 12, 2017) and remain exercisable until September 12, 2022.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Warrants issued in connection with a Severance Agreement with Richard N. Azar II, the Company’s former Chief Executive Officer. The warrants were exercisable on the grant date (May 25, 2018) and remain exercisable until May 24, 2023.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



NOTE 14 –
SHARE-BASED COMPENSATION



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



Stock Options



As of September 30,
2020, and March 31, 2020, the Company had 2 stock options outstanding with a weighted average exercise price of $40,429,700. The
options expire in October 2020.



Of the Company’s
outstanding options, no options were exercised or forfeited during the six months ended September 30, 2020. Additionally, no stock
options were granted during the six months ended September 30, 2020. Compensation expense related to stock options during the six-month
periods ended September 30, 2020, and 2019 was $0.



Options outstanding
and exercisable at September 30, 2020, and March 31, 2020, had no intrinsic value. The intrinsic value is based upon the difference
between the market price of Camber’s common stock on the date of exercise and the grant price of the stock options.



As of September 30,
2020, and March 31, 2020, there was no remaining unrecognized share-based compensation expense related to all non-vested stock
options.



Options outstanding and exercisable as
of September 30, 2020:



|Exercise   |  | Remaining   |       |  | Options     |  |   | Options     | 
|---------- |  | ----------- | ----- |  | ----------- |  | - | ----------- | 
|Price ($)  |  | Life (Yrs.) |       |  | Outstanding |  |   | Exercisable | 
|40,429,700 |  |             | 0.02  |  |             |  | 2 |             | 
|           |  |             | Total |  |             |  | 2 |             | 





24


Table of Contents




NOTE 15 –
INCOME (LOSS) PER COMMON SHARE



The calculation of income (loss) per
share for the three and six months ended September 30, 2020, and 2019 was as follows:



|                                             |  | Three Months Ended |            |   | Six Months Ended |  
|-------------------------------------------- |  | ------------------ | ---------- | - | ---------------- | -
|                                             |  | September 30,      |            |   | September 30,    |  
|                                             |  | 2020               |            |   | 2019             |  
|Numerator:                                   |  |                    |            |   |                  |  
|Net (loss) before Discontinued Operations    |  | $                  | (2,056,508 | ) |                  | $
|Discontinued Operations                      |  |                    | —          |   |                  |  
|Net (Loss)                                   |  |                    | (2,056,508 | ) |                  |  
|Less preferred dividends                     |  |                    | (1,651,219 | ) |                  |  
|Net loss attributable to common stockholders |  | $                  | (3,707,727 | ) |                  | $
|                                             |  |                    |            |   |                  |  
|Denominator                                  |  | $                  |            |   |                  | $
|Weighted average share – basic               |  |                    | 19,815,872 |   |                  |  
|                                             |  |                    |            |   |                  |  
|Dilutive effect of common stock equivalents  |  |                    |            |   |                  |  
|Options/warrants                             |  |                    | —          |   |                  |  
|Preferred C shares                           |  |                    | —          |   |                  |  
|                                             |  |                    |            |   |                  |  
|Denominator                                  |  |                    |            |   |                  |  
|Total Weighted average shares – diluted      |  |                    | 19,815,872 |   |                  |  
|Income (loss) per share – basic              |  |                    |            |   |                  |  
|Continuing operations                        |  | $                  | (0.19      | ) |                  | $
|Discontinued Operations                      |  |                    | —          |   |                  |  
|Total                                        |  |                    | (0.19      | ) |                  |  
|Income (loss) per share – diluted            |  |                    |            |   |                  |  
|Continuing Operations                        |  | $                  | (0.19      | ) |                  | $
|Discontinued Operations                      |  |                    | —          |   |                  |  
|Total                                        |  |                    | (0.19)     |   |                  |  





25


Table of Contents




For the three and six
months ended September 30, 2020, and 2019, the following share equivalents related to convertible debt and warrants to purchase
shares of common stock were excluded from the computation of diluted net income (loss) per share as the inclusion of such
shares would be anti-dilutive.



|                             |  | Three Months Ended |                |  | Six Months Ended | 
|---------------------------- |  | ------------------ | -------------- |  | ---------------- | 
|                             |  | September 30,      |                |  | September 30,    | 
|                             |  | 2020               |                |  | 2019             | 
|Common Shares Issuable for:  |  |                    |                |  |                  | 
|Convertible Debt             |  |                    | 276            |  |                  | 
|Options and Warrants         |  |                    | 38             |  |                  | 
|Series C Preferred Shares(1) |  |                    | 47,033,410,723 |  |                  | 
|Total                        |  |                    | 47,033,411,037 |  |                  | 



| | (1) | Based on the lowest possible conversion rate of the Series C Preferred Stock ($0.001 per share, the par value of the common
stock).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------



NOTE 16 –
SUPPLEMENTAL CASH FLOW INFORMATION



Net cash paid for interest
and income taxes was as follows for the six months ended September 30, 2020, and 2019:



|             |  | 2020 |   |  | 2019 |  
|------------ |  | ---- | - |  | ---- | -
|Interest     |  | $    | — |  |      | $
|Income taxes |  | $    | — |  |      | $



Non-cash investing
and financing activities included the following:



|                                                          |  | Six
Months Ended September 30, |          
|--------------------------------------------------------- |  | ------------------------------ | ---------
|                                                          |  | 2020                           |          
|Settlement of Common Stock Payable                        |  | $                              | 173,000  
|Change in Estimate for Asset Retirement Obligations       |  | $                              | 4,260    
|Stock Dividends Distributable but not Issued              |  | $                              | 3,331,975
|Issuance of Stock Dividends                               |  | $                              | —        
|Conversion of Preferred C Stock to Common Stock           |  | $                              | 19,823   
|Common Stock Issued in Abeyance                           |  | $                              | —        
|Reclassification of Preferred C Stock to Permanent Equity |  | $                              | 5,000,000



NOTE 17 –
FAIR VALUE MEASUREMENTS



When applying fair
value principles in the valuation of assets and liabilities, the Company is required to maximize the use of quoted market prices
and minimize the use of unobservable inputs. The Company has not changed its valuation techniques used in measuring the fair value
of any financial assets or liabilities during the fiscal years presented. The fair value estimates take into consideration the
credit risk of both the Company and its counterparties.



When active market
quotes are not available for financial assets and liabilities, the Company uses industry-standard valuation models. Where applicable,
these models project future cash flows and discount the future amounts to a present value using market-based observable inputs
including credit risk, interest rate curves, foreign currency rates, and forward and spot prices for currencies. In circumstances
where market-based observable inputs are not available, management judgment is used to develop assumptions to estimate fair value.
Generally, the fair value of our Level 3 instruments are estimated as the net present value of expected future cash flows
based on internal and external inputs.





26


Table of Contents




Fair Value Measurements



There were no liabilities carried at fair
value as of September 30, 2020, and March 31, 2020.



Assets and Liabilities Measured at Fair Value on a Non-recurring
Basis



In addition to the
financial instruments that are recorded at fair value on a recurring basis, the Company records assets and liabilities at fair
value on a non-recurring basis as required by U.S. GAAP. Generally, assets are recorded at fair value on a non-recurring basis
as a result of impairment charges or as part of a business combination. There were no liabilities carried at fair value as of September
30, 2020, and March 31, 2020.



NOTE
18 – SUBSEQUENT EVENTS



On October
9, 2020, Viking and Camber entered into the First Amendment to Amended and Restated Agreement and Plan of Merger (the “First
Amendment”) to amend the Merger Agreement to (a) fix the percentage of the post-Merger capitalization of the
combined company which would be held by stockholders of Camber (on a fully-diluted basis, but without taking into account the shares
of common stock of Camber issuable upon conversion of Camber’s outstanding Series C Preferred Stock)(the “Camber
Percentage”) at 20% (previously such Camber Percentage was adjustable between 15% to 25%, depending on the amount
of cash and/or other unencumbered assets Camber and Viking had at the time of the closing of the Merger which was available to
the combined company); (b) extend the date that the Merger Agreement could be terminated by either party until December 31,
2020, provided that the right to terminate the Merger Agreement thereafter is not available to a party if the failure of the closing
of the Merger to occur by such date is principally due to the failure of such party to perform or observe the obligations, covenants
and agreements of such party set forth in the Merger Agreement; and (c) remove the requirement that Viking obtain the consent
of its lender, ABC Funding, LLC, for the Merger.





On December
11, 2020, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Discover (the
“Investor”), the sole shareholder of the Company’s Series C Preferred Stock. The transactions contemplated
by the Exchange Agreement closed on December 11, 2020. Pursuant to the Exchange Agreement, as an accommodation to the Company,
and in order to reduce the potential dilutive impact of the Series C Preferred Stock, by reducing the number of outstanding shares
of Series C Preferred Stock, the Investor exchanged 600 shares of Series C Preferred Stock (the “Exchanged Shares”),
which had an aggregate face value of $6,000,000 (600 shares each with a face value of $10,000 per share), for a $6,000,000 secured
Promissory Note (the “Investor Note”). The Company is in the process of obtaining the Exchanged Shares from
the Investor and plans to cancel such shares once transferred. The 600 Exchanged Shares were outstanding as of September 30, 2020,
and included in temporary equity on the balance sheet.



Pursuant
to the Exchange Agreement (a) the Investor waived all prior breaches and defaults that occurred prior to the date of the Exchange
Agreement or that may continue or occur for 90 days thereafter, under any agreements entered into with the Investor relating to
the acquisition of shares of Series C Preferred Stock (the “90 Day Period”), and waived all rights and remedies
with respect to any such breaches and defaults; (b) we agreed to timely file all reports required by the Securities and Exchange
Commission (the “SEC”) for so long as the Investor holds any Series C Preferred Stock (provided the Company
was provided until December 31, 2020, to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020); (c) we
agreed to indemnify and hold the Investor, its affiliates, managers and advisors, and their related parties, harmless from any
losses related to any breach of the Exchange Agreement (or other transaction documents), and from any action by the Company or
a creditor or stockholder of the Company, challenging the transactions contemplated by the Exchange Agreement and related agreements,
except to the extent finally adjudicated to be caused solely by such indemnified party’s unexcused material breach of an
express provision of the Exchange Agreement or related agreements; (d) we agreed to reserve from our outstanding common stock,
shares of common stock to allow for the conversion of the outstanding Series C Preferred Stock (subject to the 90 Day Period);
(e) the Investor agreed to vote all shares of common stock which it holds as of the record date for any shareholder meeting
in favor of the Company’s previously announced pending plan of merger with Viking (the “Merger”), and
the other proposals that are recommended for approval by the Board of Directors of the Company in the proxy statement filed in
connection with such Merger; (f) the Investor agreed to the Merger and agreed to waive any rights it may have (including favored
nations, anti-dilution and/or reset rights) in connection therewith; (g) we acknowledged that the Investor had previously
provided notice to the Company of its intent to increase the beneficial ownership limitation set forth in the designation of the
Series C Preferred Stock to 9.99%, and that such limitation will continue to apply moving forward; and (h) we provided the
Investor and its related parties a general release.



The Exchange Agreement also amended the June 22, 2020 Stock Purchase
Agreement previously entered into with the Investor, pursuant to which the Investor purchased 630 shares of Series C Preferred
Stock, to remove from such June 22, 2020 agreement (i) the prohibition on the Investor transferring and/or selling shares
of Series C Preferred Stock; and (ii) the repurchase obligation, which required the Company to redeem for cash, at 110% of
the face value thereof ($10,000 per share), all 630 shares of Series C Preferred Stock sold by the Company in June 2020, in the
event the Merger did not close by the required date set forth in the plan of merger relating thereto (as amended from time to time),
and all similar provisions in any prior agreements entered into between the Company and the Investor. As a result of such amendment,
the remaining 30 shares of Series C Preferred Stock sold in June 2020, that were included in temporary equity as of September 30,
2020 and which were not part of the Exchanged Shares, became permanent equity.



The Investor Note
(which has no conversion features) has a balance of $6,000,000 and accrues interest at the rate of 10% per annum, which
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) December 11, 2022 (which
may be extended with the mutual consent of the parties and a written amendment to the Investor Note signed by the Investor);
(b) March 11, 2021, in the event the Merger does not close or is not fully consummated by such date; and (c) 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). The Investor Note includes customary events of default. Upon the occurrence of an
event of default, the Investor has the right to accelerate the full amount of the Investor Note and all interest thereon, to
enforce its rights under the Security Agreement, and take other actions allowed under applicable law.



Payment
of the Investor Note 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 Investor Note, provided that no guarantees
have been entered into to date. The Investor Note may be assigned by the Investor subject to compliance with applicable securities
laws. The Company may prepay the Investor Note at any time.



The payment
of amounts due under the Investor Note is secured by the terms of a Security Agreement entered into by the Company in favor of
the Investor, which provides the Investor a first priority security interest in substantially all of our assets (the “Security
Agreement”). If an event of default occurs under the Investor Note, the Investor can enforce its rights under the Security
Agreement and foreclose on our assets in order to satisfy amounts owed thereunder.







27


Table of Contents




ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.



CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS



This
report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are generally located in the material set forth below under the headings “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” but may be found in other locations as well. For a more detailed description of the risks and uncertainties
involved, the following discussion and analysis should be read in conjunction with management’s discussion and analysis
contained in Camber’s Annual
Report on Form 10-K for the fiscal year ended March 31, 2020, as filed with the SEC on June 29, 2020, and related
discussion of our business and properties contained therein.



These
forward-looking statements are subject to risks and uncertainties and other factors that may cause our actual results, performance,
or achievements to be materially different from the results, performance, or achievements expressed or implied by the forward-looking
statements. You should not unduly rely on these statements. Factors, risks, and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements include, among others:



| | ● | the
availability of funding and the terms of such funding;
| | - | ----------------------------------------------------------



| | ● | our
    ability to integrate and realize the benefits from future acquisitions that we may complete, including our pending Merger
    with Viking Energy Group, Inc. (“Viking”) and the costs of such integrations;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | our
    ability to close the announced Merger with Viking on the terms disclosed, if at all;
| | - | --------------------------------------------------------------------------------------------



| | ● | the
    consideration we may be required to pay under certain circumstances upon termination of the Merger with Viking;
| | - | -----------------------------------------------------------------------------------------------------------------------



| | ● | our
    ability to timely collect amounts owed to us under secured and unsecured notes payable;
| | - | -----------------------------------------------------------------------------------------------



| | ● | costs
    associated with the Viking Merger;
| | - | --------------------------------------------



| | ● | significant
    dilution caused by the conversion of Series C Preferred Stock into common stock, as well as downward pressure on our stock
    price as a result of the sale of such shares;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | our
    growth strategies;
| | - | --------------------------



| | ● | anticipated
    trends in our business;
| | - | ---------------------------------------



| | ● | our
    ability to repay outstanding loans and satisfy our outstanding liabilities;
| | - | -----------------------------------------------------------------------------------



| | ● | our
    liquidity and ability to finance our exploration, acquisition, and development strategies;
| | - | --------------------------------------------------------------------------------------------------



| | ● | market
    conditions in the oil and gas and pipeline services industries;
| | - | --------------------------------------------------------------------------



| | ● | the
    ability of the Company to collect amounts due under outstanding promissory notes, including interest and principal payable
    thereunder, and defaults under such promissory notes;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the
    timing, cost, and procedure for future acquisitions;
| | - | ------------------------------------------------------------



| | ● | the
    impact of government regulation;
| | - | ----------------------------------------





28


Table of Contents




| | ● | estimates
    regarding future net revenues from oil and natural gas reserves and the present value thereof;
| | - | ------------------------------------------------------------------------------------------------------------



| | ● | legal
    proceedings and/or the outcome of and/or negative perceptions associated therewith;
| | - | ---------------------------------------------------------------------------------------------



| | ● | planned
    capital expenditures (including the amount and nature thereof);
| | - | ---------------------------------------------------------------------------



| | ● | increases
    in oil and gas production;
| | - | ----------------------------------------



| | ● | changes
    in the market price of oil and gas;
| | - | -----------------------------------------------



| | ● | changes
    in the number of drilling rigs available;
| | - | -----------------------------------------------------



| | ● | the
    number of wells we anticipate drilling in the future;
| | - | -------------------------------------------------------------



| | ● | estimates,
    plans, and projections relating to acquired properties;
| | - | ----------------------------------------------------------------------



| | ● | the
    number of potential drilling locations;
| | - | -----------------------------------------------



| | ● | our
    ability to maintain our NYSE listing;
| | - | ---------------------------------------------



| | ● | the
    voting and conversion rights of our preferred stock;
| | - | ------------------------------------------------------------



| | ● | the
    effects of global pandemics, such as COVID-19 on our operations, properties, the market for oil and gas, and the demand for
    oil and gas; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | our
    financial position, business strategy, and other plans and objectives for future operations.
| | - | ----------------------------------------------------------------------------------------------------



We
identify forward-looking statements by use of terms such as “may,” “will,” “expect,”
“anticipate,” “estimate,” “hope,” “plan,” “believe,”
“predict,” “envision,” “intend,” “continue,” “potential,”
“should,” “confident,” “could” and similar words and expressions, although
some forward-looking statements may be expressed differently. You should be aware that our actual results could differ materially
from those contained in the forward-looking statements. You should consider carefully the statements under the “Risk
Factors” section of this report and other sections of this report which describe factors that could cause our actual
results to differ from those set forth in the forward-looking statements, and the following factors:



| | ● | the
    availability of funding and the terms of such funding;
| | - | --------------------------------------------------------------



| | ● | our
    ability to integrate and realize the benefits from future acquisitions that we may complete, including the pending Merger
    with Viking;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | our
    ability to timely close the Viking Merger on the terms disclosed and closing conditions associated therewith;
| | - | ---------------------------------------------------------------------------------------------------------------------



| | ● | significant
    dilution caused by the conversion of Series C Preferred Stock into common stock, as well as downward pressure on our stock
    price as a result of the sale of such shares;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | our
    growth strategies;
| | - | --------------------------



| | ● | anticipated
    trends in our businesses;
| | - | -----------------------------------------



| | ● | our
    ability to repay outstanding loans and satisfy our outstanding liabilities;
| | - | -----------------------------------------------------------------------------------





29


Table of Contents




| | ● | our
    ability to collect amounts due under outstanding promissory notes owed to us, and the holder’s ability and willingness
    to pay the interest due thereunder and principal thereon;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | our
    liquidity and ability to finance our acquisition and development strategies;
| | - | ------------------------------------------------------------------------------------



| | ● | market
    conditions in the oil and gas and pipeline services industries;
| | - | --------------------------------------------------------------------------



| | ● | the
    timing, cost, and procedure for future acquisitions;
| | - | ------------------------------------------------------------



| | ● | the
    impact of operational hazards;
| | - | --------------------------------------



| | ● | the
    outcome of competitive bids;
| | - | ------------------------------------



| | ● | customer
    defaults;
| | - | ----------------------



| | ● | estimates
    regarding future net revenues from oil and natural gas reserves and the present value thereof;
| | - | ------------------------------------------------------------------------------------------------------------



| | ● | legal
    proceedings and/or the outcome of and/or negative perceptions associated therewith;
| | - | ---------------------------------------------------------------------------------------------



| | ● | planned
    capital expenditures (including the amount and nature thereof);
| | - | ---------------------------------------------------------------------------



| | ● | increases
    in oil and gas production;
| | - | ----------------------------------------



| | ● | changes
    in the market price of oil and gas;
| | - | -----------------------------------------------



| | ● | changes
    in the number of drilling rigs available;
| | - | -----------------------------------------------------



| | ● | the
    number of wells we anticipate drilling in the future;
| | - | -------------------------------------------------------------



| | ● | estimates,
    plans, and projections relating to acquired properties, businesses, and operations;
| | - | --------------------------------------------------------------------------------------------------



| | ● | the
    number of potential drilling locations;
| | - | -----------------------------------------------



| | ● | our
    ability to maintain our NYSE American listing; and
| | - | ----------------------------------------------------------



| | ● | our
    financial position, business strategy, and other plans and objectives for future operations.
| | - | ----------------------------------------------------------------------------------------------------



Forward-looking
statements speak only as of the date of this report or the date of any document incorporated by reference in this report. Except
to the extent required by applicable law or regulation, we do not undertake any obligation to update forward-looking statements
to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.



Review
of Information and Definitions



This
information should be read in conjunction with the interim unaudited financial statements and the notes thereto included in this
Quarterly Report on Form 10-Q, and the consolidated financial statements and notes thereto and Part II, Item 7, Management’s
Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K
for the year ended March 31, 2020.



Certain
capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our consolidated
financial statements included above under “Part I – Financial Information –Item
1. Financial Statements”.



Unless
the context requires otherwise, references to the “Company,” “we,” “us,”
“our,” “Camber”, and “Camber Energy, Inc.” refer specifically to Camber
Energy, Inc. and its consolidated subsidiaries.





30


Table of Contents




In
addition, unless the context otherwise requires and for the purposes of this report only:



| | ● | “Exchange
    Act” refers to the Securities Exchange Act of 1934, as amended;
| | - | -----------------------------------------------------------------------------



| | ● | “Bbl”
    refers to one stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude oil or other
    liquid hydrocarbons;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | “SEC”
    or the “Commission” refers to the United States Securities and Exchange Commission;
| | - | ---------------------------------------------------------------------------------------------



| | ● | “Boe”
    barrels of oil equivalent, determined using the ratio of one Bbl of crude oil, condensate or natural gas liquids, to six Mcf
    of natural gas;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | “Mcf”
    refers to a thousand cubic feet of natural gas; and
| | - | -------------------------------------------------------------



| | ● | “Securities
    Act” refers to the Securities Act of 1933, as amended.
| | - | ----------------------------------------------------------------------



Overview



Corporate
History and Operations



Camber
Energy, Inc., a Nevada corporation, is based in Houston, Texas. 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 in Louisiana and
Texas. 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. After
the divestiture of our South Texas properties during fiscal 2019, we initiated discussions with several potential acquisition
and merger candidates to diversify our operations. Additionally, from the July 8, 2019 acquisition of Lineal, until the divestiture
of Lineal effective on December 31, 2019, each as discussed in further detail under “Part I. Financial Information –
Item 1. Financial Statements” – “Note 11 – Lineal Merger Agreement and Divestiture”,
the Company was involved in the oil and gas services industry.



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”). Lineal is a specialty construction and oil and gas services enterprise providing
services to the energy industry. 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 under “Note 1 – General” and “Note
11 – Lineal Merger Agreement and Divestiture”, to the consolidated unaudited financial statements included under
“Part I. – Item 1. Financial Statements”. Lineal is a specialty construction and oil and gas services
enterprise providing services to the energy industry, and, as a result of the acquisition, during the period that the Company
owned Lineal, the Company undertook oil and gas services. On October 8, 2019, Lineal acquired an 80% interest in Evercon
Energy LLC (“Evercon”). 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. As part of the Lineal Divestiture, Evercon was divested
effective December 31, 2019.



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 “Redemption Agreement” and the “Preferred Holders”). 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. Additionally, all of the Series E Preferred
Stock and Series F Preferred Stock of the Company were automatically canceled 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. See also – “Note
1 – General” and “Note 11 – Lineal Merger Agreement and Divestiture”,
to the consolidated unaudited financial statements included under “Part I. – Item 1. Financial Statements”.





31


Table of Contents




On February 3, 2020, the Company entered into an Agreement and Plan
of Merger, which was amended and restated by an Amended and Restated Agreement and Plan of Merger entered into with Viking on August
31, 2020, and which has been further amended to date (as further amended to date, the “Merger Agreement”) with
Viking Energy Group, Inc. (“Viking”). 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.



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. 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. As described below, the Merger is subject to various closing conditions that may not be met pursuant
to the contemplated timeline, if at all.



Recent
Events



Viking
Plan of Merger



On
February 3, 2020, the Company and Viking entered into the original Agreement and Plan of Merger Agreement which was amended and
restated by an Amended and Restated Merger Agreement entered into between the parties on August 31, 2020, which has been further
amended. Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective
Time”), (a) 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(when including the Viking preferred stock conversion rights (defined below)) of
80% of the Company’s post-closing capitalization (excluding shares issuable upon conversion of the Series C Preferred Stock
of the Company); and (b) each share of Viking preferred stock outstanding immediately prior to the effective time
will be converted into one share of Camber Series A Preferred Stock, which preferred stock will have the right to vote, and convert
into, that number of shares of Camber common stock that its holder would have received in the Merger, had such holder fully converted
the Viking preferred stock into Viking common stock immediately prior to the Effective Time (the “Viking preferred stock
conversion rights”). Holders of Viking Common Stock will have any fractional shares of
Company common stock after the Merger rounded up to the nearest whole share. The completion of the Merger is subject tocertain
closing conditions.



The
Merger Agreement can be terminated (i) at any time with the mutual consent of the parties; (ii) by either the Company
or Viking if any governmental consent or approval required for closing is not obtained, or any governmental entity issues a final
non-appealable order or similar decree preventing the Merger; (iii) by either Viking or the Company if the Merger shall not
have been consummated on or before December 31, 2020, subject to certain exceptions; (iv) by the Company or Viking, upon
the breach by the other of a term of the Merger, which is not cured within 30 days of the date of written notice thereof by the
other; (v) by the Company if Viking is unable to obtain the affirmative vote of its stockholders for approval of the Merger;
(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; 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.





32


Table of Contents




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 Holdings, 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, 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 above under “Note 5 – Plan of Merger and Investment In Unconsolidated Entity”,
to the consolidated unaudited financial statements included under “Part I. – Item 1. Financial Statements”.



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 (defined above under
“Note 5 – Plan of Merger and Investment In Unconsolidated
Entity”, to the consolidated unaudited financial statements included under “Part I. – Item 1. Financial
Statements”), minus (ii) the amount due to the Company pursuant to the terms of the Secured Notes upon repayment
thereof (the “Additional Payment”) is due.



The
Company obtained the funds for the Viking loans through the sale of Series C Preferred Stock to Discover as discussed above under
“Note 5 –
Plan of Merger and Investment In Unconsolidated Entity”, to the consolidated unaudited financial statements included
under “Part I. – Item 1. Financial Statements”.



As
of the date of the filing, the Company holds a 30% interest in Elysium, which through its wholly-owned subsidiary, holds certain
working interests and overriding 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
2,200 Boe per day for the quarter ended September 30, 2020.



Series C Preferred Stock Corrections
and Amendments



On December 14, 2020,
the Company, with the approval of the Board of Directors of the Company, and the sole holder of the Company’s Series C
Preferred Stock, filed a certificate of corrections with the Secretary of State of Nevada to correct the original designation
of the Series C Preferred Stock and the first amended and restated designation thereof, to correct certain errors which were
identified in such designations, which failed to clarify, in error, that (A) the failure of any holder of Series C Preferred
Stock to receive the number of shares of common stock due upon conversion of Series C Preferred Stock within five trading
days of any conversion notice, and any halt or suspension of trading of the Company’s common stock on its then
applicable trading market or by any U.S. governmental agency, for 10 or more consecutive trading days, should not have been
‘deemed liquidation events’ under the Series C Preferred Stock designation, unless such events were due to the
occurrence of an event that is solely within the control of the Company; (B) the Company was not required to redeem any
shares of Series C Preferred Stock for cash solely because the Company does not have sufficient authorized but unissued
shares of common stock to issue upon receipt of a notice of conversion or upon a maturity conversion (where the remaining
shares of Series C Preferred Stock convert into common stock of the Company automatically on the seven year anniversary date
of the Series C Preferred Stock)(a “Maturity Conversion”); and (C) that a Maturity Conversion is only
required to occur to the extent that the Company has sufficient authorized but unissued shares of common stock available for
issuance upon conversion in connection therewith. The corrections were made solely to match the agreements to the original
intent of the parties. The parties determined the corrections were needed because without such corrections, under ASC480-10-
S99-3A5 and ASC 480-10-S99-3A3(f), the non-corrected designations could have required the Series C Preferred Stock to be
classified as temporary equity due to the foregoing events being outside the Company’s control. The embedded conversion
meets the requirements to be considered permanent equity as stipulated under ASC 815-40-25, under an assessment of the option
as a freestanding instrument, as the option requires net share settlement and the issuer has the choice to settle in cash if
it wishes.



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



Also on December 14, 2020,
the Company, with the approval of the Board of Directors of the Company, and the sole holder of the Company’s Series C Preferred
Stock, filed a second amended and restated designation of the Series C Preferred Stock with the Secretary of State of Nevada which
was effective upon filing (the “Second Amended and Restated Designation”), which amended the first amended
and restated designation of the Series C Preferred Stock (as corrected), to include the right of the Company to redeem all (but
not less than all) of the outstanding shares of Series C Preferred Stock at a redemption price equal to 110% of the face value
of such preferred stock ($10,000 per share), at the Company’s option, at any time, in the event the Company is not in default
of any of the terms of any Stock Purchase Agreement pursuant to which such applicable shares of Series C Preferred Stock were
sold; (b) update the conversion price of the face amount ($10,000 per share) of the Series C Preferred Stock in connection with
the Company’s prior 1-for-50 reverse stock split (i.e., to confirm the change in such conversion price from $3.25 per share
to $165.50 per share), which had no effect on the conversion rate of conversion premiums due under the terms of the Series C Preferred
Stock, and which conversion price was already being reflected in prior conversion notices after the date of such reverse split;
(c) formally amend the measurement period for the calculation of the conversion premiums due under the terms of the Series C Preferred
Stock to begin on the later of February 3, 2020 or, if no trigger event (as described in the designation of the Series C Preferred
Stock) has occurred, 30 trading days, and if a trigger event has occurred 60 trading days, before the date of an applicable conversion
notice, which had previously been agreed to contractually by the parties (i.e., the beginning of each future measurement period
for conversions made after February 3, 2020, will extend back to February 3, 2020); and (d) update the references in the designation
to the “Merger” which had previously referred to the Company’s combination with Lineal Star Holdings,
LLC, which transaction was rescinded and terminated effective December 31, 2019, to refer to the planned merger with Viking Energy
Group, Inc., which has the effect of the Viking merger being approved by the holder of the Series C Preferred Stock and not being
a ‘deemed liquidation event’ under the Second Amended and Restated Designation.



Discover
Exchange Agreement, Promissory Note and Security Agreement



On December
11, 2020, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Discover (the
“Investor”), the sole shareholder of the Company’s Series C Preferred Stock. The transactions contemplated
by the Exchange Agreement closed on December 11, 2020. Pursuant to the Exchange Agreement, as an accommodation to the Company,
and in order to reduce the potential dilutive impact of the Series C Preferred Stock, by reducing the number of outstanding shares
of Series C Preferred Stock, the Investor exchanged 600 shares of Series C Preferred Stock (the “Exchanged Shares”),
which had an aggregate face value of $6,000,000 (600 shares each with a face value of $10,000 per share), for a $6,000,000 secured
Promissory Note (the “Investor Note”). The Company is in the process of obtaining the Exchanged Shares from
the Investor and plans to cancel such shares once transferred.





33


Table of Contents




Pursuant
to the Exchange Agreement (a) the Investor waived all prior breaches and defaults that occurred prior to the date of the Exchange
Agreement or that may continue or occur for 90 days thereafter, under any agreements entered into with the Investor relating to
the acquisition of shares of Series C Preferred Stock (the “90 Day Period”), and waived all rights and remedies
with respect to any such breaches and defaults; (b) we agreed to timely file all reports required by the Securities and Exchange
Commission (the “SEC”) for so long as the Investor holds any Series C Preferred Stock (provided the Company
was provided until December 31, 2020, to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020); (c) we
agreed to indemnify and hold the Investor, its affiliates, managers and advisors, and their related parties, harmless from any
losses related to any breach of the Exchange Agreement (or other transaction documents), and from any action by the Company or
a creditor or stockholder of the Company, challenging the transactions contemplated by the Exchange Agreement and related agreements,
except to the extent finally adjudicated to be caused solely by such indemnified party’s unexcused material breach of an
express provision of the Exchange Agreement or related agreements; (d) we agreed to reserve from our outstanding common stock,
shares of common stock to allow for the conversion of the outstanding Series C Preferred Stock (subject to the 90 Day Period);
(e) the Investor agreed to vote all shares of common stock which it holds as of the record date for any shareholder meeting
in favor of the Company’s previously announced pending plan of merger with Viking (the “Merger”), and
the other proposals that are recommended for approval by the Board of Directors of the Company in the proxy statement filed in
connection with such Merger; (f) the Investor agreed to the Merger and agreed to waive any rights it may have (including favored
nations, anti-dilution and/or reset rights) in connection therewith; (g) we acknowledged that the Investor had previously
provided notice to the Company of its intent to increase the beneficial ownership limitation set forth in the designation of the
Series C Preferred Stock to 9.99%, and that such limitation will continue to apply moving forward; and (h) we provided the
Investor and its related parties a general release.



The Exchange
Agreement also amended the June 22, 2020 Stock Purchase Agreement previously entered into with the Investor, pursuant to which
the Investor purchased 630 shares of Series C Preferred Stock, to remove from such June 22, 2020 agreement (i) the prohibition
on the Investor transferring and/or selling shares of Series C Preferred Stock; and (ii) the repurchase obligation, which
required the Company to redeem for cash, at 110% of the face value thereof ($10,000 per share), all 630 shares of Series C Preferred
Stock sold by the Company in June 2020, in the event the Merger did not close by the required date set forth in the plan of merger
relating thereto (as amended from time to time), and all similar provisions in any prior agreements entered into between the Company
and the Investor.



The Investor
Note has a balance of $6,000,000 and accrues interest at the rate of 10% per annum, which 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) December 11, 2022 (which may be extended with the mutual consent of the parties
and a written amendment to the Investor Note signed by the Investor); (b) March 11, 2021, in the event the Merger does not
close or is not fully consummated by such date; and (c) 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). The Investor Note includes customary events of default. Upon the occurrence
of an event of default the Investor has the right to accelerate the full amount of the Investor Note and all interest thereon,
to enforce its rights under the Security Agreement, and take other actions allowed under applicable law.



Payment
of the Investor Note 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 Investor Note, provided that no guarantees
have been entered into to date. The Investor Note may be assigned by the Investor subject to compliance with applicable securities
laws. The Company may prepay the Investor Note at any time.



The payment of amounts
due under the Investor Note is secured by the terms of a Security Agreement entered into by the Company in favor of the Investor,
which provides the Investor a first priority security interest in substantially all of our assets (the “Security Agreement”).
If an event of default occurs under the Investor Note, the Investor can enforce its rights under the Security Agreement and foreclose
on our assets in order to satisfy amounts owed thereunder.



Corporate
Information and Summary of Current Operations



Our
website address is http://www.camber.energy. Our fiscal year ends on the last day
of March of each year. The information on, or that may be accessed through, our website
is not incorporated by referenceinto this report and should not be considered a part of this report. We refer to
the twelve-month periods ended March 31, 2021, 2020, and March 31, 2019, as our 2021 Fiscal Year, 2020 Fiscal Year, and 2019 Fiscal
Year, respectively.



As
of September 30, 2020, the Company had leasehold interests (working interests) covering approximately 221 / 3,500 (net/gross) acres,
producing from the Cline and Wolfberry formations. The remaining Texas acreage as of March 31, 2020, consisted 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 was transferred as part of the PetroGlobe settlement discussed in “Part I. Financial
Information – Item 1. Financial Statements” – “Note 9 – Commitments and
Contingencies” – “Legal Proceedings”, in July 2020.  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. The Company subsequently followed TRC procedures in
order to regain TRC compliance for the Panhandle wells. Additionally, as a result of a notice from its working interest partner,
PetroGlobe Energy, and related litigation, all prior production on the Panhandle wells was held in suspense for the past several
fiscal quarters. The Company cured the issues raised by the TRC transferred its ownership of its Hutchinson County, Texas properties,
and wells to PetroGlobe on July 16, 2020. As a result of such transfer, the Company no longer holds any interests in such Hutchinson
County, Texas wells, or assets.





34


Table of Contents




As
of September 30, 2020, Camber was producing an average of approximately 28.1 net barrels of oil equivalent per day (“Boepd”) from
25 active wellbores. The ratio between the gross and net production varies due to varied working interests and net revenue interests
in each well. Our production sales totaled 5,138 Boe, net to our interest, for the six months ended September 30, 2020. At September
30, 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. None of these reserves relate to the Company’s Panhandle properties,
which has since been divested. Camber holds an interest in 25 producing wells in Glascock County.



On
July 12, 2018, we entered into an Asset Purchase Agreement, which closed on September 26, 2018, with N&B Energy. Pursuant
to the Asset Purchase Agreement and the related Assumption Agreement, the Company transferred a significant portion of its assets
to N&B Energy in consideration for N&B Energy assuming all of its debt owed to International Bank of Commerce.



Notwithstanding
the sale of the Company’s assets to N&B Energy, the Company retained its assets in Glasscock County and Hutchinson County,
Texas (which Hutchinson County, Texas assets have now been divested), and also retained a 12.5% production payment (effective
until a total of $2.5 million has been received); a 3% overriding royalty interest in its existing Okfuskee County, Oklahoma asset;
and an overriding royalty interest on certain other undeveloped leasehold interests, pursuant to an Assignment of Production Payment
and Assignments of Overriding Royalty Interests. No payments were received in regard to any of the retained items noted through
September 30, 2020, or through the date of this filing.



As
of September 30, 2020, Camber had no employees and utilized independent contractors on an as-needed basis.



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. 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. As described above, the Merger is subject to various closing conditions that may not be met
pursuant to the contemplated timeline, if at all.



Recent
Reverse Stock Splits and Amendments to Articles



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 effect a 1-for-25 reverse stock split of all outstanding common stock shares of the Company which was effective
on March 5, 2018. On December 20, 2018, the Company filed a Certificate of Change with the Secretary of State of Nevada to
effect 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); and (b) issued and outstanding shares of common stock, which was effective on December 24,
2018. 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 par value per share, from 20,000,000 shares to 250,000,000 shares. 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 effect another 1-for-25 reverse stock split of all outstanding common stock shares of the Company, which was effective on July
8, 2019. On October 28, 2019, the Company filed a Certificate of Change with the Secretary of State of Nevada to effect 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);
and (b) issued and outstanding shares of common stock. The reverse stock split was effective on October 29, 2019. 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. 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). 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.





35


Table of Contents




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.



Industry
Segments



Our
operations during the three and six months ended September 30, 2020, were all crude oil and natural gas exploration and production
related. For the three and six months ended September 30, 2019, our operations were all crude oil and natural gas exploration
and production related, except that from July 8, 2019, to December 31, 2019 (which September 30, 2019 period included such operations
through September 30, 2019), we also owned and operated Lineal, which operated as an oil and gas service company and generated
oil and gas service revenues. As described above under “Part I. Financial Information” – “Item
1. Financial Statements” – “Note 11 – Lineal Merger Agreement and Divestiture”,
on December 31, 2019, we divested our entire interest in Lineal. In conjunction with the Lineal Divestiture, all contract revenue
(oil and gas service revenue) has been included in “Loss from Discontinued Operations” for the three and six
months ended September 30, 2019, on the statement of operations.



Operations



Oil
and Gas Properties



Weoperate
and invest in areas that are known to be productive, with a reasonably established production history, to decrease geological
and exploratory risk. The Company has certain interests in wells producing from various formations in Louisiana and Texas.



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. As described above under “Part I. Financial Information” – “Item
1. Financial Statements” – “Note 11 – Lineal Merger Agreement and Divestiture”,
on December 31, 2019, we divested our entire interest in Lineal.



Financing



A
summary of our financing transactions, funding agreements, and other material funding and loan transactions can be found under
“Part I. Financial Information – Item 1. Financial Statements” – “Note
1 – General”, “Note 5 – Plan of Merger
and Investment In Unconsolidated Entity”, “Note 6 – Long-Term Notes Receivable”,
“Note 11 – Lineal Merger Agreement and Divestiture” and “Note
13 – Stockholders’ Equity (Deficit)”, above.



The
Company believes that it will not have sufficient liquidity to operate as a going concern for the next twelve months following
the issuance of the financial statements included herein unless it can close the Viking Merger, which is the Company’s current
plan, which Merger is anticipated to close in the fourth calendar quarter of 2020 or first quarter of calendar 2021, pursuant
to certain conditions in the Merger Agreement.



Market
Conditions and Commodity Prices



Our
financial results depend on many factors, particularly the price of natural gas, natural gas liquids, and crude oil and our ability
to market our production on economically attractive terms. Commodity prices are affected by many factors outside of our control,
including changes in market supply and demand, which are impacted by weather conditions, inventory storage levels, basis differentials,
and other factors. As a result, we cannot accurately predict future commodity prices and, therefore, we cannot determine with
any degree of certainty what effect increases or decreases in these prices will have on our production volumes or revenues. We
expect prices to remain volatile for the remainder of the year. For information about the impact of realized commodity prices
on our crude oil revenues, refer to “Results of Operations” below.





36


Table of Contents




Novel
Coronavirus (“COVID-19”)



In
December 2019, a novel strain of coronavirus, which causes the infectious disease known as COVID-19, was reported in Wuhan, China.
The World Health Organization declared COVID-19 a “Public Health Emergency of International Concern” on January
30, 2020, and a global pandemic on March 11, 2020. In March and April, many U.S. states and local jurisdictions, including Texas,
where the Company has its operations, began issuing ‘stay-at-home’ orders, which continue in various forms as of the
date of this report. Notwithstanding the above, because all of the Company’s properties are non-operated, the Company’s
operations have not been materially affected by COVID-19 to date.



However,
the oil and gas industry experienced multiple factors that lowered both the demand for and prices of, oil and gas as a result
of the pandemic. First, the COVID-19 pandemic lowered global demand for hydrocarbons, as social distancing and travel restrictions
were implemented across the world. Second, the lifting of the Organization of the Petroleum Exporting Countries (OPEC)+ supply
curtailments, and the associated increase in production of oil, drove the global supply of hydrocarbons higher through the first
quarter of calendar 2020. In addition, while global gross domestic product (GDP) growth was impacted by COVID-19 during the
first nine months of calendar 2020, we expect GDP to continue to decline globally throughout the remainder of calendar 2020 and
for at least the early part of calendar 2021, as a result of the COVID-19 pandemic. As a result, we expect oil and gas-related
markets will continue to experience significant volatility in 2020 and 2021.



COVID-19
has impacted the operations of Lineal Holdings, LLC (“Lineal”) which currently owes the Company $2,339,719
(see “Part I. Financial Information – Item 1. Financial Statements” – “Note
11 – Lineal Merger Agreement and Divestiture”), and has notified the Company that it currently has insufficient
liquidity to make scheduled interest payments due under the notes. The Company is in negotiations with Lineal to restructure the
notes receivable.



The
full extent of the impact of COVID-19 on our business and operations currently cannot be estimated and will depend on a number
of factors including the scope and duration of the global pandemic.



Currently,
we believe that we have sufficient cash on hand to support our operations for the foreseeable future, through the closing of the
Merger Agreement; however, we will continue to evaluate our business operations based on new information as it becomes available
and will make changes that we consider necessary in light of any new developments regarding the pandemic.



The
pandemic is developing rapidly and the full extent to which COVID-19 will ultimately impact us depends on future developments,
including the duration and spread of the virus, as well as the potential seasonality of new outbreaks.



RESULTS
OF OPERATIONS



The
following discussion and analysis of the results of operations for the three-month periods and six-month periods ended September
30, 2020, and 2019 should be read in conjunction with our consolidated financial statements and notes thereto included in this
Quarterly Report on Form 10-Q under “Part I. Financial Information –Item 1. Financial
Statements”. The majority of the numbers presented below are rounded numbers and should be considered as approximate.



Three
Months Ended September 30, 2020, vs. Three Months Ended September 30, 2019



We
reported a net loss for the three months ended September 30, 2020, of $2.1 million, or $0.19 per share of common stock.
We reported a net loss for the three months ended September 30, 2019, of $0.3 million, or $4.40 per share of common stock. The
increase in net loss of $1.8 million relates primarily to the $1.1 million loss associated with the operations of Elysium, an
unconsolidated entity, the reserve of approximately $0.2 million of notes receivable from Lineal, and the decline in oil and gas
operations in the current quarter due to the decreased demand due to COVID-19.





37


Table of Contents




Oil
and Gas Exploration and Production Segment Information



The
following table sets forth the operating results and production data for our oil and gas exploration and production segment, for
the periods indicated:



|                           |  | Three Months Ended September 30, |        |  | Increase |   |        | % Increase | 
|-------------------------- |  | -------------------------------- | ------ |  | -------- | - | ------ | ---------- | 
|                           |  | 2020                             |        |  | 2019     |   |        | (Decrease) | 
|Sale Volumes:              |  |                                  |        |  |          |   |        |            | 
|Crude Oil (Bbls)           |  |                                  | 990    |  |          |   | 1,288  |            | 
|Natural Gas (Mcf)          |  |                                  | 3,550  |  |          |   | 5,828  |            | 
|NGL (Gallons)              |  |                                  | 35,671 |  |          |   | 50,928 |            | 
|Total (Boe)(1)             |  |                                  | 2,431  |  |          |   | 3,472  |            | 
|                           |  |                                  |        |  |          |   |        |            | 
|Crude Oil (Bbls per day)   |  |                                  | 11     |  |          |   | 14     |            | 
|Natural Gas (Mcf per day)  |  |                                  | 39     |  |          |   | 63     |            | 
|NGL (Gallons per day)      |  |                                  | 388    |  |          |   | 554    |            | 
|Total (Boe per day)(1)     |  |                                  | 26     |  |          |   | 38     |            | 
|                           |  |                                  |        |  |          |   |        |            | 
|Average Sale Price:        |  |                                  |        |  |          |   |        |            | 
|Crude Oil ($/Bbl)          |  | $                                | 46.31  |  |          | $ | 51.85  |            | 
|Natural Gas ($/Mcf)        |  | $                                | 1.31   |  |          | $ | 2.12   |            | 
|NGL ($/Bbl)                |  | $                                | 8.21   |  |          | $ | 11.24  |            | 
|                           |  |                                  |        |  |          |   |        |            | 
|Net Operating Revenues:    |  |                                  |        |  |          |   |        |            | 
|Crude Oil                  |  | $                                | 45,846 |  |          | $ | 66,786 |            | 
|Natural Gas                |  |                                  | 4,643  |  |          |   | 12,343 |            | 
|NGL                        |  |                                  | 6,969  |  |          |   | 13,624 |            | 
|Total Oil and Gas Revenues |  | $                                | 57,458 |  |          | $ | 92,753 |            | 



Sales
volumes decreased by approximately 30% from the three months ended September 30, 2019, compared to the three months ended September
30, 2020, primarily due to a significant drop in the market price of oil and gas compared to the same period in the prior year,
due mainly to decreased demand due to COVID-19, including an approximate 11% decline in the average sales price of crude oil.



(1) Assumes
6 Mcf of natural gas equivalents and 42 gallons of NGL to 1 barrel of oil, respectively.



Operating
and Other Expenses



The
following table summarizes our production costs and operating expenses for the periods indicated:



|                                                                                |  | Three Months Ended September 30, |           |  | Increase |   |         | % Increase | 
|------------------------------------------------------------------------------- |  | -------------------------------- | --------- |  | -------- | - | ------- | ---------- | 
|                                                                                |  | 2020                             |           |  | 2019     |   |         | (Decrease) | 
|Direct lease operating expense                                                  |  | $                                | 14,124    |  |          | $ | 171,452 |            | 
|Other                                                                           |  |                                  | 13,098    |  |          |   | 17,031  |            | 
|Lease Operating Expenses                                                        |  | $                                | 27,222    |  |          | $ | 188,483 |            | 
|                                                                                |  |                                  |           |  |          |   |         |            | 
|Severance and Property Taxes                                                    |  | $                                | 2,126     |  |          | $ | 4,031   |            | 
|Depreciation, Depletion, Amortization, and Accretion Expense                    |  |                                  | 2,837     |  |          |   | 3,592   |            | 
|General and Administrative Expenses (“G&A”)(excluding share-based compensation) |  |                                  | 816,413   |  |          |   | 940,483 |            | 
|Share-Based Compensation                                                        |  |                                  | 36,502    |  |          |   | —       |            | 
|Total G & A Expense                                                             |  |                                  | 852,915   |  |          |   | 940,483 |            | 
|                                                                                |  |                                  |           |  |          |   |         |            | 
|Interest Expense                                                                |  | $                                | —         |  |          | $ | 4,174   |            | 
|Loss from Unconsolidated Entity                                                 |  | $                                | 1,056,766 |  |          | $ | —       |            | 
|Other Expense (Income), Net                                                     |  | $                                | 172,100   |  |          | $ | (9,278  | )          | 





38


Table of Contents




Lease
Operating Expenses



There
was a decrease in lease operating expense of approximately $161,000 when comparing the current quarter to the prior year’s
quarter. The decrease is primarily due to the decline in production due to significant price declines as a result of decreased
demand due to COVID-19 and governmental responses thereto and declines in costs related to the divestiture of the Company’s
Panhandle, Texas properties in July 2020.



Depreciation,
Depletion, Amortization, and Accretion (“DD&A”)



DD&A
decreased for the current quarter as compared to the prior year’s quarter by approximately $1,000 due to the decline in
production due to significant price declines.



General
and Administrative (G&A) Expenses (Excluding Share-Based Compensation)



G&A
expenses (excluding share-based compensation) decreased by approximately $0.1 million for the three months ended September
30, 2020, compared to the prior year’s period. The decrease was due primarily to costs incurred in the prior year’s
period related to the Lineal Merger that were not present in the current period.



Share-Based
Compensation



Share-based
compensation increased by $37,000 for the three months ended September 30, 2020, compared to the prior year’s period, due
primarily to the value of restricted common shares issued for consulting fees in the current period.



Interest
Expense



Interest
expense decreased by approximately $4,000 for the three months ended September 30, 2020, compared to the three months ended September
30, 2019, due to the absence of any interest-bearing obligations in the current period.



Loss
from Unconsolidated Entity



Loss
from unconsolidated entity for the three months ended September 30, 2020, increased by approximately $1.1 million, when compared
to the three months ended September 30, 2019, due to the inclusion of the equity loss of Elysium Holdings, LLC, which the Company
acquired 25% of on February 3, 2020, and an additional 5% of on June 25, 2020 (30% total).



Other
Expense (Income), Net



Other
expense, net, for the three months ended September 30, 2020, decreased by approximately $0.2 million, compared to the same period
ended September 30, 2019, due primarily to the partial allowance of $0.2 million of the loans due from Lineal and related accrued
interest.





39


Table of Contents




Six
Months Ended September 30, 2020, vs. Six Months Ended September 30, 2019



We reported a net loss for the six months ended September 30, 2020,
of $3.7 million, or $0.51 per share of common stock. We reported a net loss for the six months ended September 30, 2019, of $1.6
million, or $20.57 per share of common stock. The increase in net loss of $2.1 million relates primarily to the partial allowance
of $0.2 million of the notes receivable from Lineal and associated accrued interest and the $2.1 million loss associated with the
operations of Elysium, an unconsolidated entity, which we owned 30% of as of September 30, 2020, and held 25% of as of March 31,
2020 (having first acquired such 25% interest on February 3, 2020, and an additional 5% interest on June 25, 2020).



Oil
and Gas Exploration and Production Segment Information



The
following table sets forth the operating results and production data for our oil and gas exploration and production segment, for
the periods indicated:



|                           |  | Six Months Ended September 30, |        |  | Increase |   |         | % Increase | 
|-------------------------- |  | ------------------------------ | ------ |  | -------- | - | ------- | ---------- | 
|                           |  | 2020                           |        |  | 2019     |   |         | (Decrease) | 
|Sale Volumes:              |  |                                |        |  |          |   |         |            | 
|Crude Oil (Bbls)           |  |                                | 2,182  |  |          |   | 2,849   |            | 
|Natural Gas (Mcf)          |  |                                | 7,221  |  |          |   | 10,178  |            | 
|NGL (Gallons)              |  |                                | 73,587 |  |          |   | 97,828  |            | 
|Total (Boe)(1)             |  |                                | 5,138  |  |          |   | 6,874   |            | 
|                           |  |                                |        |  |          |   |         |            | 
|Crude Oil (Bbls per day)   |  |                                | 12     |  |          |   | 16      |            | 
|Natural Gas (Mcf per day)  |  |                                | 39     |  |          |   | 56      |            | 
|NGL (Gallons per day)      |  |                                | 402    |  |          |   | 535     |            | 
|Total (Boe per day)(1)     |  |                                | 28     |  |          |   | 38      |            | 
|                           |  |                                |        |  |          |   |         |            | 
|Average Sale Price:        |  |                                |        |  |          |   |         |            | 
|Crude Oil ($/Bbl)          |  | $                              | 30.99  |  |          | $ | 56.34   |            | 
|Natural Gas ($/Mcf)        |  | $                              | 1.22   |  |          | $ | 1.92    |            | 
|NGL ($/Bbl)                |  | $                              | 8.39   |  |          | $ | 14.63   |            | 
|                           |  |                                |        |  |          |   |         |            | 
|Net Operating Revenues:    |  |                                |        |  |          |   |         |            | 
|Crude Oil                  |  | $                              | 67,635 |  |          | $ | 160,485 |            | 
|Natural Gas                |  |                                | 8,807  |  |          |   | 19,547  |            | 
|NGL                        |  |                                | 14,705 |  |          |   | 34,072  |            | 
|Total Oil and Gas Revenues |  | $                              | 91,147 |  |          | $ | 214,104 |            | 



Sales
volumes decreased by approximately 25% from the six months ended September 30, 2019, compared to the six months ended September
30, 2020, due to a significant drop in the market price of oil and gas compared to the same period in the prior year, due mainly
to decreased demand due to COVID-19, including an approximate 45% decline in the average sales price of crude oil.



| | (1) | Assumes
                                         6 Mcf of natural gas equivalents and 42 gallons of NGL to 1 barrel of oil, respectively.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------



40


Table of Contents




Operating
and Other Expenses



The
following table summarizes our production costs and operating expenses for the periods indicated:



|                                                                        |  | Six Months Ended September 30, |           |   | Increase |   |           | % Increase | 
|----------------------------------------------------------------------- |  | ------------------------------ | --------- | - | -------- | - | --------- | ---------- | 
|                                                                        |  | 2020                           |           |   | 2019     |   |           | (Decrease) | 
|Direct lease operating expense                                          |  | $                              | 71,672    |   |          | $ | 279,430   |            | 
|Other                                                                   |  |                                | 24,841    |   |          |   | 32,610    |            | 
|Lease Operating Expenses                                                |  | $                              | 96,513    |   |          | $ | 312,040   |            | 
|                                                                        |  |                                |           |   |          |   |           |            | 
|Severance and Property Taxes                                            |  | $                              | 3,475     |   |          | $ | 6,605     |            | 
|Depreciation, Depletion, Amortization, and Accretion                    |  |                                | 5,132     |   |          |   | 7,834     |            | 
|General and Administrative (Excluding Share-Based Compensation) (“G&A”) |  |                                | 1,503,076 |   |          |   | 2,243,049 |            | 
|Share-Based Compensation                                                |  |                                | 36,502    |   |          |   | 29,425    |            | 
|Total G & A Expense                                                     |  |                                | 1,539,578 |   |          |   | 2,272,474 |            | 
|                                                                        |  |                                |           |   |          |   |           |            | 
|Interest Expense                                                        |  | $                              | —         |   |          | $ | 5,021     |            | 
|Loss from Unconsolidated Entity                                         |  | $                              | 2,140,121 |   |          | $ | —         |            | 
|Other Expense (Income), Net                                             |  | $                              | (42,532   | ) |          | $ | (63,540   | )          | 



Lease
Operating Expenses



There
was a decrease in lease operating expense of approximately $216,000 when comparing the current quarter to the prior year’s
quarter. The decrease is primarily due to the decline in production due to significant price declines as a result of decreased
demand due to COVID-19 and governmental responses thereto and the decline in costs associated with our Panhandle, Texas properties
which were divested in July 2020.



Depreciation,
Depletion, Amortization, and Accretion (“DD&A”)



DD&A
decreased for the current quarter as compared to the prior year’s quarter by approximately $3,000 due to the decline in
production due to significant price declines



General
and Administrative (G&A) Expenses Excluding Share-Based Compensation



G&A
expenses (excluding share-based compensation) decreased by approximately $740,000 for the six months ended September 30,
2020, compared to the prior year’s period. The decrease was due primarily to costs incurred in the prior year’s period
related to the Lineal Merger that were not present in the current period.



Share-Based
Compensation



Share-based
compensation increased by approximately $7,000 for the six months ended September 30, 2020, compared to the prior year’s
period. The increase was due primarily to a slight increase in the value of restricted shares of common stock issued related to
consulting agreements during the current period.





41


Table of Contents




Interest
Expense



Interest
expense for the six months ended September 30, 2020, decreased by approximately $5,000 when compared to the six months ended September
30, 2019, due to the absence of any interest-bearing obligations in the current period.



Loss
from Unconsolidated Entity



Loss
from unconsolidated entity for the six months ended September 30, 2020, increased by approximately $2.1 million when compared
to the six months ended September 30, 2019, due to the inclusion of the equity loss of Elysium Holdings, LLC, which the Company
acquired 25% of on February 3, 2020, and an additional 5% of on June 25, 2020.



Other
Expense (Income), Net



Other
expense, net, for the six months ended September 30, 2020, decreased by approximately $21,000, compared to the same period ended
September 30, 2019, due to the partial impairment of the notes receivable from Lineal and related accrued interest and the elimination
of other income from Lineal.



LIQUIDITY
AND CAPITAL RESOURCES



The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America on a going concern basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. Accordingly, the consolidated financial statements do not include any adjustments
relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable
to continue as a going concern.



Additionally,
recent oil and gas price volatility as a result of geopolitical conditions and the global COVID-19 pandemic has already had, and
are expected to continue to have, a negative impact on the Company’s financial position and results of operations. Negative
impacts could include but are not limited to: the Company’s ability to sell its oil and gas production, reduction in the
selling price of the Company’s oil and gas, failure of a counterparty to make required payments, possible disruption of
production as a result of worker illness or mandated production shutdowns or ‘stay-at-home’ orders, and access to
new capital and financing.



Our
primary sources of cash for the six months ended September 30, 2020, and 2019, were from funds generated from the sale of preferred
stock. The primary uses of cash were funds used in operations and for the six months ended September 30, 2020, funds invested
in connection with Viking’s Rule 506(c) convertible note offering, as described above under “Part I. Financial
Information – Item 1. Financial Statements” – “Note
5 – Plan of Merger and Investment In Unconsolidated Entity”, and “Note 6 –
Long-Term Notes Receivable”. As of September 30, 2020, the Company had a working capital deficit of approximately $0.1
million. The Company believes that it will not have sufficient liquidity to operate as a going concern for the next twelve months
following the issuance of the financial statements included herein unless it can close the Viking Merger, which is the Company’s
current plan, which Merger is anticipated to close in the fourth calendar quarter of 2020 or first calendar quarter of 2021.



Pursuant
to the December 31, 2019 Redemption Agreement, we entered into a new unsecured promissory note in the amount of $1,539,719 with
Lineal, evidencing the repayment of the prior July 2019 Lineal Note, together with additional amounts loaned by Camber to Lineal
through December 31, 2019; and loaned Lineal an additional $800,000, which was evidenced by an unsecured promissory note in the
amount of $800,000, entered into by Lineal in favor of the Company on December 31, 2019. The December 2019 Lineal Note and Lineal
Note No. 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.
The December 2019 Lineal Note and Lineal Note No. 2 are unsecured. COVID-19 has impacted the operations of Lineal and Lineal has
notified the Company that it currently has insufficient liquidity to make scheduled interest payments due under the notes. The
Company is in negotiations with Lineal to restructure the notes receivable and reserved $115,719 of the notes subject to the completion
of the negotiations. Such loans are described in greater detail above under “Part I. Financial Information – Item
1. Financial Statements” – “Note 1 – General”, “Note
6 – Long-Term Notes Receivable” and “Note 11 – Lineal Merger
Agreement and Divestiture”.





42


Table of Contents




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 for $5 million, at a 5% original issue discount to the $10,000 face value of such preferred stock.



On
February 3, 2020, we advanced the $5.0 million raised from the sale of Series C Preferred Stock to Discover to Viking, and Viking
provided us, among other things, a $5 million, 10.5% Secured Promissory Note. On June
25, 2020, we advanced an additional $4.2 million to Viking in consideration for, among other things, an additional 10.5% Secured
Promissory Note in the principal amount of $4.2 million. The Secured Notes accrue interest at the rate of 10.5% per annum, payable
quarterly, and are due and payable on February 3, 2022. The notes include standard events of default, including certain defaults
relating to the trading status of Viking’s common stock and change of control transactions involving Viking. The Secured
Notes can be prepaid at any time with prior notice as provided therein, and together with a pre-payment penalty equal to 10.5%
of the original amount of the Secured Notes. The Secured Notes are secured by a security interest,
pari 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. Additionally, pursuant to a separate Security and Pledge Agreement,
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 Secured Notes. As additional
consideration for providing the Secured Notes, Viking assigned us 30% of Elysium, which is fully or partially assignable back
to Viking upon the termination of the Merger, under certain circumstancesas discussed in greater detail above under
“Part I. Financial Information – Item 1. Financial Statements” – “Note
5 – Plan of Merger and Investment In Unconsolidated Entity”, and “Note 6 –
Long-Term Notes Receivable”.



On June 22, 2020, the Company and Discover entered
into a Stock Purchase Agreement pursuant to which Discover purchased 630 shares of Series C Preferred Stock for $6 million (of
which $4.2 million of such funds were subsequently loaned to Viking as discussed above). In the event the Merger Agreement is terminated
in specified circumstances, upon termination thereof, the Company is required to redeem the 630 shares of Series C Preferred Stock
held by Discover at an aggregate price of $6,930,000, provided that if the Merger is terminated, which obligation was terminated
in December 2020 in connection with the transactions contemplated by the Exchange Agreement with Discover discussed above. Separately,
Viking has agreed to pay the Company, a break-up fee 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”), which Additional Payment, if timely paid, should enable the Company to repay the Investor Note, which will
be due on March 11, 2021, if the Merger has not closed by such date.



Plan
of Operations



As
described in greater detail above under “Part I. Financial Information – Item 1. Financial Statements”
– “Note 5 – Plan of Merger and Investment In Unconsolidated
Entity”, on February 3, 2020, the Company entered into a Merger Agreement with Viking, which contemplates Viking
merging with and into a newly-formed wholly-owned subsidiary of the Company, with Viking surviving the Merger as a wholly-owned
subsidiary of the Company. 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. 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. As described above, the Merger is subject to various closing conditions
that may not be met pursuant to the contemplated timeline, if at all.





43


Table of Contents




Separately,
the price Camber receives for its oil heavily influences its revenue and cash flows, and the present value and quality of its
reserves. Oil, NGL, and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response
to relatively minor changes in supply and demand. The price of crude oil has experienced significant volatility over the last
five years, with the price per barrel of West Texas Intermediate (“WTI”) crude rising from a low of $27
in February 2016 to a high of $76 in October 2018, then, in 2020, dropping below $20 per barrel due in part to reduced global
demand stemming from the recent global COVID-19 outbreak, until more recently increasing back to around $35-$45 a barrel. A prolonged
period of low market prices for oil and natural gas, or further declines in the market prices for oil and natural gas, due to
the COVID-19 outbreak, governmental responses thereto, decreased demand in connection therewith, or other factors will likely
adversely affect Camber’s business, financial condition, and liquidity and its ability to meet obligations, targets or financial
commitments and could ultimately lead to restructuring or filing for bankruptcy.



Working
Capital



At
September 30, 2020, the Company’s total current assets of $1.5 million were less than its total current liabilities of approximately
$1.6 million, resulting in a working capital deficit of $0.1 million, while at March 31, 2020, the Company’s total
current assets of $1.1 million were less than its total current liabilities of approximately $2.0 million, resulting in a working
capital deficit of $0.9 million. The decrease from a working capital deficit of $0.9 million to a working capital deficit of $0.1
million is due primarily to the sale of $6 million of Series C Preferred Stock in June 2020.



Cash
Flows



|                                            |  | Six Months Ended September 30, |           
|------------------------------------------- |  | ------------------------------ | ----------
|                                            |  | 2020                           |           
|Cash flows used in operating activities     |  | $                              | (1,343,650
|Cash flows used in investing activities     |  |                                | (4,200,000
|Cash flows provided by financing activities |  |                                | 6,000,000 
|Net increase (decrease) in cash             |  | $                              | 456,350   



Net
cash used in operating activities was $1.3 million for the six months ended September 30, 2020, compared to $2.8 million for the
same period a year ago. Net cash used in operating activities decreased mainly due to the reduction in G&A and operating costs
during the six months ended September 30, 2020, offset by the increase in net loss.



Net
cash used in investing activities was $4.2 million for the six months ended September 30, 2020, compared to approximately $1.2 million
for the same period a year ago. The increase in net cash used in investing activities was due to the $4.2 loan made to Viking
during the six months ended September 30, 2020, as discussed above.



Net cash provided by financing activities was $6.0 million for the
six months ended September 30, 2020, and net cash provided by financing activities was $0.4 million for the six months ended September
30, 2019. The increase in net cash provided by financing activities was due to the sale of 630 shares of Series C Preferred Stock
for $6 million in June 2020.



Financing



A
summary of our financing transactions, funding agreements, lending transactions, and other material funding transactions can be
found under “Part I – Item 1. Financial Statements” — “Note 1 –
General”, “Note 5 – Plan of Merger and Investment
In Unconsolidated Entity”, “Note 6 – Long-Term Notes Receivable”, “Note
11 – Lineal Merger Agreement and Divestiture”, and “Note 13 – Stockholders’
Equity (Deficit)”.





44


Table of Contents




Off-Balance
Sheet Arrangements



Camber
does not participate in financial transactions that generate relationships with unconsolidated entities or financial partnerships,
other than the Company’s 30% interest in Elysium which it held as of September 30, 2020 (25% as of March 31, 2020) as
discussed herein.



ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.



Market
risk is the risk of loss arising from adverse changes in market rates and prices. We are exposed to risks related to increases
in the prices of fuel and raw materials consumed in exploration, development, and production. We currently do not engage in commodity
price hedging activities.



Commodity
Price Risk



All
of our revenues for the six months ended September 30, 2020, and some of our revenues for the six months ended September 30, 2019,
were derived from the sale of our crude oil, natural gas, and natural gas liquids production. Based on projected sales volumes
for the remainder of our fiscal year, changes in the prices we receive for our crude oil, natural gas, and natural gas liquids
production could have a significant impact on our revenues.



ITEM
4. CONTROLS AND PROCEDURES.



Disclosure
Controls and Procedures.



Disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure
that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized,
and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information
is accumulated and communicated to management, including the interim Chief Executive Officer and Chief Financial Officer (our
principal executive officer and principal financial officer), to allow timely decisions regarding required disclosures. The Company’s
management, including the interim Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal
financial officer), evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the
period covered by this report. Based upon that evaluation, the Company’s interim Chief Executive Officer and Chief Financial
Officer (our principal executive officer and principal financial officer) concluded that the Company’s disclosure controls
and procedures were not effective as of September 30, 2020, due to a lack of segregation of duties.



Changes
in Internal Control Over Financial Reporting



There
have not been any changes in our internal control over financial reporting during the quarter ended September 30, 2020, that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



45


Table of Contents




PART
II – OTHER INFORMATION



ITEM
1. LEGAL PROCEEDINGS.



Camber is periodically
named in legal actions arising from normal business activities. Camber evaluates the merits of these actions and, if it determines
that an unfavorable outcome is probable and can be reasonably estimated, Camber will establish the necessary reserves. The Company
is subject to legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business.
We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business,
prospects, financial condition, or results of operations. except as described in “Part I. Financial Information –
Item 1. Financial Statements” – “Note 9 – Commitments and Contingencies”
– “Legal Proceedings”, of this Form 10-Q. We may become involved in material legal proceedings
in the future.



The outcome of litigation
is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts in excess
of management’s expectations, the Company’s financial condition and operating results for that reporting period could
be materially adversely affected.



ITEM
1A. RISK FACTORS.



There have been no
material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended
March 31, 2020, filed with the Commission on June 29, 2020 (the “Form 10-K”) under the heading “Item
1A. Risk Factors”, which are incorporated by reference herein, except as provided and discussed below, and investors
should review the risks provided below and in the Form
10-K prior to investing in the Company. The business, financial condition, and operating results of the Company can be
affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K
for the year ended March 31, 2020, under “Risk
Factors”, and below, any one or more of which could, directly or indirectly, cause the Company’s actual financial
condition and operating results to vary materially from past, or anticipated future, financial condition, and operating results.
Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition,
operating results, and stock price.



General Business and Other Risks



We
currently have only limited oil and gas operations.



Our
Hutchinson County, Texas leases which made up approximately 30% of our historical total producing properties, were transferred
in July 2020 as part of the Settlement Agreement. Although prior to the settlement, we were in the process of performing workovers
on the wells on the leases and had very limited production from the properties, our oil and gas revenues, results of operations,
and prospects may be materially adversely affected as a result of such transfer. Notwithstanding the above, we believe that
our current non-operated properties will be immaterial to the combined company following the Merger and following the Merger, the
combined company’s management will determine what course to take regarding such combined company assets, including our non-operated
properties.



Our Business
and operations may be adversely affected by the recent COVID-19 pandemic or other similar outbreaks.



As a result of the
recent COVID-19 outbreak or other adverse public health developments, including voluntary and mandatory quarantines, travel
restrictions, and other restrictions, our operations, and those of our subcontractors, customers, and suppliers, have and may continue
to experience delays or disruptions and temporary suspensions of operations. In addition, our financial condition and results of
operations have been and may continue to be adversely affected by the coronavirus outbreak.





46


Table of Contents




The timeline and the
potential magnitude of the COVID-19 outbreak are currently unknown.  The continuation or amplification of this virus
could continue to more broadly affect the United States and global economy, including our business and operations, and the demand
for oil and gas (as it has already).  For example, a significant outbreak of coronavirus or other contagious diseases in the
human population could result in a widespread health crisis that could adversely affect the economies and financial markets of
many countries, resulting in an economic downturn that could affect our operating results. In addition, the effects of COVID-19
and concerns regarding its global spread have recently negatively impacted the domestic and international demand for crude oil
and natural gas, which has contributed to price volatility, impacted the price we receive for oil and natural gas, and materially
and adversely affected the demand for and marketability of our production. As the potential impact from COVID-19 is difficult to
predict, the extent to which it may negatively affect our operating results or the duration of any potential business disruption
is uncertain. Any impact will depend on future developments and new information that may emerge regarding the severity and duration
of COVID-19 and the actions taken by authorities to contain it or treat its impact, all of which are beyond our control. These
potential impacts, while uncertain, could adversely affect our operating results, notwithstanding the fact that the impact of COVID-19
has already negatively affected our first quarter and second-quarter results of operations.



Furthermore, COVID-19
and the measures being taken to address and limit the spread of the virus have adversely affected the economies and financial markets
of many countries, resulting in an economic downturn that has negatively impacted, and may continue to negatively impact, global
demand and prices for crude oil and NGLs. If the COVID-19 outbreak should continue or worsen, we may also experience disruptions
to commodities markets, equipment supply chains, and the availability of personnel, which could adversely affect our ability to
conduct our business and operations. There are still too many variables and uncertainties regarding the COVID-19 pandemic - including
the ultimate geographic spread of the virus, the duration and severity of the outbreak, and the extent of travel restrictions and
business closures imposed in affected countries - to fully assess the potential impact on our business and operations.



Lineal and Viking
owe us a substantial amount of money which may not be timely repaid, if at all.



Pursuant to a December
31, 2019 Redemption Agreement entered into between us and the prior owners of Lineal, we entered into a new unsecured promissory
note in the amount of $1,539,719 with Lineal, evidencing the outstanding amount of a prior July 2019 promissory note, together
with additional amounts loaned by us to Lineal through December 31, 2019 (the “December 2019 Lineal Note”);
and loaned Lineal an additional $800,000, which was evidenced by an unsecured promissory note in the amount of $800,000, entered
into by Lineal in favor of us on December 31, 2019 (“Lineal Note No. 2”). The December 2019 Lineal Note
and Lineal Note No. 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.
The December 2019 Lineal Note and Lineal Note No. 2 are unsecured. COVID-19 has impacted the operations
of Lineal which currently owes the Company $2,339,719 pursuant to the notes described above, and has notified the Company that
it currently has insufficient liquidity to make scheduled interest payments due under the notes. The Company is in negotiations
with Lineal to restructure the notes receivable and has reserved $115,719 of the notes subject to completion of the negotiations.



On February 3, 2020,
and June 25, 2020, we advanced $5 million and $4.2 million, respectively, to Viking and Viking provided us, among other things,
the Secured Notes. The Secured Notes accrue interest at the rate of 10.5% per annum, payable quarterly, and are due and payable
on February 3, 2022. The notes include standard events of default, including certain defaults relating to the trading status of
Viking’s common stock and change of control transactions involving Viking. The Secured Notes can be prepaid at any time with
prior notice as provided therein, and together with a pre-payment penalty equal to 10.5% of the original amount of the Secured
Notes. The Secured Notes are secured by a security interest, pari 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. Additionally, pursuant to a separate Security and Pledge Agreement, Viking provided us 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 Secured Notes. The Secured Notes will be forgiven upon the closing of the Merger.





47


Table of Contents




If
we are unable to agree to acceptable terms with Lineal on modification of the notes, or the Secured Notes are not paid when due,
we may have to take legal action to enforce the repayment of such notes. Furthermore, Lineal and/or Viking may not have sufficient
cash to repay such notes when due, including, but not limited to interest due thereon. The Lineal notes are unsecured and as such,
secured credits of Lineal may have priority rights to Lineal’s assets in connection with any liquidation or bankruptcy. Although
the Secured Notes are secured by Viking, such security interests may not be sufficient to repay the notes and other creditors may
have priority rights to such collateral. In the event the notes payable to us are not timely paid and/or not paid in full, it could
have a material adverse effect on our cash flows and our ability to pay our debts as they become due. Any failure by Viking or
Lineal to timely repay their debt obligations to us could cause the value of our securities to decline in value or become worthless.



We
currently have limited production and revenues from our non-operated properties.



Our interest in non-operated
properties is producing limited revenues. As such, we do not anticipate generating any significant revenues until the closing date
of the Merger and will need to rely on cash on hand, funds which we can raise through the sale of equity (including shares of Series
C Preferred Stock), and other borrowings to support our operations, pay operational expenses, and funds due in connection with
the preparation and negotiation of the Merger documents and related filing documents, and our filings with the SEC. Such funds
may not be available on favorable terms if at all. If we run out of available funds prior to the date of the Merger, we may be
forced to abandon the Merger and/or our filings with the SEC and may be forced to seek bankruptcy protection.



Declines in oil
and, to a lesser extent, NGL and natural gas prices, have in the past and will continue in the future to, adversely affect our
business, financial condition, and results of operations may adversely affect our ability to meet our capital obligations or targets
and financial commitments.



The price we receive
for oil, natural gas, and NGLs, heavily influences our revenue, profitability, cash flows, liquidity, access to capital, present
value and quality of reserves, the nature and scale of our operations, and future rate of growth. Oil, NGL, and natural gas are
commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and
demand. In recent years, the markets for oil and natural gas have been volatile. These markets will likely continue to be volatile
in the future. Further, oil prices and natural gas prices do not necessarily fluctuate in direct relation to each other. In
general, our financial results are more sensitive to movements in oil prices. The price of crude oil has experienced significant
volatility over the last five years, with the price per barrel of West Texas Intermediate (“WTI”) crude
rising from a low of $27 in February 2016 to a high of $76 in October 2018, then, in 2020, dropping below $20 per barrel due in
part to reduced global demand stemming from the recent global COVID-19 outbreak, provided that pricing has since increased to around
$35-$45 per barrel prior to the filing of this Report. A prolonged period of low market prices for oil and natural gas, or further
declines in the market prices for oil and natural gas, will likely result in capital expenditures being further curtailed and will
adversely affect our business, financial condition and liquidity and our ability to meet obligations, targets or financial commitments
and could ultimately lead to restructuring or filing for bankruptcy, which would have a material adverse effect on our stock price
and indebtedness. Additionally, lower oil and natural gas prices have, and may, in the future, cause a decline in our stock price.
During the calendar year ended December 31, 2019, the daily NYMEX WTI oil spot price ranged from a high of $66.24 per Bbl
to a low of $46.31 per Bbl and the NYMEX natural gas Henry Hub spot price ranged from a high of $4.25 per MMBtu to a low of $1.75
per MMBtu. During the calendar nine months ended September 30, 2020, the daily NYMEX WTI oil spot price ranged from a high of $63.27
per Bbl to a low of $(36.98) per Bbl in April 2020 and the NYMEX natural gas Henry Hub spot price ranged from a high of $2.57
per MMBtu to a low of $1.33 per MMBtu.





48


Table of Contents




We currently have no authorized but
unissued shares of common stock.



We have authorized capital stock consisting of 25,000,000 shares
of common stock, $0.001 par value per share, and 10,000,000 shares of preferred stock, $0.001 par value per share. As of the date
of this filing, we had 25,000,000 shares of common stock outstanding and 2,693 shares of Series C Preferred Stock outstanding (including
600 shares of Series C Preferred Stock we are in the process of cancelling). As a result, we currently have no authorized but unissued
shares of common stock. In the short term we believe that the cap on our outstanding shares may be a positive as it will limit
the future dilution to existing shareholders as a result of the conversion of Series C Preferred Stock, which is convertible into
approximately 118,181,407 shares of common stock as of the date of this filing (ignoring the 9.99% beneficial ownership limitation
governing the Series C Preferred Stock and including the 600 shares of Series C Preferred Stock which we are in the process of
cancelling); however, in the long term, until such time as we are able to increase our authorized shares of common stock, which
will require the approval of the shareholders of Camber (which approval we are seeking pursuant to our Registration Statement on
Form S-4 and included joint proxy statement), we anticipate that such limit may negatively affect our ability to undertake transactions
which may be accretive to shareholder value, including the Merger. For example, until such time as our authorized shares of common
stock are increased, we will not be able to use our common stock as consideration for any acquisitions or combination transactions.
Furthermore, we will not be able to sell equity or convertible debt to raise funding or issue share-based compensation to officers,
directors, employees, or consultants. All of the above may negatively affect our revenues and results of operations and cause the
value of our common stock to decline in value or become worthless.



Risks Relating to the Planned Merger



Because
the Exchange Ratio in the Merger will be set based on a number of factors immediately prior to closing the Merger that cannot be
determined now, Camber stockholders cannot be certain how many shares of Camber common stock will be issued to the Viking stockholders,
in the Merger.



At the Effective Time
of the Merger, (a) each share of Viking common stock issued and outstanding immediately prior to the effective time (other
than Viking shares owned by Camber, Viking and Merger Sub) will be converted into the right to receive the pro rata share
(when including the Viking preferred stock conversion rights (defined below)) of 80% of Camber’s post-effective time
capitalization (Camber’s 20% share is referred to as the “Camber Percentage”), taking into account the
number of shares of common stock of Camber outstanding on a fully-diluted basis, but without taking into account any shares of
common stock which the holder of Camber’s Series C Preferred Stock can receive upon conversion of the Series C Preferred
Stock (which are currently convertible into approximately 118,181,407 shares of common stock, subject to a 9.99% beneficial ownership
limitation and to further adjustment as provided in the designation of such Series C Preferred Stock, not including 15,348 shares
of common stock which are currently held in abeyance subject to Camber increasing its authorized shares of common stock); and (b) each
share of Viking preferred stock outstanding immediately prior to the effective time, will be converted into one (1) share
of Camber Series A Preferred Stock, which preferred stock will have the right to vote, and convert into, that number of shares
of Camber common stock as its holder would have received in the Merger, had such Viking preferred stock been fully converted into
Viking common stock immediately prior to the effective time (which we refer to as the “Viking preferred stock conversion
rights”). Holders of Viking common stock will have any fractional shares of Camber common stock after the Merger rounded
up to the nearest whole share.



As a result of the
above, the specific number of shares of Camber common stock issuable for each share of Viking common stock and Viking preferred
stock in the Merger, will not be known at the time of the vote to approve such Merger, provided that we anticipate such Merger
resulting in substantial dilution to existing shareholders and resulting in a change of control of the Company, and provided further
that such Viking stockholders in aggregate, and calculated on a fully-diluted basis of Viking (including shares issuable upon conversion
of the Series C Preferred Stock of Viking), will receive an aggregate of 100,000,000 shares of Camber common stock in the Merger.





49


Table of Contents




The
termination of the Merger Agreement could negatively impact us.



IIn the event the Merger Agreement is terminated, our business may
be adversely impacted by our failure to pursue other beneficial opportunities due to the focus of management on the Merger, and
the market price of our common stock might decline to the extent that the current market price reflects a market assumption that
the Merger will be completed. If the Merger Agreement is terminated and our Board of Directors seeks another merger or business
combination, stockholders cannot be certain that we will be able to find a party willing to offer equivalent or more attractive
consideration than the consideration provided for by the Merger. If the Merger Agreement is terminated under certain circumstances,
we may be required to transfer Viking back the 30% interest in Elysium and the maturity date of the Investor Note will be accelerated
to being due on March 11, 2021, if the Merger has not closed by such date. Although Viking has agreed to repay the Secured Notes
upon the termination of the Merger Agreement and to pay us an additional amount as a break-up fee upon termination of the Merger,
which if paid will be sufficient for us to pay the amount we owe to Discover in connection with the Investor Note ($6,000,000,
plus interest), Viking may be unable to pay such amounts when due and we may be unable to pay any difference in amounts owed. If
we are unable to timely pay Discover amounts due in connection with the required repayment of the Investor Note it could have a
material adverse effect on our cash flows, operations, and our ability to continue as a going concern, all of which could cause
the value of our common stock to decline in value or become worthless.



Additionally,
in the event the Merger Agreement is terminated and we are unable to raise additional funding to support our operations and/or
promptly identify another party willing to enter into a combination transaction with us, we may be forced to seek bankruptcy protection.



In
the event the Merger closes, it will cause immediate and substantial dilution to existing stockholders and a change of control
of the Company.



Upon
the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time of the Merger, each share of common
stock of Viking issued and outstanding immediately prior to the Effective Time will convert into the right to receive a pro-rata
share of 80% of our post-effective time capitalization in the Merger, taking into account the number of shares of common stock
we have outstanding on a fully-diluted basis and without taking into account any shares of common stock which the holder of our
Series C Preferred Stock can receive upon conversion of the Series C Preferred Stock, subject to certain adjustment mechanisms
discussed in the Merger Agreement. As such, in the event the contemplated Merger closes, the issuance of the common stock consideration
to Viking stockholders will result in immediate and substantial dilution to the interests of our then stockholders and result in
a change of control of the Company.



Failure
to complete the Merger could negatively impact our stock price and future business and financial results.



If
the Merger is not completed, our ongoing business may be adversely affected and we would be subject to a number of risks, including
the following:



●          we
will not realize the benefits expected from the Merger, including a potentially enhanced competitive and financial position, expansion
of assets and therefore opportunities, and will instead be subject to all the risks we currently face as an independent company;



●          we
may experience negative reactions from the financial markets and our partners and employees;



●          under the Merger Agreement, we may be required to transfer back to
Viking the 30% interest in Elysium which we have acquired to date if the Merger Agreement is terminated, and will be required to
repay amounts owed to Discover under the Investor Note ($6,000,000, plus interest) if the Merger does not close by March 11, 2021.
If such amounts are payable, the payment of such amounts could have material and adverse consequences to our financial condition
and operations. Furthermore, although Viking has agreed to pay us a break-up fee in the event the Merger is terminated, which will
allow us to repay the Investor Note, Viking may be unable to pay such amount when due;



●          the
Merger Agreement places certain restrictions on the conduct of our business prior to the completion of the Merger or the termination
of the Merger Agreement. Such restrictions, the waiver of which is subject to the consent of Viking, may prevent us from making
certain acquisitions, taking certain other specified actions, or otherwise pursuing business opportunities during the pendency
of the Merger;





50


Table of Contents




●          matters
relating to the Merger (including integration planning) may require substantial commitments of time and resources by our management,
which would otherwise have been devoted to other opportunities that may have been beneficial to Camber as an independent company;
and



●          in
the event the Merger Agreement is terminated and we are unable to raise additional funding to support our operations and/or promptly
identify another party willing to enter into a combination transaction with us, we may be forced to seek bankruptcy protection.



Additional
risks affecting the Company, Viking, and the combined Company will be included in the Company’s final Registration Statement
on Form S-4 and a final proxy statement which the Company plans to file to seek shareholder approval for the Merger Agreement and
Merger, among other things, and readers are encouraged to read such risk factors in such final Registration Statement on Form S-4
and proxy statement, when available.



Risks Relating to the Series C Preferred
Stock



The issuance
of common stock upon conversion of the Series C Preferred Stock will cause immediate and substantial dilution and
the sale of such stock will cause significant downward pressure on our stock price.



The
issuance of common stock upon conversion of the Series C Preferred Stock will result in immediate and substantial dilution to the
interests of other stockholders. Although Discover may not receive shares of common stock exceeding 9.99% of our outstanding shares
of common stock immediately after affecting such conversion, this restriction does not prevent Discover from receiving shares up
to the 9.99% limit, selling those shares, and then receiving the rest of the shares it is due, in one or more tranches, while still
staying below the 9.99% limit. If Discover chooses to do this, it will cause substantial dilution to the then holders of our common
stock. Additionally, the continued sale of shares issuable upon successive conversions will likely create significant downward
pressure on the price of our common stock as Discover sells material amounts of our common stock over time and/or in a short period
of time. This could place further downward pressure on the price of our common stock and in turn result in Discover receiving an
ever-increasing number of additional shares of common stock upon conversion of its securities, and adjustments thereof, which in
turn will likely lead to further dilution, reductions in the exercise/conversion price of Discover’s securities and even
more downward pressure on our common stock, which could lead to our common stock becoming devalued or worthless. Additionally,
because the beginning date for the Measuring Period for all outstanding shares of Series C Preferred Stock is February 3, 2020,
the conversion price of the conversion premiums on such Series C Preferred Stock will never be above approximately $0.3985 per
share (the current estimated lowest conversion price in the period from February 3, 2020 to the date of this filing), regardless
of the actual trading price of Camber’s common stock.



Discover
holds an approximately$74.0 million liquidation preference in the Company.



Each share of Series C Preferred Stock held by Discover includes
a liquidation preference, payable to Discover upon any liquidation, dissolution or winding up of the Company, whether voluntary
or involuntary, after payment or provision for payment of debts and other liabilities of the Company, prior toany distribution
or payment made to the holders of preferred stock or common stock, by reason of their ownership thereof equal to $10,000, plus
an amount equal to any accrued but unpaid dividends thereon. Because the dividends currently require that interest be paid on the
Face Value of 24.95% per annum, for the entire seven-year term of the Series C Preferred Stock (even if payable sooner than seven
years after the issuance date), the total liquidation value required to be paid to Discover upon a liquidation, dissolution or
winding up of the Company is approximately $74.0 million as of the date of this report (which amount will be reduced by $6 million
upon the cancellation of the 600 shares of Series C Preferred Stock which Discover has agreed to cancel pursuant to the Exchange
Agreement). As referenced above, this liquidation preference would be payable before any amount being distributed to the holders
of our common stock. Because our net assets total significantly less than $74.0 million, it is likely that our common stockholders
would not receive any amount in the event the Company was liquidated, dissolved, or wound up, and that Discover would instead receive
the entire amount of available funds after liquidation.





51


Table of Contents




Because
the conversion discounts related to the conversion premiums payable in connection with the Series C Preferred Stock are fixed,
and not based on percentages, the percentage of such discounts increase as our stock price declines.



The conversion rate
of such premiums and dividends payable on the Series C Preferred Stock equals 95% of the average of the lowest 5 individual daily
volume-weighted average prices during the applicable Measuring Period, not to exceed 100% of the lowest sales prices on the last
day of the Measuring Period (the “Non-Triggering Event Percentage Discounted VWAP”), less $0.05 per share of
common stock, unless a triggering event (described in the Series C Preferred Stock Designation) has occurred, in which case
the conversion rate equals 85% of the lowest daily volume-weighted average price during the Measuring Period (the “Triggering
Event Percentage Discounted VWAP” and together with the Non-Triggering Event Percentage Discounted VWAP, as applicable,
the “Percentage Discounted VWAP”), less $0.10 per share of common stock, not to exceed 85% of the lowest sales
prices on the last day of such Measuring Period, less $0.10 per share. Because the $0.05 and $0.10 discounts (the “Fixed
Conversion Discounts”) which apply to the already discounted Percentage Discounted VWAPs are fixed, the percentage
of such discounts increase as the value of its common stock decreases. For example, see the table below:



|$0.05 Discount to PercentageDiscounted VWAP |                            |  | $0.10 Discount to PercentageDiscounted VWAP |  
|------------------------------------------- | -------------------------- |  | ------------------------------------------- | -
|                                            | Percentage Discounted VWAP |  |                                             |  
|$                                           | 2.00                       |  |                                             | $
|$                                           | 1.75                       |  |                                             | $
|$                                           | 1.50                       |  |                                             | $
|$                                           | 1.25                       |  |                                             | $
|$                                           | 1.00                       |  |                                             | $
|$                                           | 0.75                       |  |                                             | $
|$                                           | 0.50                       |  |                                             | $
|$                                           | 0.25                       |  |                                             | $
|$                                           | 0.10                       |  |                                             | $
|$                                           | 0.05                       |  |                                             | $



* Minimum conversion price is $0.001 per
share (the par value of the common stock).





52


Table of Contents




As a result, as shown
above, as the trading price of Camber’s common stock decreases in value, the percentage discount to the Percentage Discounted
VWAP which each further $0.05/$0.10 discount results in, increases exponentially, and in certain cases may result in the ultimate
conversion price being less than zero, which would result in a conversion price of $0.001 per share, the par value of Camber’s
common stock, and the minimum conversion price which the Series C Preferred Stock is convertible at. Notwithstanding the above,
because the beginning date for the Measuring Period for all outstanding shares of Series C Preferred Stock is February 3, 2020,
the conversion price of the conversion premiums on such Series C Preferred Stock will never be above approximately $0.3985 per
share (as adjusted for the reverse stock split, if approved and implemented)(the current estimated lowest conversion price in the
period from February 3, 2020 to the date of this filing), regardless of the actual trading price of Camber’s common stock.



The effects of the
Fixed Conversion Discounts may be further affected by a reverse stock split. Historically, the trading prices of companies that
have completed a reverse stock split decline following such a split. At the current Fixed Conversion Discount of $0.05/$0.10 per
share, the conversion price of the conversion premiums on the Series C Preferred Stock would be equal to par value ($0.001) if
the Percentage Discounted VWAP falls below $0.05 and $0.10, respectively (depending on whether a triggering event has occurred,
provided that no such triggering event is currently applicable to the conversion price). If the Company completes a reverse stock
split of its outstanding shares of common stock, the $0.05/$0.10 Fixed Conversion Discounts will be automatically adjusted by such
reverse stock split (i.e., such amounts will equal increased by the amount of the reverse stock split) and a significant decrease
in the trading price of our common stock following such reverse stock split could result in the ultimate conversion price of the
conversion premiums on the Series C Preferred Stock decreasing to the par value of the Company’s common stock.



Our obligations
under the Investor Note are secured by a first priority security interest in substantially all of our assets.



Our obligations under the Investor Note (described and defined above
“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Events—Discover
Exchange Agreement, Promissory Note and Security Agreement”) are secured by a first priority security interest in substantially
all of our assets. The Investor Note has a balance as of the date of this Report of $6 million, and is due on the earlier of (a)
the second anniversary of the date of the Investor Note; (b) three months after the date of the Investor Note (March 11, 2021)
in the event the Viking merger does not close by such three month anniversary; (c) the date of any change of control of the Company
(provided that the Viking merger does not constitute a change of control); and (d) the date accelerated by Investor upon the occurrence
of an event of default under the Investor Note. As such, in the event we fail to pay the Investor Note when due, or an event of
default occurs under such Investor Note, Investor may enforce its security interests over our assets, take control of our assets
and operations, force us to seek bankruptcy protection, or force us to curtail or abandon our current business plans and operations.
If that were to happen, any investment in the Company could become worthless.



ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.



There have been no
sales of unregistered securities for the period from July 1, 2020, to the filing date of this report, which have not previously
been disclosed in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, or in a Current Report on Form 8-K, except
as set forth below:



Since July 1, 2020,
and through the date of this filing, Discover converted 258 shares of Series C Preferred Stock into 11,779,818 shares of common
stock, of which, all but 15,348 shares have been fully issued to date and which shares of common stock are currently held in abeyance
pending the increase in our authorized shares of common stock.



The sales and issuances
of the securities described above have been determined to be exempt from registration under the Securities Act in reliance on Sections
3(a)(9) and 4(a)(2) of the Securities Act, Rule 506 of Regulation D promulgated thereunder and Regulation S promulgated
thereunder, as transactions by an issuer not involving a public offering. The preferred stockholder (Discover) has represented
that it is an accredited investor, as that term is defined in Regulation D, it is not a U.S. Person, and that it is acquiring the
securities for its own account.



As of December 17, 2020, the 2,693 outstanding shares of Series
C Preferred Stock can (which number includes 600 shares of Series C Preferred Stock which the Company is in the process of cancelling
in connection with the Exchange Agreement) convert, pursuant to their terms, into 118,181,407 shares of our common stock, which
number includes 165,723 shares of common stock convertible upon conversion of all of the outstanding shares of outstanding Series
C Preferred Stock at a conversion price of $162.50 per share (based on the $10,000 face amount of the Series C Preferred Stock)
and approximately 118,015,683 shares of common stock for premium shares due thereunder (based on the current dividend rate of 24.95%
per annum), and a conversion price of $0.3985 per share, the Company’s estimate of the current conversion price of such Series
C Preferred Stock conversion premiums, which may be greater than or less than the conversion price that currently applies to the
conversion of the Series C Preferred Stock pursuant to the terms of the Designation, which number of premium shares may increase
significantly from time to time as the trading price of our common stock decreases, upon the occurrence of any trigger event under
the Designation of the Series C Preferred Stock and upon the occurrence of certain other events, as described in greater detail
in the Designation of the Series C Preferred Stock. The lowest possible conversion price of the Series C Preferred Stock is $0.001
per share. If converted in full at the lowest possible conversion price, the Series C Preferred Stock would convert into a maximum
of 47,033,410,723 shares of common stock.





53


Table of Contents




Use of Proceeds
from Sale of Registered Securities



None.



Issuer
Purchases of Equity Securities



None.



ITEM
3. DEFAULTS UPON SENIOR SECURITIES.



None.



ITEM
4. MINE SAFETY DISCLOSURES.



Not Applicable.



ITEM
5. OTHER INFORMATION.



We have elected to make
the following disclosures in this Quarterly Report on Form 10-Q instead of in a Current Report on Form 8-K under Items 1.01,
2.03, 3.03, 5.03, and 5.07, as applicable:







|Item 1.01 | Entry into
    a Material Definitive Agreement.
|--------- | -----------------------------------------------

On December 11,
2020, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Discover Growth
Fund, LLC (the “Investor”), the sole shareholder of the Company’s Series C Redeemable Convertible
Preferred Stock (the “Series C Preferred Stock”). The transactions contemplated by the Exchange Agreement
closed on December 14, 2020. Pursuant to the Exchange Agreement, as an accommodation to the Company, and in order to reduce
the potential dilutive impact of the Series C Preferred Stock, by reducing the number of outstanding shares of Series C
Preferred Stock, the Investor exchanged 600 shares of Series C Preferred Stock (the “Exchanged Shares”),
which had an aggregate face value of $6,000,000 (600 shares each with a face value of $10,000 per share), for a $6,000,000
secured Promissory Note (the “Investor Note”). The Company is in the process of obtaining the Exchanged
Shares from the Investor and plans to cancel such shares once transferred.

Pursuant to the
Exchange Agreement (a) the Investor waived all prior breaches and defaults that occurred prior to the date of the Exchange
Agreement or that may continue or occur for 90 days thereafter, under any agreements entered into with the Investor relating to
the acquisition of shares of Series C Preferred Stock (the “90 Day Period”), and waived all rights and remedies
with respect to any such breaches and defaults; (b) we agreed to timely file all reports required by the Securities and Exchange
Commission (the “SEC”) for so long as the Investor holds any Series C Preferred Stock (provided the Company
was provided until December 31, 2020, to file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2020); (c) we
agreed to indemnify and hold the Investor, its affiliates, managers and advisors, and their related parties, harmless from any
losses related to any breach of the Exchange Agreement (or other transaction documents), and from any action by the Company or
a creditor or stockholder of the Company, challenging the transactions contemplated by the Exchange Agreement and related agreements,
except to the extent finally adjudicated to be caused solely by such indemnified party’s unexcused material breach of an
express provision of the Exchange Agreement or related agreements; (d) we agreed to reserve from our outstanding common stock,
shares of common stock to allow for the conversion of the outstanding Series C Preferred Stock (subject to the 90 Day Period);
(e) the Investor agreed to vote all shares of common stock which it holds as of the record date for any shareholder meeting
in favor of the Company’s previously announced pending plan of merger with Viking Energy Group, Inc. (the “Merger”),
and the other proposals that are recommended for approval by the Board of Directors of the Company in the proxy statement filed
in connection with such Merger; (f) the Investor agreed to the Merger and agreed to waive any rights it may have (including
favored nations, anti-dilution and/or reset rights) in connection therewith; (g) we acknowledged that the Investor had
previously provided notice to the Company of its intent to increase the beneficial ownership limitation set forth in the designation
of the Series C Preferred Stock to 9.99%, and that such limitation will continue to apply moving forward; and (h) we provided
the Investor and its related parties a general release.

The Exchange Agreement
also amended the June 22, 2020 Stock Purchase Agreement previously entered into with the Investor, pursuant to which the Investor
purchased 630 shares of Series C Preferred Stock, to remove from such June 22, 2020 agreement (i) the prohibition on the Investor
transferring and/or selling shares of Series C Preferred Stock; and (ii) the repurchase obligation, which required the Company
to redeem for cash, at 110% of the face value thereof ($10,000 per share), all 630 shares of Series C Preferred Stock sold by the
Company in June 2020, in the event the Merger did not close by the required date set forth in the plan of merger relating thereto
(as amended from time to time), and all similar provisions in any prior agreements entered into between the Company and the Investor.

The Investor
Note has a balance of $6,000,000 and accrues interest at the rate of 10% per annum, which 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) December 11, 2022 (which may be extended with the mutual
consent of the parties and a written amendment to the Investor Note signed by the Investor); (b) March 11, 2021, in the
event the Merger does not close or is not fully consummated by such date; and (c) 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).

54


Table of Contents




The Investor Note
includes customary events of default including (a) if we don’t pay principal or accrued interest within five business
days following the maturity date of the note, (b) we admit in writing our inability to pay our debts as they become due, or
make a general assignment for the benefit of creditors; (c) we commence any case relating to bankruptcy or similar proceedings;
(d) any bankruptcy or similar proceeding is commenced against us, and such case or proceeding (i) results in the entry
of an order for relief against us which is not fully stayed within five business days after the entry thereof or (ii) is not
dismissed within sixty days of commencement; or (e) we default in the performance of any of the terms, covenants, or conditions
contained in the Security Agreement (defined below) and such default continues for a period of more than ten days following written
notice from the Investor. Upon the occurrence of an event of default, the Investor has the right to accelerate the full amount
of the Investor Note and all interest thereon, to enforce its rights under the Security Agreement, and take other actions allowed
under applicable law.

Payment of the Investor
Note and performance of our 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 Investor Note, provided that no guarantees have been entered into to
date.

The Investor Note
may be assigned by the Investor subject to compliance with applicable securities laws. We may prepay the Investor Note at any time.

The payment of amounts
due under the Investor Note is secured by the terms of a Security Agreement entered into by the Company in favor of the Investor,
which provides the Investor a first priority security interest in substantially all of our assets (the “Security Agreement”).
If an event of default occurs under the Investor Note, the Investor can enforce its rights under the Security Agreement and foreclose
on our assets in order to satisfy amounts owed thereunder.

The foregoing
descriptions of the Exchange Agreement, Investor Note and Security Agreement, do not purport to be complete and are qualified
in their entirety by reference to the Exchange Agreement, herein Investor Note and Security Agreement, copies of which are
filed as Exhibits 10.32, 10.33 and 10.34, to this Quarterly Report on Form 10-Q, respectively, and
incorporated in this Item 1.01 by reference in their entirety.

|Item 2.03 | Creation of Direct Financial Obligation or an Obligation
    under an Off-Balance Sheet Arrangement of a Registrant.
|--------- | --------------------------------------------------------------------------------------------------------------------



The information
contained in Item 1.01, including, but not limited to the discussion of the
Investor Note and Security Agreement, is incorporated in this Item 2.03 by reference.



|Item 3.03 | Material Modification to Rights of Security Holders.
|--------- | ----------------------------------------------------



To the extent
required by Item 3.03 of Form 8-K, the information contained in Item 5.03 relating to the
Corrections and Second Amended and Restated Designation (each as defined in Item 5.03), is incorporated in this Item
3.03 by reference.



|Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
|--------- | -------------------------------------------------------------------------



On December 11, 2020, the
Company’s Board of Directors, and the Investor, the sole shareholder of the Company’s Series C Preferred Stock (pursuant
to a written consent to action without meeting of the sole Series C Preferred Stock shareholder), approved (a) the filing
of Certificate of Corrections to the original Certificate of Designations of Preferences, Powers, Rights and Limitations of Series
C Redeemable Convertible Preferred Stock of the Company filed by the Company with the Secretary of State of Nevada on August 25,
2016 and the Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable
Convertible Preferred Stock of the Company filed with the Secretary of State of Nevada on July 8, 2019 (collectively, the “Original
Series C Designations” and the “Corrections”); and (b) a Second Amended and Restated Certificate
of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock (the “Second
Amended and Restated Designation”).



55


Table of Contents




The Corrections corrected
certain errors which were recently identified in the Original Series C Designations, which failed to clarify, in error, that (A)
the failure of any holder of Series C Preferred Stock to receive the number of shares of common stock due upon conversion of Series
C Preferred Stock within five trading days of any conversion notice, and any halt or suspension of trading of the Company’s
common stock on its then applicable trading market or by any U.S. governmental agency, for 10 or more consecutive trading days,
should not have been ‘deemed liquidation events’ under the Original Series C Designations, unless such events were
due to the occurrence of an event that is solely within the control of the Company; (B) we were not required to redeem any
shares of Series C Preferred Stock for cash solely because we do not have sufficient authorized but unissued shares of common stock
to issue upon receipt of a notice of conversion or upon a maturity conversion (where the remaining shares of Series C Preferred
Stock convert into common stock of the Company automatically on the seven year anniversary date of the Series C Preferred Stock)(a
“Maturity Conversion”); and (C) that a Maturity Conversion is only required to occur to the extent that
we have sufficient authorized but unissued shares of common stock available for issuance upon conversion in connection therewith.



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



The Second Amended and
Restated Designation, which was filed with, and became effective with, the Secretary of State of Nevada on December 14, 2020, amended
the first amended and restated designation of the Series C Preferred Stock (as corrected by the Corrections), to include the
right of the Company to redeem all (but not less than all) of the outstanding shares of Series C Preferred Stock at a redemption
price equal to 110% of the face value of such preferred stock ($10,000 per share), at our option, at any time, in the event we
are not in default of any of the terms of any Stock Purchase Agreement pursuant to which such applicable shares of Series C Preferred
Stock were sold; (b) update the conversion price of the face amount ($10,000 per share) of the Series C Preferred Stock
in connection with our prior 1-for-50 reverse stock split (i.e., to confirm the change in such conversion price from $3.25 per
share to $165.50 per share), which had no effect on the conversion rate of conversion premiums due under the terms of the Series
C Preferred Stock, and which conversion price was already being reflected in prior conversion notices after the date of such reverse
split; (c) formally amend the measurement period for the calculation of the conversion premiums due under the terms of the
Series C Preferred Stock to begin on the later of February 3, 2020 or, if no trigger event (as described in the designation of
the Series C Preferred Stock) has occurred, 30 trading days, and if a trigger event has occurred 60 trading days, before the
date of an applicable conversion notice, which had previously been agreed to contractually by the parties (i.e., the beginning
of each future measurement period for conversions made after February 3, 2020, will extend back to February 3, 2020); and (d) update
the references in the designation to the “Merger” which had previously referred to the Company’s combination
with Lineal Star Holdings, LLC, which transaction was rescinded and terminated effective December 31, 2019, to refer to the planned
Merger with Viking Energy Group, Inc., which has the effect of the Merger being approved by the holder of the Series C Preferred
Stock and not being a ‘deemed liquidation event’ under the Second Amended and Restated Designation.



Except as corrected and
amended as described above, the description of the Company’s Series C Preferred Stock is set forth under “Item
5. 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” in the Company’s Annual Report
on Form 10-K, filed with the SEC on June 29, 2020, and is incorporated by reference herein.



The foregoing descriptions
of the Corrections and Second Amended and Restated Designation do not purport to be complete and are qualified in their entirety
by reference to the Corrections and Second Amended and Restated Designation, copies of which are filed as Exhibits 3.23,
3.24 and 3.25 to this Quarterly Report on Form 10-Q, respectively, and incorporated in this Item 5.03 by
reference in their entirety.



Item 5.07

Submission of Matters to a Vote
of Security Holders.



As described above in
Item 5.03, which information is incorporated by reference in this Item 5.07, on December 11, 2020, via a written
consent to action without meeting, the sole shareholder of the Company’s Series C Preferred Stock approved the filing of
the Corrections and the adoption of the Second Amended and Restated Designation of the Series C Preferred Stock of the Company.





56


Table of Contents




ITEM
6. EXHIBITS.



See the Exhibit Index following
the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit
Index is incorporated herein by reference.



SIGNATURES



Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



| | CAMBER ENERGY, INC.                     
| | ----------------------------------------
| | (Registrant)                            
| |                                         
| | /s/ Louis G. Schott                     
| | Louis G. Schott                         
| | Interim Chief Executive Officer         
| | (Principal Executive Officer)           
| |                                         
| | Date: December 18, 2020                 
| |                                         
| | /s/ Robert Schleizer                    
| | Robert Schleizer                        
| | Chief Financial Officer                 
| | (Principal Financial/Accounting Officer)
| |                                         
| | Date: December 18, 2020                 



57


Table of Contents




EXHIBIT INDEX



|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                                                 
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1#        | Agreement and Plan of Merger by and Between Viking Energy Group, Inc., and Camber Energy, Inc. dated as of February 3, 2020 (Filed as Exhibit 2.1 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                            
|2.2         | First Amendment to Agreement and Plan of Merger, dated as of May 27, 2020, by and between Viking Energy, Inc. and Camber Energy, Inc. (Filed as Exhibit 2.2 to the Company’s Report on Form 8-K, filed with the Commission on June 1, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                      
|2.3         | Second Amendment to Agreement and Plan of Merger, dated as of June 16, 2020, by and between Viking Energy, Inc. and Camber Energy, Inc. (Filed as Exhibit 2.3 to the Company’s Report on Form 8-K, filed with the Commission on June 16, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                   
|2.4         | Third Amendment to Agreement and Plan of Merger, dated as of June 25, 2020, by and between Viking Energy, Inc. and Camber Energy, Inc. (Filed as Exhibit 2.4 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                    
|2.5#        | Amended and Restated Agreement and Plan of Merger by and Between Viking Energy Group, Inc., and Camber Energy, Inc. dated as of August 31, 2020 (Filed as Exhibit 2.1 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                            
|2.6         | First Amendment to Amended and Restated Agreement and Plan of Merger by and Between Viking Energy Group, Inc., and Camber Energy, Inc. dated as of October 9, 2020 (Filed as Exhibit 2.1 to Camber’s Report on Form 8-K, filed with the Commission on October 9, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                           
|3.1         | Articles of Incorporation (Filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended November 30, 2005, filed with the SEC on February 14, 2006, and incorporated herein by reference)(File No. 000-51414)                                                                                                                                                               
|3.2         | Certificate of Amendment to Articles of Incorporation (Incorporated by reference herein to Exhibit B to the Company’s Information Statement on Schedule 14C filed with the SEC on June 1, 2006) (File No. 000-51414)                                                                                                                                                                                        
|3.3         | Certificate of Amendment to Articles of Incorporation (Incorporated by reference herein to Exhibit B to the Company’s Information Statement on Schedule 14C filed with the SEC on February 20, 2007)(File No. 000-51414)                                                                                                                                                                                    
|3.4         | Certificate of Amendment to Articles of Incorporation (Incorporated by reference herein to Exhibit B to the Company’s Proxy Statement on Schedule 14A filed with the SEC on March 11, 2010) (File No. 001-32508)                                                                                                                                                                                            
|3.5         | Certificate of Amendment to Articles of Incorporation (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on January 11, 2011, and incorporated herein by reference)(File No. 001-32508)                                                                                                                                                                                   
|3.6         | Certificate of Amendment to Articles of Incorporation (1-for-25 Reverse Stock Split of Common Stock) (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on July 2, 2015, and incorporated herein by reference)(File No. 001-32508)                                                                                                                                        
|3.7         | Certificate of Amendment to the Articles of Incorporation, amending the Company’s name to “Camber Energy, Inc.”, filed with the Secretary of State of Nevada on January 3, 2017 (Filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on February 14, 2017, and incorporated herein by reference)(File No. 001-32508)                                             
|3.8         | Certificate of Amendment to the Company’s Articles of Incorporation to increase the number of our authorized shares of common stock from 200,000,000 to 500,000,000, as filed with the Secretary of State of Nevada on January 10, 2018 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on January 12, 2018, and incorporated herein by reference) (File No. 001-32508)
|3.9         | Certificate of Amendment to Articles of Incorporation (1-for-25 Reverse Stock Split of Common Stock) filed with the Nevada Secretary of State on March 1, 2018, and effective March 5, 2018 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on March 2, 2018, and incorporated herein by reference) (File No. 001-32508)                                               



58


Table of Contents




|3.10 | Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209, as filed by Camber Energy, Inc. with the Secretary of State of the State of Nevada on December 20, 2018 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on December 26, 2018, and incorporated herein by reference)(File No. 001-32508)                                                                                                    
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.11 | Certificate of Amendment to the Company’s Articles of Incorporation to increase the number of our authorized shares of common stock from 20,000,000 to 250,000,000, as filed with the Secretary of State of Nevada on April 10, 2019 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on April 11, 2019, and incorporated herein by reference)(File No. 001-32508)                                                    
|3.12 | Certificate of Amendment to Articles of Incorporation (1-for-25 Reverse Stock Split of Common Stock) filed with the Nevada Secretary of State on July 3, 2019, and effective July 8, 2019 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on July 8, 2019, and incorporated herein by reference) (File No. 001-32508)                                                                                                
|3.13 | Camber Energy, Inc. Amended and Restated Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock as filed with the Secretary of State of Nevada on July 8, 2019 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on July 9, 2019, and incorporated herein by reference) (File No. 001-32508)                                                    
|3.14 | State of Delaware Certificate of Merger of Domestic Corporation Into Domestic Limited Liability Company, filed with the Secretary of State of Delaware on July 10, 2019, and effective July 9, 2019, merging Camber Energy Merger Sub 2, Inc. into Lineal Star Holdings LLC (Filed as Exhibit 3.8 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on August 14, 2019, and incorporated herein by reference) (File No. 001-32508)
|3.15 | Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209, filed by Camber Energy, Inc. with the Secretary of State of Nevada on October 25, 2019, and effective on October 29, 2019 (Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Commission on October 29, 2019, and incorporated herein by reference) (File No. 001-32508)                                                                          
|3.16 | Certificate of Amendment to Articles of Incorporation (Increase in Authorized Common Stock to 25 Million Shares) filed with the Nevada Secretary of State on April 16, 2020, and effective April 16, 2020                                                                                                                                                                                                                                                 
|3.17 | Certificate of Withdrawal of Certificate of Designation of Series A Convertible Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)                                                                                                                               
|3.18 | Certificate of Withdrawal of Certificate of Designation of Series B Redeemable Convertible Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.2 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)                                                                                                                    
|3.19 | Certificate of Withdrawal of Certificate of Designation of Series D Convertible Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.3 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)                                                                                                                               
|3.20 | Certificate of Withdrawal of Certificate of Designation of Series E Redeemable Convertible Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.4 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)                                                                                                                    
|3.21 | Certificate of Withdrawal of Certificate of Designation of Series F Redeemable Preferred Stock filed with the Secretary of State of Nevada on May 15, 2020 (Filed as Exhibit 3.5 to the Company’s Report on Form 8-K, filed with the Commission on May 19, 2020, and incorporated herein by reference)(File No. 001-32508)                                                                                                                                
|3.22 | Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of Camber Energy, Inc., filed with the Secretary of State of Nevada on August 31, 2020 (Filed as Exhibit 3.1 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference)(File No. 001-32508)                                                                                         



|3.23* | Certificate of Correction filed with the Secretary of State of Nevada
on December 14, 2020, correcting the Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable
Convertible Preferred Stock as filed with the Secretary of State of Nevada on August 25, 2016
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.24* | Certificate of Correction filed with the Secretary of State of Nevada
on December 14, 2020, correcting the Certificate of Designations of Preferences, Powers, Rights and Limitations of Series C Redeemable
Convertible Preferred Stock as filed with the Secretary of State of Nevada on July 8, 2019   
|3.25* | Second Amended and Restated Certificate of Designations of Preferences,
Powers, Rights and Limitations of Series C Redeemable Convertible Preferred Stock as filed with the Secretary of State of Nevada
on December 14, 2020                                                                             





59


Table of Contents




|3.26  | Amended and Restated Bylaws (effective March 29, 2016) (Filed as Exhibit 3.1 to the Company’s Report on Form 8-K, filed with the Commission on April 1, 2016, and incorporated herein by reference)(File No. 001-32508)                                                                                                                                                                                              
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1  | $1,539,719 Promissory Note effective December 31, 2019, evidencing amounts owed by Lineal Star Holdings, LLC to Camber Energy, Inc. (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on January 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                             
|10.2  | $800,000 Promissory Note No. 2 effective December 31, 2019, evidencing amounts owed by Lineal Star Holdings, LLC to Camber Energy, Inc. (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on January 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                         
|10.3+ | Form of Stock Purchase Agreement relating to the purchase of $5 million in shares of Series C Redeemable Convertible Preferred Stock dated February 3, 2020 (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                    
|10.4  | Form of Waivers and Amendments to Stock Purchase Agreements dated February 3, 2020, by and between Camber Energy, Inc. and the Investor Named Therein (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                          
|10.5+ | Securities Purchase Agreement dated as of February 3, 2020, by and Between Camber Energy, Inc. (Purchaser) and Viking Energy Group, Inc. (Filed as Exhibit 10.3 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                       
|10.6  | $5,000,000 10.5% Secured Promissory Note Issued by Viking Energy Group, Inc. to Camber Energy, Inc. Dated February 3, 3020 (Filed as Exhibit 10.4 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                                     
|10.7  | Security and Pledge Agreement, dated as of February 3, 2020, by and among Viking Energy Group, Inc. and Camber Energy, Inc. (Filed as Exhibit 10.5 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                                    
|10.8  | Security and Pledge Agreement, dated as of February 3, 2020, by and among Viking Energy Group, Inc. and Camber Energy, Inc. (Filed as Exhibit 10.6 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                                    
|10.9  | Assignment of Membership Interests by Viking Energy Group, Inc. in favor of Camber Energy, Inc. dated February 3, 2020 (Filed as Exhibit 10.7 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                                         
|10.10 | Compromise Settlement Agreement executed January 31, 2020, between PetroGlobe Energy Holdings, LLC, Signal Drilling, LLC, Petrolia Oil, LLC, Prairie Gas Company of Oklahoma, LLC, Canadian River Trading Company, LLC, and Camber Energy, Inc. (Filed as Exhibit 10.8 to the Company’s Report on Form 8-K, filed with the Commission on February 5, 2020, and incorporated herein by reference) (File No. 001-32508)
|10.11 | February 15, 2020 Letter Agreement with Sylva International LLC dba SylvaCap Media (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on May 13, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                                                                                 
|10.12 | Form of Stock Purchase Agreement relating to the purchase of $6 million in shares of Series C Redeemable Convertible Preferred Stock dated June 22, 2020 (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on June 23, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                          
|10.13 | Form of Amendment to Stock Purchase Agreements dated June 22, 2020, by and between Camber Energy, Inc. and the Investor Named Therein (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on June 23, 2020, and incorporated herein by reference) (File No. 001-32508)                                                                                                             



60


Table of Contents




|10.14+   | Securities Purchase Agreement dated as of June 25, 2020, by and Between Camber Energy, Inc. (Purchaser) and Viking Energy Group, Inc. (Filed as Exhibit 10.1 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020, and incorporated herein by reference) (File No. 001-32508)        
|-------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.15    | $5,000,000 10.5% Secured Promissory Note Issued by Viking Energy Group, Inc. to Camber Energy, Inc. Dated June 25, 2020 (Filed as Exhibit 10.2 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020, and incorporated herein by reference) (File No. 001-32508)                      
|10.16    | Security and Pledge Agreement, dated as of June 25, 2020, by and among Viking Energy Group, Inc. and Camber Energy, Inc. (Filed as Exhibit 10.3 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020, and incorporated herein by reference) (File No. 001-32508)                     
|10.17    | Amended and Restated Security and Pledge Agreement, dated as of June 25, 2020, by and among Viking Energy Group, Inc. and Camber Energy, Inc. (Filed as Exhibit 10.4 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020, and incorporated herein by reference) (File No. 001-32508)
|10.18    | Assignment of Membership Interests by Viking Energy Group, Inc. in favor of Camber Energy, Inc. dated June 25, 2020 (Filed as Exhibit 10.5 to the Company’s Report on Form 8-K, filed with the Commission on June 26, 2020, and incorporated herein by reference) (File No. 001-32508)                          
|10.19*** | Past Service Payment and Success Bonus Agreement dated August 31, 2020, with Louis G. Schott (Filed as Exhibit 10.4 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                  
|10.20*** | Past Service Payment and Success Bonus Agreement dated August 31, 2020, with Robert Schleizer (Filed as Exhibit 10.5 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                 
|10.21*** | Past Service Payment and Success Bonus Agreement dated August 31, 2020, with Fred Zeidman (Filed as Exhibit 10.6 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                     
|10.22*** | Past Service Payment and Success Bonus Agreement dated August 31, 2020, with James G. Miller (Filed as Exhibit 10.7 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                  
|10.23*** | Engagement Letter with Fides Energy LLC/Louis G. Schott dated May 25, 2018 (Filed as Exhibit 10.3 to the Company’s Report on Form 8-K, filed with the Commission on May 25, 2018, and incorporated herein by reference) (File No. 001-32508)                                                                    
|10.24*** | First Amendment to May 25, 2018, Engagement Letter with Fides Energy LLC/Louis G. Schott dated August 31, 2020 (Filed as Exhibit 10.9 to the Company’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)                           
|10.25*** | December 1, 2017 Letter Agreement between Camber Energy, Inc. and BlackBriar Advisors LLC (Filed as Exhibit 10.41 to the Company’s Annual Report on Form 10-K, filed with the Commission on July 1, 2019, and incorporated herein by reference)(File No. 001-32508)                                             
|10.26*** | First Amendment to December 1, 2017 Letter Agreement between Camber Energy, Inc. and BlackBriar Advisors LLC dated August 31, 2020 (Filed as Exhibit 10.11 to the Company’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)      
|10.27*** | Past Service Payment and Success Bonus Agreement dated August 31, 2020, with Louis G. Schott (Filed as Exhibit 10.4 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                  
|10.28*** | Past Service Payment and Success Bonus Agreement dated August 31, 2020, with Robert Schleizer (Filed as Exhibit 10.5 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                 
|10.29*** | Past Service Payment and Success Bonus Agreement dated August 31, 2020, with Fred Zeidman (Filed as Exhibit 10.6 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)                                                     



61


Table of Contents




|10.30    | May 19, 2020, First Amendment to Letter Agreement with Sylva International LLC dba SylvaCap Media (Filed as Exhibit 10.2 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)    
|-------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.31    | August 30, 2020, Second Amendment to Letter Agreement with Sylva International LLC dba SylvaCap Media (Filed as Exhibit 10.3 to Camber’s Report on Form 8-K, filed with the Commission on September 3, 2020, and incorporated herein by reference) (File No. 001-32508)
|10.32*   | Form of Exchange Agreement dated December 11, 2020, by and between Camber Energy, Inc. and the Investor Named
Therein                                                                                                                                                  
|10.33*   | Form of $6,000,000 Promissory Note dated December 11, 2020, by and between Camber Energy, Inc. and the Investor
Named Therein                                                                                                                                          
|10.34*   | Form of Security Agreement dated December 11, 2020, by and between
Camber Energy, Inc. and the Investor Named Therein                                                                                                                                                  
|31.1*    | Section 302 Certification of Periodic Report of Principal Executive Officer                                                                                                                                                                                            
|31.2*    | Section 302 Certification of Periodic Report of Principal Financial Officer                                                                                                                                                                                            
|32.1**   | Section 906 Certification of Periodic Report of Principal Executive Officer                                                                                                                                                                                            
|32.2**   | Section 906 Certification of Periodic Report of Principal Financial Officer                                                                                                                                                                                            
|*101.INS | XBRL Instance Document.                                                                                                                                                                                                                                                
|*101.SCH | XBRL Schema Document.                                                                                                                                                                                                                                                  
|*101.CAL | XBRL Calculation Linkbase Document.                                                                                                                                                                                                                                    
|*101.LAB | XBRL Label Linkbase Document.                                                                                                                                                                                                                                          
|*101.PRE | XBRL Presentation Linkbase Document.                                                                                                                                                                                                                                   
|*101.DEF | XBRL Definition Linkbase Document.                                                                                                                                                                                                                                     



* Exhibits
filed herewith.



** Exhibits furnished
herewith.



*** Management contract
or compensatory plan.



+ Certain schedules and exhibits have been
omitted pursuant to Item 601(b)(2) and/or Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit
will be furnished supplementally to the Commission upon request; provided



62