EXHIBIT 99.3

 

 

Camber Energy, Inc.

Unaudited Pro Forma Condensed Combined Financial Statements

 

 

 

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

On December 23, 2020, Camber Energy, Inc. completed the acquisition of 51% of the issued and outstanding common stock of Viking Energy Group, Inc. The acquisition will be accounted for using the acquisition method of accounting in accordance with GAAP. Under the acquisition method of accounting, Camber will record all assets acquired and liabilities assumed at their respective acquisition-date fair values at the Effective Time.

 

The following unaudited pro forma condensed combined financial statements and the related notes present the combination of the historical consolidated financial statements of Camber and Viking to give effect to the acquisition. See additional information in Note 1 – Basis of Presentation to the Unaudited Pro Forma Condensed Combined Financial Information

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical

 

 

 

 

 

 

 

 

 

Camber Energy, Inc. 9/30/20

 

 

Viking Energy Group, Inc. 9/30/20

 

 

Pro Forma Adjustments

 

 

Pro Forma Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$ 1,112,965

 

 

$ 5,951,272

 

 

 

 

 

$ 7,064,237

 

Accounts receivable

 

 

145,362

 

 

 

3,806,746

 

 

 

 

 

 

3,952,108

 

Prepaid expenses and other current assets, net

 

 

220,682

 

 

 

33,178

 

 

 

 

 

 

253,860

 

Total current assets

 

 

1,479,009

 

 

 

9,791,196

 

 

 

 

 

 

11,270,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas properties, net

 

 

75,394

 

 

 

141,073,588

 

 

 

14,847,863 (f)

 

 

155,996,845

 

Other property and equipment, net

 

 

-

 

 

 

443,513

 

 

 

 

 

 

 

443,513

 

Notes receivable

 

 

10,241,048

 

 

 

-

 

 

 

(8,017,048 )(a)(b)

 

 

2,224,000

 

Derivative asset

 

 

-

 

 

 

4,376,174

 

 

 

 

 

 

 

4,376,174

 

Goodwill

 

 

 

 

 

 

 

 

 

 

45,855,539 (c)

 

 

45,855,539

 

Other assets

 

 

-

 

 

 

121,196

 

 

 

 

 

 

 

121,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$ 11,795,451

 

 

$ 155,805,667

 

 

 

 

 

 

$ 220,287,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND MEMBERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$ 1,563,519

 

 

$ 6,650,344

 

 

 

 

 

 

$ 8,213,863

 

Derivative liability

 

 

-

 

 

 

965,903

 

 

 

 

 

 

 

965,903

 

Amounts due directors

 

 

-

 

 

 

573,562

 

 

 

 

 

 

 

573,562

 

Current asset retirement obligation

 

 

25,766

 

 

 

-

 

 

 

 

 

 

 

25,766

 

Undistributed revenue and royalties

 

 

-

 

 

 

3,415,990

 

 

 

 

 

 

 

3,415,990

 

Current income taxes payable

 

 

3,000

 

 

 

-

 

 

 

 

 

 

 

3,000

 

Current portion of long term debt

 

 

-

 

 

 

61,614,657

 

 

 

(7,630,482 )(a)(i)

 

 

53,984,175

 

Total current liabilities

 

 

1,592,285

 

 

 

73,220,456

 

 

 

 

 

 

 

67,182,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long term debt - net of current portion

 

 

-

 

 

 

66,891,550

 

 

 

12,000,000 (g)

 

 

78,891,550

 

Operating lease liability

 

 

-

 

 

 

258,948

 

 

 

 

 

 

 

258,948

 

Asset retirement obligations

 

 

20,017

 

 

 

5,413,902

 

 

 

 

 

 

 

5,433,919

 

Total Liabilities

 

 

1,612,302

 

 

 

145,784,856

 

 

 

 

 

 

 

151,766,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Temporary equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock series C

 

 

6,000,000

 

 

 

-

 

 

 

 

 

 

 

6,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity attributable to Company

 

 

4,183,149

 

 

 

11,203,763

 

 

 

(2,431,182 )(e)(h)

 

 

12,955,730

 

Noncontrolling interest

 

 

-

 

 

 

(1,182,952 )

 

 

50,748,018 (b)(d)

 

 

49,565,066

 

Total Stockholders' Equity (Deficit)

 

 

4,183,149

 

 

 

10,020,811

 

 

 

 

 

 

 

62,520,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

$ 11,795,451

 

 

$ 155,805,667

 

 

 

 

 

 

$ 220,287,472

 

 

 
2

 

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE SIX MONTH PERIOD ENDED SEPTEMBER 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Historical

 

 

 

 

 

 

 

 

 

Camber Energy, Inc. - Six Months Ended 9/30/20

 

 

Viking Energy Group, Inc. - Six Months Ended 9/30/20

 

 

Pro Forma Adjustments

 

 

Pro Forma Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas sales

 

$ 91,147

 

 

$ 19,699,250

 

 

 

 

 

$ 19,790,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses and production taxes

 

 

99,988

 

 

 

9,388,437

 

 

 

 

 

 

9,488,425

 

Depreciation, depletion and amortization

 

 

5,132

 

 

 

5,494,391

 

 

 

 

 

 

5,499,523

 

Impairment of oil and gas properties

 

 

-

 

 

 

2,500,000

 

 

 

(2,500,000 )(k)

 

 

-

 

General and administrative

 

 

1,539,578

 

 

 

2,107,335

 

 

 

 

 

 

 

3,646,913

 

Stock based compensation

 

 

-

 

 

 

3,432,832

 

 

 

 

 

 

 

3,432,832

 

Accretion of asset retirement obligation

 

 

-

 

 

 

235,317

 

 

 

 

 

 

 

235,317

 

Other expense

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

TOTAL OPERATING EXPENSES

 

 

1,644,698

 

 

 

23,158,312

 

 

 

 

 

 

 

22,303,010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

(1,553,551 )

 

 

(3,459,062 )

 

 

 

 

 

 

(2,512,613 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

-

 

 

 

(12,237,480 )

 

 

 

 

 

 

(12,237,480 )

Amortization of debt discount

 

 

 

 

 

 

(4,770,198 )

 

 

 

 

 

 

(4,770,198 )

Change in fair value of derivatives

 

 

 

 

 

 

(14,310,351 )

 

 

 

 

 

 

(14,310,351 )

Equity in earnings of unconsolidated entity

 

 

(2,140,121 )

 

 

-

 

 

 

2,140,121 (j)

 

 

-

 

Loss on financing settlements

 

 

-

 

 

 

(931,894 )

 

 

 

 

 

 

(931,894 )

Other income (expense)

 

 

42,532

 

 

 

1,228

 

 

 

 

 

 

 

43,760

 

TOTAL OTHER INCOME (EXPENSE)

 

 

(2,097,589 )

 

 

(32,248,695 )

 

 

 

 

 

 

(32,206,163 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

 

(3,651,140 )

 

 

(35,707,757 )

 

 

 

 

 

 

(34,718,776 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONCONTROLLING INTEREST

 

 

-

 

 

 

2,140,121

 

 

 

15,356,680 (j)(l)

 

 

17,496,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO CAMBER

 

$ (3,651,140 )

 

$ (33,567,636 )

 

 

 

 

 

$ (17,221,975 )

 

 
3

 

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED MARCH 31, 2020

 

 

 

 

 

 

 

 

 

 

 

Historical

 

 

 

 

 

 

 

 

 

Camber Energy, Inc. - Year Ended 3/31/20

 

 

Viking Energy Group, Inc. - Twelve Months Ended 3/31/20

 

 

Pro Forma Adjustments

 

 

Pro Forma Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Oil and gas sales

 

$ 397,118

 

 

$ 37,034,210

 

 

 

 

 

$ 37,431,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses and production taxes

 

 

494,096

 

 

 

13,363,586

 

 

 

 

 

 

13,857,682

 

Depreciation, depletion and amortization

 

 

20,420

 

 

 

11,742,960

 

 

 

 

 

 

11,763,380

 

General and administrative

 

 

4,909,871

 

 

 

5,484,329

 

 

 

 

 

 

10,394,200

 

Stock based compensation

 

 

-

 

 

 

1,165,701

 

 

 

 

 

 

1,165,701

 

Accretion of asset retirement obligation

 

 

-

 

 

 

434,556

 

 

 

 

 

 

434,556

 

TOTAL OPERATING EXPENSES

 

 

5,424,387

 

 

 

32,191,132

 

 

 

 

 

 

37,615,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM OPERATIONS

 

 

(5,027,269 )

 

 

4,843,078

 

 

 

 

 

 

(184,191 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(14,771 )

 

 

(14,440,862 )

 

 

 

 

 

(14,455,633 )

Amortization of debt discount

 

 

-

 

 

 

(6,931,815 )

 

 

 

 

 

(6,931,815 )

Change in fair value of derivatives

 

 

-

 

 

 

29,316,147

 

 

 

 

 

 

29,316,147

 

Equity in earnings of unconsolidated entity

 

 

957,169

 

 

 

-

 

 

 

(957,169 )(m)

 

 

-

 

Other income (expense)

 

 

228,572

 

 

 

3,242

 

 

 

 

 

 

 

231,814

 

TOTAL OTHER INCOME (EXPENSE)

 

 

1,170,970

 

 

 

7,946,712

 

 

 

 

 

 

 

8,160,513

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

 

(3,856,299 )

 

 

12,789,790

 

 

 

 

 

 

 

7,976,322

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONCONTROLLING INTEREST

 

 

-

 

 

 

(957,169 )

 

 

(5,309,828 )(m)(n)

 

 

(6,266,997 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO CAMBER

 

$ (3,856,299 )

 

$ 11,832,621

 

 

 

 

 

 

$ 1,709,325

 

 

 
4

 

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

Note 1—Basis of Presentation

 

The unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of SEC Regulation S-X using the acquisition method of accounting in accordance with GAAP and are based on the historical consolidated financial statements of Camber and Viking, after giving effect to the acquisition as well as pro forma adjustments.

 

The unaudited pro forma condensed combined balance sheet combines the unaudited historical condensed consolidated balance sheets of Camber and Viking as of September 30, 2020, giving effect to the acquisition as if it had occurred on September 30, 2020.

 

The unaudited pro forma condensed combined statements of operations for the fiscal year ended March 31, 2020 and the six months ended September 30, 2020 assume the acquisition took place on April 1, 2019, the beginning of Camber’s most recently completed fiscal year. Camber’s audited consolidated statement of operations for the fiscal year ended March 31, 2020 has been combined with Viking’s unaudited proforma consolidated statement of operations for the twelve months ended March 31, 2020. The unaudited pro forma condensed combined statement of operations for the six months ended September 30, 2020 combines the unaudited consolidated statement of operations of Camber for the six months ended September 30, 2020 with the unaudited consolidated statement of operations of Viking for the six months ended September 30, 2020, as if the effective date of the acquisition was September 30, 2020, and interim unaudited financial statements were prepared for both Camber and Viking as of that date.

 

The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and are not intended to represent the consolidated results of operations or financial position of the combined company that would have been recorded had the merger been completed as of the dates presented and should not be taken as representative of future results of operations or financial position of the combined company. The unaudited pro forma condensed combined financial statements do not reflect the impacts of any potential operational efficiencies, cost savings or economies of scale that Camber may achieve with respect to the combined operations of Camber and Viking. Additionally, the pro forma statements of operations do not include non-recurring charges or credits and the related tax effects that result directly from the acquisition.

 

The unaudited pro forma condensed combined financial statements reflect the estimated acquisition consideration, which does not represent what the actual merger consideration transferred will be at the Effective Time. In accordance with GAAP, the fair value of equity securities issued as the consideration transferred will be measured on the closing date of the acquisition at the then-current market price. Viking has estimated the total consideration to be approximately $27,050,979, which consists of $10,900,000 paid in cash, forgiveness of two notes receivable from Viking with an estimated aggregate fair value of $9,700,204, and the assignment back to Viking of Camber’s 30% interest in one of Viking’s subsidiaries with an estimated fair value of $6,450,775.

 

The unaudited pro forma condensed combined financial statements illustrate the assets and liabilities of Viking recorded at their preliminary estimated fair values at the effective date of the acquisition. The preliminary fair value estimates are subject to change based on the final valuations that will be determined as of the closing date of the acquisition. Actual results will differ from this unaudited pro forma condensed combined financial information once Camber has determined the final acquisition consideration and completed the valuation analysis and computations necessary to finalize the required purchase price allocations. Accordingly, the final allocations of acquisition consideration and their effects on results of operations may differ materially from the preliminary allocations and unaudited pro forma combined amounts included herein. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

 

The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes contained in the Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q of Camber Energy, Inc. and Viking Energy Group, Inc.

 

 
5

 

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

Note 2—Accounting Policies

 

The unaudited pro forma financial information has been compiled in a manner consistent with the accounting policies of Camber and Viking.

 

Note 3—Estimated Acquisition Consideration and Allocation

 

Under the terms of the “Stock Purchase Agreement”, the Company closed on the acquisition of 51% of the issued and outstanding common shares of Viking in a transaction accounted for under the acquisition method of accounting, whereby the assets acquired and the liabilities assumed, if any, are to be valued at fair value, and compared to the fair value of the consideration given to identify if there are any identifiable intangible assets to be recognized as a result of the transaction. The Company was required to provide a cash payment of $10,900,000, forgiveness of two notes receivable from Viking with an estimated aggregate fair value of $9,700,204, and the assignment back to Viking of Camber’s 30% interest in one of Viking’s subsidiaries with an estimated fair value of $6,450,775.

 

The Company performed an initial screen test provided for in Accounting Standards Update (ASU) 2017-01, Clarifying the Definition of a Business (ASU 2017-01) to determine the appropriate accounting treatment as business combination and then performed a fair value assessment performed utilizing cost, market and income approaches, as well as a discounted cash flow analysis. Pursuant to the Purchase Agreement, Viking is generally obligated (subject to certain limitations) to issue additional shares of Viking common stock to Camber to ensure that Camber shall own at least 51% of the common stock of Viking through July 1, 2022.

 

As a result of the acquisition Viking is now a 51% majority-owned subsidiary of Camber Energy, Inc. and is included

 

Under GAAP, if the value of the consideration given exceeds the fair value of the business enterprise and its net assets, the transaction can create goodwill, which is to be recognized immediately by the purchaser. The following table summarizes our calculation of goodwill to be recognized based on the estimated fair values as of December 23, 2020.

 

 
6

 

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

  

The total value of the consideration given as outlined in the "Stock Purchase Agreement", representing the full purchase price of the common shares, is calculated as follows:

 

Cash consideration

 

$ 10,900,000

 

Debt cancellation including accrued interest

 

 

9,700,204

 

Assignment of interest in Elysium

 

 

6,450,775

 

 

 

 

 

 

Total value of consideration given

 

$ 27,050,979

 

 

Goodwill, if any, is calculated by comparing the total purchase price to the fair values of assets acquired and liabilites assumed in connection with this acquisition as follows:

 

Total Purchase Price

 

$ 27,050,979

 

 

 

 

 

 

Fair Value of Assets and Liabilities, including the recognition of a 49% noncontrolling interest

 

Cash

 

$ 16,179,481

 

Accounts receivable

 

 

3,162,974

 

Oil and gas properties

 

 

155,921,451

 

Property and equipment

 

 

433,168

 

Commodity derivative asset

 

 

1,234,308

 

Other asset - rental deposit

 

 

57,896

 

Accounts payable

 

 

(4,054,426 )

Accrued expenses and amount due director

 

 

(3,896,055 )

Undistributed revenues and royaoties

 

 

(4,115,462 )

Commodity derivative liability

 

 

(1,003,670 )

Long term debt

 

 

(126,777,395 )

Operating lease liability

 

 

(241,431 )

Asset retirement obligations

 

 

(6,140,333 )

Noncontrolling interest recognized at fair value

 

 

(49,565,066 )

 

 

 

 

 

Total Fair Value of Acquisition

 

 

(18,804,560 )

 

 

 

 

 

Fair Value of Goodwill

 

$ 45,855,539

 

  

 
7

 

 

CAMBER ENERGY, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

  

Note 4—Pro Forma Adjustments

 

(a)

Record elimination of notes receivable cancelled

 

 

 

 

Current portion of long term debt

 

$ 9,200,000

 

 

Notes receivable

 

 

(9,200,000 )

 

 

 

$

-

 

 

 

 

 

 

 

(b)

Record elimination of book value of interest in unconsolidated entity

 

 

 

 

 

Notes receivable

 

$ 1,182,952

 

 

Noncontrolling interest

 

 

(1,182,952 )

 

 

 

$

-

 

 

 

 

 

 

 

(c)

Record goodwill based on fair value estimates

 

$ 45,855,539

 

 

 

 

 

 

 

(d)

Record noncontrolling interest based on fair value estimates

 

$ 49,565,066

 

 

 

 

 

 

 

(e)

Record elimination of Viking Equity

 

$ (11,203,763 )

 

 

 

 

 

 

(f)

Record estimated fair value of oil and gas properties acquired

 

$ 14,847,863

 

 

 

 

 

 

 

(g)

Record increase in Camber debt to facilitate closing

 

$ 12,000,000

 

 

 

 

 

 

 

(h)

Record increase in Camber equity to recognize change in fair value of notes receivable and the equity interest assigned to Viking as consideration

 

$ 8,772,581

 

 

 

 

 

 

 

(i)

Record fair value adjustment to the carrying value of long term debt

 

$ 1,569,518

 

 

 

 

 

 

 

(j)

Eliminate equity in earnings of unconsolidated entity for the six months ended September 30, 2020

 

 

 

 

 

Equity in earnings of unconsolidated entity

 

$ 2,140,121

 

 

Noncontrolling interest

 

 

(2,140,121 )

 

 

 

$

-

 

 

 

 

 

 

 

(k)

Adjust impairment loss for the six months ended September 30, 2020

 

$ (2,500,000 )

 

 

 

 

 

 

(l)

Recognize noncontrolling interest at 49% of Vikings net income (loss) for the six months ended September 30, 2020

 

$ 17,496,801

 

 

 

 

 

 

 

(m)

Eliminate equity in earnings of unconsolidated entity for the twelve months ended March 31, 2020

 

 

 

 

 

Equity in earnings of unconsolidated entity

 

$ (957,169 )

 

Noncontrolling interest

 

 

957,169

 

 

 

 

$

-

 

 

 

 

 

 

 

(n)

Recognize noncontrolling interest at 49% of Vikings net income (loss) for the twelve months ended March 31, 2020

 

$ (6,266,997 )

 

 
8