As filed with the Securities and Exchange Commission on September 3, 2020

 

Registration No. 333-238927

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 

 

 

Amendment No. 1 to

 FORM S-4

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

 

 

 

Camber Energy, Inc.

(Exact name of Registrant as specified in its charter)

 

 

 

Nevada 1311 20-2660243

(State or other jurisdiction of

incorporation or organization) 

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

 

1415 Louisiana, Suite 3500

Houston, Texas 77002

(210) 998-4035

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

 

Louis G. Schott

Interim Chief Executive Officer

1415 Louisiana, Suite 3500

Houston, Texas 77002

(210) 998-4035

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

   

Aaron D. McGeary, Esq.

The McGeary Law Firm, P.C.

1600 Airport Fwy., Suite 300

Bedford, Texas 76022

(817) 282-5885 

Lance Brunson, Esq.

Callie Tempest Jones, Esq.

 Brunson Chandler & Jones, PLLC

 Walker Center

175 S. Main Street, 14th Floor

 Salt Lake City, Utah 84111

(801) 303-5737

 

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement is declared effective and upon completion of the merger described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 company     

 

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 7(a)(2)(B) of the Securities Act.

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)   

 

 

 

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE.

 

 

 

 

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The information in this joint proxy statement/prospectus is not complete and may be changed. A registration statement relating to the securities described in this joint proxy statement/prospectus has been filed with the U.S. Securities and Exchange Commission. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This joint proxy statement/prospectus does not constitute an offer to sell or the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED SEPTEMBER 3, 2020

 

To the stockholders of Camber Energy, Inc. and Viking Energy Group, Inc.

 

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

 

On behalf of the boards of directors of Camber Energy, Inc. (“Camber”) and Viking Energy Group, Inc. (“Viking”), we are pleased to enclose the accompanying joint proxy statement/prospectus relating to the proposed business combination of Camber and Viking. We are requesting that you take certain actions as a Camber stockholder or a Viking stockholder, as described in greater detail below.

 

Pursuant to the Agreement and Plan of Merger, dated as of February 3, 2020, as amended by the First Amendment thereto dated on or around May 27, 2020, the Second Amendment thereto dated on or around June 15, 2020, and the Third Amendment thereto dated on or around June 25, 2020, and subsequently amended and restated by the Amended and Restated Agreement and Plan of Merger, dated as of August 31, 2020 (which we refer to as the “merger agreement,” including as it may be amended from time to time), by and between Camber and Viking, a newly formed wholly-owned of Camber (“Merger Sub”) will merge with and into Viking (which we refer to as the “merger”) on the terms and subject to the conditions of the merger agreement, with Viking continuing as the surviving entity in the merger and a wholly-owned subsidiary of Camber. We sometimes refer to Camber following the merger and in its capacity as parent company of Viking as “Camber Viking” or the “combined company.”

 

In the merger, Viking stockholders will be entitled to receive a number of shares of Camber common stock for each share of Viking common stock they own and one share of Camber Series A Preferred Stock (discussed in greater detail below under “The Merger AgreementTreatment of Viking Convertible Securities and Preferred Stock”, beginning on page 191) for each share of Viking preferred stock they own. The actual number of shares of Camber common stock that Viking stockholders will receive per share of Viking common stock (the “merger consideration”) will fluctuate based on a number factors described below and will not be known at the time Viking stockholders vote on the merger, and the market value of the merger consideration will fluctuate with the market price of Camber common stock and will not be known at the time Viking stockholders vote on the merger. While the number of shares of Camber Series A Preferred Stock will be fixed (i.e., such number will equal the number of Viking preferred stock outstanding at closing), the voting and conversion rights of such preferred stock will similarly fluctuate based on a number of factors described below and will not be known at the time Viking stockholders vote on the merger.

 

At the effective time of the merger (the “effective time”), (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 an adjustable percentage (initially 80% prior to adjustment) 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 72,506,063 shares of common stock, subject to adjustment as provided in the designation of such Series C Preferred Stock, and in connection with the proposed reverse stock split described below); 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 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 (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. Neither Camber, nor Viking, currently anticipates any change to the Camber Percentage.

 

 

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The Camber Percentage is to be adjusted as follows: (i) for each additional $500,000 (a) of unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, which comes from equity sold by Camber for cash from February 3, 2020 through the closing of the merger which is not contingent or conditional upon the closing of the merger, or (b) in other unencumbered assets acquired by Camber after the date of the merger agreement and prior to closing without increasing Camber’s liabilities, the Camber Percentage will increase by an incremental 0.5%; and (ii) for each additional $500,000 in Viking unencumbered cash (without any associated debt), which is not contingent or conditional upon the closing of the merger, available for use by the combined company after the closing of the merger, outside of Viking’s Ichor division or Elysium division in excess of $500,000, which comes from equity sold by Viking for cash from February 3, 2020 through the closing of the merger, the Camber Percentage will decrease by an incremental 0.5%. Notwithstanding the above, the Camber Percentage will not be decreased to lower than 15% or be increased to more than 25% and no funds loaned by Camber to Viking will qualify as Viking Unencumbered Cash.

 

Based on the closing price of Camber’s common stock on the NYSE American stock exchange on February 4, 2020, the last trading day before public announcement of the merger and the fully diluted number of shares of Camber and Viking on that date (without taking into account the Series C Preferred Stock in the case of Camber, or the recent amendments to the Viking Series C Preferred Stock), the exchange ratio represented approximately $0.09 in value for each share of Viking common stock, without taking into account the proposed reverse stock split discussed below. Based on the closing price of Camber’s common stock on the NYSE American stock exchange on [], 2020 of $[], and the fully diluted number of shares of Camber and Viking on that date, the exchange ratio represented approximately $[] in value for each share of Viking common stock. The value of the Camber common stock at the time of completion of the merger could be greater than, less than or the same as, the value of Camber common stock on the date of the accompanying joint proxy statement/prospectus. We urge you to obtain current market quotations of Camber common stock (trading symbol “CEI”) and Viking common stock (trading symbol “VKIN”). Following the completion of the merger, the common stock of the combined company will be listed on the NYSE American stock exchange under the symbol “CEI.”

 

The merger has been structured to qualify as a reorganization for federal income tax purposes. Accordingly, Viking stockholders generally will not recognize any gain or loss for federal income tax purposes on the exchange of shares of Viking common stock for Camber common stock in the merger.

 

Based on the number of shares of Viking common stock and Camber common stock considered outstanding on a fully diluted basis as of [], 2020, Camber expects to issue approximately [] million shares of Camber common stock to Viking stockholders in the aggregate in connection with the merger (when including shares of Camber common stock which will be issuable upon conversion of the Camber Series A Preferred Stock), representing total aggregate consideration of approximately $[] in value, based on the closing price of Camber’s common stock on the NYSE American stock exchange on [], 2020 of $[]. Upon completion of the merger, we estimate that Viking stockholders as of immediately prior to the merger will collectively own approximately 80% and Camber stockholders as of immediately prior to the merger will own approximately 20% of the fully-diluted shares of common stock of the combined company (assuming there is no adjustment of the Camber Percentage per the conditions described above, and in each case, on a fully diluted basis and without regard to the fact that immediately prior to the merger, some stockholders may own both Camber and Viking stock), and without taking into account the conversion rights of Camber’s Series C Preferred Stock.

 

Camber and Viking will each hold a special meeting of their stockholders in connection with the merger. Camber stockholders will be asked to vote to approve among other things, the issuance of shares of Camber common stock, pursuant to the terms of the merger agreement, in an amount necessary to complete the merger and the other transactions contemplated by the merger agreement (which we refer to as the “Camber share issuance proposal”), and the voting and conversion terms of the Series A Preferred Stock of Camber (which we refer to as the “Camber preferred stock proposal”), each of which require the approval of the holders of a majority of the outstanding shares of stock entitled to vote thereon present in person or by proxy at the Camber special meeting, and to approve certain other matters related to the merger. Viking stockholders will be asked to approve the merger agreement and approve the merger (which we refer to as the “Viking merger proposal”), which requires the approval of the holders of a majority of the outstanding shares of Viking common stock and Viking preferred stock, and to approve certain other matters related to the merger.

 

 

 

 

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The special meeting of Viking stockholders will be held on [], 2020 at [], at [] local time. The special meeting of Camber stockholders will be held on [], 2020 at [], at [] local time. Information about these meetings and the merger is contained in this joint proxy statement/prospectus. In particular, see “Risk Factors” beginning on page 32. We urge you to read this joint proxy statement/prospectus carefully and in its entirety.

 

Your vote is very important regardless of the number of shares of Camber common stock, Viking common stock or Viking Series C Preferred Stock that you own. The merger cannot be completed without the approval of the Camber share issuance proposal and Camber preferred stock proposal by Camber stockholders and the approval of the Viking merger proposal by the Viking stockholders. Whether or not you plan to attend your special meeting, please vote as soon as possible to make sure that your shares are represented at the meeting.

 

Each of our boards of directors recommends that holders of stock vote “FOR” each of the proposals to be considered at the respective meetings. We strongly support this combination of our companies and join our boards in their recommendations.

 

/s/ Robert Schleizer   /s/ James A. Doris
Chief Financial Officer and Director   Chief Executive Officer and Director
Camber Energy, Inc.   Viking Energy Group, Inc.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or determined if this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

The accompanying joint proxy statement/prospectus is dated [], 2020, and is first being mailed to Camber stockholders and Viking stockholders on or about [], 2020.

 

 

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ADDITIONAL INFORMATION

 

Camber and Viking file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including both Camber and Viking, which can be accessed at http://www.sec.gov. You can also request such information, and copies of any of the other information or documents attached hereto or incorporated herein, in writing, by e-mail or by telephone at the appropriate address below:

     

if you are a Camber stockholder:

 

Camber Energy, Inc.

1415 Louisiana, Suite 3500

Houston, Texas 77002

Attn: Investor Relations

Email: Info@camber.energy 

 

if you are a Viking stockholder:

 

Viking Energy Group, Inc.

15915 Katy Freeway, Suite 450

Houston, Texas 77094

Attn: Investor Relations

Email: IR@vikingenergygroup.com 

 

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, you must request them no later than five (5) business days before the date of the applicable special meeting. This means that Camber stockholders requesting documents must do so by [], 2020 in order to receive them before the Camber special meeting, and Viking stockholders requesting documents must do so by [], 2020 in order to receive them before the Viking special meeting.

 

No one has been authorized to provide you with information that is different from that contained in this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [], 2020, and you should assume that the information in this joint proxy statement/prospectus is accurate only as of such date. You should assume that the information included in this joint proxy statement/prospectus is accurate as of the date of such document. Neither the mailing of this joint proxy statement/prospectus to Camber stockholders or Viking stockholders, nor the issuance by Camber of shares of Camber common stock in connection with the merger will create any implication to the contrary.

 

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this joint proxy statement/prospectus regarding Camber has been provided by Camber, and information contained in this document regarding Viking has been provided by Viking.

 

See “Where You Can Find More Information” beginning on page 257 of the accompanying joint proxy statement/prospectus for further information.

 

 

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Camber Energy, Inc.

1415 Louisiana, Suite 3500

Houston, TX 77002

 

Notice of Special Meeting of Stockholders

 

To Camber Stockholders:

 

On February 3, 2020, Camber Energy, Inc. (“Camber”) and Viking Energy Group, Inc. (“Viking”) entered into an Agreement and Plan of Merger, as amended by the First Amendment thereto dated on or around May 27, 2020, the Second Amendment thereto dated on or around June 15, 2020, and the Third Amendment thereto dated on or around June 25, 2020, and subsequently amended and restated by the Amended and Restated Agreement and Plan of Merger, dated as of August 31, 2020 (which we refer to as the “merger agreement,” including as it may be further amended from time to time), pursuant to which a newly formed wholly-owned subsidiary of Camber (“Merger Sub”) will merge with and into Viking (which we refer to as the “merger”) on the terms and subject to the conditions of the merger agreement, with Viking continuing as the surviving entity in the merger and as a wholly-owned subsidiary of Camber. A copy of the merger agreement is attached as Annex A to the accompanying joint proxy statement/prospectus.

 

NOTICE IS HEREBY GIVEN that a special meeting of Camber stockholders (which we refer to as the “Camber special meeting,” including any adjournments or postponements thereof) will be held on [], 2020 at [], local time at []. We are pleased to notify you of and invite you to the Camber special meeting.

 

At the Camber special meeting you will be asked to vote on the following matters:

 

 

Proposal to approve the issuance of shares of Camber common stock pursuant to the terms of the merger agreement, in an amount necessary to complete the merger, the merger agreement and the other transactions contemplated by the merger agreement (the “Camber share issuance proposal”).

 

 

Proposal to approve the issuance of such number of shares of common stock exceeding 19.99% of Camber’s outstanding common stock, issuable upon conversion of the Series A Convertible Preferred Stock (“Series A Preferred Stock”) Camber plans to issue in connection with the merger, and the voting rights associated therewith (the “Camber Series A preferred stock proposal”).

 

  Proposal to approve the issuance of such number of shares of common stock exceeding 19.99% of Camber’s outstanding common stock, issuable upon conversion of the 630 shares of Series C Redeemable Convertible Preferred Stock (“Series C Preferred Stock”), including shares issuable for dividends and conversion premiums thereon sold pursuant to that certain Stock Purchase Agreement entered into with an institutional investor on June 22, 2020 (the “June 2020 Stock Purchase Agreement”), and to approve the terms of such June 2020 Stock Purchase Agreement (the “Camber Series C preferred stock proposal”).
     
 

Proposal to approve and adopt an amendment to Camber’s articles of incorporation (which we refer to as the “Camber charter”) to increase the number of authorized shares of Camber common stock from 25 million to 250 million, which will be effective upon the closing of the merger (or shortly prior to such closing)(such amendment being referred to as the “Camber charter amendment” and such proposal being referred to as the “Camber charter amendment proposal”).

 

 

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  Proposal to authorize the board of directors of Camber to effect a reverse stock split of Camber’s outstanding common stock in a ratio of between one-for-five and one-for-twenty-five (the “Camber reverse stock split”), in their sole discretion, as mutually agreed to between Camber and Viking, prior to the effectiveness of the merger (the “Camber reverse split proposal”).
     
  Proposal to approve and adopt Camber’s 2020 Equity Incentive Plan (the “Camber equity plan proposal”).

 

  Proposal to adjourn the Camber special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the Camber share issuance proposal, Camber charter amendment proposal, Camber reverse split proposal, Camber equity plan proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Camber stockholders (the “Camber adjournment proposal”).

 

The board of directors of Camber has fixed the close of business on [], 2020, as the record date for the Camber special meeting. Only holders of record of Camber common stock as of the close of business on the record date for the Camber special meeting are entitled to notice of, and to vote at, the Camber special meeting or any adjournment or postponement thereof.

 

Your vote is very important regardless of the number of shares of Camber common stock that you own. The merger cannot be completed without the approval of the Camber charter amendment proposal, Camber share issuance proposal, and Camber Series A preferred stock proposal by Camber stockholders and the closing conditions of the merger likely will not be met if the Camber reverse split proposal is not approved by Camber stockholders.

 

Camber’s board of directors recommends that holders of common stock vote “FOR” each of the proposals to be considered at the Camber special meeting.

 

Whether or not you plan to attend the Camber special meeting, please vote as soon as possible by either completing, signing, dating and returning the accompanying proxy card in the enclosed postage-paid envelope or voting using the telephone or Internet voting procedures described on your proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by such bank, broker or other nominee.

 

By Order of the Board of Directors

 

/s/ Robert Schleizer

Robert Schleizer

Chief Financial Officer and Director

 

[], 2020

 

 

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Viking Energy Group, Inc.

15915 Katy Freeway, Suite 450

Houston, TX 77094

 

Notice of Special Meeting of Stockholders

 

To Viking Stockholders:

 

On February 3, 2020, Viking Energy Group, Inc. (“Viking”) and Camber Energy, Inc. (“Camber”) entered into an Agreement and Plan of Merger, as amended by the First Amendment thereto dated on or around May 27, 2020, the Second Amendment thereto dated on or around June 15, 2020, and the Third Amendment thereto dated on or around June 25, 2020, and subsequently amended and restated by the Amended and Restated Agreement and Plan of Merger, dated as of August 31, 2020 (which we refer to as the “merger agreement,” including as it may be further amended from time to time), pursuant to which a newly formed wholly-owned subsidiary of Camber (“Merger Sub”) will merge with and into Viking (which we refer to as the “merger”) on the terms and subject to the conditions of the merger agreement, with Viking continuing as the surviving entity in the merger and as a wholly-owned subsidiary of Camber. A copy of the merger agreement is attached as Annex A to the accompanying joint proxy statement/prospectus.

 

NOTICE IS HEREBY GIVEN that a special meeting of Viking stockholders (which we refer to as the “Viking special meeting,” including any adjournments or postponements thereof) will be held on [], 2020 at [], local time at []. We are pleased to notify you of and invite you to the Viking special meeting. The purpose of the Viking special meeting is to consider and vote upon the following matters:

 

 

Proposal to approve the merger agreement (which we refer to as the “Viking merger proposal”).

 

  Proposal to approve, on an advisory (non-binding) basis, an amendment to Camber’s articles of incorporation (which we refer to as the “Camber charter”) to increase the number of authorized shares of Camber common stock from 25 million to 250 million (such amendment being referred to as the “Camber charter amendment” and such proposal being referred to as the “Viking charter amendment proposal”).
     
  Proposal to approve, on an advisory (non-binding) basis, authority for the board of directors of Camber to affect a reverse stock split of Camber’s outstanding common stock in a ratio of between one-for-five and one-for-twenty-five (the “Camber reverse stock split”), in their sole discretion, as mutually agreed to between Camber and Viking, prior to the effectiveness of the merger (the “Viking reverse split proposal”).
     
  Proposal to adjourn the Viking special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the Viking merger proposal or to ensure that any supplement or amendment to the accompanying joint proxy statement/prospectus is timely provided to Viking stockholders (which we refer to as the “Viking adjournment proposal”).

 

The board of directors of Viking has fixed the close of business on [], 2020, as the record date for the Viking special meeting. Only holders of record of Viking common stock and Viking Series C Preferred Stock as of the close of business on the record date for the Viking special meeting are entitled to notice of, and to vote at, the Viking special meeting or any adjournment or postponement thereof.

 

Your vote is very important regardless of the number of shares of Viking common stock or Viking Series C Preferred Stock that you own. The merger cannot be completed without the approval of the Viking merger proposal by Viking stockholders.

 

Viking’s board of directors recommends that holders of common stock and Viking Series C Preferred Stock vote “FOR” each of the proposals to be considered at the Viking special meeting.

 

 

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Whether or not you plan to attend the Viking special meeting, please vote as soon as possible by either completing, signing, dating and returning the accompanying proxy card in the enclosed postage-paid envelope or voting using the telephone or Internet voting procedures described on your proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by such bank, broker or other nominee.

 

By Order of the Board of Directors

 

/s/ James A. Doris

James A. Doris

Chief Executive Officer and Director

 

[], 2020

 

 

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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS     1
SUMMARY     20
The Parties to the Merger     20
The Merger and the Merger Agreement     20
Merger Consideration     21
Treatment of Viking Warrants, Options, Convertible Promissory Notes and Preferred Stock     22
Treatment of Camber Warrants and Options Awards     23
Material U.S. Federal Income Tax Consequences     23
Camber’s Reasons for the Merger; Recommendation of the Camber Board     23
Viking’s Reasons for the Merger; Recommendation of the Viking Board     23
Opinion of Camber’s Financial Advisor     24
Opinion of Viking’s Financial Advisor     24
Appraisal Rights in the Merger     24
Interests of Camber’s Directors and Executive Officers in the Merger     24
Interests of Viking’s Directors and Executive Officers in the Merger     25
Governance and Leadership of the Combined Company After the Merger     25
Name and Headquarters of the Combined Company After the Merger     26
Regulatory Approvals     26
Conditions to Complete the Merger     26
Termination of the Merger Agreement     27
Termination – Retention of Elysium Interest     28
Accounting Treatment     28
The Rights of Viking Stockholders Will Change as a Result of the Merger     28
Listing of Camber Common Stock; Delisting and Deregistration of Viking Common Stock     28
The Camber Special Meeting     28
The Viking Special Meeting     29
Certain Beneficial Owners of Camber Common Stock     30
Certain Beneficial Owners of Viking Securities     30
Risk Factors     30
HISTORICAL PER SHARE DATA, MARKET PRICE AND DIVIDEND DATA     31
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS     32
RISK FACTORS     32
Risks Relating to the Merger     32
General Business and Other Risks Relating to Camber     42
Specific Risks Relating to Camber’s Oil and Gas Operations     45
Risks Relating to Ownership of Camber’s Securities     48
Risks Relating to Camber’s Series C Preferred Stock     53
General Business and Other Risks Relating to Viking and Its Securities     57
General Risks Relating to Camber’s, Viking’s and the Combined Company’s Oil and Gas Operations and the Industry in General     60
THE CAMBER SPECIAL MEETING     73
Date, Time and Place of the Meeting     73
Matters to Be Considered     73
Recommendation of the Camber Board     73
Record Date and Quorum     73
Vote Required; Treatment of Abstentions and Failure to Vote     74
Attending the Special Meeting     75
Proxies     75
Shares Held in Street Name     76
Revocability of Proxies     76
Delivery of Proxy Materials     77
Solicitation of Proxies     77
Other Matters to Come Before the Camber Special Meeting     77
Assistance     77
CAMBER PROPOSALS     77
Proposal 1: Camber Share Issuance Proposal     77
Proposal 2: Camber Series A Preferred Stock Proposal     78
Proposal 3: Camber Series C Preferred Stock Proposal     80
Proposal 4: Camber Charter Amendment Proposal     84

 

 

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Proposal 5: Camber Reverse Split Proposal     84
Proposal 6: Camber Equity Plan Proposal     90
Proposal 7: Camber Adjournment Proposal     96
THE VIKING SPECIAL MEETING     97
Date, Time and Place of the Meeting     97
Matters to Be Considered     97
Recommendation of the Viking Board     97
Record Date and Quorum     97
Vote Required; Treatment of Abstentions and Failure to Vote     98
Attending the Special Meeting     99
Proxies     99
Shares Held in Street Name     99
Revocability of Proxies     100
Delivery of Proxy Materials     100
Solicitation of Proxies     101
Other Matters to Come Before the Viking Special Meeting     101
Assistance     101
VIKING PROPOSALS     101
Proposal 1: Viking Merger Proposal     101
Proposal 2: Viking Charter Amendment Proposal     101
Proposal 3: Viking Reverse Split Proposal     102
Proposal 4: Viking Adjournment Proposal     103
INFORMATION ABOUT CAMBER     103
INFORMATION ABOUT MERGER SUB     122
INFORMATION ABOUT VIKING     122
CAMBER MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     131
VIKING MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     142
THE MERGER     150
Terms of the Merger     150
Background of the Merger     151
Viking’s Reasons for the Merger; Recommendation of the Viking Board     163
Opinion of Viking’s Financial Advisor     166
Camber’s Reasons for the Merger; Recommendation of the Camber Board     171
Opinion of Camber’s Financial Advisor     174
Certain Unaudited Prospective Financial Information     179
Interests of Camber’s Directors and Executive Officers in the Merger     181
Interests of Viking’s Directors and Executive Officers in the Merger     182

 

 

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Governance and Leadership of the Combined Company After the Merger     183
Name and Headquarters of the Combined Company After the Merger     184
Dividends of Viking and Camber Prior to the Merger     184
Accounting Treatment     184
Regulatory Approvals     184
Stock Exchange Listings     185
Appraisal Rights in the Merger     185
THE MERGER AGREEMENT     186
Explanatory Note Regarding the Merger Agreement     186
Structure of the Merger     187
Merger Consideration     187
Fractional Shares     191
Governing Documents     191
Treatment of Viking Convertible Securities and Preferred Stock     191
Treatment of Camber Convertible Securities and Preferred Stock     192
Closing of the Merger     192
Effective Time of the Merger     192
Conversion of Shares; Exchange of Viking Stock Certificates     192
Representations and Warranties     193
Covenants and Agreements     195
Combined Company Governance and Headquarters Matters     198
Stockholder Meetings and Recommendation of Camber’s and Viking’s Boards of Directors     198
Agreement Not to Solicit Other Offers     199
Conditions to Complete the Merger     200
Camber’s Elysium Interest     202
Termination of the Merger Agreement     203
Expenses and Fees     205
Amendment, Waiver and Extension of the Merger Agreement     205
Governing Law     206
Specific Performance     206
AGREEMENTS RELATING TO THE MERGER     206

 

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS     206
DESCRIPTION OF CAMBER CAPITAL STOCK     216
MANAGEMENT FOLLOWING THE MERGER     220
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE     227
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK     227
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER     227
Tax Consequences of the Merger Generally     229
Information Reporting and Backup Withholding     230
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION     230
PRO FORMA OIL, NATURAL GAS AND NGL RESERVE INFORMATION     239
COMPARISON OF STOCKHOLDERS’ RIGHTS     241
SECURITY OWNERSHIP OF CAMBER BENEFICIAL OWNERS AND MANAGEMENT PRIOR TO MERGER     248
SECURITY OWNERSHIP OF VIKING BENEFICIAL OWNERS AND MANAGEMENT PRIOR TO MERGER     248
SECURITY OWNERSHIP OF COMBINED COMPANY BENEFICIAL OWNERS AND MANAGEMENT SUBSEQUENT TO MERGER     250
LEGAL MATTERS     252
EXPERTS     252
DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS     252
GLOSSARY OF OIL AND NATURAL GAS TERMS     253
WHERE YOU CAN FIND MORE INFORMATION     257
INDEX TO THE FINANCIAL STATEMENTS     259

 

Annex A   Amended and Restated Merger Agreement A-1
Annex B  

Certificate of Designations of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of Camber Energy, Inc.

B-1
Annex C   Stock Purchase Agreement relating to the purchase of $6 million in shares of Series C Redeemable Convertible Preferred Stock dated June 22, 2020 C-1
Annex D   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 D-1
Annex E   Certificate of Amendment to Articles of Incorporation of Camber (Increase in Authorized Shares)  E-1
Annex F   Certificate of Amendment to Articles of Incorporation of Camber (Reverse Stock Split) F-1
Annex G   Camber Energy, Inc., 2020 Equity Incentive Plan G-1
Annex H   Opinion of Mercer Capital Management, Inc. H-1
Annex I   Opinion of Scalar, LLC I-1
Annex J   Nevada Dissenters’ Rights Statutes J-1
       

PART II INFORMATION NOT REQUIRED IN PROSPECTUS II-1
   
Item 20. Indemnification of Directors and Officers II-1
Item 21. Exhibits and Financial Statement Schedules II-2
Item 22. Undertakings II-6

 

 

 

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QUESTIONS AND ANSWERS

 

The following are some questions that you may have about the merger, the Camber special meeting or the Viking special meeting, and brief answers to those questions. We urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger and the Camber special meeting or the Viking special meeting. For your convenience, we have also provided a Glossary of Oil and Natural Gas Terms, beginning on page 254, of selected terms and abbreviations.

 

In this joint proxy statement/prospectus, unless the context otherwise requires:

 

“Camber” refers to Camber Energy, Inc., a Nevada corporation;

 

“Camber adjournment proposal” refers to the proposal to adjourn the Camber special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Camber special meeting to approve the Camber share issuance proposal or Camber charter amendment proposal, or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Camber stockholders;

 

“Camber board” refers to the board of directors of Camber.

 

“Camber charter” means the articles of incorporation of Camber as in effect as of the date of this joint proxy statement/prospectus;

 

“Camber charter amendment” means the amendment of the Camber charter to increase the number of authorized shares of Camber common stock from 25 million to 250 million shares;

 

“Camber charter amendment proposal” refers to the proposal that Camber stockholders adopt the Camber charter amendment;

 

“Camber common stock” refers to the common stock of Camber, par value $0.001 per share;

 

“Camber equity plan proposal” means the proposal for the Camber stockholders to approve Camber’s 2020 Equity Incentive Plan;

 

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“Camber Percentage” refers to the percentage, initially equal to 20%, subject to adjustment at the time of the merger as follows: (i) for each additional $500,000 (a) of unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, which comes from equity sold by Camber for cash from February 3, 2020 through the closing of the merger which is not contingent or conditional upon the closing of the merger, or (b) in other unencumbered assets acquired by Camber after the date of the merger agreement and prior to closing without increasing Camber’s liabilities, the Camber Percentage will increase by an incremental 0.5% (for example, from 20% to 20.5%); and (ii) for each additional $500,000 in Viking unencumbered cash (without any associated debt), which is not contingent or conditional upon the closing of the merger, available for use by the combined company after the closing of the merger, outside of Viking’s Ichor division or Elysium division in excess of $500,000, which comes from equity sold by Viking for cash from February 3, 2020 through the closing of the merger, the Camber Percentage will decrease by an incremental 0.5% (for example, from 20% to 19.5%). Notwithstanding the above, the Camber Percentage will not be decreased to lower than 15% or increased to more than 25% and no funds loaned by Camber to Viking will qualify as Viking Unencumbered Cash. Neither Camber, nor Viking, currently anticipates any change to the Camber Percentage.

 

“Camber reverse stock split” means a reverse stock split of Camber’s outstanding common stock in a ratio of between one-for-five and one-for-twenty-five, as mutually agreed to between Camber and Viking, to be approved by the board of directors of Camber, in their sole discretion;

 

“Camber reverse split proposal” means the proposal for the Camber stockholders to authorize the board of directors of Camber to approve the Camber reverse stock split, prior to the effectiveness of the merger;

 

“Camber Series A Preferred Stock” refers to the Series A Convertible Preferred Stock of Camber, par value of $0.001 per share;

 

“Camber’s Series C Preferred Stock” refers to Camber’s Series C Redeemable Convertible Preferred Stock, par value $0.001 per share;

 

“Camber Series A preferred stock proposal” refers to the proposal to approve the issuance of such number of shares of common stock exceeding 19.99% of Camber’s outstanding common stock, issuable upon conversion of the Series A Preferred Stock Camber plans to issue in connection with the merger, and the voting rights associated therewith.

 

“Camber Series C preferred stock proposal” refers to the proposal that Camber stockholders approve the issuance of such number of shares of common stock exceeding 19.99% of Camber’s outstanding common stock, issuable upon conversion of the 630 shares of Series C Preferred Stock, including shares issuable for dividends and conversion premiums thereon sold pursuant to the June 2020 Stock Purchase Agreement and the terms of such June 2020 Stock Purchase Agreement;

 

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“Camber share issuance proposal” refers to the proposal that Camber stockholders approve the issuance of shares of Camber common stock pursuant to the terms of the merger agreement, in an amount necessary to complete the merger, the merger agreement and the other transactions contemplated by the merger agreement;

 

“Camber special meeting” refers to the special meeting of Camber stockholders to consider and vote upon the Camber share issuance proposal, Camber Series A preferred stock proposal, Camber Series C preferred stock proposal, Camber charter amendment proposal, Camber reverse stock split proposal, and Camber equity plan proposal and related matters, including any adjournments or postponements thereof;

 

“Camber stockholder” refers to one or more holders of Camber common stock, as applicable;

 

“Camber Surplus Cash” refers to the unencumbered cash (without any associated debt) available for use by the combined company after the merger, which is raised by Camber from February 3, 2020 through the closing of the merger through the sale of equity;

 

“Camber Viking” or the “combined company” refers to Camber following the merger, including in its capacity as the parent company of Viking;

 

“Camber Viking board” refers to the board of directors of Camber Viking following the merger;

 

“Camber Viking preferred stock” refers to the preferred stock of Camber Viking following the merger;

 

“Camber Viking stockholder” refers to one or more holders of Camber Viking common stock or Camber Viking preferred stock, as applicable;

 

“Code” refers to the Internal Revenue Code of 1986, as amended;

 

“Discover” means Discover Growth Fund, an institutional investor which has funded Camber in the past and which holds Camber’s Series C Preferred Stock.

 

“effective time” refers to the effective time of the merger;

 

“Elysium” means Elysium Energy Holdings, LLC, a Nevada limited liability currently owned 30% by Camber and 70% by Viking;

 

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

 

“exchange ratio” refers to the number of shares of Camber common stock, and the number of shares of Camber common stock issuable upon conversion of Camber Series A Preferred Stock, issuable in the merger per share of Viking common stock and convertible upon conversion of Camber Series A Preferred Stock issuable in the merger;

 

“Lineal” means Lineal Star Holdings, LLC, which Camber acquired pursuant to a July 8, 2019 Agreement and Plan of Merger which was effectively rescinded pursuant to a Preferred Stock Redemption Agreement dated December 31, 2019;

 

“Mercer Capital” refers to Mercer Capital Management, Inc.;

 

“merger” refers to the merger of Merger Sub with and into Viking, on the terms and subject to the conditions of the merger agreement, with Viking continuing as the surviving entity in the merger and as a wholly-owned subsidiary of Camber;

 

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“merger agreement” refers to the Agreement and Plan of Merger, dated as of February 3, 2020, as amended by the First Amendment thereto dated on or around May 27, 2020, the Second Amendment thereto dated on or around June 15, 2020, and the Third Amendment thereto dated on or around June 25, 2020, and subsequently amended and restated by the Amended and Restated Agreement and Plan of Merger, dated as of August 31, 2020, each by and among Camber and Viking, as it may be further amended from time to time in accordance with its terms. Specifically, as used in this joint proxy statement/prospectus, references to the “merger agreement” refer to the Amended and Restated Plan of Merger if such references refer to present time, or any date after August 31, 2020, and the original Agreement and Plan of Merger, as amended through such applicable date, if such references refer to a date prior to August 31, 2020. Only the Amended and Restated Agreement and Plan of Merger is included as Annex A hereto, as such agreement restates all prior amendments to the merger agreement as of such date;

 

“merger consideration” means the shares of Camber common stock the Viking stockholders are entitled to receive pursuant to the merger agreement and the Camber Series A Preferred Stock the Viking preferred stockholders are entitled to receive pursuant to the merger agreement;

 

“Merger Sub” means Viking Merger Sub, Inc., a Nevada corporation, a newly formed wholly-owned subsidiary of Camber which will merge with and into Viking in the merger pursuant to the merger agreement;

 

“NRS” refers to Chapters 78 and 92A of the Nevada Revised Statutes of the State of Nevada, as amended;

 

“NYSE American” refers to the NYSE American stock exchange;

 

“OTCQB” refers to the over-the-counter OTC Link Alternative Trading System (ATS) operated by OTC Markets Group, Inc.;

 

“Other Camber Surplus Assets” refers to the non-cash unencumbered assets acquired by Camber after February 3, 2020, and prior to the effective time without increasing Camber’s liabilities;

 

“Scalar” refers to Scalar, LLC;

 

“SEC” refers to the Securities and Exchange Commission;

 

“Securities Act” refers to the Securities Act of 1933, as amended;

 

“Series C Preferred Stock” refers to either Camber’s Series C Preferred Stock or the Viking Series C Preferred Stock as the context requires;

 

“Viking” refers to Viking Energy Group, Inc., a Nevada corporation;

 

“Viking adjournment proposal” refers to the proposal to adjourn the Viking special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Viking special meeting to approve the Viking merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Viking stockholders;

 

“Viking board” refers to the board of directors of Viking;

 

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“Viking common stock” refers to the common stock of Viking, par value $0.001 per share;

 

“Viking charter amendment proposal” refers to the proposal that Viking stockholders approve, by advisory (non-binding) vote, the Camber charter amendment;

 

“Viking merger proposal” refers to the proposal that Viking stockholders approve the merger agreement and approve the merger;

 

“Viking reverse split proposal” refers to the proposal that Viking stockholders approve, by advisory (non-binding) vote, the Camber reverse stock split;

 

“Viking Series C Preferred Stock” refers to Viking’s Series C Preferred Stock, par value $0.001 per share;

 

“Viking special meeting” refers to the special meeting of Viking stockholders to consider and vote upon the Viking merger proposal and related matters, including any adjournments or postponements thereof;

 

“Viking stockholder” refers to one or more holders of Viking common stock and/or Viking Series C Preferred Stock, as applicable; and

 

“Viking Unencumbered Cash” refers to Viking’s unencumbered cash (without any associated debt) outside of Viking’s Ichor subsidiary division or Elysium subsidiary division, raised through the sale of equity from February 3, 2020, through the closing date of the merger (without any associated debt).

 

Q:Why am I receiving this joint proxy statement/prospectus?

 

A: You are receiving this joint proxy statement/prospectus because Camber and Viking have agreed to combine their companies in a merger, structured as a merger of a newly formed wholly-owned subsidiary of Camber, Viking Merger Sub, Inc., a Nevada corporation (“Merger Sub”) with and into Viking (the “merger”), with Viking continuing as the surviving entity in the merger and as a wholly-owned subsidiary of Camber thereafter. A copy of the Amended and Restated Agreement and Plan of Merger, dated as of August 31, 2020, by and among Camber and Viking (the “merger agreement”), which provides for the merger, is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference herein. Because the Amended and Restated Agreement and Plan of Merger restates all prior amendments to the merger agreement, only the Amended and Restated Agreement and Plan of Merger has been included with this joint proxy statement/prospectus; however, the original merger agreement, the first amendment, second amendment and third amendment thereto can be found in Camber’s and Viking’s filings with the SEC at www.sec.gov.

 

In order to complete the merger, among other things:

 

Camber stockholders must approve the issuance of shares of Camber common stock pursuant to the terms of the merger agreement, in an amount necessary to complete the merger, the merger agreement and the other transactions contemplated by the merger agreement (the “Camber share issuance proposal”);

 

Camber stockholders must approve the issuance of such number of shares of common stock exceeding 19.99% of Camber’s outstanding common stock, issuable upon conversion of the Series A Convertible Preferred Stock (“Series A Preferred Stock”) Camber plans to issue in connection with the merger, and the voting rights associated therewith (the “Camber Series A preferred stock proposal”);

 

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Camber stockholders must approve and adopt an amendment to Camber’s articles of incorporation (the “Camber charter”) to increase the number of authorized shares of Camber common stock from 25 million to 250 million shares, effective at the effective time of the merger (such amendment the “Camber charter amendment” and such proposal the “Camber charter amendment proposal”); and

 

Viking stockholders must approve the merger agreement and approve the merger (the “Viking merger proposal”).

 

Additionally, it is anticipated that in order for Camber’s common stock to be authorized for continued trading on the NYSE American following the merger, Camber will need to complete a reverse stock split in order to meet the minimum stock price requirements of the NYSE American, and as such, it expected that in the event the Camber reverse split proposal is not approved by the Camber stockholders, the conditions to closing the merger will not be met and the merger will not close.

 

Camber is holding a special meeting of Camber stockholders (the “Camber special meeting,” including any adjournments or postponements thereof) to obtain approval of the Camber share issuance proposal, Camber Series A preferred stock proposal, the Camber Series C preferred stock proposal, the Camber charter amendment proposal, Camber reverse stock split proposal, and Camber equity plan proposal. Camber stockholders will also be asked to approve the proposal to adjourn the Camber special meeting to solicit additional proxies if there are not sufficient votes at the time of the Camber special meeting to approve the Camber share issuance proposal, Camber Series A preferred stock proposal, the Camber charter amendment proposal, Camber reverse stock split proposal or Camber equity plan proposal, or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Camber stockholders (the “Camber adjournment proposal”). The approval of the Camber adjournment proposal, the Camber Series C preferred stock proposal and the Camber equity plan proposal by the Camber stockholders are not required in order to complete the merger.

 

Viking is holding a special meeting of Viking stockholders (the “Viking special meeting,” including any adjournments or postponements thereof) to obtain approval of the Viking merger proposal. Viking stockholders will also be asked to approve, on an advisory (non-binding) basis, an amendment to the Camber charter, effective upon the completion of the merger, to increase the number of authorized shares of Camber common stock from 25 million to 250 million shares (the “Viking charter amendment proposal”), authority for Camber’s board of directors to approve a reverse stock split of Camber’s outstanding common stock in a ratio of between one-for-five and one-for-twenty-five, prior to the closing of the merger (the “Viking stock split proposal”), and to approve the proposal to adjourn the Viking special meeting to solicit additional proxies if there are not sufficient votes at the time of the Viking special meeting to approve the Viking merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Viking stockholders (the “Viking adjournment proposal”). Neither the approval of the Viking charter amendment proposal, Viking reverse split proposal, nor the approval of the Viking adjournment proposal by the Viking stockholders is required in order to complete the merger.

 

This document is also a prospectus that is being delivered to Viking stockholders because, in connection with the merger, Camber is offering shares of Camber common stock to Viking stockholders.

 

This joint proxy statement/prospectus contains important information about the merger agreement and the merger. You should read it carefully and in its entirety. The enclosed materials allow you to vote your shares of common stock without attending the meeting either by completing and submitting the enclosed proxy card or voting using the telephone or Internet voting procedures described on your proxy card. Your vote is important, and we encourage you to vote or submit your proxy as soon as possible.

 

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Q:What will happen in the merger?

 

A:In the merger, Merger Sub will merge with and into Viking, with Viking continuing as the surviving entity in the merger as a wholly-owned subsidiary of Camber. Each share of (a) Viking common stock issued and outstanding immediately prior to the effective time of the merger (the “effective time”) (other than certain shares owned by Camber, Viking or Merger Sub) will be converted into the right to receive a number of shares (the “exchange ratio” and such shares, the “merger consideration”) of Camber common stock calculated as follows: (w) the number of shares of Camber common stock considered outstanding on a fully-diluted basis immediately prior to the effective time of the merger (the “effective time”), excluding any shares into which Camber’s Series C Preferred Stock may be convertible, (x) multiplied by the difference between 100% and the Camber Percentage (as defined and described below), (y) divided by the Camber Percentage, (z) divided by the number of shares of Viking common stock considered outstanding on a fully diluted basis immediately prior to the merger, rounded up to the nearest one-hundred thousandth (1/100,000th); and (b) Viking Series C Preferred Stock issued and outstanding immediately prior to the effective time will be converted into one share of Camber Series A Preferred Stock, which Camber Series A Preferred Stock will have the right to vote, and convert into, that number of shares of Camber common stock that its holder would have had the right to receive upon closing the merger, had the Viking Series C Preferred Stock been fully converted into Viking common stock immediately prior to the effective time.

 

The “Camber Percentage” will initially equal 20%, and the Camber Percentage shall be subject to adjustment at the time of the merger as follows: (i) for each (A) additional $500,000 of unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, which comes from equity sold by Camber for cash from February 3, 2020 through the closing of the merger, which is not contingent or conditional upon the closing of the merger (the “Camber Surplus Cash”), or (B) $500,000 in other unencumbered assets acquired by Camber after February 3, 2020, and prior to the effective time without increasing Camber’s liabilities (the “Other Camber Surplus Assets”), the Camber Percentage will generally be increased by 0.5% (for example, from 20% to 20.5%) (unless by the written agreement of Viking and Camber, such Camber Surplus Cash or Other Camber Surplus Assets, as applicable, shall be distributed to the Camber Common Stock holders subject to applicable law); and (ii) for each additional $500,000 in Viking unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, outside of Viking’s Ichor division or Elysium division (“Viking Unencumbered Cash”) in excess of $500,000 at the effective time (the “Viking Surplus Cash”), which comes from equity sold by Viking for cash from February 3, 2020 through the closing of the merger, which is not contingent or conditional upon the closing of the merger, the Camber Percentage shall decrease by 0.5% (for example, from 20% to 19.5%). Notwithstanding the above, the Camber Percentage will not be decreased to lower than 15% or increased to more than 25%, and no funds loaned by Camber to Viking will qualify as Viking Unencumbered Cash. Neither Camber, nor Viking, currently anticipates any change to the Camber Percentage.

 

After completion of the merger, Viking will no longer be a public company, and the Viking common stock will no longer be quoted on the OTCQB, will be deregistered under the Exchange Act, and will cease to be publicly traded. Camber stockholders will continue to own their existing shares of common stock and preferred stock. Following the merger, shares of Camber Viking common stock will be traded on the NYSE American. See “The Merger AgreementStructure of the Merger” beginning on page 187 and the merger agreement for more information about the merger and the calculation of the exchange ratio.

 

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Q:When and where will each of the special meetings take place?

 

A:The Camber special meeting will be held at [●] on [●], 2020 at [●] local time.

 

The Viking special meeting will be held at [●] on [●], 2020 at [●] local time.

 

Even if you plan to attend your respective company’s special meeting, Camber and Viking recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the applicable special meeting. Shares held in “street name” may be voted in person by you only if you obtain a signed legal proxy from your bank, broker or other nominee giving you the right to vote the shares.

 

As described above and throughout this joint proxy statement/prospectus, both Camber and Viking intend to hold their special meetings in person. However, both Camber and Viking are monitoring the situation regarding COVID-19 (coronavirus), taking into account guidance from public health officials and applicable ‘stay-at-home’ orders. The health and well-being of Camber’s and Viking’s employees and stockholders is our top priority. Accordingly, both Camber and Viking are planning for the possibility that one or both of the special meetings may be held in a different location or solely by means of remote communication (i.e., a virtual-only meeting). Camber and Viking will announce any such updates as promptly as practicable, including details on how to participate, by press release, through a filing with the SEC and on their websites. We encourage you to check Camber’s and Viking’s websites prior to the special meetings if you plan to attend. As always, we encourage you to vote your shares prior to the special meetings.

 

Q:What matters will be considered at each of the special meetings?

 

A:At the Camber special meeting, Camber stockholders will be asked to consider and vote on the following proposals:

 

Camber Proposal 1: The Camber share issuance proposal. Approval of (a) the issuance of shares of Camber common stock, pursuant to the terms of the merger agreement, in an amount necessary to complete the merger and the other transactions contemplated by the merger agreement, (b) the merger agreement, and (c) the other transactions contemplated by the merger agreement (which we refer to in this joint proxy statement/prospectus as the “Camber share issuance proposal”);

 

Camber Proposal 2: The Camber Series A preferred stock proposal. Approval of the issuance of such number of shares of common stock exceeding 19.99% of Camber’s outstanding common stock, issuable upon conversion of the Series A Preferred Stock Camber plans to issue in connection with the merger, and the voting rights associated therewith (which we refer to in this joint proxy statement/prospectus as the “Camber Series A preferred stock proposal”);

 

Camber Proposal 3: The Camber Series C preferred stock proposal. Approval of the issuance of such number of shares of common stock exceeding 19.99% of Camber’s outstanding common stock, issuable upon conversion of the 630 shares of Series C Preferred Stock, including shares issuable for dividends and conversion premiums thereon sold pursuant to that certain June 2020 Stock Purchase Agreement, and to approve the terms of such June 2020 Stock Purchase Agreement (which we refer to in this joint proxy statement/prospectus as the “Camber Series C preferred stock proposal”);

 

Camber Proposal 4: The Camber charter amendment proposal. Adoption and approval of an amendment to the Camber charter (which we refer to in this joint proxy/statement/prospectus as the “Camber charter amendment”), effective upon the completion of the merger, to increase the number of authorized shares of Camber common stock from 25 million to 250 million shares (which we refer to in this joint proxy statement/prospectus as the “Camber charter amendment proposal”);

 

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Camber Proposal 5: The Camber reverse split proposal. Authorization and approval of the board of directors of Camber to affect a reverse stock split of Camber’s outstanding common stock in a ratio of between one-for-five and one-for-twenty-five, in their sole discretion, as mutually agreed to between Camber and Viking, prior to the effectiveness of the merger (which we refer to in this joint proxy statement/prospectus as the “Camber reverse split proposal”);

 

Camber Proposal 6: The Camber equity plan proposal. Approval of Camber’s 2020 Equity Incentive Plan (which we refer to in this joint proxy statement/prospectus as the “Camber equity plan proposal”); and

 

Camber Proposal 7: The Camber adjournment proposal. Approval of the adjournment of the Camber special meeting to solicit additional proxies if there are not sufficient votes at the time of the Camber special meeting to approve the Camber share issuance proposal, Camber Series A preferred stock proposal, the Camber charter amendment proposal, the Camber reverse split proposal, the Camber equity plan proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Camber stockholders (which we refer to in this joint proxy statement/prospectus as the “Camber adjournment proposal”).

 

At the Viking special meeting, Viking stockholders will be asked to consider and vote on the following proposals:

 

Viking Proposal 1: The Viking merger proposal. Approval of the merger agreement (which we refer to in this joint proxy statement/prospectus as the “Viking merger proposal”);

 

Viking Proposal 2: The Viking charter amendment proposal. Approval of, on an advisory (non-binding) basis, an amendment to the Camber charter, effective upon the completion of the merger, to increase the number of authorized shares of Camber common stock from 25 million to 250 million shares (which we refer to in this joint proxy statement/prospectus as the “Viking charter amendment proposal”);

 

Viking Proposal 3: The Viking reverse split proposal. Approval of authority for the board of directors of Camber to affect a reverse stock split of Camber’s outstanding common stock in a ratio of between one-for-five and one-for-twenty-five, in their sole discretion, as mutually agreed to between Camber and Viking, prior to the effectiveness of the merger (which we refer to in this joint proxy statement/prospectus as the “Viking reverse split proposal”);

 

Viking Proposal 4: The Viking adjournment proposal. Approval of the adjournment of the Viking special meeting to solicit additional proxies if there are not sufficient votes at the time of the Viking special meeting to approve the Viking merger proposal or to ensure that any supplement or amendment to this joint proxy statement/prospectus is timely provided to Viking stockholders (which we refer to in this joint proxy statement/prospectus as the “Viking adjournment proposal”).

 

In order to complete the merger, among other things: Camber stockholders must approve the Camber share issuance proposal, the Camber Series A preferred stock proposal and the Camber charter amendment proposal, and Viking stockholders must approve the Viking merger proposal.

 

Additionally, it is anticipated that in order for Camber’s common stock to be authorized for continued trading on the NYSE American following the merger, Camber will need to complete a reverse stock split in order to meet the minimum stock price requirements of the NYSE American, and as such, it is expected that in the event the Camber reverse split proposal is not approved by the Camber stockholders, the conditions to closing the merger will not be met and the merger will not close.

 

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Q:What will Viking stockholders receive in the merger?

 

A: In the merger, Viking common stockholders will be entitled to receive a number of shares of Camber common stock for each share of Viking common stock they own and Viking Series C Preferred Stock holders will receive one share of Camber Series A Preferred Stock (described in greater detail under “Description of Camber Capital Stock – Description of Capital Stock – Preferred Stock - Series A Convertible Preferred Stock”, beginning on page 218) for each share of Viking Series C Preferred Stock they own. The actual number of shares of Camber common stock that Viking stockholders will receive per share of Viking common stock and which will be issuable upon conversion of the Camber Series A Preferred Stock (collectively, the exchange ratio) will fluctuate based on a number of factors described below and will not be known at the time Viking stockholders vote on the merger, and the market value of the merger consideration will fluctuate with the market price of Camber common stock and will not be known at the time Viking stockholders vote on 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 an adjustable percentage (initially 80% prior to adjustment) 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; 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”). Camber will not issue any fractional shares of Camber common stock in the merger. Instead, holders of Viking common stock will have any fractional shares of Camber common stock after the merger rounded up to the nearest whole share. Neither Camber, nor Viking, currently anticipate any change to the Camber Percentage.

 

The Camber Percentage is to be adjusted as follows: (i) for each additional $500,000 (a) of unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, which comes from equity sold by Camber for cash from February 3, 2020 through the closing of the merger which is not contingent or conditional upon the closing of the merger, or (b) in other unencumbered assets acquired by Camber after the date of the merger agreement and prior to closing without increasing Camber’s liabilities, the Camber Percentage will increase by an incremental 0.5%; and (ii) for each additional $500,000 in Viking unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, outside of Viking’s Ichor division or Elysium division in excess of $500,000, which comes from equity sold by Viking for cash from February 3, 2020 through the closing of the merger which is not contingent or conditional upon the closing of the merger, the Camber Percentage will decrease by an incremental 0.5%. Notwithstanding the above, the Camber Percentage will not be decreased to lower than 15% or increased to more than 25%, and no funds loaned by Camber to Viking will qualify as Viking Unencumbered Cash.

 

Q:What will Camber stockholders receive in the merger?

 

A:In the merger, Camber stockholders will not receive any consideration, and their shares of Camber stock will remain outstanding and will constitute shares of the combined company. Following the merger, shares of Camber Viking common stock will be traded on the NYSE American. The shares of Camber’s Series C Preferred Stock outstanding prior to the merger will continue to remain outstanding and will continue to have conversion rights into Camber Viking common stock following the merger, on the same terms as they had prior to the merger.

 

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Q:Will the value of the merger consideration change between the date of this joint proxy statement/prospectus and the time the merger is completed?

 

A:Yes. The number of shares of Camber common stock that Viking stockholders will receive (and which will be issuable upon conversion of the Camber Series A Preferred Stock which Viking preferred stock holders will receive) will fluctuate based on a number of factors described above (i.e., the number of shares of Camber and Viking common stock considered outstanding immediately prior to the effective time of the merger on a fully-diluted basis, and the amounts of Camber Surplus Cash, Other Camber Unencumbered Assets, and Viking Unencumbered Cash at the effective time), and the value of the merger consideration will fluctuate between the date of this joint proxy statement/prospectus and the completion of the merger based upon the market value of Camber common stock.

 

Based on the closing price of Camber common stock on the NYSE American on February 4, 2020, the last trading day before public announcement of the merger, and the fully diluted number of shares of Camber and Viking on that date (without taking into account the conversion rights of the holder of Camber’s Series C Preferred Stock, or the recent amendments to the Viking Series C Preferred Stock), the exchange ratio represented approximately $0.09 in value for each share of Viking common stock. Based on the closing price of Camber’s common stock on the NYSE American stock exchange on [●], 2020 of $[●], and the fully diluted number of shares of Camber and Viking on that date (without taking into account the conversion rights of the holder of Camber’s Series C Preferred Stock, which are currently convertible into approximately 72,506,063 shares of common stock, subject to adjustment as provided in the designation of such Series C Preferred Stock), the exchange ratio represented approximately $[●] in value for each share of Viking common stock. Any fluctuation in the market price of Camber common stock after the date of this joint proxy statement/prospectus will change the value of the shares of Camber common stock that Viking stockholders will receive. We urge you to obtain current market quotations of Camber common stock (trading symbol “CEI”) and Viking common stock (trading symbol “VKIN”).

 

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Q:How will the merger affect Viking warrants, options, convertible promissory notes, and preferred stock?

 

A:At the effective time, each outstanding Viking warrant or option will vest (if not already vested and granted prior to February 3, 2020) and be converted into Camber warrants or options, as applicable, with proportional adjustments to the number of shares and the per share exercise price based on the exchange ratio.

 

At the effective time, each outstanding Viking convertible promissory note will be converted into a Camber convertible promissory note having the same terms and conditions, except that the conversion price, shares issuable upon conversion or reserved for issuance thereunder and related matters shall be adjusted based on the exchange ratio.

 

Immediately prior to the effective time, there shall be no more than 28,092 shares of Viking preferred stock outstanding, all of which shall be shares of Viking Series C Preferred Stock. The outstanding Series C Preferred Stock of Viking at the effective time will be converted into an identical number of shares of Camber Series A Preferred Stock (as discussed below under “Description of Camber Capital Stock – Description of Capital Stock – Preferred Stock - Series A Convertible Preferred Stock”, beginning on page 218), which will have substantially similar terms as the Series C Preferred Stock of Viking (as discussed below under “The Merger AgreementTreatment of Viking Convertible Securities and Preferred Stock”, beginning on page 191), except that such Camber Series A Preferred Stock shares will have the right to vote, and convert into, the number of shares of Camber common stock that its holder would have received in the merger had the Viking Series C Preferred Stock been fully-converted into common stock of Viking immediately prior to the Effective Time. Currently, all 28,092 shares of Viking Series C Preferred Stock outstanding are held by Viking’s CEO and director, James Doris.

 

For details on the treatment of Viking convertible securities, including additional details regarding Viking’s preferred stock, see “The Merger AgreementTreatment of Viking Convertible Securities and Preferred Stock” beginning on page 191.

 

Q:How will the merger affect Camber equity awards?

 

A:Each warrant or option to purchase shares of Camber common stock will not be impacted by the merger and will continue to be a warrant or option in respect of Camber common stock following the effective time, subject to the same terms and conditions that were applicable to such warrant or option before the effective time.

 

For details on the treatment of Camber equity awards, see “The Merger AgreementTreatment of Camber Convertible Securities and Preferred Stock” beginning on page 192.

 

Q:How does the Camber board recommend that I vote at the Camber special meeting?

 

A:The Camber board recommends that you vote “FOR” the Camber share issuance proposal, “FOR” the Camber Series A preferred stock proposal, “FOR” the Camber Series C preferred stock proposal, “FOR” the Camber charter amendment proposal, “FOR” the Camber reverse split proposal, “FOR” the Camber equity plan proposal and “FOR” the Camber adjournment proposal.

 

In considering the recommendations of the Camber board, Camber stockholders should be aware that Camber directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of Camber stockholders generally. For a more complete description of these interests, see “The MergerInterests of Camber’s Directors and Executive Officers in the Merger” beginning on page 181.

 

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Q:How does the Viking board recommend that I vote at the Viking special meeting?

 

A:The Viking board recommends that you vote “FOR” the Viking merger proposal, “FOR” the Viking charter amendment proposal, “FOR” the Viking reverse split proposal and “FOR” the Viking adjournment proposal.

 

In considering the recommendations of the Viking board, Viking stockholders should be aware that Viking directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of Viking stockholders generally. For a more complete description of these interests, see “The MergerInterests of Viking’s Directors and Executive Officers in the Merger” beginning on page 182.

 

Q:Who is entitled to vote at the Camber special meeting?

 

A:The record date for the Camber special meeting is [●], 2020. All Camber stockholders who held shares at the close of business on the record date for the Camber special meeting are entitled to receive notice of, and to vote at, the Camber special meeting.

 

Each Camber stockholder is entitled to cast one (1) vote on each matter properly brought before the Camber special meeting for each share of Camber common stock that such holder owned of record as of the record date. As of the close of business on the record date for the Camber special meeting, there were [●] outstanding shares of Camber common stock. Physical attendance at the special meeting is not required to vote. See below and “The Camber Special Meeting—Proxies” beginning on page 75 for instructions on how to vote your shares without attending the Camber special meeting.

 

Q:Who is entitled to vote at the Viking special meeting?

 

A:The record date for the Viking special meeting is [●], 2020. All Viking stockholders who held shares at the close of business on the record date for the Viking special meeting are entitled to receive notice of, and to vote at, the Viking special meeting.

 

Each Viking stockholder is entitled to cast one (1) vote on each matter properly brought before the Viking special meeting for each share of Viking common stock that such holder owned of record as of the record date and 4,900 votes on each matter properly brought before the Viking special meeting for each share of Viking Series C Preferred Stock that such holder owned as of record as of the record date. As of the close of business on the record date for the Viking special meeting, there were [●] outstanding shares of Viking common stock and 28,092 outstanding shares of Viking Series C Preferred Stock, for a total of [●] outstanding voting shares. Physical attendance at the special meeting is not required to vote. See below and “The Viking Special Meeting—Proxies” beginning on page 99 for instructions on how to vote your shares without attending the Viking special meeting.

 

Q:What constitutes a quorum for the Camber special meeting?

 

A:Holders of at least 33% of the shares of Camber common stock entitled to vote at the special meeting, present in person or represented by proxy, will be necessary to constitute a quorum for the transaction of business at the Camber special meeting. If you fail to submit a proxy or to vote at the Camber special meeting, your shares of Camber common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum. Broker non-votes, which occur when a stockholder’s broker or nominee does not have voting instructions or discretionary authority to vote on the matter, will not be counted for the purpose of determining the presence of a quorum for the transaction of business at the Camber special meeting.

 

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Q:What constitutes a quorum for the Viking special meeting?

 

A:Holders of a majority of the shares entitled to vote at the special meeting, present in person or represented by proxy, will be necessary to constitute a quorum for the transaction of business at the Viking special meeting. If you fail to submit a proxy or to vote at the Viking special meeting, your shares will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum. Broker non-votes, which occur when a stockholder’s broker or nominee does not have voting instructions or discretionary authority to vote on the matter, will not be counted for the purpose of determining the presence of a quorum for the transaction of business at the Viking special meeting.

 

Q:What vote is required for the approval of each proposal at the Camber special meeting?

 

A:Camber Proposal 1: Camber share issuance proposal. Approval of the Camber share issuance proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber share issuance proposal present in person or by proxy at the Camber special meeting. Shares of Camber common stock not present (in person or by proxy) at the Camber special meeting and broker non-votes will have no effect on the outcome of the Camber share issuance proposal. Abstentions will have the same effect as votes cast “AGAINST” the Camber share issuance proposal.

 

Camber Proposal 2: The Camber Series A preferred stock proposal. Approval of the Camber Series A preferred stock proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber Series A preferred stock proposal present in person or by proxy at the Camber special meeting. Shares of Camber common stock not present (in person or by proxy) at the Camber special meeting and broker non-votes will have no effect on the outcome of the Camber Series A preferred stock proposal. Abstentions will have the same effect as votes cast “AGAINST” the Camber share issuance proposal.

 

Camber Proposal 3: The Camber Series C preferred stock proposal. Approval of the Camber Series C preferred stock proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber Series C preferred stock proposal present in person or by proxy at the Camber special meeting. Shares of Camber common stock not present (in person or by proxy) at the Camber special meeting and broker non-votes will have no effect on the outcome of the Camber Series C preferred stock proposal. Abstentions will have the same effect as votes cast “AGAINST” the Camber share issuance proposal.

 

Camber Proposal 4: Camber charter amendment proposal. Adoption and approval of the Camber charter amendment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber charter amendment proposal present in person or by proxy at the Camber special meeting. Shares of Camber common stock not present (in person or by proxy) at the Camber special meeting, and shares present but not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the Camber charter amendment proposal.

 

Camber Proposal 5: Camber reverse split proposal. Adoption and approval of the Camber reverse split proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber reverse split proposal present in person or by proxy at the Camber special meeting. Shares of Camber common stock not present (in person or by proxy) at the Camber special meeting, and shares present but not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the Camber reverse split proposal.

 

Camber Proposal 6: Camber equity plan proposal. Approval of the Camber equity plan proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber equity plan proposal present in person or by proxy at the Camber special meeting. Shares of Camber common stock not present (in person or by proxy) at the Camber special meeting and broker non-votes will have no effect on the outcome of the Camber equity plan proposal. Abstentions will have the same effect as votes cast “AGAINST” the Camber equity plan proposal.

 

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Camber Proposal 7: Camber adjournment proposal. Approval of the Camber adjournment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber adjournment proposal present in person or by proxy at the Camber special meeting. Shares of Camber common stock not present (in person or by proxy) at the Camber special meeting and broker non-votes will have no effect on the outcome of the Camber adjournment proposal. Abstentions will have the same effect as votes cast “AGAINST” the Camber adjournment proposal.

 

Q:What vote is required for the approval of each proposal at the Viking special meeting?

 

A:Viking Proposal 1: Viking merger proposal. Approval of the Viking merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Viking common stock and Viking Series C Preferred Stock entitled to vote on the Viking merger proposal, voting together. Shares of Viking common stock and Viking Series C Preferred Stock not present (in person or by proxy) at the Viking special meeting, and shares present but not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the Viking merger proposal.

 

Viking Proposal 2: Viking charter amendment proposal. Approval of the Viking charter amendment proposal requires the affirmative vote of the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Viking charter amendment proposal. Shares of Viking common stock and Viking Series C Preferred Stock not present (in person or by proxy) at the Viking special meeting and broker non-votes will have no effect on the outcome of the Viking charter amendment proposal. Abstentions will have the same effect as votes cast “AGAINST” the Viking charter amendment proposal. As further described below, the vote on the Viking charter amendment proposal by Viking stockholders is advisory (non-binding) and will have no impact on whether the Camber charter amendment is approved by Camber stockholders under applicable law.

 

Viking Proposal 3: Viking reverse split proposal. Approval of the Viking reverse split proposal requires the affirmative vote of the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Viking reverse split proposal. Shares of Viking common stock and Viking Series C Preferred Stock not present (in person or by proxy) at the Viking special meeting and broker non-votes will have no effect on the outcome of the Viking reverse split proposal. Abstentions will have the same effect as votes cast “AGAINST” the Viking reverse split proposal. As further described below, the vote on the Viking reverse split proposal by Viking stockholders is advisory (non-binding) and will have no impact on whether the Camber reverse split proposal is approved by Camber stockholders under applicable law.

 

Viking Proposal 4: Viking adjournment proposal. Approval of the Viking adjournment proposal requires the affirmative vote of the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Viking adjournment proposal. Shares of Viking common stock and Viking Series C Preferred Stock not present (in person or by proxy) at the Viking special meeting and broker non-votes will have no effect on the outcome of the Viking adjournment proposal. Abstentions will have the same effect as votes cast “AGAINST” the Viking adjournment proposal.

 

Q:Why are Viking stockholders being asked to consider and vote on a proposal to approve the Camber charter amendment (i.e., the Viking charter amendment proposal) and the Camber reverse stock proposal (i.e., the Camber reverse stock split)?

 

A:Even though approval by Viking stockholders of the Camber charter amendment and Camber reverse stock split is not a condition to the closing of the merger, the SEC has issued interpretive guidance with respect to the “unbundling” of proposals under the Exchange Act that requires Viking stockholders (in their capacity as stockholders of Viking) to also separately vote on the Camber charter amendment and Camber reverse stock split. As further described below, this vote by Viking stockholders is advisory (non-binding) and will have no impact on whether the Camber charter amendment or Camber reverse stock split is approved by Camber stockholders under applicable law.

 

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Q:What if I hold shares in both Camber and Viking?

 

A:If you hold shares of both Camber common stock and Viking common stock or Viking Series C Preferred Stock, you will receive two (2) separate packages of proxy materials. A vote cast as a Camber stockholder will not count as a vote cast as a Viking stockholder, and a vote cast as a Viking stockholder will not count as a vote cast as a Camber stockholder. Therefore, please submit separate proxies for your shares of Camber common stock and your shares of Viking common stock and Viking Series C Preferred Stock.

 

Q:How can I vote my shares in person at my respective special meeting?

 

A:Record holders. Shares held directly in your name as the holder of record of Camber or Viking may be voted in person at the Camber special meeting or the Viking special meeting, as applicable. If you choose to vote your shares in person at the respective special meeting, please bring your enclosed proxy card and proof of identification.

 

Shares in “street name.” Shares held in “street name” may be voted in person by you only if you obtain a signed legal proxy from your bank, broker or other nominee giving you the right to vote the shares. If you choose to vote your shares in person at the Camber special meeting or the Viking special meeting, as applicable, please bring the signed legal proxy and proof of identification.

 

Even if you plan to attend the Camber special meeting or the Viking special meeting, as applicable, Camber and Viking recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the respective special meeting.

 

Additional information on attending the special meetings can be found under the section entitled “The Camber Special Meeting” on page 73 and under the section entitled “The Viking Special Meeting” on page 97.

 

Q:How can I vote my shares without attending my respective special meeting?

 

A:Whether you hold your shares directly as the holder of record of Camber or Viking or beneficially in “street name,” you may vote your shares of common stock and preferred stock (as to Viking) without attending the Camber special meeting or the Viking special meeting, as applicable, by either completing and submitting the enclosed proxy card or voting over the Internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. Please note that if you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

 

Additional information on voting procedures can be found under the section entitled “The Camber Special Meeting” on page 73 and under the section entitled “The Viking Special Meeting” on page 97.

 

Q:What do I need to do now?

 

A:After carefully reading and considering the information contained in this joint proxy statement/prospectus, please respond by completing, signing and dating the accompanying proxy card and returning it in the enclosed postage-paid envelope, or by voting by telephone or through the Internet, as described on your proxy card, as soon as possible so that your shares may be represented at your meeting. Please note that if you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker or other nominee.

 

Q:If my shares are held in “street name” by a broker, bank or other nominee, will my broker, bank or other nominee vote my shares for me?

 

A:No. Your bank, broker or other nominee cannot vote your shares without instructions from you. You should instruct your bank, broker or other nominee how to vote your shares in accordance with the instructions provided to you. Please check the voting instructions provided by your bank, broker or other nominee.

 

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Q:Why is my vote important?

 

A:If you do not vote, it will be more difficult for Camber or Viking to obtain the necessary quorum to hold its respective special meeting. In addition, your failure to submit a proxy or vote at the meeting, or failure to instruct your bank or broker how to vote, will have the same effect as a vote “AGAINST” the Camber share issuance proposal by Camber stockholders, the Camber Series A preferred stock proposal, the Camber Series C preferred stock proposal, the Camber charter amendment proposal by Camber stockholders, the Camber reverse split proposal by Camber stockholders, the Camber equity plan proposal by Camber stockholders, and the Viking merger proposal, as applicable. The merger cannot be completed without the approval of the Camber share issuance proposal, the Camber Series A preferred stock proposal and Camber charter amendment proposal by Camber stockholders and the approval of the Viking merger proposal by the Viking stockholders.

 

Additionally, it is anticipated that in order for Camber’s common stock to be authorized for continued trading on the NYSE American following the merger, Camber will need to complete a reverse stock split in order to meet the minimum stock price requirements of the NYSE American, and as such, it expected that in the event the Camber reverse split proposal is not approved by the Camber stockholders, the conditions to closing the merger will not be met and the merger will not close.

 

The Camber board and the Viking board recommend that you vote “FOR” for each of the proposals submitted at the Camber special meeting and the Viking special meeting, respectively.

 

Q:Can I change my vote after I have voted or delivered my proxy or voting instruction card?

 

A:Yes. You can change your vote at any time before your proxy is voted at your meeting. You can do this by:

 

submitting a written statement that you would like to revoke your proxy to the corporate secretary of Camber or Viking, as applicable;

signing and returning a proxy card with a later date;

attending the applicable special meeting in person, notifying the corporate secretary and voting by ballot at the applicable special meeting; or

voting by telephone or the Internet at a later time.

 

If your shares are held by a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

 

Q:Will Camber be required to submit the Camber share issuance proposal and Camber Series A preferred stock proposal to its stockholders even if the Camber board has withdrawn, modified or qualified its recommendation?

 

A:Yes. Unless the merger agreement is terminated before the Camber special meeting, Camber is required to submit the Camber share issuance proposal and Camber Series A preferred stock proposal to its stockholders even if the Camber board has withdrawn or modified its recommendation.

 

Q:Will Viking be required to submit the Viking merger proposal to its stockholders even if the Viking board has withdrawn, modified or qualified its recommendation?

 

A:Yes. Unless the merger agreement is terminated before the Viking special meeting, Viking is required to submit the Viking merger proposal to its stockholders even if the Viking board has withdrawn or modified its recommendation.

 

Q:Are Camber stockholders entitled to appraisal or dissenters’ rights?

 

A: No. Camber stockholders are not entitled to appraisal rights under Chapters 78 and 92A of the Nevada Revised Statutes of the State of Nevada, as amended (the “NRS”). For more information, see “The Merger—Appraisal Rights in the Merger” beginning on page 185.

 

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Q:Are Viking stockholders entitled to appraisal or dissenters’ rights?

 

A: Yes. Viking stockholders who comply with the requirements of the NRS and who do not vote in favor of the Viking merger proposal, may elect to exercise statutory dissenters’ rights under the NRS. For more information, see “The Merger—Appraisal Rights in the Merger” beginning on page 185 and the text of the Nevada dissenters’ rights statute, Sections 92A.300 – 92A.500 of the Nevada Revised Statutes, which is reproduced in its entirety as Annex J to this proxy statement/prospectus.

 

Q:Are there any risks that I should consider in deciding whether to vote?

 

A: Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 30.

 

Q:What is the material U.S. federal income tax consequences of the merger to Viking stockholders?

 

A: The merger has been structured to qualify as a reorganization for U.S. federal income tax purposes. Accordingly, Viking stockholders generally will not recognize any gain or loss for federal income tax purposes on the exchange of their Viking common stock for Camber common stock in the merger. You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to U.S. federal non-income, state, local or foreign tax laws that are not discussed in this joint proxy statement/prospectus. You should therefore consult with your own tax advisors for a full understanding of the tax consequences to you of the merger. For a more complete discussion of the material U.S. federal income tax consequences of the merger, see “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 23.

 

Q:When is the merger expected to be completed?

 

A:Camber and Viking expect the merger to close in the third or fourth calendar quarter of 2020. However, neither Camber nor Viking can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion is subject to conditions and factors outside the control of both companies. Camber and Viking must first obtain the required approvals of Camber stockholders and Viking stockholders, as well as obtain necessary regulatory approvals and satisfy certain other closing conditions in order to close the merger.

 

Q:What happens if the merger is not completed?

 

A: If the merger is not completed, Viking stockholders will not receive any consideration for their shares of Viking common stock in connection with the merger. Instead, Viking and Camber will remain independent public companies, Viking common stock will continue to be listed and traded on the OTCQB, Camber common stock will continue to be listed and traded on the NYSE American and Camber will not complete the issuance of shares of Camber common stock and Camber Series A Preferred Stock pursuant to the merger agreement. In addition, if the merger agreement is terminated in certain circumstances, Camber may retain all or a portion of its 30% interest in Viking’s subsidiary, Elysium Energy Holdings, LLC (“Elysium”). See “The Merger AgreementCamber’s Elysium Interest” beginning on page 202 for a more detailed discussion regarding Camber’s Elysium interest and “The Merger Agreement— Termination of the Merger Agreement”, beginning on page 203 for more information on the percentage of Elysium that Camber is required to assign back to Viking upon termination of the merger, under certain circumstances.

 

Q:Should I send in my stock certificates now?

 

A: No. Please do not send in your stock certificates with your proxy or vote. After the merger is completed, an exchange agent designated by Camber and reasonably acceptable to Viking (the “exchange agent”) will send you instructions for exchanging Viking stock certificates for the consideration to be received in the merger. See “The Merger AgreementConversion of Shares; Exchange of Viking Stock Certificates” beginning on page 192.

 

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Q:What should I do if I receive more than one set of voting materials for the same special meeting?

 

A:If you hold shares of Camber common stock or Viking common stock or Viking Series C Preferred Stock in “street name” and also directly in your name as a holder of record or otherwise or if you hold shares of Camber common stock or Viking common stock or Viking Series C Preferred Stock in more than one (1) brokerage account or such shares are registered differently, you may receive more than one (1) set of voting materials relating to the same special meeting. To ensure that all shares are voted, please either vote each account as discussed herein or sign and return by mail all proxy cards or voting instruction forms for each separate account.

 

Record holders. For shares held directly, please complete, sign, date and return each proxy card by mail (or cast your vote by telephone or Internet as provided on each proxy card) or otherwise follow the voting instructions provided in this joint proxy statement/prospectus in order to ensure that all of your shares of Camber common stock or Viking common stock or Viking Series C Preferred Stock are voted.

 

Shares in “street name.” For shares held in “street name” through a bank, broker or other nominee, you should follow the procedures provided by your bank, broker or other nominee to vote your shares.

 

Q:Who can help answer my questions?

 

A: Camber stockholders: If you have any questions about the merger or how to submit your proxy or vote, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card or voting instruction card, you should contact Camber’s Secretary, Robert Schleizer at Info@camber.energy, or at the following address or phone number: 1415 Louisiana, Suite 3500, Houston, Texas 77002 | (210) 998-4035.

 

Viking stockholders: If you have any questions about the merger or how to submit your proxy or vote, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card or voting instruction card, you should contact Viking’s President, James Doris, at IR@vikingenergy.com or at the following address or phone number: 15915 Katy Freeway, Suite 450, Houston, TX 77094, or (281) 404-4387. 

 

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SUMMARY

 

This summary highlights selected information in this joint proxy statement/prospectus and may not contain all of the information that is important to you. You should carefully read this entire joint proxy statement/prospectus and the other documents we refer you to for a more complete understanding of the matters being considered at the special meetings. For your convenience, we have also provided a Glossary of Oil and Natural Gas Terms, beginning on page 253, of selected terms and abbreviations.

 

The Parties to the Merger

 

Camber Energy, Inc.

 

1415 Louisiana, Suite 3500

Houston, Texas 77002

(210) 998-4035

 

Camber 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 including the Cline shale and upper Wolfberry shale in Glasscock County, Texas.

 

Camber’s common stock is traded on the NYSE American under the symbol “CEI.”

 

Viking Energy Group, Inc.

 

15915 Katy Freeway

Suite 450

Houston, Texas 77094

(281) 404-4387

 

Viking is an independent exploration and production company focused on the acquisition and development of oil and natural gas properties in the Gulf Coast and Mid-Continent regions of the United States. The company owns oil and gas leases in Texas, Louisiana, Mississippi and Kansas.  

 

Viking’s common stock is traded on the OTCQB under the symbol “VKIN.”

 

The Merger and the Merger Agreement

 

The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus. You are encouraged to read the merger agreement carefully in its entirety, as it is the primary legal document that governs the merger.

 

The original merger agreement (Agreement and Plan of Merger) was entered into between Viking and Camber on February 3, 2020, which was amended by the First Amendment thereto dated on or around May 27, 2020, the Second Amendment thereto dated on or around June 15, 2020, and the Third Amendment thereto dated on or around June 25, 2020, and subsequently amended and restated by the Amended and Restated Agreement and Plan of Merger, dated as of August 31, 2020. As used in this joint proxy statement/prospectus, references to the “merger agreement” refer to the Amended and Restated Plan of Merger if such references refer to present time, or any date after August 31, 2020, and the original Agreement and Plan of Merger, as amended through such applicable date, if such references refer to a date prior to August 31, 2020. Only the Amended and Restated Agreement and Plan of Merger is included as Annex A hereto, as such agreement restates all prior amendments to the merger agreement as of such date.

 

Subject to the terms and conditions of the merger agreement, at the completion of the merger, Merger Sub (a newly formed wholly-owned subsidiary of Camber) will merge with and into Viking, with Viking surviving the merger as a wholly-owned subsidiary of Camber.

 

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Merger Consideration

 

In the merger, Viking stockholders will receive a number of shares of Camber common stock for each share of Viking common stock they own and one share of Camber Series A Preferred Stock for each share of Viking Series C Preferred Stock they own, immediately prior to the effective time. The actual number of shares of Camber common stock that Viking stockholders will receive per share of Viking common stock and which will be issuable upon conversion of the Camber Series A Preferred Stock (the exchange ratio) will fluctuate based on a number of factors described below and will not be known at the time Viking stockholders vote on the merger, and the market value of the merger consideration will fluctuate with the market price of Camber common stock and will not be known at the time Viking stockholders vote on 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 an adjustable percentage (initially 80% prior to adjustment) 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; 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”). Camber will not issue any fractional shares of Camber common stock in the merger. Instead, holders of Viking common stock will have any fractional shares of Camber common stock after the merger rounded up to the nearest whole share. Neither Camber, nor Viking, currently anticipates any change to the Camber Percentage.

 

The Camber Percentage is to be adjusted as follows: (i) for each additional $500,000 (a) of unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, which comes from equity sold by Camber for cash from February 3, 2020 through the closing of the merger, which is not contingent or conditional upon the closing of the merger, or (b) in other unencumbered assets acquired by Camber after the date of the merger agreement and prior to closing without increasing Camber’s liabilities, the Camber Percentage will increase by an incremental 0.5%; and (ii) for each additional $500,000 in Viking unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, outside of Viking’s Ichor division or Elysium division in excess of $500,000, which comes from equity sold by Viking for cash from February 3, 2020 through the closing of the merger, which is not contingent or conditional upon the closing of the merger, the Camber Percentage will decrease by an incremental 0.5%. Notwithstanding the above, the Camber Percentage will not be decreased to lower than 15% or increased to more than 25%, and no funds loaned by Camber to Viking will qualify as Viking Unencumbered Cash.

 

Camber common stock is listed on the NYSE American under the symbol “CEI,” and Viking common stock is quoted on the OTCQB under the symbol “VKIN.” The following table shows the closing sale prices of Camber common stock and Viking common stock as reported on NYSE American and OTCQB respectively on February 4, 2020, the last full trading day before the public announcement of the merger agreement, and on [], 2020, the last practicable trading day before the date of this joint proxy statement/prospectus. This table also shows the implied value of the merger consideration to be issued in exchange for each share of Viking common stock, which was calculated by multiplying the closing price of Camber common stock on those dates by the exchange ratio on those dates of 0.055728 as of February 4, 2020 (based on 5,000,000 and 358,884,280 shares of Camber and Viking common stock considered outstanding on a fully-diluted basis, and without any adjustment to the 20% Camber Percentage and without taking into account any shares issuable upon conversion of Camber’s Series C Preferred Stock) and [] as of [], 2020 (based on [] and [] shares of Camber and Viking common stock considered outstanding on a fully-diluted basis, and without any adjustment to the 20% Camber Percentage and without taking into account any shares issuable upon conversion of Camber’s Series C Preferred Stock, but including shares of Camber common stock which would be issuable upon conversion of Camber Series A Preferred Stock issued as part of the merger.

 

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    Camber
Common
Stock
    Viking
Common
Stock
    Implied Value
of One Share
of Viking
Common
Stock(1)
 
February 4, 2020   $ 1.64     $ 0.238     $ 0.09  
[], 2020   $ [●]     $ [●]     $ [●]   
                           

(1)

 

The implied value of one share of Viking common stock has been determined by (i) multiplying (a) the number of fully-diluted shares of Camber outstanding on the applicable date (without taking into account any shares issuable upon conversion of Camber’s Series C Preferred Stock, or the recent amendments to the Viking Series C Preferred Stock), by (b) 1 minus the Camber Percentage (initially 20%), (ii) dividing that number by the Camber Percentage (initially 20%), (iii) dividing that number by the number of fully-diluted shares of Viking outstanding on the applicable date of determination, and (iv) multiplying the resulting number by the applicable Camber common stock value on the date of determination and is presented for comparative and information purposes only. The “Implied Value of One Share of Viking Common Stock” value does not represent the value of the consideration that Viking stockholders will receive per share as a result of the merger.

 

For more information on the exchange ratio, see “The Merger—Terms of the Merger” beginning on page 150 and “The Merger AgreementMerger Consideration” beginning on page 187.

 

Treatment of Viking Warrants, Options, Convertible Promissory Notes, and Preferred Stock

 

At the effective time, each outstanding warrant or option to purchase shares of Viking common stock (“Viking option”) will be converted into a warrant or option, as applicable, to purchase shares of Camber common stock (“Camber option”), with adjustments to the number of shares and the per share exercise price based on the exchange ratio. Other than those adjustments, the Camber option will have the same terms and conditions as applied to the corresponding Viking option, including any extended post-termination exercise period that applies following the effective time, provided that any then unvested Viking options granted prior to February 3, 2020, will vest at the effective time.

 

At the effective time, each outstanding Viking convertible promissory note (“Viking convertible note”) will be converted into a Camber convertible promissory note (“Camber convertible note”), having the same terms and conditions, with adjustments to the conversion price and shares issuable upon conversion or reserved for issuance thereunder to take into account the exchange ratio and related matters, and with the same terms and conditions as the Viking convertible note otherwise. As of August 20, 2020, Viking convertible notes consisted of (i) convertible notes maturing on August 31, 2020, in the aggregate principal amount of approximately $83,000, with 50% of the principal amount under each note convertible into Viking common stock at $0.20 per share; (ii) convertible notes maturing on December 31, 2020, in the aggregate principal amount of approximately $6,519,320, with 50% of the principal amount under each note convertible into Viking common stock at $0.20 per share; (iii) a convertible note maturing January 3, 2021, in the principal amount of $500,000, with 100% of the principal amount convertible into Viking common stock at $0.15 per share, and (iv) convertible notes maturing on February 11, 2022, in the aggregate principal amount of approximately $5,277,004, with 100% of the principal amount under each note convertible into Viking common stock at $0.15 per share.

 

On August 31, 2020, Viking amended the certificate of designations of the preferences, rights and limitations of its Series C Preferred Stock, to provide that each outstanding share of Series C Preferred Stock votes an aggregate of 4,900 voting shares on all stockholder matters, voting together with the common stock as a single class (previously that number was 32,500 voting shares on all stockholder matters); amend the liquidation rights associated with such preferred stock to provide that each share of Series C Preferred Stock is to receive, upon the occurrence of a liquidation of Viking, the same amount of consideration that would have been due if such share of Series C Preferred Stock had been converted into common stock of Viking immediately prior to such liquidation; and provide rights for each such share of Series C Preferred Stock to convert, at the option of the holder thereof, into 4,900 shares of Viking common stock (previously such Series C Preferred Stock had the right to convert into Viking common stock on a one-for-one basis). The Viking Series C Preferred Stock does not have any redemption rights. The Viking Series C Preferred Stock shares equally in any dividends authorized by the Board of Directors for distribution to common stock holders, on an as-converted basis.

 

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Immediately prior to the effective time, there shall be no more than 28,092 shares of Viking preferred stock outstanding, all of which shall be shares of Viking Series C Preferred Stock. The outstanding shares of Viking Series C Preferred Stock at the effective time will be converted into an identical number of shares of Camber Series A Preferred Stock (as discussed below under “Description of Camber Capital Stock – Description of Capital Stock – Preferred Stock - Series A Convertible Preferred Stock”, beginning on page 218), which will have substantially similar terms as the Viking Series C Preferred Stock (as discussed below under “The Merger AgreementTreatment of Viking Convertible Securities and Preferred Stock”, beginning on page 191), except that such Camber Series A Preferred Stock shares will have the right to vote, and convert into, that number of shares of Camber common stock equal to, the number of shares of Camber common stock that its holder would have received in the merger had the Viking Series C Preferred Stock been fully-converted into common stock of Viking immediately prior to the Effective Time. Currently, all 28,092 shares of Viking Series C Preferred Stock outstanding are held by Viking’s CEO and director, James Doris.

 

The Secured Notes will be forgiven upon closing of the merger.

 

For additional information on Viking’s warrants, options, convertible promissory notes, and preferred stock see “The Merger AgreementTreatment of Viking Convertible Securities and Preferred Stock” beginning on page 191.

 

Treatment of Camber Warrants and Options

 

Each warrant or option to purchase shares of Camber common stock will not be impacted by the merger and will continue to be an award in respect of Camber common stock following the effective time, subject to the same terms and conditions that were applicable to such award before the effective time.

 

For additional information on Camber’s warrants and options, see “The Merger AgreementTreatment of Camber Convertible Securities and Preferred Stock” beginning on page 192.

 

Material U.S. Federal Income Tax Consequences

 

The merger has been structured to qualify as a reorganization for U.S. federal income tax purposes. Accordingly, Viking stockholders generally will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their Viking common stock for Camber common stock in the merger.

 

You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to U.S. federal non-income, state, local or foreign tax laws that are not discussed in this joint proxy statement/prospectus. You should therefore consult with your own tax advisors for a full understanding of the tax consequences to you of the merger.

 

Camber’s Reasons for the Merger; Recommendation of the Camber Board

 

The Camber board has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Camber and its stockholders and has adopted and approved the merger agreement, the merger (subject to stockholder approval) and the other transactions contemplated by the merger agreement. The Camber board recommends that Camber stockholders vote “FOR” the approval of the Camber share issuance proposal, “FOR” the approval of the Camber Series A issuance proposal; “FOR” the approval of the Camber Series C issuance proposal; “FOR” the Camber charter amendment, “FOR” the Camber reverse split proposal, “FOR” the Camber equity plan proposal and “FOR” the other proposals presented at the Camber special meeting. For a more detailed discussion of the Camber board’s recommendation, see “The Merger—Camber’s Reasons for the Merger; Recommendation of the Camber Board” beginning on page 154.

 

Viking’s Reasons for the Merger; Recommendation of the Viking Board

 

The Viking board has determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Viking and its stockholders and has adopted and approved the merger agreement, the merger (subject to stockholder approval) and the other transactions contemplated by the merger agreement. The Viking board recommends that Viking stockholders vote “FOR” the approval of the merger agreement and “FOR” the other proposals presented at the Viking special meeting. For a more detailed discussion of the Viking board’s recommendation, see “The Merger—Viking’s Reasons for the Merger; Recommendation of the Viking Board” beginning on page 163.

 

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Opinion of Camber’s Financial Advisor

 

Mercer Capital Management, Inc. (“Mercer Capital”) delivered its written opinion to the Camber board that, as of April 23, 2020, and based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to Camber.

 

The full text of the written opinion of Mercer Capital, dated April 23, 2020, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex H. Mercer Capital provided advisory services and its opinion for the information and assistance of Camber and the Camber board in connection with its consideration of the merger. Mercer Capital’s opinion is not a recommendation as to how any Camber stockholder should vote with respect to the Camber share issuance proposal or any other matter. Pursuant to an engagement letter between Camber and Mercer Capital, Camber has agreed to pay Mercer Capital a transaction fee equal to $82,500, of which $41,125 was payable upon Mercer Capital’s engagement and $41,375 was paid upon delivery of Mercer Capital’s opinion to the Camber board.

 

For a further discussion of Mercer Capital’s opinion, Camber’s relationship with Mercer Capital and the terms of Mercer Capital’s engagement, see “The Merger—Opinion of Camber’s Financial Advisor” beginning on page 174 of this joint proxy statement/prospectus.

 

Opinion of Viking’s Financial Advisor

 

Scalar, LLC (“Scalar”) delivered its opinion to the Viking board that, as of July 8, 2020, and based upon and subject to the factors and assumptions set forth therein, the exchange ratio pursuant to the merger agreement was fair from a financial point of view to the holders (other than Camber and its affiliates) of shares of Viking common stock.

 

The full text of the written opinion of Scalar, dated July 10, 2020, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex H. Scalar provided advisory services and its opinion for the information and assistance of the Viking board in connection with its consideration of the merger. The Scalar opinion is not a recommendation as to how any holder of shares of Viking common stock should vote with respect to the merger or any other matter. Pursuant to an engagement letter between Viking and Scalar, Viking has agreed to pay Scalar a transaction fee equal to $85,000, $21,250 of which was payable at engagement, and the remainder of which was payable upon delivery of Scalar’s written opinion.

 

For a further discussion of Scalar’s opinion, Viking’s relationship with Scalar and the terms of Scalar’s engagement, see “The Merger—Opinion of Viking’s Financial Advisor” beginning on page 166 of this joint proxy statement/prospectus.

 

Appraisal Rights in the Merger

 

Camber stockholders are not entitled to appraisal or dissenters’ rights under the relevant provision of the NRS of the State of Nevada. Viking stockholders who do not vote in favor of the Viking merger proposal may elect to exercise statutory dissenters’ rights under the NRS. For more information, see “The Merger—Appraisal Rights in the Merger” beginning on page 185.

 

Interests of Camber’s Directors and Executive Officers in the Merger

 

In considering the Camber board’s recommendation to vote for the Camber share issuance proposal, the Camber Series A preferred stock proposal, the Camber charter amendment proposal, the Camber reverse split proposal, and the Camber equity plan proposal, Camber stockholders should be aware that Camber’s directors and executive officers may have interests in the merger that are different from, or in addition to, those of Camber stockholders generally. These interests include:

 

    Camber’s directors and executive officers are entitled to receive bonuses payable in connection with the merger in cash.

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    At closing of the merger, certain of Camber’s directors and executive officers will continue to serve as directors, employees or consultants, as applicable, of the combined company.

 

    Camber’s directors and executive officers are entitled to continued indemnification and insurance coverage under the merger agreement.

 

The Camber board was aware of and considered these respective interests when deciding to adopt the merger agreement. For more information, see “The Merger—Interests of Camber’s Directors and Executive Officers in the Merger” beginning on page 181.

 

Interests of Viking’s Directors and Executive Officers in the Merger

 

In considering the recommendations of the Viking board with respect to the merger, Viking stockholders should be aware that Viking’s executive officers and directors have certain interests in the merger that may be different from, or in addition to, the interests of Viking stockholders generally. 

 

    At closing of the merger, certain of Viking’s directors and executive officers will continue to serve as directors or executive officers, as applicable, of the combined company.

 

    Viking’s directors and executive officers are entitled to continued indemnification and insurance coverage under the merger agreement.

 

The Viking board was aware of these interests and considered them, among other matters, in making its recommendations.  For more information, see “The Merger—Interests of Viking’s Directors and Executive Officers in the Merger” beginning on page 182.

 

Governance and Leadership of the Combined Company After the Merger

 

Charter

 

If the Camber charter amendment proposal is approved by the Camber stockholders, the Camber charter will be amended at the time of merger to increase the number of authorized shares of Camber common stock from 25 million to 250 million shares. If the charter amendment proposal is not approved at the Camber special meeting, shares of Camber common stock issuable to Viking stockholders as the merger consideration in the merger will not be able to be issued, and the merger will not be able to be completed. Additionally, if the Camber reverse split proposal is approved by the Camber stockholders and the board of directors of Camber determines to affect such Camber reverse stock split, the outstanding shares of common stock of Camber prior to the merger will be reduced in a ratio of between one-for-five and one-for-twenty-five, depending on the final ratio approved by the board of directors.

 

Bylaws

 

No changes to the current bylaws of Camber will be made in connection with the merger. A copy of the current bylaws of Camber are incorporated by reference as Exhibit 3.23 to the registration statement of which this joint proxy statement/prospectus forms a part.

 

Board of Directors

 

Pursuant to the terms of the merger agreement, following the completion of the merger, the board of directors of the combined company after the merger will have five (5) members, consisting of four (4) members nominated by Viking prior to the completion of the merger, and one (1) member nominated by Camber prior to the completion of the merger. Information regarding the proposed management of Camber, including the Board of Directors and officers, is set forth below under “Management Following The Merger”, beginning on page 220.

 

Chief Executive Officer

 

Following completion of the merger, James A. Doris, the current Chief Executive Officer and President of Viking, and one of its directors, will serve as Chief Executive Officer of the combined company, and certain other current executive officers of Viking will serve as executive officers of the combined company – see “Management Following The Merger”, beginning on page 220.

 

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Name and Headquarters of the Combined Company After the Merger

 

The name of the combined company will remain “Camber Energy, Inc.” upon the completion of the merger, and shares of Camber Viking common stock will be traded on the NYSE American under the symbol “CEI.”

 

As of the effective time, the headquarters of the combined company will be located in Houston, Texas.

 

Regulatory Approvals

 

While we do not currently anticipate needing to obtain any regulatory approvals in connection with the merger, other than the approval of the NYSE American for the initial listing of the combined company’s common stock on the NYSE following the closing of the merger, there can be no assurance that a challenge to the merger on antitrust or other regulatory grounds will not be made or, if such a challenge is made, that it would not be successful.

 

Conditions to Complete the Merger

 

As more fully described in this joint proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include:

 

approval of the Camber share issuance proposal, Camber Series A preferred stock proposal and Camber charter amendment proposal by Camber stockholders and the Viking merger proposal by Viking stockholders;

 

the effectiveness of the registration statement on Form S-4 for the Camber common stock to be issued in the merger;

 

the absence of any law, order, injunction, decree or other legal restraint preventing the completion of the merger or making the completion of the merger illegal;

 

each of Viking and Camber receiving an opinion, in writing, to the effect that as of the date thereof and based upon and subject to the matters set forth therein, the exchange ratio in the merger is fair, from a financial point of view, to Camber or Viking, as applicable, and their stockholders (which opinions have been obtained to date);

 

subject to certain exceptions, the accuracy of the representations and warranties of each of Camber and Viking;

 

performance by each of Camber and Viking of its obligations under the merger agreement in all material respects;

 

the absence of any material adverse effect on the other party, as defined in the merger agreement;

 

authorization for listing of the shares of Camber common stock to be issued in the merger on the NYSE American;

 

in the event the NYSE American determines that the merger constitutes, or will constitute, a “back-door listing”/“reverse merger”, Camber (and its common stock) is required to qualify for initial listing on the NYSE American, pursuant to the applicable guidance and requirements of the NYSE as of the closing of the merger;

 

Viking having arranged to extend the maturity date to June 1, 2021, or later, of the promissory note executed and delivered by Viking in connection with Viking’s oil and gas acquisition closed on or about December 28, 2018, or any promissory note(s) issued in replacement thereof (which extension has been obtained to date);

 

Camber obtaining the consent of its Series C Preferred Stockholder for the merger and not being in breach of any of its agreements with the holder;

 

Viking having no more than 28,092 shares of Viking preferred stock outstanding, all of which shall be shares of Viking Series C Preferred Stock;

 

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Viking obtaining the consent its lender, ABC Funding, LLC, for the merger;

 

Viking having negotiated a new remuneration arrangement with Network 1 Financial Securities, Inc. with respect to its role in and compensation associated with the merger, on terms and conditions satisfactory to Viking and Camber (which negotiation has been completed to date);

 

Viking obtaining an opinion, from legal counsel or an independent public or certified accountant, in form and substance reasonably satisfactory to Viking, dated as of the Closing Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, for U.S. federal income Tax purposes, the merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code;

 

Camber having been assigned 30% of Elysium as part of a $9,200,000 investment in Viking’s Rule 506(c) offering, and in connection therewith having received promissory notes issued by Viking, accruing interest at 10.5% per annum, in the aggregate principal amount of $9,200,000, which acquisition of Elysium and issuance of promissory notes has occurred to date;

 

members of the existing management team of Camber having executed agreements as to their role with and compensation from Camber following the merger, for a transition period following the closing of six months (which has since been agreed to be six months for Louis G. Schott, Camber’s current Chief Executive Officer and three months for Robert Schleizer, Camber’s current Chief Financial Officer, who are not expected to continue as executive officers following the effective date); and

 

Viking having no loan obligations with a maturity date in 2020 other than the series of $13.5 million of convertible debt issued in connection with Viking’s offering completed in December of 2018 (which condition is satisfied as of the current date).

 

Additionally, it is anticipated that in order for Camber’s common stock to be authorized for continued trading on the NYSE American following the merger, Camber will need to complete a reverse stock split in order to meet the minimum stock price requirements of the NYSE American, and as such, it expected that in the event the Camber reverse split proposal is not approved by the Camber stockholders, the conditions to closing the merger will not be met and the merger will not close.

 

Finally, if the merger closes prior to the repayment in full (or partial conversion and repayment of the remaining portion) of Viking’s outstanding convertible promissory notes maturing on August 31, 2020, and December 31, 2020, each of the holders of those notes will have to approve the merger, amend their notes, or their notes will need to be repaid in full at closing of the merger.

 

Termination of the Merger Agreement

 

The merger agreement may be terminated at any time prior to the completion of the merger, whether before or after the receipt of the required vote by Camber stockholders or Viking stockholders, as applicable, in the following circumstances:

 

at any time with the mutual consent of the parties;

 

by either Camber 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;

 

by either Viking or Camber if the merger has not occurred by September 30, 2020, provided that Camber or Viking shall have the right to extend such date from time to time, until up to December 31, 2020, in the event that Camber has not fully resolved SEC comments on the Form S-4 or other SEC filings related to the merger, and Camber is responding to such comments in a reasonable fashion, subject to certain exceptions or Camber has resolved such SEC comments and has scheduled a meeting to approve the merger, which meeting will occur after September 30, 2020;

 

by Camber or Viking (provided, that the terminating party is not then in material breach of any obligation, covenant or other agreement contained in the merger agreement), upon the breach by the other of a term of the merger agreement, which is not cured within 30 days of the date of written notice thereof by the other;

 

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by Camber or Viking if (i) the approval of the Camber share issuance proposal, Camber Series A preferred stock proposal and Camber charter amendment proposal by Camber stockholders has not been obtained following a vote taken at the Camber special meeting (unless the Camber special meeting has been validly adjourned or postponed, or validly requested by Viking to be adjourned or postponed, in accordance with the merger agreement, in which case at the final adjournment or postponement thereof), or (ii) the approval of the Viking merger proposal by Viking stockholders has not been obtained following a vote taken at the Viking special meeting (unless the Viking special meeting has been validly adjourned or postponed, or validly requested by Camber to be adjourned or postponed, in accordance with the merger agreement, in which case at the final adjournment or postponement thereof);

 

by Camber, at any time prior to the approval of the Viking merger proposal by Viking stockholders, if (i) Viking or the Viking board has made a change in their recommendation that Viking stockholders approve the merger, or (ii) there has been a willful breach by Viking (including by the Viking board) of its obligations relating to non-solicitation of acquisition proposals or its obligations related to stockholder approval and the Viking board recommendation; or

 

by Viking, at any time prior to the approval of the Camber share issuance proposal, Camber Series A preferred stock proposal and Camber charter amendment proposal by Camber stockholders, if (i) Camber or Camber’s board has made a change in their recommendation that Camber stockholders approve such proposals, or (ii) there has been a willful breach by Camber (including by the Camber board) of its obligations relating to non-solicitation of acquisition proposals or its obligations related to stockholder approval and the Camber board recommendation in any material respect.

 

Termination – Retention of Elysium Interest

 

If the merger agreement is terminated under certain circumstances, Camber may retain all or a portion of its 30% interest in Viking’s subsidiary, Elysium Energy Holdings, LLC. See “The Merger AgreementCamber’s Elysium Interest” beginning on page 202 and “The Merger Agreement— Termination of the Merger Agreement”, beginning on page 203.

 

Accounting Treatment

 

Camber and Viking each prepare their respective financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”). The merger will be accounted for using the reverse acquisition method of accounting, and Viking will be treated as the accounting acquirer in the transaction.

 

The Rights of Viking Stockholders Will Change as a Result of the Merger

 

The rights of Viking stockholders are governed by Nevada law and by the articles of incorporation and bylaws of Viking. In the merger, Viking stockholders will become holders of common stock of the combined company, and their rights will continue to be governed by Nevada law and the articles of incorporation of Camber as amended by the Camber charter amendment, and Camber reverse stock split (if approved by the stockholders and authorized by Camber’s board of directors) and the bylaws of Camber. Viking stockholders will have different rights once they become holders of common stock of the combined company due to differences between the Viking governing documents and the Camber governing documents. These differences are described in more detail under the section entitled “Comparison of Stockholders’ Rights” beginning on page 238.

 

Listing of Camber Common Stock; Delisting and Deregistration of Viking Common Stock

 

The shares of Camber common stock to be issued in the merger will be listed for trading on the NYSE American. Following the merger, shares of Camber common stock will be traded on the NYSE American, under the symbol “CEI.” In addition, following the merger, Viking common stock will no longer be quoted on the OTCQB, will be deregistered under the Exchange Act and cease to be publicly traded.

 

The Camber Special Meeting

 

The Camber special meeting will be held at [] on [], 2020, at [], local time. At the Camber special meeting, Camber stockholders will be asked to vote on the following matters:

 

    approval of the Camber share issuance proposal;

 

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    approval of the Camber Series A preferred stock proposal;
       
    approval of the Camber Series C preferred stock proposal;
       
    approval of the Camber charter amendment proposal;
       
  ●    approval of the Camber reverse split proposal;
       
    approval of the Camber equity plan proposal; and

 

    approval of the Camber adjournment proposal.

 

You may vote at the Camber special meeting if you owned shares of Camber common stock at the close of business on [], 2020. On that date there were [] shares of Camber common stock outstanding, none of which were owned and entitled to be voted by Camber directors and executive officers and their affiliates.

 

The Camber share issuance proposal, Camber Series A preferred stock proposal, Camber Series C preferred stock proposal and Camber equity plan proposal will be approved if a quorum exists at the special meeting and the holders of a majority of the outstanding shares of stock entitled to vote on the Camber share issuance proposal, Camber Series A preferred stock proposal, Camber Series C preferred stock proposal and Camber equity plan proposal present in person or by proxy at the Camber special meeting vote “FOR” such proposals, respectively. The Camber charter amendment proposal and Camber reverse split proposal will be approved if a majority of the outstanding shares of stock entitled to vote on the Camber charter amendment and Camber reverse split proposal vote “FOR” such proposals, respectively. The Camber adjournment proposal will be approved if the holders of a majority of the outstanding shares of stock entitled to vote on the Camber adjournment proposal present in person or by proxy at the Camber special meeting vote “FOR” such proposal.

 

If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Camber share issuance proposal, Camber Series A preferred stock proposal, Camber Series C preferred stock proposal, Camber equity plan proposal or the Camber adjournment proposal, as applicable. If you fail to submit a proxy or to vote in person at the Camber special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Camber share issuance proposal or the Camber adjournment proposal, your shares will not be deemed to be represented at the Camber special meeting, and it will have no effect on the Camber share issuance proposal, Camber Series A preferred stock proposal, Camber Series C preferred stock proposal or the Camber adjournment proposal, as applicable. If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the Camber special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Camber charter amendment proposal and/or Camber reverse split proposal, it will have the same effect as a vote “AGAINST” the Camber charter amendment proposal and/or Camber reverse split proposal, as applicable.

 

The Viking Special Meeting

 

The Viking special meeting will be held at [] on [], 2020, at [], local time. At the Viking special meeting, Viking stockholders will be asked to vote on the following matters:

 

    Approval of the Viking merger proposal;

 

    approval of the Viking charter amendment proposal;
       
    approval of the Viking reverse split proposal; and

 

    approval of the Viking adjournment proposal.

 

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You may vote at the Viking special meeting if you owned shares of Viking common stock or Viking Series C Preferred Stock at the close of business on [], 2020. On that date there were [] shares of Viking common stock outstanding, approximately [] percent ([]%) of which were owned and entitled to be voted by Viking directors and executive officers and their affiliates, 28,092 shares of Viking Series C Preferred Stock, representing 100% of Viking’s outstanding preferred stock, collectively representing approximately [] total voting shares or []% of Viking’s total voting shares on [], 2020, see also “Security Ownership of Viking Beneficial Owners and Management Prior to the Merger” beginning on page 248. We currently expect that Viking’s directors and executive officers will vote their shares in favor of the merger, although none of them has entered into any agreements obligating them to do so.

 

The Viking merger proposal will be approved if the holders of a majority of Viking’s outstanding voting shares entitled to vote on the Viking merger proposal vote “FOR” such proposal. The Viking charter amendment proposal and Viking reverse split proposal will be approved if the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Viking charter amendment proposal and Viking reverse split proposal vote “FOR” such proposals, respectively. The Viking adjournment proposal will be approved if the holders of a majority of the shares present or represented by proxy at the meeting and entitled to vote on the Viking adjournment proposal vote “FOR” such proposal.

 

If you mark “ABSTAIN” on your proxy, fail to submit a proxy or vote in person at the Viking special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Viking merger proposal, it will have the same effect as a vote “AGAINST” the Viking merger proposal. If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Viking charter amendment proposal, Viking reverse split proposal and the Viking adjournment proposal, as applicable. If you fail to submit a proxy or to vote in person at the Viking special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Viking charter amendment proposal, Viking reverse split proposal or the Viking adjournment proposal, your shares will not be deemed to be represented at the Viking special meeting, and it will have no effect on the Viking charter amendment proposal, Viking reverse split proposal or the Viking adjournment proposal, as applicable.

 

Certain Beneficial Owners of Camber Common Stock

 

At the close of business on [], 2020, directors and executive officers of Camber beneficially owned and were entitled to vote no shares of Camber common stock, see “Security Ownership of Camber Beneficial Owners and Management Prior to the Merger” beginning on page 248.

 

Certain Beneficial Owners of Viking Securities

 

At the close of business on [], 2020, directors and executive officers of Viking beneficially owned and were entitled to vote approximately [] shares of Viking common stock, collectively representing []% of the shares of Viking common stock outstanding on [], 2020, 28,092 shares of Viking Series C Preferred Stock, representing 100% of the shares of Viking Series C Preferred Stock outstanding on [], 2020, and approximately [] total voting shares, collectively representing []% of Viking’s total voting shares on [], 2020. Although none of them has entered into any agreement obligating them to do so, Viking currently expects that all of its directors and executive officers will vote their shares “FOR” the Viking merger proposal, “FOR” the Viking charter amendment proposal, “FOR the Viking reverse split proposal and “FOR” the Viking adjournment proposal. For more information regarding the security ownership of Viking directors and executive officers, see “Security Ownership of Viking Beneficial Owners and Management Prior to the Merger” beginning on page 248.

 

Risk Factors

 

In evaluating the merger agreement, the merger or the issuance of shares of Camber common stock in the merger, you should carefully read this joint proxy statement/prospectus and give special consideration to the factors discussed in the section entitled “Risk Factors” beginning on page 32.

 

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HISTORICAL PER SHARE DATA, MARKET PRICE AND DIVIDEND DATA

 

Stock Prices

 

Shares of Camber’s common stock are listed for trading on the NYSE American. The following table sets forth the closing sales prices per share of Camber common stock on the following dates:

 

    February 4, 2020, the last full trading day prior to the public announcement of the merger, and

 

                        , 2020, the last practicable trading day for which this information could be calculated prior to the filing of this joint proxy statement/prospectus.
                         
    Camber
Common
Stock
    Viking
Common
Stock
    Implied Value
of One Share
of Viking
Common
Stock(1)
 
February 4, 2020   $ 1.64     $ 0.238     $ 0.09  
[], 2020   $ [●]     $ [●]     $ [●]  
                           

(1)

 

The implied value of one share of Viking common stock has been determined by (i) multiplying (a) the number of fully-diluted shares of Camber outstanding on the applicable date (without taking into account any shares issuable upon conversion of Camber’s Series C Preferred Stock, or the recent amendments to the Viking Series C Preferred Stock), by (b) 1 minus the Camber Percentage (initially 20%), (ii) dividing that number by the Camber Percentage (initially 20%), (iii) dividing that number by the number of fully-diluted shares of Viking outstanding on the applicable date of determination, and (iv) multiplying the resulting number by the applicable Camber common stock value on the date of determination and is presented for comparative and information purposes only. The “Implied Value of One Share of Viking Common Stock” value does not represent the value of the consideration that Viking stockholders will receive per share as a result of the merger.

 

Market Price Data

 

Historical information regarding sales prices of Camber’s common stock is widely available because Camber’s common stock is listed on the NYSE American.

 

The following table sets forth the high and low sales prices per share of Viking common stock for each quarterly period since March 31, 2018. For current price information, you should consult publicly available sources.

                 
Calendar Period   High     Low  
Twelve months ended December 31, 2018                
First Quarter   $ 0.24     $ 0.12  
Second Quarter   $ 0.23     $ 0.15  
Third Quarter   $ 0.42     $ 0.16  
Fourth Quarter   $ 0.42     $ 0.22  
Twelve months ended December 31, 2019                
First Quarter   $ 0.29     $ 0.16  
Second Quarter   $ 0.24     $ 0.14  
Third Quarter   $ 0.24     $ 0.15  
Fourth Quarter   $ 0.18     $ 0.07  
Twelve months ending December 31, 2020                
First Quarter   $ 0.27     $ 0.06  
Second Quarter   $  0.20     $ 0.07  
Third Quarter (through September 1, 2020)   $ 0.18     $ 0.09  
                 

Market price data for Merger Sub common stock is not available because Merger Sub is currently a wholly-owned subsidiary of Camber, and shares of Merger Sub common stock do not trade separately from shares of Camber common stock.

 

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Dividends

 

Camber has not declared or paid cash dividends or made distributions in the past. Camber does not anticipate that it will pay cash dividends or make distributions in the foreseeable future. Camber currently intends to retain and reinvest future earnings to finance operations. 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the statements contained in this joint proxy statement/prospectus are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

 

Words such as “anticipate,” “estimate,” “continue,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “objective,” “goal,” “positions,” “prospects,” “potential,” “will,” “would,” “should,” “could,” “may” and words and terms of similar substance identify forward-looking statements, including any statements or discussions regarding timing of completion of the merger, expected benefits of the merger and the future operating or financial performance of Camber, Viking or the combined company identify forward-looking statements. All forward-looking statements are management’s present expectations or forecasts of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The factors relating to the merger discussed under the caption “Risk Factors” beginning on page 32 and the factors previously disclosed in Camber’s and Viking’s reports filed with the SEC, among others, could cause actual results to differ materially from those described in the forward-looking statements. For any forward-looking statements made in this joint proxy statement/prospectus, Camber and Viking claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus. Except as required by applicable law, neither Camber nor Viking undertakes to update these forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made.

 

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, see the reports that Camber and Viking have filed with the SEC as described under “Where You Can Find More Information” beginning on page 257.

 

We expressly qualify in their entirety all forward-looking statements attributable to either of us or any person acting on our behalf by the cautionary statements contained or referred to in this joint proxy statement/prospectus.

 

RISK FACTORS

 

In addition to the other information contained in this joint proxy statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 32, you should carefully consider the following risk factors in deciding whether to vote for the approval of the merger agreement.

 

Risks Relating to the 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, Viking stockholders cannot be certain of the number of shares of Camber common stock they will receive, and 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 (the “effective time”), (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 an adjustable percentage (initially 80% prior to adjustment) 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 72,506,063 shares of common stock, subject to adjustment as provided in the designation of such Series C Preferred Stock, without taking into account the effects of the proposed reverse stock split); 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.

 

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The Camber Percentage is to be adjusted as follows: (i) for each additional $500,000 (a) of unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, which comes from equity sold by Camber for cash from February 3, 2020 through the closing of the merger, or (b) in other unencumbered assets acquired by Camber after the date of the merger agreement and prior to closing without increasing Camber’s liabilities, which is not contingent or conditional upon the closing of the merger, the Camber Percentage will increase by an incremental 0.5%; and (ii) for each additional $500,000 in Viking unencumbered cash (without any associated debt) available for use by the combined company after the closing of the merger, outside of Viking’s Ichor division or Elysium division in excess of $500,000, which comes from equity sold by Viking for cash from February 3, 2020 through the closing of the merger, which is not contingent or conditional upon the closing of the merger, the Camber Percentage will decrease by an incremental 0.5%. Notwithstanding the above, the Camber Percentage will not be decreased to lower than 15% or increased to more than 25%, and no funds loaned by Camber to Viking will qualify as Viking Unencumbered Cash.

 

These factors will not be known at the time the Viking and Camber stockholders vote on the merger, and therefore Viking stockholders will not know precisely how many shares of Camber common stock will be issued to the Viking stockholders at the time of the merger. For examples of different number of shares of Camber common stock issuable in certain situations, see “The Merger Agreement Merger Consideration”, beginning on page 187.

 

Also, as discussed in the risk factors below, Viking may raise funding through the sale of debt or equity prior to the closing of the merger and/or may issue equity securities to certain note holders or warrant holders, in consideration for such holders agreeing to the terms of the merger, which may cause significant dilution to existing stockholders of Viking and may reduce (as a result of the exchange ratio) the number of shares of Camber common stock which Viking stockholders would otherwise receive as part of the merger. Such dilution and adjustment to the exchange ratio will not be known until after Viking stockholders have approved the merger.

 

See also “The Merger AgreementMerger Consideration” beginning on page 187.

 

Because the market price of the Camber common stock may fluctuate, Viking stockholders cannot be certain of the market value of the merger consideration they will receive.

 

In the merger, each share of Viking common stock issued and outstanding immediately prior to the effective time (other than certain shares owned by Camber, Viking or Merger Sub) will be converted into a number of shares of Camber common stock based on the fluctuating exchange ratio described in the prior risk factor, and the Viking preferred stock will be converted into Camber Series A Preferred Stock, which will convert into a number of shares of Camber common stock based on the exchange ratio. Even though the exchange ratio will fluctuate based on a number of factors, the exchange ratio will not be adjusted for changes in the market price of either Camber common stock or Viking common stock between the date of the merger agreement and the effective time. Therefore, changes in the price of Camber common stock prior to the merger will affect the value that Viking stockholders will receive in the merger.

 

Stock price changes may result from a variety of factors, including general market and economic conditions, the market for and demand for oil and gas, the status of the U.S. and global economy, economic recessions and depressions, pandemics, including the recent pandemic related to Covid-19, and world governmental responses to such pandemics, changes in Viking’s and Camber’s businesses, operations and prospects and regulatory considerations, many of which factors are beyond Viking’s and Camber’s control. Therefore, at the time of the Viking special meeting, Viking stockholders will not know the market value of the consideration to be received at the effective time. Viking stockholders should obtain current market quotations for shares of Camber common stock and for shares of Viking common stock.

 

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The market price of Camber common stock after the merger may be affected by factors different from those affecting the shares of Viking or Camber currently.

 

In the merger, Viking stockholders will become Camber stockholders. Camber’s business differs from that of Viking. Accordingly, the results of operations of the combined company and the market price of Camber common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Camber and Viking. For a discussion of the businesses of Camber and Viking and of certain factors to consider in connection with those businesses, see “Information about Camber” and “Information about Viking”, beginning on pages 103 and 122, respectively.

 

Camber and Viking have not obtained updated fairness opinions from Mercer Capital and Scalar, respectively, reflecting changes in circumstances that may have occurred since the date such fairness opinions were provided.

 

Camber and Viking have not obtained updated fairness opinions either as of the date of this joint proxy statement/prospectus or as of any other date subsequent to the dates of such opinions from Mercer Capital and Scalar, which are Camber’s and Viking’s respective financial advisors. As such, the prior fairness opinions do not take into account changes to the terms of the merger which were affected by the prior amendments to the merger agreement, and will not take into account future amendments to the merger agreement. Additionally, changes in the operations and prospects of Camber or Viking, general market and economic conditions and other factors which may be beyond the control of Camber and Viking, and on which the fairness opinions were based, may have altered the value of Camber or Viking or the prices of shares of Camber common stock and shares of Viking common stock as of the date of this joint proxy statement/prospectus, or may alter such values and prices by the time the merger is completed. The opinions do not speak as of any date other than the dates of those opinions.

 

Combining Camber and Viking may be more difficult, costly or time-consuming than expected and Camber and Viking may fail to realize the anticipated benefits of the merger, including expected financial and operating performance of the combined company.

 

The success of the merger will depend, in part, on the combined company’s ability to realize anticipated cost savings from combining the businesses of Camber and Viking. To realize the anticipated benefits and cost savings from the merger, Camber and Viking must successfully integrate and combine their businesses in a manner that permits those cost savings to be realized. If Camber and Viking are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings of the merger could be less than anticipated.

 

Camber and Viking have operated and, until the completion of the merger, must continue to operate independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with leaseholders, customers, suppliers and employees or to achieve the anticipated benefits and cost savings of the merger. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on each of Camber and Viking during this transition period and for an undetermined period after completion of the merger on the combined company. All projections regarding the combined company’s business are, by their nature, estimates which are subject to risks and uncertainties. Business and financial measures of the combined company, including, but not limited to, revenue, free cash flow, synergies and dividend yield, are uncertain and subject to change based on changes in assumptions underlying such measures or other changes in circumstances, many of which may be outside of Camber’s or Viking’s control.

 

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The combined company may be unable to retain Camber and/or Viking personnel successfully after the merger is completed.

 

The success of the merger will depend in part on the combined company’s ability to retain the talents and dedication of key employees currently employed by Camber and Viking. It is possible that these employees may decide not to remain with Camber or Viking, as applicable, while the merger is pending, or with the combined company after the merger is consummated. If key employees terminate their employment, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Camber and Viking to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, Camber and Viking may not be able to locate or retain suitable replacements for any key employees who leave either company.

 

The unaudited pro forma condensed combined financial statements included in this joint proxy statement/prospectus are preliminary and estimated, and the actual financial condition and results of operations of the combined company after the merger may differ materially.

 

The unaudited pro forma condensed combined financial statements in this joint proxy statement/prospectus are presented for illustrative purposes only and are not necessarily indicative of what the combined company’s actual financial condition or results of operations would have been had the merger been completed on the dates indicated. The unaudited pro forma condensed combined financial statements reflect adjustments, which are based upon preliminary estimates, to record Viking as the accounting acquirer, and to estimate the fair value of Camber’s identifiable assets acquired and liabilities assumed and the resulting goodwill recognized. The purchase price allocation reflected in this joint proxy statement/prospectus is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Camber/Viking as of the date of the completion of the merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this joint proxy statement/prospectus. For more information, see “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 230.

 

Certain of Camber’s and Viking’s directors and executive officers may have interests in the merger that may differ from the interests of Camber stockholders and Viking stockholders.

 

Camber stockholders and Viking stockholders should be aware that some of Camber’s and Viking’s directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of Camber stockholders and Viking stockholders generally. These interests and arrangements may create potential conflicts of interest. The Camber board and the Viking board were aware of these respective interests and considered these interests, among other matters, when making their decisions to approve the merger agreement, and in recommending that holders of common stock vote to for the merger agreement and the Camber share issuance, as applicable. For a more complete description of these interests, see “The Merger—Interests of Camber’s Directors and Executive Officers in the Merger” beginning on page 181 and “The Merger—Interests of Viking’s Directors and Executive Officers in the Merger” beginning on page 182.

 

Termination of the merger agreement could negatively impact Camber and/or Viking.

 

If the merger agreement is terminated, there may be various consequences. For example, Camber’s or Viking’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of Camber’s or Viking’s common stock could decline to the extent that the current market prices reflect a market assumption that the merger will be completed. If the merger agreement is terminated under certain circumstances, Camber may also retain a portion of Viking’s Elysium subsidiary, which could negatively impact Viking and/or Camber. For example, in the event of termination of the merger agreement by either party because there is a reasonable likelihood that the combined company will not meet the initial listing requirements of the NYSE American, required regulatory approvals will not be obtained, or the Form S-4 of which this joint proxy statement/prospectus is a part, will not be declared effective, through no fault of Camber or Viking, Camber will retain a 20% interest in Elysium if the Secured Notes (defined below under “The Merger Agreement—Camber’s Elysium Interest” beginning on page 202) owed by Viking to Camber are repaid on or prior to the 90th day following the termination of the merger agreement (and a required additional payment is made in connection therewith from Viking to Camber), and Camber will return a 10% interest in Elysium to Viking. In the event of termination of the merger agreement by either party, through no fault of Camber, Camber will retain a 25% interest in Elysium if the payment obligations relating to the Secured Notes are met and it will return a 5% interest in Elysium to Viking; in the event of termination of the merger agreement due to the failure of Camber’s shareholders to approve the merger Camber will retain a 15% interest in Elysium; and in the event of termination of the merger agreement due to a material breach of the merger agreement by Camber or its disclosure schedules, and if the payment obligations relating to the Secured Notes are met, Camber will return the entire 30% interest in Elysium to Viking. If the payment obligations relating to the Secured Notes are not met, Camber will retain the entire 30% interest in Elysium following any termination of the merger agreement for any reason. See also “The Merger AgreementCamber’s Elysium Interest” beginning on page 202 and “The Merger Agreement— Termination of the Merger Agreement”, beginning on page 203. In the event of termination of the merger agreement through no fault of Viking, due to the failure of the Camber stockholders to approve the Camber share issuance and charter amendment, Camber will issue Viking 300,000 restricted shares of Camber common stock as a termination fee, subject to Viking confirming its status as an ‘accredited investor’ and making certain other customary representations to Camber in order to allow Camber to claim an exemption from registration for such issuance, and subject to NYSE American additional listing approval of such shares. See also “The Merger AgreementTermination of the Merger Agreement” beginning on page 203.

 

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Additionally, each of Camber and Viking has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of filing, printing and mailing this joint proxy statement/prospectus, and filing and other fees paid or to be paid to the SEC and other regulatory agencies in connection with the merger. If the merger is not completed, Camber and Viking would nonetheless have to recognize these expenses but without realizing the expected benefits of the merger.

 

Camber and Viking will be subject to business uncertainties and contractual restrictions while the merger is pending.

 

Uncertainty about the effect of the merger on employees, suppliers and customers may have an adverse effect on Camber or Viking. These uncertainties may impair Camber’s or Viking’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with Camber or Viking to seek to change existing business relationships with Camber or Viking. In addition, subject to certain exceptions, Camber and Viking have agreed to operate their respective businesses in the ordinary course consistent with past practice prior to closing. See “The Merger AgreementCovenants and Agreements” beginning on page 195 for a description of the restrictive covenants applicable to Camber and Viking.

 

The merger agreement contains provisions that could adversely impact competing proposals to acquire Camber. These provisions include the prohibition on Camber generally from soliciting any acquisition proposal or offer for a competing transaction and the requirement that Camber transfer back to Viking up to the entire 30% interest in Elysium which it acquired on February 3, 2020 (25%) and June 25, 2020 (5%), if the merger agreement is terminated in specified circumstances and requiring Camber, upon termination of the merger, to redeem 630 shares of Series C Preferred Stock held by Discover at an aggregate price of $6,930,000. These provisions might discourage a third party that might have an interest in acquiring all or a significant part of Camber from considering or proposing an acquisition, even if that party were prepared to pay consideration with a higher value than the current proposed merger consideration. Furthermore, the termination fee may result in a potential competing acquirer proposing to pay a lower per share price to acquire Camber than it might otherwise have proposed to pay.

 

Holders of Camber and Viking common stock will have a reduced ownership and voting interest in the combined company after the merger and will therefore have less voting influence over the combined company.

 

Holders of Camber and Viking common stock currently have the right to vote in the election of the board of directors and on other matters involving Camber and Viking, respectively. In the merger, each Viking stockholder who receives shares of Camber common stock will become a holder of common stock of the combined company, with a percentage ownership of the combined company that is smaller than such holder’s percentage ownership of Viking. Upon completion of the merger, Viking stockholders as of immediately prior to the merger will collectively own approximately (80%) of the outstanding shares of the combined company immediately after the merger (when including shares of common stock issuable upon conversion of the Camber Series A Preferred Stock), and Camber stockholders as of immediately prior to the merger will collectively own approximately (20%) of the outstanding shares of the combined company immediately after the merger (in each case, on a fully diluted basis and without regard to the fact that immediately prior to the merger, certain stockholders may own both Camber and Viking stock), without taking into account Camber’s Series C Preferred Stock holder. As a result, Viking stockholders will have less voting influence on the combined company and may have less influence on its management and policies than they now have on Viking, and Camber stockholders will have less voting influence on the combined company and may have less influence on its management and policies than they now have on Camber.

 

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Camber stockholders will not have appraisal rights in the merger.

 

Appraisal rights are statutory rights that, if applicable under law, enable stockholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction.

 

Under the relevant provisions of the NRS, the Camber stockholders will not be entitled to appraisal rights in connection with the merger with respect to their shares of Camber common stock.

 

Stockholder litigation could prevent or delay the closing of the merger or otherwise negatively impact the business and operations of Camber and Viking.

 

Camber and Viking may incur costs in connection with the defense or settlement of any stockholder lawsuits filed in connection with the merger. Such litigation could have an adverse effect on the financial condition and results of operations of Camber and Viking and could prevent or delay the consummation of the merger.

 

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

 

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, other than certain shares owned by Camber, Viking and Merger Sub, and the holders of the Viking Series C Preferred Stock will have their preferred stock converted into Camber Series A Preferred Stock, which converts into Camber common stock, will in aggregate have the right to receive their pro rata share of 80% of Camber’s post-effective time capitalization in the merger, taking into account the number of shares of common stock of Camber outstanding on a fully-diluted basis and 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, 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 and preferred stock consideration to Viking stockholders will result in immediate and substantial dilution to the interests of Camber’s then stockholders and result in a change of control of Camber.

 

Failure to complete the merger could negatively impact Camber’s stock price and future business and financial results.

 

If the merger is not completed, Camber’s ongoing business may be adversely affected and it would be subject to a number of risks, including the following:

 

●          it 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 Camber currently faces as an independent company;

 

●          it may experience negative reactions from the financial markets and its partners and employees;

 

●          under the merger agreement, Camber may be required to transfer back to Viking the 30% interest in Elysium which Camber has acquired to date, and will be required to redeem 630 shares of Series C Preferred Stock held by Discover at a price of $6,930,000 if the merger is terminated. If such termination fee is payable, the payment of this fee could have material and adverse consequences to Camber’s financial condition and operations. Furthermore, although Viking has agreed to pay Camber a break-up fee in the event the merger is terminated, which will allow Camber to redeem the 630 shares of Series C Preferred Stock required to be redeemed from Discover, Viking may be unable to pay such amount when due;

 

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●          the merger agreement places certain restrictions on the conduct of Camber’s 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 Camber from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the merger; and

 

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

 

The merger agreement may be terminated in accordance with its terms, and the merger may not be completed.

 

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger as described below under “The Merger Agreement—Conditions to Complete the Merger” beginning on page 200. These conditions to the closing of the merger may not be fulfilled and, accordingly, the merger may not be completed. In addition, if the merger is not completed by September 30, 2020 (or up to December 30, 2020, if the required closing date is extended by the parties, which is allowed under certain circumstances), either Camber or Viking may choose not to proceed with the merger, and the parties can mutually decide to terminate the merger agreement at any time, before or after stockholder approval. In addition, Camber or Viking may elect to terminate the merger agreement in certain other circumstances.

 

Certain of Viking’s convertible note holders will need to approve the merger, or be repaid, prior to the merger closing.

 

As of August 20, 2020, Viking’s outstanding convertible notes consisted of (i) convertible notes maturing on August 31, 2020, in the aggregate principal amount of approximately $83,000, with 50% of the principal amount under each note convertible into Viking common stock at $0.20 per share; (ii) convertible notes maturing on December 31, 2020, in the aggregate principal amount of approximately $6,519,320, with 50% of the principal amount under each note convertible into Viking common stock at $0.20 per share; (iii) a convertible note maturing January 3, 2021, in the principal amount of $500,000, with 100% of the principal amount convertible into Viking common stock at $0.15 per share, and (iv) convertible notes maturing on February 11, 2022, in the aggregate principal amount of approximately $5,277,004, with 100% of the principal amount under each note convertible into Viking common stock at $0.15 per share. If the merger closes prior to the repayment in full (or partial conversion and repayment of the remaining portion) of Viking’s outstanding convertible promissory notes maturing on August 31, 2020, and December 31, 2020, each of the holders of those notes will have to approve the merger, or their notes will need to be repaid in full at closing of the merger. Any failure of those note holders to approve the merger, or Viking to repay those note holders prior to closing, may prevent the merger from closing. Viking may raise funding through the sale of debt or equity prior to the closing of the merger to repay those note holders, which may cause significant dilution to existing stockholders of Viking and may reduce (as a result of the exchange ratio) the number of shares of Camber common stock which Viking stockholders would otherwise receive as part of the merger. Such dilution and adjustment to the exchange ratio will not be known until after Viking stockholders have approved the merger.

 

Certain of Viking’s warrant holders will need to approve the merger prior to the merger closing.

 

As of August 20, 2020, Viking’s outstanding warrants to purchase common stock of Viking included (i) warrants to purchase approximately 10,043,431 shares of Viking common stock, with the warrants requiring the consent of the holders of the warrants (the “Consenting Warrants”) prior to closing the merger, and (ii) warrants to purchase approximately 38,883,008 shares of Viking common stock not requiring warrant holder consent prior to closing the merger. As of August 20, 2020, holders of approximately 98.9% of the Consenting Warrants have consented to the merger, and holders of the remaining 1.1% have not. If Viking is unable to obtain the consent of all of the holders of the Consenting Warrants to the merger, the closing of the merger may not occur. Furthermore, Viking may need to issue holders of the Consenting Warrants equity consideration in order to induce them to approve the merger, the issuance of which may cause dilution to existing stockholders of Viking and may reduce (as a result of the exchange ratio) the number of shares of Camber common stock which Viking stockholders would otherwise receive as part of the merger. Such dilution and adjustment to the exchange ratio will not be known until after Viking stockholders have approved the merger.

 

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Termination of the merger agreement could negatively impact Camber.

 

In the event the merger agreement is terminated, Camber’s business may have been adversely impacted by its failure to pursue other beneficial opportunities due to the focus of management on the merger, and the market price of its 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 Camber’s Board of Directors seeks another merger or business combination, Camber’s stockholders cannot be certain that Camber 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, Camber may be required to transfer Viking back the 30% interest in Elysium and will be required to redeem 630 shares of Series C Preferred Stock held by Discover at a price of $6,930,000. Although Viking has agreed to repay the Secured Notes (defined below under “The Merger AgreementCamber’s Elysium Interest” beginning on page 202) upon the termination of the merger agreement and to pay Camber an additional amount as a break-up fee upon termination of the merger, which if paid will be sufficient for Camber to pay the amount it owes to Discover in connection with the redemption of 630 shares of Series C Preferred Stock ($6,930,000), Viking may be unable to pay such amounts when due and Camber may be unable to pay any difference in amounts owed. If Camber is unable to timely pay Discover amounts due in connection with the required redemption of the Series C Preferred Stock it could have a material adverse effect on Camber’s cash flows, operations, and its ability to continue as a going concern, all of which could cause the value of Camber’s common stock to decline in value or become worthless.

 

Significant costs are expected to be incurred in connection with the consummation of the merger and integration of Camber and Viking into a single business, including legal, accounting, financial advisory and other costs.

 

If the merger is consummated, Camber and Viking expect to incur significant costs in connection with integrating their operations and personnel. These costs may include costs for:

 

  employee redeployment, relocation or severance;
     
  integration of information systems; and
     
  reorganization or closures of facilities.

 

In addition, Camber and Viking expect to incur a number of non-recurring costs associated with combining the operations of the two companies, which cannot be estimated accurately at this time. Camber and Viking will also incur transaction fees and other costs related to the merger. Additional unanticipated costs may be incurred in the integration of the businesses of Camber and Viking. Although Camber and Viking expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and transaction-related costs over time, this net benefit may not be achieved in the near term, or at all. There can be no assurance that Camber and Viking will be successful in these integration efforts.

 

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The exchange ratio of the merger is calculated without taking into account Camber’s Series C Preferred Stock.

 

The merger agreement provides that the exchange ratio representing the number of shares of Camber common stock that each holder of Viking common stock will receive in the merger is calculated without regard to the conversion rights of Camber’s Series C Preferred Stock. The conversion price of the Series C Preferred Stock is $162.50 per share for the face amount of each share of Series C Preferred Stock ($10,000 per share). The Series C Preferred Stock also provides that all applicable dividends (conversion premiums), which initially accrued in the amount of 24.95% per annum and which increase or decrease subject to the terms of the Series C Preferred Stock, based on among other things, the trading price of Camber’s common stock, up to a maximum of 34.95% per annum, are due upon conversion or repayment/redemption (where applicable) thereof, for the full seven year term of such securities, based on the face amount of such security. The conversion premium under the Series C Preferred Stock is payable and the dividend rate under the Series C Preferred Stock is adjustable. Specifically, the conversion rate of such premiums and dividends equals 95% of the average of the lowest 5 individual daily volume weighted average prices during the Measuring Period, not to exceed 100% of the lowest sales prices on the last day of the Measuring Period, less $0.05 per share of common stock, unless a trigger event has occurred, in which case the conversion rate equals 85% of the lowest daily volume weighted average price during the Measuring Period, 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. Notwithstanding the above, in no event will the value of the common stock pursuant to the foregoing be below the par value per share of the common stock ($0.001). The “Measuring Period” is the period beginning, if no trigger event has occurred, 30 trading days, and if a trigger event has occurred, 60 trading days, before the applicable notice has been provided regarding the exercise or conversion of the applicable security (provided that the parties have contractually agreed that the Measuring Period for all outstanding shares of Series C Preferred Stock begins on February 3, 2020), and ending, if no trigger event has occurred, 30 trading days, and if a trigger event has occurred, 60 trading days, after the applicable number of shares stated in the initial exercise/conversion notice have actually been received into Discover’s designated brokerage account in electronic form and fully cleared for trading. Trigger events are described in the designation of the Series C Preferred Stock, but include items which would typically be events of default under a debt security, including filing of reports late with the SEC.

 

As a result of the above, based on recent trading prices of Camber’s common stock, the 2,770 currently outstanding shares of Series C Preferred Stock would, if converted in full, convert into approximately 72,506,063 shares of common stock, which shares are not included in the calculation of the exchange ratio, and the conversion of which will cause significant dilution to Camber stockholders following the merger. Because the exchange ratio does not take into account the shares of common stock issuable upon conversion of the Series C Preferred Stock, the actual percentage of Camber’s post-merger capitalization received by stockholders of Viking in the merger will be significantly less than 80% of the post-merger capitalization of merger.

 

Although Discover may not receive shares of common stock exceeding 9.99% of its 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 its common stock. Additionally, the continued sale of shares issuable upon successive conversions will likely create significant downward pressure on the price of its common stock as Discover sells material amounts of Camber’s common stock over time and/or in a short period of time. This could place further downward pressure on the price of its 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 its common stock, which could lead to its common stock becoming devalued or worthless.

 

The combined company will be required to re-meet the initial listing standards of the NYSE American in order to close the merger.

 

The merger agreement provides that in the event the NYSE American determines that the merger constitutes, or will constitute, a “back-door listing”/“reverse merger”, Camber (and its common stock) is required to qualify for initial listing on the NYSE American, pursuant to the applicable guidance and requirements of the NYSE as of the date of the merger and the NYSE American has expressed their initial opinion that the merger will constitute, a “back-door listing”/“reverse merger”. The NYSE American initial listing standards include more stringent requirements than the NYSE American continued listing standards, which as discussed in the risk factors below, Camber is not currently in compliance with; provided that Camber believes it will be in compliance with the continued listing standards upon closing of the merger.

 

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The NYSE American initial listing standards require that issuers meeting one of the following tests: (1) $750,000 of pre-tax income (in either the last fiscal year or two of the three most recent years), $3 million of public float, $4 million of stockholders’ equity and a minimum share price of $3 per share; (2) $15 million of public float, $4 million of stockholders’ equity, a $3 per share price and 2 years of operating history; (3) a $50 million market cap; $15 million of public float, $4 million of stockholders’ equity, and a $2 per share price; (4) a $75 million market cap; $20 million of public float and a $3 per share price; or (5) $75 million in total assets and total revenue (in either the last fiscal year or two of the three most recent years); $20 million of public float and a $3 per share price, plus in each case either (a) 800 public stockholders and 500,000 shares of total public float; (b) 400 public stockholders and 1,000,000 shares of total public float; or (c) 400 public stockholders, 500,000 shares of total public float and a 2,000 share daily trading volume (over the past six months).

 

Camber as a stand-alone company does not currently meet the initial listing standards described above, and the combined company may similarly not meet such requirements.

 

Camber’s Series C Preferred Stockholder, Discover, holds rights of first refusal to provide further funding and favored nation rights.

 

Camber has granted Discover a right of first offer to match any offer for financing Camber receives from any person while the shares of Series C Preferred Stock are outstanding, except for debt financings not convertible into common stock, which are excluded from such right to match. Such right of first refusal may delay or prevent Camber from raising funding in the future.

 

Camber also agreed that if it issues any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Discover, then Camber would notify Discover of such additional or more favorable term and such term, at Discover’s option, may become a part of the transaction documents with Discover, including the Series C Preferred Stock and the agreements relating to the sale thereof. Such favored nations provision may make it more costly to complete transactions in the future, may prevent future transactions from occurring and/or may provide Discover additional rights than it currently has, all of which may cause significant dilution to existing stockholders, and/or cause the value of Camber’s common stock to decline in value.

 

Viking’s Chief Executive Officer, James Doris, holds preferred stock which currently affords him enough stockholder votes to control Viking and approve the merger on behalf of Viking’s stockholders, and will provide him significant voting control over the combined company.

 

Viking’s CEO and director, James Doris, holds 28,092 shares of Viking Series C Preferred Stock, with each share of preferred stock entitling the holder thereof to 4,900 votes on all matters submitted to the vote of Viking’s security holders. By virtue of such stock ownership, Mr. Doris is able to control the election of the members of Viking’s Board of Directors and to generally exercise control over the affairs of Viking, including approving the merger.

 

Although such Viking Series C Preferred Stock will be exchanged for Camber Series A Preferred Stock as a result of the merger, such Camber Series A Preferred Stock will be able to vote, and be converted into, the same number of shares of Camber common stock as a holder would have received in the merger if such preferred stock was converted into Common Stock immediately prior to the effective time. As a result, it is currently anticipated that Mr. Doris (or his assigns) will control approximately 30% of the combined company’s voting shares following the merger, which number may be decreased by dilution to Viking stockholders and the voting rights of the Viking Series C Preferred Stock as a result of the sale of equity prior to closing and other issuances of Viking common stock which may occur prior to closing. As such, Mr. Doris will have significant control over the combined company following the closing, and the interests of Mr. Doris may differ from other stockholders. There can be no assurance that conflicts of interest will not arise with respect to Mr. Doris’s ownership of Camber Series A Preferred Stock, or that such conflicts will be resolved in a manner favorable to combined company stockholders. See “The Merger—Interests of Viking’s Directors and Executive Officers in the Merger” beginning on page 182 and “Security Ownership of Combined Company Beneficial Owners and Management Subsequent to Merger”, beginning on page 250.

 

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Camber’s officers and directors will receive significant consideration and bonuses in the event the merger closes.

 

On August 31, 2020, Camber’s Board of Directors entered into Past Service Payment and Success Bonus Agreements with each non-executive member of the Board of Directors of Camber, and each of Louis G. Schott, Camber’s Interim Chief Executive Officer and Robert Schleizer, Camber’s Chief Financial Officer (collectively, the “Merger Compensation Agreements”). Pursuant to such agreements: each non-executive director, and each officer, of Camber, is to receive, contingent upon closing the merger, $100,000 in consideration for past services provided to Camber through the date of the merger as a member of the Board of Directors/officer, and $50,000 as a success bonus for Camber’s successful completion of the merger, in cash, contingent on such non-executive director/officer’s continued service to Camber at the same level of service he is currently performing, through the effective date of the merger. The consideration payable to the officers and directors of Camber upon the closing of the merger will (a) reduce the cash available for the combined company’s activities; (b) reduce the amount of cash which would have otherwise been deemed Camber Surplus Cash (which would have resulted in an increase to the percentage of the combined company which Camber stockholders would have received upon the closing of the merger); and (c) may result in conflicts of interest between such officers and directors and other stockholders of Camber. See also “The Merger—Interests of Camber’s Directors and Executive Officers in the Merger” beginning on page 181.

 

General Business and Other Risks Relating to Camber

 

Camber’s business and operations are subject to many risks. The risks described below may not be the only risks Camber faces, as its business and operations may also be subject to risks that it does not yet know of, or that it currently believes are immaterial. If any of the events or circumstances described below actually occurs, Camber’s business, financial condition, results of operations or cash flow could be materially and adversely affected and the trading price of its common stock could decline. The following risk factors should be read in conjunction with the other information contained herein, including the financial statements and the related notes. Please read “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 32 of this joint proxy statement/prospectus, where Camber describes additional uncertainties associated with Camber’s business and the forward-looking statements included in this joint proxy statement/prospectus.

 

Camber currently has only limited oil and gas operations.

 

Camber’s Hutchinson County, Texas leases, which made up approximately 30% of its historical total producing properties, were transferred in July 2020 as part of a settlement agreement. Although prior to the settlement, Camber was in the process of performing workovers on the wells on the leases and had very limited production from the properties, Camber’s oil and gas revenues, results of operations and prospects in the future may be materially adversely affected as a result of such transfer. Camber’s primary assets as of this date are its indirect interests in the Elysium assets and its non-operated assets in Glasscock County, Texas. Notwithstanding the above, Camber’s management believes that Camber’s 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 Camber’s non-operated properties.

 

Lineal and Viking owe Camber 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 Camber and the prior owners of Lineal, Camber 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 Camber 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 Camber 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.

 

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On February 3, 2020 and June 25, 2020, Camber advanced $5 million and $4.2 million, respectively, to Viking, and Viking provided Camber, among other things, the Secured Notes, defined and described in greater detail below under, “The Merger Agreement—Camber’s Elysium Interest” beginning on page 199. 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 will be forgiven upon the closing of the merger.

 

In the event the Lineal notes or the Secured Notes are not paid when due and/or the interest thereon is not timely paid, Camber 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 interest 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 Camber are not timely paid and/or not paid in full, it could have a material adverse effect on Camber’s cash flows and its ability to pay its debts as they become due. Any failure by Viking or Lineal to timely repay their debt obligations to Camber could cause the value of Camber’s securities to decline in value or become worthless.

 

Camber may have difficulty managing growth in its business, which could have a material adverse effect on its business, financial condition and results of operations and its ability to execute its business plan in a timely fashion.

 

Because of Camber’s small size, growth in accordance with its business plans, if achieved, will place a significant strain on its financial, technical, operational and management resources. If Camber expands its activities, developments and production, and increases in the number of projects it is evaluating or in which it participates, there will be additional demands on its financial, technical and management resources. The failure to continue to upgrade its technical, administrative, operating and financial control systems or the occurrence of unexpected expansion difficulties, including the inability to recruit and retain experienced managers, geoscientists, petroleum engineers, landmen, engineers and employees could have a material adverse effect on Camber’s business, financial condition and results of operations and its ability to execute its business plan in a timely fashion.

 

Camber depends significantly upon the continued involvement of its present management.

 

Camber depends to a significant degree upon the involvement of its management, specifically, its Interim Chief Executive Officer, Louis G. Schott, who is in charge of its strategic planning and operations, and its Chief Financial Officer, Robert Schleizer. Camber’s performance and success are dependent to a large extent on the efforts and continued employment of Mr. Schott and Mr. Schleizer. Camber does not believe that Mr. Schott or Mr. Schleizer could be quickly replaced with personnel of equal experience and capabilities, and their successor(s) may not be as effective. If Mr. Schott, Mr. Schleizer, or any of its other key personnel resign or become unable to continue in their present roles and if they are not adequately replaced, Camber’s business operations could be adversely affected.

 

Camber has an active Board of Directors that meets several times throughout the year and is intimately involved in its business and the determination of its operational strategies. Members of Camber’s Board of Directors work closely with management to identify potential prospects, acquisitions and areas for further development. If any of its directors resign or become unable to continue in their present role, it may be difficult to find replacements with the same knowledge and experience and as a result, its operations may be adversely affected.

 

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Future increases in Camber’s tax obligations; either due to increases in taxes on energy products, energy service companies and exploration activities or reductions in currently available federal income tax deductions with respect to oil and natural gas exploration and development, may adversely affect its results of operations and increase its operating expenses.

 

Federal, state and local governments have jurisdiction in areas where Camber operates and impose taxes on the oil and natural gas products it sells. There are constant discussions by federal, state and local officials concerning a variety of energy tax proposals, some of which, if passed, would add or increase taxes on energy products, service companies and exploration activities. The passage of any legislation or any other changes in U.S. federal income tax laws could impact or increase the taxes that it is required to pay and consequently adversely affect Camber’s results of operations and/or increase its operating expenses.

 

Camber’s officers and directors have limited liability, and Camber is required in certain instances to indemnify its officers and directors for breaches of their fiduciary duties.

 

Camber has adopted provisions in its articles of incorporation and bylaws which limit the liability of its officers and directors and provide for indemnification by it of its officers and directors to the full extent permitted by Nevada corporate law. Camber’s articles generally provide that its officers and directors shall have no personal liability to it or its stockholders for monetary damages for breaches of their fiduciary duties as directors, except for breaches of their duties of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, acts involving unlawful payment of dividends or unlawful stock purchases or redemptions, or any transaction from which a director derives an improper personal benefit. Such provisions substantially limit Camber’s stockholders’ ability to hold officers and directors liable for breaches of fiduciary duty, and may require Camber to indemnify its officers and directors.

 

Camber it may incur additional indebtedness, which could reduce its financial flexibility, increase interest expense and adversely impact its operations in the future.

 

Camber currently has no significant outstanding indebtedness; however, in the future it may incur significant amounts of additional indebtedness in order to make acquisitions or to develop properties. Camber’s level of future indebtedness could affect its operations in several ways, including the following:

 

  ●   a significant portion of its cash flows could be used to service its indebtedness;
  a high level of debt would increase its vulnerability to general adverse economic and industry conditions;
  any covenants contained in the agreements governing its outstanding indebtedness could limit its ability to borrow additional funds, dispose of assets, pay dividends and make certain investments;
  a high level of debt may place it at a competitive disadvantage compared to its competitors that are less leveraged and, therefore, may be able to take advantage of opportunities that its indebtedness may prevent it from pursuing; and
  debt covenants to which it may agree may affect its flexibility in planning for, and reacting to, changes in the economy and in its industry.

A high level of indebtedness increases the risk that Camber may default on its debt obligations. Camber may not be able to generate sufficient cash flows to pay the principal or interest on its debt, and future working capital, borrowings or equity financing may not be available to pay or refinance such debt. If it does not have sufficient funds and is otherwise unable to arrange financing for future operations, Camber may have to sell significant assets or have a portion of its assets foreclosed upon which could have a material adverse effect on its business, financial condition and results of operations.

 

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Specific Risks Relating to Camber’s Oil and Gas Operations

 

Camber currently has limited production and revenues from its non-operated properties.

 

Camber’s interest in non-operated properties are producing limited revenues. As such, Camber does not anticipate generating any significant revenues through the closing date of the merger, and will need to rely on cash on hand, funds which it can raise through the sale of equity (including shares of Series C Preferred Stock) and other borrowings to support its operations, pay operational expenses, and funds due in connection with the preparation and negotiation of the merger documents and related filing documents, and its filings with the SEC. Such funds may not be available on favorable terms if at all. In the event that Camber runs out of available funds prior to the date of the merger, it may be forced to abandon the merger and/or its filings with the SEC, and may be forced to seek bankruptcy protection.

 

Camber is subject to production declines and loss of revenue due to shut-in wells.

 

The majority of Camber’s historical oil and gas production revenues have come from a small number of producing wells. Camber does not currently have any material producing wells aside from its interests in the Elysium assets. If in the future, wells which Camber owns are required to be shut-in (as they were for various periods in the past), its production and revenue could be adversely affected. Camber’s wells have historically been shut-in from time-to-time for maintenance, workovers, upgrades and other matters outside of its control, including repairs, adverse weather (including hurricanes, flooding and tropical storms), inability to dispose of produced water or other regulatory and market conditions. Any significant period where its wells are shut-in, would have a material adverse effect on its future results of production, oil and gas revenues and net income or loss for the applicable period. However, notwithstanding the above, Camber’s management believes that Camber’s 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 Camber’s non-operated properties.

 

Camber’s 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, Camber’s operations, and those of Camber’s subcontractors, customers and suppliers, have and may continue to experience delays or disruptions and temporary suspensions of operations. In addition, Camber’s financial condition and results of operations have been and may continue to be adversely affected by the coronavirus outbreak.

 

The timeline and potential magnitude of the COVID-19 outbreak is currently unknown.  The continuation or amplification of this virus could continue to more broadly affect the United States and global economy, including Camber’s 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 Camber’s 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 Camber’s production. As the potential impact from COVID-19 is difficult to predict, the extent to which it may negatively affect Camber’s 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 Camber’s control. These potential impacts, while uncertain, could adversely affect Camber’s operating results, notwithstanding the fact that the impact of COVID-19 has already negatively affected Camber’s 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 Camber’s ability to conduct Camber’s 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 Camber’s business and operations.

 

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Downturns and volatility in global economies and commodity and credit markets have materially adversely affected Camber’s business, results of operations and financial condition.

 

Camber’s results of operations are materially adversely affected by the conditions of the global economies and the credit, commodities and stock markets. Among other things, Camber has recently been adversely impacted, and anticipates to continue to be adversely impacted, due to a global reduction in consumer demand for oil and gas, and consumer lack of access to sufficient capital to continue to operate their businesses or to operate them at prior levels. In addition, a decline in consumer confidence or changing patterns in the availability and use of disposable income by consumers can negatively affect the demand for oil and gas and as a result Camber’s results of operations.

 

Camber faces intense competition in connection with its oil and gas operations.

 

Camber is in direct competition for properties with numerous oil and natural gas companies, drilling and income programs and partnerships exploring various areas of Texas and Louisiana. Many competitors are large, well-known energy companies, although no single entity dominates the industry. Many of its competitors possess greater financial and personnel resources enabling them to identify and acquire more economically desirable energy producing properties and drilling prospects than Camber. Additionally, there is competition from other fuel choices to supply the energy needs of consumers and industry. Management of Camber believes that a viable marketplace exists for smaller producers of natural gas and crude oil.

 

Camber has identified material weaknesses in its disclosure controls and procedures and internal control over financial reporting. If not remediated, its failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in its financial statements and a failure to meet its reporting and financial obligations, each of which could have a material adverse effect on its financial condition and the trading price of its common stock.

 

Maintaining effective internal control over financial reporting and effective disclosure controls and procedures are necessary for Camber to produce reliable financial statements. As of June 30, 2020, Camber’s Interim CEO and CFO have determined that Camber’s disclosure controls and procedures were not effective, and such disclosure controls and procedures have not been deemed effective since approximately September 30, 2017. Separately, management assessed the effectiveness of Camber’s internal control over financial reporting as of March 31, 2020 and determined that such internal control over financial reporting was not effective as a result of such assessment, due mainly to limited staff and lack of segregation of duties.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of Camber’s annual or interim financial statements will not be prevented or detected on a timely basis. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

 

Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for Camber to produce reliable financial statements and Camber is committed to remediating its material weaknesses in such controls as promptly as possible. However, there can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future. Any failure to remediate the material weaknesses, or the development of new material weaknesses in Camber’s internal control over financial reporting, could result in material misstatements in its financial statements and cause it to fail to meet its reporting and financial obligations, which in turn could have a material adverse effect on its financial condition and the trading price of its common stock, and/or result in litigation against Camber or its management. In addition, even if Camber was successful in strengthening its controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or facilitate the fair presentation of its financial statements or its periodic reports filed with the SEC.

 

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If Camber does not hedge its exposure to reductions in oil and natural gas prices, it may be subject to significant reductions in prices. Alternatively, Camber may use oil and natural gas price hedging contracts, which involve credit risk and may limit future revenues from price increases and result in significant fluctuations in its profitability.

 

In the event that Camber chooses not to hedge its exposure to reductions in oil and natural gas prices by purchasing futures and by using other hedging strategies, Camber may be subject to significant reduction in prices which could have a material negative impact on its profitability. Alternatively, Camber may elect to use hedging transactions with respect to a portion of its oil and natural gas production to achieve more predictable cash flow and to reduce its exposure to price fluctuations. While the use of hedging transactions limits the downside risk of price declines, their use also may limit future revenues from price increases. Hedging transactions also involve the risk that the counterparty may be unable to satisfy its obligations.

 

All of Camber’s oil and gas properties are located in Texas and Louisiana, making it vulnerable to risks associated with operating in one major geographic area.

 

All of Camber’s oil and gas properties are located in Texas and Louisiana. As a result, Camber may be disproportionately exposed to the impact of delays or interruptions of production from wells caused by transportation capacity constraints, curtailment of production, availability of equipment, facilities, personnel or services, significant governmental regulation, natural disasters, adverse weather conditions, or interruption of transportation of oil or natural gas produced from the wells in this area, governmental restrictions, stay-at-home orders and local outbreaks of communicable diseases, including COVID-19. In addition, the effect of fluctuations on supply and demand may become more pronounced within specific geographic oil and gas producing areas such as the ones Camber operates in, which may cause these conditions to occur with greater frequency or magnify the effect of these conditions. Due to the concentrated nature of Camber’s portfolio, a number of its properties could experience any of the same conditions at the same time, resulting in a relatively greater impact on its results of operations than they might have on other companies that have a more diversified portfolio of properties. Such delays or interruptions could have a material adverse effect on Camber’s financial condition and results of operations.

 

Camber is limited in its ability to undertake subsequent financings.

 

On and effective June 22, 2020, Camber and Discover entered into a Stock Purchase Agreement (the “June 2020 Purchase Agreement”). Pursuant to the June 2020 Purchase Agreement, as long as Discover holds any shares of Camber Series C Preferred Stock, Camber agreed that, except as contemplated in connection with the merger, Camber would not issue or enter into or amend an agreement pursuant to which Camber may issue any shares of common stock, other than (a) for restricted securities with no registration rights, (b) in connection with a strategic acquisition, (c) in an underwritten public offering, or (d) at a fixed price; or issue or amend any debt or equity securities convertible into, exchangeable or exercisable for, or including the right to receive, shares of common stock (i) at a conversion price, exercise price or exchange rate or other price that is based upon or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of the security or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of the security or upon the occurrence of specified or contingent events directly or indirectly related to the business of Camber or the market for its common stock. These restrictions may make it more costly for Camber to raise funding in the future or may limit Camber’s ability to raise funding, which could force Camber to curtail its business plan or prohibit Camber from taking advantage of an attractive investment, acquisition or drilling activities, all of which could have a negative effect on the value of Camber’s common stock and its near-term or long-term prospects.

 

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Risks Relating Ownership of Camber’s Securities

 

If Camber is unable to maintain compliance with NYSE American continued listing standards, its common stock may be delisted from the NYSE American equities market, which would likely cause the liquidity and market price of its common stock to decline.

 

Camber’s common stock is currently listed on the NYSE American. The NYSE American will consider suspending dealings in, or delisting, securities of an issuer that do not meet its continued listing standards. If it cannot meet the NYSE American continued listing requirements, the NYSE American may delist its common stock, which could have an adverse impact on Camber and the liquidity and market price of its stock.

 

On February 24, 2020, Camber received notice from the NYSE American (the “Exchange”) that Camber was not in compliance with certain of the Exchange’s continued listing standards as set forth in Part 10 of the NYSE American Company Guide (the “Company Guide”). Specifically, because Camber reported stockholders’ equity of $3.1 million as of December 31, 2019 and net losses in three of its four most recent fiscal years then ended, Camber did not comply with Section 1003(a)(ii) of the Company Guide because it had stockholders’ equity of less than $4,000,000 and reported losses from continuing operations and/or net losses in three of its four most recent fiscal years. In order to maintain its listing on the Exchange, the Exchange requested Camber submit a plan of compliance (the “Plan”) by March 25, 2020 addressing how Camber intended to regain compliance with Section 1003(a)(ii) of the Company Guide by August 24, 2021, which plan was submitted and accepted. During the plan period, Camber is able to continue its listing and will be subject to continued periodic review by the Exchange staff. If Camber does not make progress consistent with the Plan during the plan period, Camber will be subject to delisting procedures as set forth in the Company Guide.

 

It is a required condition to the closing of the merger that in the event the Exchange determines that the merger constitutes, or will constitute, a “back-door listing”/“reverse merger”, which we expect that it will, Camber (and its common stock) will qualify for initial listing on the NYSE American, pursuant to the applicable guidance and requirements of the Exchange.

 

Camber may be unable to comply with NYSE American continued listing standards. Camber’s business has been and may continue to be affected by worldwide macroeconomic factors, which include uncertainties in the credit and capital markets. External factors that affect its stock price, such as liquidity requirements of its investors, as well as its performance, could impact its market capitalization, revenue and operating results, which, in turn, could affect its ability to comply with the NYSE American’s listing standards. The NYSE American has the ability to suspend trading in its common stock or remove its common stock from listing on the NYSE American if in the opinion of the exchange: (a) the financial condition and/or operating results of Camber appear to be unsatisfactory; or (b) it appears that the extent of public distribution or the aggregate market value of its common stock has become so reduced as to make further dealings on the exchange inadvisable; or (c) it has sold or otherwise disposed of its principal operating assets, or has ceased to be an operating company; or (d) it has failed to comply with its listing agreements with the exchange (which include requiring additional listing approval from the exchange prior to issuing any shares of common stock, something Camber has inadvertently failed to comply with in the past); or (e) any other event shall occur or any condition shall exist which makes further dealings on the exchange unwarranted.

 

In the past Camber has been out of compliance with the NYSE American’s continued listing standards which (a) require a listed company to maintain stockholders’ equity of more than $2 - $6 million, depending on the prior years of net losses experienced by the listed company; and (b) require a listed company to maintain an average trading price for its securities which exceeds $0.20 per share, for each 30 day rolling period. While it has cured such prior non-compliance, as discussed above, Camber is currently not in compliance with the Exchange’s continued listing rules. Notwithstanding that, Camber expects that upon completion of the merger it will once again regain compliance with the NYSE American listing standards and the parties anticipate Camber being able to meet the initial listing standards of the Exchange prior to the closing of the merger, which is a condition to closing the merger.

 

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If Camber is unable to maintain compliance with the NYSE American criteria for continued listing, its common stock would be subject to delisting. A delisting of its common stock could negatively impact it by, among other things, reducing the liquidity and market price of its common stock and reducing the number of investors willing to hold or acquire its common stock, which could negatively impact its ability to raise equity financing. In addition, delisting from the NYSE American might negatively impact its reputation and, as a consequence, its business. Additionally, if Camber were delisted from the NYSE American and it was not able to list its common stock on another national exchange, it would no longer be eligible to use Form S-3 registration statements (provided that Camber is currently not eligible to use Form S-3 until approximately October 2020 due to a late Form 8-K which was due in September 2019) and will instead be required to file a Form S-1 registration statement for any primary or secondary offerings of common stock, which would delay its ability to raise funds in the future, may limit the type of offerings of common stock it could undertake, and would increase the expenses of any offering, as, among other things, registration statements on Form S-1 are subject to SEC review and comments whereas take downs pursuant to a previously filed Form S-3 are not.

 

If Camber is delisted from the NYSE American, your ability to sell your shares of common stock of Camber would also be limited by the penny stock restrictions, which could further limit the marketability of your shares.

 

If Camber’s common stock is delisted from the NYSE American, it would come within the definition of “penny stock” as defined in the Exchange Act and would be covered by Rule 15g-9 of the Exchange Act. That Rule imposes additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors. For transactions covered by Rule 15g-9, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Consequently, Rule 15g-9, if it were to become applicable, would affect the ability or willingness of broker-dealers to sell Camber’s securities, and accordingly would affect the ability of stockholders to sell their securities in the public market. These additional procedures could also limit Camber’s ability to raise additional capital in the future.

 

Camber does not intend to pay cash dividends to stockholders.

 

Camber currently anticipates that it will retain all future earnings, if any, to finance the growth and development of its business. Camber does not intend to pay cash dividends in the foreseeable future. Any payment of cash dividends will depend upon its financial condition, capital requirements, earnings and other factors deemed relevant by its Board of Directors. As a result, only appreciation of the price of Camber’s common stock, which may not occur, will provide a return to stockholders.

 

Camber currently has a volatile market for its common stock, and the market for its common stock is and may remain volatile in the future.

 

Camber currently has a highly volatile market for its common stock, which market is anticipated to remain volatile in the future. Factors that could affect Camber’s stock price or result in fluctuations in the market price or trading volume of its common stock include:

 

  its actual or anticipated operating and financial performance and drilling locations, including reserve estimates;
  quarterly variations in the rate of growth of its financial indicators, such as net income/loss per share, net income/loss and cash flows, or those of companies that are perceived to be similar to Camber;
  changes in revenue, cash flows or earnings estimates or publication of reports by equity research analysts;
  speculation in the press or investment community;
  public reaction to Camber’s press releases, announcements and filings with the SEC;
  sales of Camber’s common stock by Camber or other stockholders, or the perception that such sales may occur;

 

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  the amount of Camber’s freely tradable common stock available in the public marketplace;
  general financial market conditions and oil and natural gas industry market conditions, including fluctuations in commodity prices;
  the realization of any of the risk factors that it is subject to;
  the global spread and containment of COVID-19, as well as U.S., local and foreign actions to control the spread of COVID-19;
  the recruitment or departure of key personnel;
  commencement of, or involvement in, litigation;
  the prices of oil and natural gas;
  changes in market valuations of companies similar to Camber; and
  domestic and international economic, legal and regulatory factors unrelated to Camber’s performance.

Camber’s common stock is listed on the NYSE American under the symbol “CEI.” Camber’s stock price may be impacted by factors that are unrelated or disproportionate to Camber’s operating performance. The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of Camber’s common stock. Additionally, general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of Camber’s common stock. Due to the limited volume of Camber’s shares which trade, it believes that its stock prices (bid, ask and closing prices) may not be related to its actual value, and not reflect the actual value of its common stock. You should exercise caution before making an investment in Camber.

 

A prolonged decline in the market price of Camber’s common stock could affect its ability to obtain additional financing which would adversely affect its operations.

 

Historically, Camber has relied on equity and debt financing as primary sources of financing. A prolonged decline in the market price of its common stock or a reduction in its accessibility to the global markets may result in its inability to secure additional financing which would have an adverse effect on Camber’s operations.

 

Nevada law and Camber’s articles of incorporation authorize Camber to issue shares of stock which shares may cause substantial dilution to its existing stockholders.

 

Camber has authorized capital stock consisting of 25,000,000 shares of common stock, $0.001 par value per share (which will increase to 250,000,000 shares in the event the Camber charter amendment is approved by stockholders at the meeting) and 10,000,000 shares of preferred stock, $0.001 par value per share. As of September 2, 2020, Camber had 22,872,484 shares of common stock outstanding (prior to taking into account the Camber reverse stock split, in the event the Camber reverse split proposal is approved and such Camber reverse stock split is authorized by the board of directors and becomes effective) and 2,770 shares of Series C Preferred Stock outstanding (each as described in greater detail below under “Description of Camber Capital Stock”, beginning on page 216). As a result, Camber’s Board of Directors has the ability to issue a large number of additional shares of common stock without stockholder approval, subject to the requirements of the NYSE American (which generally require stockholder approval for any transactions which would result in the issuance of more than 20% of its then outstanding shares of common stock or voting rights representing over 20% of its then outstanding shares of stock), which if issued could cause substantial dilution to Camber’s then stockholders. Shares of additional preferred stock may also be issued by Camber’s Board of Directors without stockholder approval, with voting powers and such preferences and relative, participating, optional or other special rights and powers as determined by its Board of Directors, which may be greater than the shares of common stock currently outstanding. As a result, shares of preferred stock may be issued by its Board of Directors which cause the holders to have majority voting power over its shares, provide the holders of the preferred stock the right to convert the shares of preferred stock they hold into shares of its common stock, which may cause substantial dilution to its then common stock stockholders and/or have other rights and preferences greater than those of its common stock stockholders. Investors should keep in mind that the Board of Directors has the authority to issue additional shares of common stock and preferred stock, which could cause substantial dilution to its existing stockholders. Additionally, the dilutive effect of any preferred stock which Camber may issue may be exacerbated given the fact that such preferred stock may have super voting rights and/or other rights or preferences which could provide the preferred stockholders with substantial voting control over Camber subsequent to the date of this joint proxy statement/prospectus and/or give those holders the power to prevent or cause a change in control. As a result, the issuance of shares of common stock and/or Preferred Stock may cause the value of Camber’s securities to decrease and/or become worthless.

 

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Stockholders may be diluted significantly through Camber’s efforts to obtain financing and/or satisfy obligations through the issuance of additional shares of Camber’s common stock.

 

Wherever possible, Camber’s Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, Camber believes that the non-cash consideration will consist of shares of its common stock. Subject to certain consent rights of Discover, Camber’s Board of Directors has authority, without action or vote of the stockholders, to issue all or part of the authorized but unissued shares of common stock (subject to NYSE American rules which limit among other things, the number of shares Camber can issue without stockholder approval to no more than 20% of Camber’s outstanding shares of common stock, subject to certain exceptions). These actions will result in dilution of the ownership interests of existing stockholders, and that dilution may be material.

 

If persons engage in short sales of Camber’s common stock, including sales of shares to be issued upon exercise of its outstanding warrants, convertible debentures and preferred stock, the price of Camber’s common stock may decline.

 

Selling short is a technique used by a stockholder to take advantage of an anticipated decline in the price of a security. In addition, holders of options, warrants and other convertible securities will sometimes sell short knowing they can, in effect, cover through the exercise or conversion of options, warrants and other convertible securities, thus locking in a profit. A significant number of short sales or a large volume of other sales within a relatively short period of time can create downward pressure on the market price of a security. Further sales of common stock issued upon exercise or conversion of options, warrants and other convertible securities could cause even greater declines in the price of Camber’s common stock due to the number of additional shares available in the market upon such exercise/conversion, which could encourage short sales that could further undermine the value of Camber’s common stock. You could, therefore, experience a decline in the value of your investment as a result of short sales of Camber’s common stock.

 

The market price for Camber’s common stock may be volatile, and its stockholders may not be able to sell common stock at a favorable price or at all.

 

Many factors could cause the market price of Camber’s common stock to rise and fall, including: actual or anticipated variations in its quarterly results of operations; changes in market valuations of companies in its industry; changes in expectations of future financial performance; fluctuations in stock market prices and volumes; issuances of dilutive common stock or other securities in the future; the addition or departure of key personnel; announcements by Camber or its competitors of acquisitions, investments or strategic alliances; and the increase or decline in the price of oil and natural gas.

 

Substantial sales of Camber’s common stock, or the perception that such sales might occur, could depress the market price of Camber’s common stock.

 

Camber cannot predict whether future issuances of its common stock or resales in the open market will decrease the market price of its common stock. The impact of any such issuances or resales of its common stock on Camber’s market price may be increased as a result of the fact that its common stock is thinly, or infrequently, traded. The exercise of any options that Camber has or that it may grant to directors, executive officers and other employees in the future, the issuance of common stock in connection with acquisitions and other issuances of its common stock (including shares previously registered in its registration statements and prospectus supplements, and/or in connection with future registration statements or prospectus supplements) could have an adverse effect on the market price of Camber’s common stock. In addition, future issuances of common stock may be dilutive to existing stockholders. Any sales of substantial amounts of common stock in the public market, or the perception that such sales might occur, could lower the market price of Camber’s common stock.

 

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Camber incurs significant costs as a result of operating as a fully reporting publicly traded company and its management is required to devote substantial time to compliance initiatives.

 

Camber incurs significant legal, accounting and other expenses in connection with its status as a fully reporting public company. Specifically, it is required to prepare and file annual, quarterly and current reports, proxy statements and other information with the SEC. Additionally, Camber’s officers, directors and significant stockholders are required to file Forms 3, 4 and 5 and Schedules 13D/G with the SEC disclosing their ownership of Camber and changes in such ownership. Furthermore, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and rules subsequently implemented by the SEC have imposed various new requirements on public companies, including requiring changes in corporate governance practices. In addition, the Sarbanes-Oxley Act requires, among other things, that Camber maintains effective internal controls for financial reporting and disclosure of controls and procedures. The costs and expenses of compliance with SEC rules and Camber’s filing obligations with the SEC, or its identification of deficiencies in its internal controls over financial reporting that are deemed to be material weaknesses, could materially adversely affect Camber’s results of operations or cause the market price of its stock to decline in value.

 

Securities analyst coverage or lack of coverage may have a negative impact on Camber’s common stock’s market price.

 

The trading market for Camber’s common stock will depend, in part, on the research and reports that securities or industry analysts publish about Camber or its business. Camber does not have any control over these analysts. If securities or industry analysts stop their coverage of Camber or additional securities and industry analysts fail to cover Camber in the future, the trading price for Camber’s common stock would be negatively impacted. If any analyst or analysts who cover Camber downgrade its common stock, change their opinion of its shares or publish inaccurate or unfavorable research about Camber’s business, Camber’s stock price would likely decline. If any analyst or analysts cease coverage of Camber or fails to publish reports on Camber regularly, demand for Camber’s common stock could decrease and it could lose visibility in the financial markets, which could cause its stock price and trading volume to decline.

 

Due to the fact that Camber’s common stock is listed on the NYSE American, it is subject to financial and other reporting and corporate governance requirements which increase its cost and expenses.

 

Camber is currently required to file annual and quarterly information and other reports with the SEC that are specified in Sections 13 and 15(d) of the Exchange Act. Additionally, due to the fact that Camber’s common stock is listed on the NYSE American, it is also subject to the requirements to maintain independent directors, comply with other corporate governance requirements and is required to pay annual listing and stock issuance fees. These obligations require a commitment of additional resources including, but not limited, to additional expenses, and may result in the diversion of Camber’s senior management’s time and attention from its day-to-day operations. These obligations increase its expenses and may make it more complicated or time consuming for it to undertake certain corporate actions due to the fact that it may require the approval of the NYSE American for such transactions and/or NYSE American rules may require Camber to obtain stockholder approval for such transactions.

 

You may experience future dilution as a result of future equity offerings or other equity issuances.

 

Camber may in the future issue additional shares of its common stock or other securities convertible into or exchangeable for its common stock.

 

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If Camber makes any acquisitions or enters into any business combinations in the future, they may disrupt or have a negative impact on Camber’s business.

 

If Camber makes acquisitions or enters into any business combinations in the future, funding permitting, it could have difficulty integrating the acquired companies’ assets, personnel and operations with its own. Additionally, acquisitions, mergers or business combinations it may enter into in the future (other than the merger) could result in a change of control of Camber, and a change in the Board of Directors or officers of Camber. In addition, the key personnel of the acquired business may not be willing to work for the combined company. Camber cannot predict the effect expansion may have on its core business. Regardless of whether Camber is successful in making an acquisition or completing a business combination, the negotiations could disrupt Camber’s ongoing business, distract management and employees and increase expenses. In addition to the risks described above, acquisitions and business combinations are accompanied by a number of inherent risks, including, without limitation, the following:

 

  the difficulty of integrating acquired companies, concepts and operations;
     
  the potential disruption of the ongoing businesses and distraction of Camber’s management and the management of acquired companies;
     
  change in Camber’s business focus and/or management;
     
  difficulties in maintaining uniform standards, controls, procedures and policies;
     
  the potential impairment of relationships with employees and partners as a result of any integration of new management personnel;
     
  the potential inability to manage an increased number of locations and employees;
     
  Camber’s ability to successfully manage the companies and/or concepts acquired;
     
  the failure to realize efficiencies, synergies and cost savings; or
     
  the effect of any government regulations which relate to the business acquired.

 

Camber’s business could be severely impaired if and to the extent that it is unable to succeed in addressing any of these risks or other problems encountered in connection with an acquisition or business combination, many of which cannot be presently identified. These risks and problems could disrupt Camber’s ongoing business, distract its management and employees, increase its expenses and adversely affect its results of operations.

 

Any acquisition or business combination transaction Camber enters into in the future could cause substantial dilution to existing stockholders, result in one party having majority or significant control over Camber or result in a change in business focus of Camber.

 

Risks Relating to Camber’s Series C Preferred Stock

 

The full amount of premiums, interest and dividends through the maturity date of the Series C Preferred Stock is due upon the repayment/redemption (where applicable), or conversion, as applicable, of the Series C Preferred Stock.

 

The Series C Preferred Stock provides that all applicable dividends, which initially accrued in the amount of 24.95% per annum and which increase or decrease subject to the terms of the Series C Preferred Stock, based on among other things, the trading price of Camber’s common stock, up to a maximum of 34.95% per annum, are due upon conversion or repayment/redemption (where applicable) thereof, for the full seven year term of such securities.

 

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The requirement that Camber pay all premiums, interest and dividends through maturity and the adjustable nature of such premium, interest and dividend rates, may force it to issue Discover significant additional shares of common stock, which may cause significant dilution to existing stockholders. The requirement that Camber pay all premiums, interest and dividends through maturity may make it too costly for it to repay or redeem, as applicable, Discover’s securities, prior to conversion thereof, as applicable.

 

The number of shares of common stock issuable in consideration for premiums, interest and dividends through maturity on the Series C Preferred Stock continue to be adjustable after the conversion of such securities.

 

Pursuant to the terms of the Series C Preferred Stock, the conversion rate of such securities in connection with the premiums and dividends due on such securities through maturity (7 years, regardless of when converted), continues to be adjustable after the issuance of such securities. Specifically, such securities remain adjustable, based on a discount to the lowest daily volume weighted average price during a measuring period for a period of 30 or 60 days (depending on whether or not a Triggering Event has occurred) before (provided that the parties have contractually agreed that the Measuring Period for all outstanding shares of Series C Preferred Stock begins on February 3, 2020) after the applicable number of shares stated in the initial conversion notice have actually been received into Discover’s designated brokerage account in electronic form and fully cleared for trading (subject to certain extensions described in the applicable securities). Because Discover is limited to holding not more than 9.99% of Camber’s common stock upon exercise/conversion of any security, Discover will not receive all of the shares due upon any conversion, until it has sold shares and been issued additional shares and as such, the beginning date for the applicable 30 or 60 day period after conversion is impossible to determine and may be a significant additional number of days after the initial conversion by Discover. 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 below $0.6688 per share, regardless of the actual trading price of Camber’s common stock.

 

In the event of a decrease in Camber’s stock price during the applicable measuring periods, the conversion rate of the premiums and dividends due on such applicable securities will adjust downward and Discover will be due additional shares of common stock, which issuances may cause further significant dilution to existing stockholders and the sale of such shares may cause the value of Camber’s common stock to decline in value. Furthermore, it is likely that the sale by Discover of the shares of common stock which Discover receives in connection with any conversion, during the applicable measuring period, will cause the value of Camber’s common stock to decline in value and the conversion rate to decrease and will result in Discover being due additional shares of common stock during the measuring period, which will trigger additional decreases in the value of Camber’s common stock upon further public sales by Discover. If this were to occur, Discover would be entitled to receive an increasing number of shares, upon conversion of the remaining securities, which could then be sold, triggering further price declines and conversions for even larger numbers of shares, which would cause additional dilution to its existing stockholders and would likely cause the value of its common stock to decline.

 

The issuance of common stock upon conversion of the Series C Preferred Stock will cause immediate and substantial dilution.

 

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 its 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 its common stock. Additionally, the continued sale of shares issuable upon successive conversions will likely create significant downward pressure on the price of its common stock as Discover sells material amounts of Camber’s common stock over time and/or in a short period of time. This could place further downward pressure on the price of its 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 its common stock, which could lead to its common stock becoming devalued or worthless.

 

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Discover holds an approximately $76.1 million liquidation preference in Camber.

 

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 Camber, whether voluntary or involuntary, after payment or provision for payment of debts and other liabilities of Camber, prior to any 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 Camber is approximately $76.1 million as of the date of this joint proxy statement/prospectus. As referenced above, this liquidation preference would be payable prior to any amount being distributed to the holders of its common stock. Because Camber’s net assets total significantly less than $76.1 million, it is likely that its common stockholders would not receive any amount in the event Camber was liquidated, dissolved or wound up, and that Discover would instead receive the entire amount of available funds after liquidation.

 

Discover, as holder of Camber’s Series C Preferred Stock, effectively has the ability to consent to any material transaction involving Camber including the merger.

 

Due to the restrictions placed on Camber as a result of the Series C Preferred Stock, including, but not limited to the significant liquidation preference discussed above and the fact that, as long as Discover holds any shares of Series C Preferred Stock, Camber agreed that Camber would not issue or enter into or amend an agreement pursuant to which Camber may issue any shares of common stock, other than (a) for restricted securities with no registration rights, (b) in connection with a strategic acquisition, (c) in an underwritten public offering, or (d) at a fixed price; or issue or amend any debt or equity securities convertible into, exchangeable or exercisable for, or including the right to receive, shares of common stock (i) at a conversion price, exercise price or exchange rate or other price that is based upon or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of the security or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of the security or upon the occurrence of specified or contingent events directly or indirectly related to the business of Camber or the market for the common stock. Discover has to effectively consent to any material transaction involving Camber. In the event Discover does not consent to any such transaction, we may be prohibited (either effectively or otherwise) from completing a material transaction in the future, including, but not limited to a combination or acquisition which may be accretive to stockholders. Furthermore, Discover may condition the approval of a future transaction, which conditions may not be favorable to stockholders. It is contemplated that Discover will be required to consent to the terms of the merger in connection with the completion for the merger, for the merger to close. As such, in the event Discover fails to approve the merger, it is likely the merger won’t be able to move forward and will be terminated.

 

Camber’s Series C Preferred Stock holder, Discover, holds rights of first refusal to provide further funding and favored nation rights.

 

Camber has granted Discover a right of first offer to match any offer for financing Camber receives while the shares of Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement are outstanding, except for debt financings not convertible into common stock, which are excluded from such right to match. Such right of first refusal may delay or prevent Camber from raising funding in the future.

 

Camber also agreed that if it issues any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Discover, then Camber would notify Discover of such additional or more favorable term and such term, at Discover’s option, may become a part of the transaction documents with Discover, including the Series C Preferred Stock and the agreements relating to the sale thereof. Such favored nations provision may make it more costly to complete transactions in the future, may prevent future transactions from occurring and/or may provide Discover additional rights than it currently has, all of which may cause significant dilution to existing stockholders, and/or cause the value of Camber’s, or the combined company’s common stock to decline in value.

 

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Discover, subject to applicable contractual restrictions, and/or a third party, may sell short Camber’s common stock, which could have a depressive effect on the price of its common stock.

 

Discover is currently prohibited from selling Camber’s stock short; however, in the event a trigger event occurs under the Series C Preferred Stock such restriction is waived. Additionally, nothing prohibits a third party from selling Camber’s common stock short based on their belief that due to the dilution caused by the conversions/exercises of the securities held by Discover, that the trading price of Camber’s common stock will decline in value. The significant downward pressure on the price of its common stock as Discover sells material amounts of its common stock could encourage investors to short sell its common stock. This could place further downward pressure on the price of its common stock and in turn result in Discover receiving additional shares of common stock upon exercise/conversion of its securities, and adjustments thereof.

 

The Shares of Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement include the obligation for Camber to redeem such shares under certain circumstances.

 

Camber 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), which date is currently September 30, 2020, but which may be extended until December 31, 2020, in the event that Camber has not fully resolved SEC comments on the Form S-4 or other SEC filings related to the merger, and Camber is responding to such comments in a reasonable fashion, subject to certain exceptions or Camber has resolved such SEC comments and has scheduled a meeting to approve the merger, which meeting will occur after September 30, 2020, and, Camber 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 ($6,930,000), provided that if the merger is terminated, Viking has agreed to pay Camber, a break-up fee equal to (i) 115.5% of the original principal amount of the Secured Notes, minus (ii) the amount due to Camber pursuant to the terms of the Secured Notes upon repayment thereof (the “Additional Payment”), which Additional Payment, if timely paid, should enable Camber to redeem the Series C Preferred Stock required to be redeemed upon termination of the merger. The required redemption of the Series C Preferred Stock, if legally authorized under Nevada law, could reduce the amount of cash Camber has available for working capital and could require Camber to raise additional funding in the future, which funding may not be available on favorable terms, if at all.

 

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 Camber’s stock price declines.

 

As described above, 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 Measuring Period (which the parties have contractually agreed begins on February 3, 2020 for all outstanding shares of Series C Preferred Stock), 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:

 

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$0.05 Discount to Percentage
Discounted VWAP
    $0.10 Discount to Percentage
Discounted VWAP
 
 Percentage
Discounted VWAP
    Conversion
Price*
    Percentage of Discount
($0.05) Compared to
Percentage Discounted VWAP
    Percentage
Discounted VWAP
    Conversion
Price*
    Percentage of Discount
($0.10) Compared to
Percentage Discounted VWAP
 
$ 2.00     $ 1.95       2.5 %   $ 2.00     $ 1.90       5.0 %
$ 1.75     $ 1.70       2.9 %   $ 1.75     $ 1.65       5.7 %
$ 1.50     $ 1.45       3.3 %   $ 1.50     $ 1.40       6.7 %
$ 1.25     $ 1.20       4.0 %   $ 1.25     $ 1.15       8.0 %
$ 1.00     $ 0.95       5.0 %   $ 1.00     $ 0.90       10.0 %
$ 0.75     $ 0.70       6.7 %   $ 0.75     $ 0.65       13.3 %
$ 0.50     $ 0.45       10.0 %   $ 0.50     $ 0.40       20.0 %
$ 0.25     $ 0.20       20.0 %   $ 0.25     $ 0.15       40.0 %
$ 0.10     $ 0.05       50.0 %   $ 0.10     $ 0.001       99.0 %
$ 0.05     $ 0.001       98.0 %   $ 0.05     $ 0.001       98.0 %

 

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

 

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 0, 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 below $0.6688 per share, regardless of the actual trading price of Camber’s common stock.

 

The effects of the Fixed Conversion Discounts will be further exacerbated in the event of a reverse stock split of Camber’s outstanding common stock. For example, if in the future Camber completes a 1-for-25 reverse stock split of Camber’s outstanding shares of common stock, the $0.05/$0.10 Fixed Conversion Discounts will be automatically adjusted to equal a fixed conversion discount to the Percentage Discounted VWAP of $1.25/$2.50 per share, which will likely result in a conversion price significantly below such values, and any decrease in the Percentage Discounted VWAP below $1.25/$2.50 per share, will result in a conversion price of the Series C Preferred Stock of $0.001 per share.

 

General Business and Other Risks Relating to Viking and its Securities

 

Viking has not established an effective system of internal control over its financial reporting, and if Viking fails to maintain such internal control, it may not be able to accurately report its financial results, and current and potential stockholders may lose confidence in Camber’s, Viking’s and the combined company’s financial reporting.

 

Viking has not established and maintained adequate and effective internal control over financial reporting that would provide reasonable assurance regarding the reliability of its financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Viking is, however, required to evaluate the effectiveness of its internal controls and to disclose any changes and material weaknesses in those internal controls.

 

Any failure to maintain adequate internal controls could adversely impact Camber’s, Viking’s and the combined company’s ability to report its financial results on a timely and accurate basis. If Camber’s, Viking’s and the combined company’s financial statements are not accurate, investors may not have a complete understanding of its operations. Likewise, if Camber’s, Viking’s and the combined company’s financial statements are not filed on a timely basis as required by the SEC, Viking could face severe consequences from those authorities. In either case, there could result a material adverse effect on Camber’s, Viking’s and the combined company’s business. Ineffective internal controls could also cause investors to lose confidence in Camber’s, Viking’s and the combined company’s reported financial information, which could have a negative effect on the trading price of Camber’s, Viking’s and the combined company’s stock.

 

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Viking currently has outstanding indebtedness, and it may incur additional indebtedness which could reduce its financial flexibility, increase interest expense and adversely impact its operations in the future.

 

Viking currently has outstanding indebtedness, and, in the future, it may incur significant amounts of additional indebtedness in order to continue operations, make acquisitions or to develop properties. Camber’s, Viking’s and the combined company’s level of indebtedness could affect its operations in several ways, including the following:

 

  a significant portion of its cash flows could be used to service its indebtedness;
     
  a high level of debt would increase its vulnerability to general adverse economic and industry conditions;
     
  any covenants contained in the agreements governing its outstanding indebtedness could limit its ability to borrow additional funds, dispose of assets, pay dividends and make certain investments;
     
  a high level of debt may place it at a competitive disadvantage compared to its competitors that are less leveraged and, therefore, may be able to take advantage of opportunities that its indebtedness may prevent it from pursuing; and
     
  debt covenants to which it may agree may affect its flexibility in planning for, and reacting to, changes in the economy and in its industry.

 

A high level of indebtedness increases the risk that Viking may default on its debt obligations. Viking may not be able to generate sufficient cash flows to pay the principal or interest on its debt, and future working capital, borrowings or equity financing may not be available to pay or refinance such debt. If it does not have sufficient funds and is otherwise unable to arrange financing, Viking may have to sell significant assets or have a portion of its assets foreclosed upon which could have a material adverse effect on its business, financial condition and results of operations.

 

As of June 30, 2020, Viking has a working capital deficiency in excess of $62,000,000, with current liabilities including (i) promissory notes maturing on August 31, 2020, and December 31, 2020, in the aggregate principal amount of approximately $6.5 million, (ii) a revolving credit facility with a balance of $7,090,000 due in May of 2021, (iii) a note payable of approximately $15.5 million due in June of 2021, (iv) a term loan agreement of approximately $31.7 million, and (iv) other debt obligations requiring principal payments of approximately $2 million in 2020.

 

Viking currently has limited available funds, and as of June 30, 2020, it has a working capital deficiency in excess of $62,000,000, with current liabilities including (i) promissory notes maturing on August 31, 2020, and December 31, 2020, in the aggregate principal amount of approximately $6.5 million, (ii) a revolving credit facility with a balance of $7,090,000 due in May of 2021, (iii) a note payable of approximately $15.5 million due in June of 2021, (iv) a term loan agreement of approximately $31.7 million, and (iv) other debt obligations requiring principal payments of approximately $2 million in 2020. If Viking is not able to raise additional capital on terms agreeable to Viking, and if cash flows from operations are not sufficient to satisfy Viking’s repayment obligations under the notes maturing August 31, 2020, and December 31, 2020, Viking may default under the notes maturing then, and Viking’s operations would then be materially and adversely affected. Similarly, if Viking is not able to raise additional capital or generate sufficient cash flows to service Viking’s other debt obligations, Viking may default under those debt obligations, and Viking’s operations would then be materially and adversely affected. There is no assurance that funds will be available from any source within the time required, or, if available, that funds can be obtained on terms acceptable to Viking.

 

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Viking stockholders may be diluted significantly through Viking’s efforts to obtain financing and/or satisfy obligations through the issuance of additional shares of Viking’s common stock, promissory notes which may be convertible into shares of Viking common stock, or warrants to purchase shares of Viking common stock.

 

When possible, Viking will attempt to use non-cash consideration to satisfy obligations. In many instances, Viking believes that such non-cash consideration will consist of shares of its common stock. Additionally, in connection with obtaining financing, Viking may issue (i) shares of its common stock to investors, (ii) debt instruments which are partially or wholly convertible into shares of Viking’s common stock, and (iii) warrants to purchase shares of Viking common stock. Viking’s Board of Directors has authority, without action or vote of Viking’s stockholders, to issue all or part of Viking’s authorized but unissued shares of common stock. These actions will result in dilution of the ownership interests of existing stockholders, and that dilution may be material. Additionally, any issuances of equity prior to the closing of the merger will reduce (as a result of the exchange ratio) the number of shares of Camber common stock which Viking stockholders would otherwise receive as part of the merger. Such dilution and adjustment to the exchange ratio will not be known until after Viking stockholders have approved the merger.

 

Viking’s common stock may be subject to additional regulations as a “penny stock.”

 

Viking's common stock may be subject to an SEC rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase "accredited investors" means, in general terms, institutions with assets in excess of $5,000,000, or individuals having a net worth, or joint net worth with spouse, in excess of $1,000,000 excluding the value of the person's primary residence or having an annual income that exceeds $200,000 (or that, when combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of broker-dealers to sell Viking's securities and also may affect the ability of purchasers in an offering to sell their securities in any market that might develop.

 

In addition, the SEC has adopted a number of rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act. Because the securities of Viking may constitute "penny stocks" within the meaning of the rules, the rules would apply to Viking and to its securities. The rules may further affect the ability of owners of shares to sell the securities of Viking in any market that might develop for them.

 

Stockholders should be aware that, according to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) "boiler room" practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.

 

Viking is substantially dependent on its Chief Executive Officer, James A. Doris, who has not entered into an employment contract with Viking.

 

Viking does not currently have an employment agreement with its Chief Executive Officer, President and Director, James A. Doris. As a result, there is no assurance that Mr. Doris will continue to be associated with Viking in the future. In connection with future business opportunities, it is possible that Mr. Doris may resign as an officer and director of Viking. Any decision to resign would occur without the vote or consent of the stockholders of Viking.

 

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Viking is required to indemnify its officers and directors.

 

Nevada law provides for the indemnification of Viking’s directors, officers, employees, and agents, under certain circumstances, against attorney’s fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of Viking. If Viking were called upon to indemnify an officer or director, then the portion of its available funds expended for such purpose would reduce the amount otherwise available for Viking’s business operations. This indemnification obligation and the resultant costs associated with indemnification may also discourage Viking from bringing a lawsuit against directors and officers for breaches of their fiduciary duties and may similarly discourage the filing of derivative litigation by Viking’s stockholders against Viking’s directors and officers even though such actions, if successful, might otherwise benefit the company and stockholders.

 

Viking would bear the expenses of such litigation for any of its directors, officers, employees, or agents, upon such person’s promise to repay Viking if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by Viking which it may be unable to recoup.

 

Viking is dependent upon outside advisors.

 

To supplement Viking’s officers, directors and employees, Viking may engage accountants, technical experts, appraisers, attorneys, or other outside consultants or advisors on an “independent contractor” basis rather than as employees. The selection of any such advisors would likely be made by Viking without any input from its stockholders. Furthermore, it is anticipated that such persons may be engaged on an “as needed” basis without a continuing fiduciary, employment or similar obligation to Viking.

 

Viking does not anticipate paying any cash dividends to its common stockholders.

 

Viking does not anticipate that it will pay dividends on any of its common stock in the foreseeable future. If payment of dividends does occur at some point in the future, it would be contingent upon revenues and earnings, if any, capital requirements, and the company’s general financial condition. The payment of any common stock dividends will be within the discretion of Viking’s Board of Directors. Viking presently intend to deploy available capital to pay its obligations as they come due and to execute its business and operational plans; accordingly, Viking does not anticipate the declaration of any dividends for common stock in the foreseeable future.

 

The outbreak of the coronavirus may negatively impact demand for oil and natural gas and Viking’s business, results of operations and financial condition.

 

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which spread in China and is continuing to spread throughout the United States and other parts of the world. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic”. The significant outbreak of COVID-19 has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide, has adversely affected the demand for oil and natural gas, has already adversely affected the realized prices for Viking’s oil and gas, and Viking’s business, results of operations and financial conditions, and may continue to do so in the future.

 

The ultimate extent of the impact of any epidemic, pandemic or other health crisis on demand for oil and natural gas and Viking’s business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the epidemic, pandemic or other health crisis and actions taken to contain or prevent their further spread, among others. These and other potential impacts of an epidemic, pandemic or other health crisis, such as COVID-19, could therefore continue to materially and adversely affect demand for oil and natural gas and Viking’s business, financial condition and results of operations.

 

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General Risks Relating to Camber’s, Viking’s and the Combined Company’s Oil and Gas Operations and the Industry in General

 

Oil and gas price fluctuations in the market may adversely affect the results of Camber’s, Viking’s and the combined company’s operations.

 

Camber’s, Viking’s and the combined company’s profitability, cash flows and the carrying value of their oil and natural gas properties are highly dependent upon the market prices of oil and natural gas. A significant portion of Camber’s, Viking’s and the combined company’s sales of oil and natural gas, if any, are made in the spot market, or pursuant to contracts based on spot market prices, and not pursuant to long-term, fixed-price contracts. Accordingly, the prices received for Camber’s, Viking’s and the combined company’s oil and natural gas production are dependent upon numerous factors beyond their control. These factors include the level of consumer product demand, governmental regulations and taxes, the price and availability of alternative fuels, the level of foreign imports of oil and natural gas and the overall economic environment.

 

Historically, the oil and natural gas markets have proven cyclical and volatile as a result of factors that are beyond Camber’s, Viking’s and the combined company’s control. Any additional declines in oil and natural gas prices or any other unfavorable market conditions could have a material adverse effect on Camber’s, Viking’s and the combined company’s financial condition.

 

Actual quantities of recoverable oil and gas reserves and future cash flows from those reserves most likely will vary from Camber’s, Viking’s and the combined company’s estimates.

 

Estimating accumulations of oil and gas is complex. The process relies on interpretations of available geological, geophysical, engineering and production data. The extent, quality and reliability of this data can vary. The process also requires certain economic assumptions, some of which are mandated by the SEC, such as oil and gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The accuracy of a reserve estimate is a function of:

 

  the quality and quantity of available data;
  the interpretation of that data;
  the accuracy of various mandated economic assumptions; and
  the judgment of the persons preparing the estimate.

 

Estimates of proved reserves prepared by others might differ materially from Camber’s, Viking’s and the combined company’s estimates. Actual quantities of recoverable oil and gas reserves, future production, oil and gas prices, revenues, taxes, development expenditures and operating expenses most likely will vary from Camber’s, Viking’s and the combined company’s estimates. Any significant variance could materially affect the quantities and net present value of Camber’s, Viking’s and the combined company’s reserves. In addition, Camber, Viking and the combined company may adjust estimates of proved reserves to reflect production history, results of exploration and development and prevailing oil and gas prices. Camber’s, Viking’s and the combined company’s reserves also may be susceptible to drainage by operators on adjacent properties.

 

Camber’s, Viking’s and the combined company’s operations will require significant expenditures of capital that may not be recovered.

 

Camber, Viking and the combined company require significant expenditures of capital to locate and develop producing properties and to drill exploratory and exploitation wells. In conducting exploration, exploitation and development activities for a particular well, the presence of unanticipated pressure or irregularities in formations, miscalculations or accidents may cause Camber’s, Viking’s and the combined company’s exploration, exploitation, development and production activities to be unsuccessful, potentially resulting in abandonment of the well. This could result in a total loss of Camber’s, Viking’s and the combined company’s investment. In addition, the cost and timing of drilling, completing and operating wells is difficult to predict.

 

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Compliance with, or breach of, environmental laws can be costly and could limit Camber’s, Viking’s and the combined company’s operations.

 

Camber’s, Viking’s and the combined company’s operations are subject to numerous and frequently changing laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Any properties Camber, Viking and the combined company own for the exploration and production of oil and gas and the wastes disposed on these properties may be subject to the Comprehensive Environmental Response, Compensation and Liability Act, the Oil Pollution Act of 1990, the Resource Conservation and Recovery Act, the Federal Water Pollution Control Act, and similar state laws. Under such laws, Camber, Viking and the combined company could be required to remove or remediate previously released wastes or property contamination. Laws and regulations protecting the environment have generally become more stringent and may, in some cases, impose "strict liability" for environmental damage. Strict liability means that Camber, Viking and the combined company may be held liable for damage without regard to whether Camber, Viking and the combined company were negligent or otherwise at fault. Environmental laws and regulations may expose Camber, Viking and the combined company to liability for the conduct of or conditions caused by others or for acts that were in compliance with all applicable laws at the time they were performed. Failure to comply with these laws and regulations may result in the imposition of administrative, civil and criminal penalties.

 

Although Camber, Viking and the combined company believe that their operations are in substantial compliance with existing requirements of governmental bodies, Camber’s, Viking’s and the combined company’s ability to conduct continued operations are subject to satisfying applicable regulatory and permitting controls. Camber’s, Viking’s and the combined company’s current permits and authorizations and ability to get future permits and authorizations may be susceptible on a go-forward basis to increased scrutiny, greater complexity resulting in increased costs, or delays in receiving appropriate authorizations.

 

Camber, Viking and the combined company are subject to other changing laws and regulations and other governmental actions that can significantly and adversely affect Camber’s, Viking’s and the combined company’s business.

 

Federal, state, local, territorial and foreign laws and regulations relating to tax increases and retroactive tax claims, disallowance of tax credits and deductions, expropriation or nationalization of property, mandatory government participation, cancellation or amendment of contract rights, and changes in import and export regulations, limitations on access to exploration and development opportunities, as well as other political developments may adversely affect Camber’s, Viking’s and the combined company’s operations. 

 

Downturns and volatility in global economies and commodity and credit markets may materially adversely affect Camber’s, Viking’s and the combined company’s business, results of operations and financial condition.

 

Camber’s, Viking’s and the combined company’s results of operations are materially adversely affected by the conditions of the global economies and the credit, commodities and stock markets. Among other things, Camber and Viking have recently been adversely impacted, and anticipate to continue to be adversely impacted, due to a global reduction in consumer demand for oil and gas, and consumer lack of access to sufficient capital to continue to operate their businesses or to operate them at prior levels. In addition, a decline in consumer confidence or changing patterns in the availability and use of disposable income by consumers can negatively affect the demand for oil and gas and as a result Camber’s, Viking’s and the combined company’s results of operations.

 

Camber, Viking and the combined company may be forced to write-down material portions of their assets if low oil prices continue.

 

The recent COVID-19 outbreak has led to low oil prices. A continued period of low prices may force Camber, Viking and the combined company to incur material write-downs of their oil and natural gas properties, which could have a material effect on the value of their properties, and cause the value of their securities to decline in value.

 

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The oil and gas Camber, Viking and the combined company produce may not be readily marketable at the time of production.

 

Crude oil, natural gas, condensate and other oil and gas products are generally sold to other oil and gas companies, government agencies and other industries. The availability of ready markets for oil and gas that Camber, Viking and the combined company produce and the prices obtained for such oil and gas depend on many factors beyond Camber’s, Viking’s and the combined company’s control, including:

 

  the extent of local production and imports of oil and gas,
  the proximity and capacity of pipelines and other transportation facilities,
  fluctuating demand for oil and gas,
  the marketing of competitive fuels, and
  the effects of governmental regulation of oil and gas production and sales.

 

Natural gas associated with oil production is often not marketable due to demand or transportation limitations and is often flared at the producing well site. Pipeline facilities do not exist in some of Camber’s, Viking’s and the combined company’s areas of exploration and, therefore, Camber, Viking and the combined company intend on utilizing trucks to transport certain of the oil that is discovered to other markets.

 

The price of oil and natural gas has historically been volatile and recently has declined significantly. If prices were to stay depressed or further decrease, Camber’s, Viking’s and the combined company’s projections, budgets and revenues would be adversely affected, potentially forcing Camber, Viking and the combined company to make changes in their operations.

 

Camber’s, Viking’s and the combined company’s future financial condition, results of operations and the carrying value of any oil and natural gas interests Camber, Viking and the combined company acquires will depend primarily upon the prices paid for oil and natural gas production. Oil and natural gas prices historically have been volatile, during calendar 2020 have significantly decreased, and likely will continue to be volatile in the future, especially given current world geopolitical and pandemic conditions. Camber’s, Viking’s and the combined company’s cash flows from operations are highly dependent on the prices that Camber, Viking and the combined company receives for oil and natural gas. This price volatility also affects the amount of Camber’s, Viking’s and the combined company’s cash flows available for capital expenditures and Camber’s, Viking’s and the combined company’s ability to borrow money or raise additional capital. The prices for oil and natural gas are subject to a variety of additional factors that are beyond Camber’s, Viking’s and the combined company’s control. These factors include:

 

  the level of consumer demand for oil and natural gas;
  the domestic and foreign supply of oil and natural gas;
  the ability of the members of the Organization of Petroleum Exporting Countries ("OPEC") to agree to and maintain oil price and production controls;
  the price of foreign oil and natural gas;
  domestic governmental regulations and taxes;
  the price and availability of alternative fuel sources;
  weather conditions;
  market uncertainty due to political conditions in oil and natural gas producing regions, including Russia and the Middle East; and
  worldwide economic conditions.

 

These factors as well as the volatility of the energy markets generally make it extremely difficult to predict future oil and natural gas price movements with any certainty. Declines in oil and natural gas prices adversely affect Camber’s, Viking’s and the combined company’s revenues and could reduce the amount of oil and natural gas that Viking can produce economically. Accordingly, such declines could have a material adverse effect on Camber’s, Viking’s and the combined company’s financial condition, results of operations, oil and natural gas reserves and the carrying values of Camber’s, Viking’s and the combined company’s oil and natural gas properties. If the oil and natural gas industry continues to experience significant price declines or if recent price declines do not recover, Camber, Viking and the combined company may be unable to make planned expenditures, among other things. If this were to happen, Camber, Viking and the combined company may be forced to abandon or curtail their business operations, which would cause the value of an investment in Camber, Viking and the combined company to decline in value or become worthless.   

 

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Because of the inherent dangers involved in oil and gas operations, there is a risk that Camber, Viking and the combined company may incur liability or damages as they conduct their business operations, which could force Camber, Viking and the combined company to expend a substantial amount of money in connection with litigation and/or a settlement.

 

The oil and natural gas business involves a variety of operating hazards and risks such as well blowouts, pipe failures, casing collapse, explosions, uncontrollable flows of oil, natural gas or well fluids, fires, spills, pollution, releases of toxic gas and other environmental hazards and risks. These hazards and risks could result in substantial losses to Camber, Viking and the combined company from, among other things, injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, cleanup responsibilities, regulatory investigation and penalties and suspension of operations. In addition, Camber, Viking or the combined company may be liable for environmental damages caused by previous owners of property purchased and leased by Camber, Viking and the combined company. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could reduce or eliminate the funds available for exploration, development or acquisitions or result in the loss of Camber’s, Viking’s and the combined company’s properties and/or force Camber, Viking and the combined company to expend substantial monies in connection with litigation or settlements. Camber, Viking and the combined company currently have no insurance to cover such losses and liabilities, and even if insurance is obtained, there can be no assurance that it will be adequate to cover any losses or liabilities. Camber, Viking and the combined company cannot predict the availability of insurance or the availability of insurance at premium levels that justify Camber’s, Viking’s and the combined company’s purchase. The occurrence of a significant event not fully insured or indemnified against could materially and adversely affect Camber’s, Viking’s and the combined company’s financial condition and operations. Camber, Viking and the combined company may elect to self-insure if management believes that the cost of insurance, although available, is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. The occurrence of an event not fully covered by insurance could have a material adverse effect on Camber’s, Viking’s and the combined company’s financial condition and results of operations, which could lead to any investment in Camber, Viking or the combined company becoming worthless.

 

Camber, Viking or the combined company may encounter operating hazards that may result in substantial losses.

 

Camber, Viking and the combined company will be subject to operating hazards normally associated with the exploration and production of oil and gas, including hurricanes, blowouts, explosions, oil spills, cratering, pollution, earthquakes, pandemics, labor disruptions and fires. The occurrence of any such operating hazards could result in substantial losses to Camber, Viking or the combined company due to injury or loss of life and damage to or destruction of oil and gas wells, formations, production facilities or other properties. Camber, Viking and the combined company do not maintain insurance coverage for some matters that may adversely affect their operations, including war, terrorism, pandemics, nuclear reactions, government fines, treatment of waste, blowout expenses, earthquake damage, wind damage and business interruptions. Losses and liabilities arising from uninsured or underinsured events could reduce Camber’s, Viking’s or the combined company’s revenues or increase their costs. There can be no assurance that any insurance Camber, Viking or the combined company do obtain will be adequate to cover losses or liabilities associated with operational hazards. Camber, Viking and the combined company cannot predict the continued availability of insurance, or its availability at premium levels that justify its purchase.

 

Camber, Viking and the combined company face strong competition from larger oil and gas companies, which could result in adverse effects on Camber’s, Viking’s and the combined company’s business.

 

The petroleum exploration and production business is highly competitive. Many of Camber’s, Viking’s and the combined company’s competitors have substantially larger financial resources, staffs and facilities. Camber’s, Viking’s and the combined company’s competitors in the United States include numerous major oil and gas exploration and production companies. Additionally, other oil and gas companies may compete with Camber, Viking and the combined company from time to time in obtaining capital from investors. Competitors include larger companies which, in particular, may have access to greater resources, may be more successful in the recruitment and retention of qualified employees and may conduct their own refining and petroleum marketing operations, which may give them a competitive advantage. Actual or potential competitors may be strengthened through the acquisition of additional assets and interests. Additionally, there are numerous companies focusing their resources on creating fuels and/or materials which serve the same purpose as oil and gas but are manufactured from renewable resources.

 

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Camber’s, Viking’s and the combined company’s estimates of the volume of reserves could have flaws, or such reserves could turn out not to be commercially extractable; and as a result, future estimates of revenues and other projections could be incorrect.

 

Estimates of reserves and of future net revenues prepared by different petroleum engineers may vary substantially depending, in part, on the assumptions made and may be subject to adjustment either up or down in the future. Camber’s, Viking’s and the combined company’s actual amounts of production, revenue, taxes, development expenditures, operating expenses, and quantities of recoverable oil and gas reserves may vary substantially from the estimates. Oil and gas reserve estimates are necessarily inexact and involve matters of subjective engineering judgment. In addition, any estimates of Camber’s, Viking’s and the combined company’s future net revenues and the present value thereof are based on assumptions derived in part from historical price and cost information, which may not reflect current and future values, and/or other assumptions made by Camber, Viking and the combined company that only represent their best estimates. If these estimates of quantities, prices and costs prove inaccurate, Camber, Viking and the combined company may be unsuccessful in expanding their oil and gas reserves base with its acquisitions. Additionally, if declines in and instability of oil and gas prices occur, then write downs in the capitalized costs associated with any oil and gas assets Camber, Viking or the combined company acquire may be required. Because of the nature of the estimates of Camber’s, Viking’s and the combined company’s reserves and estimates in general, Camber, Viking and the combined company can provide no assurance that reductions to their estimated proved oil and gas reserves and estimated future net revenues will not be required in the future, and/or that their estimated reserves will be present and/or commercially extractable. If Camber’s, Viking’s or the combined company’s reserve estimates are incorrect, the value of Camber, Viking and/or the combined company common stock could decrease, and they may be forced to write down the capitalized costs of their oil and gas properties.

 

Camber’s, Viking’s and the combined company’s business will suffer if they cannot obtain or maintain necessary licenses.

 

Camber’s, Viking’s and the combined company’s operations will require licenses, permits and in some cases renewals of licenses and permits from various governmental authorities. Camber’s, Viking’s and the combined company’s, and its operators’, ability to obtain, sustain or renew such licenses and permits on acceptable terms is subject to change in regulations and policies and to the discretion of the applicable governments, among other factors. Inability to obtain, or loss of or denial of extension of, any of these licenses or permits could hamper Camber’s, Viking’s and the combined company’s ability to produce oil and gas and generate revenues from operations.

 

Camber’s, Viking’s and the combined company’s operations may be subject to various litigation matters in the future that could have an adverse effect on their business.

 

From time to time, Camber, Viking and the combined company may become a defendant in various litigation matters. The nature of Camber’s, Viking’s and the combined company’s oil and gas operations exposes them to further possible litigation claims, including litigation relating to climate change in the future. There is risk that any matter in litigation could be adversely decided against Camber, Viking or the combined company regardless of their belief, opinion and position, which could have a material adverse effect on Camber’s, Viking’s and the combined company’s financial condition and results of operations. Litigation is highly costly, and the costs associated with defending litigation could also have a material adverse effect on Camber’s, Viking’s and the combined company’s financial condition.

 

Camber, Viking and the combined company may be affected by global climate change or by legal, regulatory, or market responses to such change.

 

The growing political and scientific sentiment is that increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere are influencing global weather patterns. Changing weather patterns, along with the increased frequency or duration of extreme weather conditions, could impact the availability or increase the cost to produce Camber’s, Viking’s and the combined company’s products. Additionally, the sale of Camber’s, Viking’s and the combined company’s products may be impacted by weather conditions.

 

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Concern over climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting greenhouse gas emissions. For example, proposals that would impose mandatory requirements on greenhouse gas emissions continue to be considered by policy makers in states and jurisdictions where Camber, Viking and the combined company operate. Laws enacted that directly or indirectly affect Camber’s, Viking’s and the combined company’s oil and gas production could impact Camber’s, Viking’s and the combined company’s business and financial results.

 

If oil or natural gas prices decrease or drilling efforts are unsuccessful, Camber, Viking and the combined company may be required to record write-downs of their oil and natural gas properties.

 

Camber, Viking and the combined company could be required to write-down the carrying value of certain of their oil and natural gas properties. Write-downs may occur when oil and natural gas prices are low, or if Camber, Viking or the combined company have downward adjustments to their estimated proved reserves, increases in their estimates of operating or development costs, deterioration in drilling results or mechanical problems with wells where the cost to re-drill or repair is not supported by the expected economics.

 

Accounting rules require that the carrying value of oil and natural gas properties be periodically reviewed for possible impairment. Under the full cost method of accounting, capitalized oil and natural gas property costs less accumulated depletion, net of deferred income taxes, may not exceed a ceiling amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil and natural gas reserves plus the cost of unproved properties not subject to amortization (without regard to estimates of fair value), or estimated fair value, if lower, of unproved properties that are subject to amortization. Should capitalized costs exceed this ceiling, which is tested on a quarterly basis, an impairment is recognized. An impairment charge would reflect Camber’s, Viking’s and the combined company’s long-term ability to recover an investment, reduce Camber’s, Viking’s and the combined company’s reported earnings and increase their leverage ratios.

 

Camber’s, Viking’s and the combined company’s future success depends on their ability to replace reserves that are produced.

 

Because the rate of production from oil and natural gas properties generally declines as reserves are depleted, Camber’s, Viking’s and the combined company’s future success depends upon their ability to economically find or acquire and produce additional oil and natural gas reserves. Except to the extent that Camber, Viking or the combined company acquires additional properties containing proved reserves, conducts successful exploration and development activities, or, through engineering studies, identifies additional behind-pipe zones or secondary recovery reserves, Camber’s, Viking’s and the combined company’s proved reserves will decline as such reserves are produced. Future oil and natural gas production, therefore, is highly dependent upon Camber’s, Viking’s and the combined company’s level of success in acquiring or finding additional reserves that are economically recoverable. Camber, Viking and the combined company cannot provide any assurance that they will be able to find or acquire and develop additional reserves at an acceptable cost.

 

Camber, Viking and the combined company may acquire significant amounts of unproved property to further their development efforts. Development and exploratory drilling and production activities are subject to many risks, including the risk that no commercially productive reservoirs will be discovered. Camber, Viking and the combined company may acquire both proved and producing properties as well as undeveloped acreage that they believe will enhance growth potential and increase earnings over time. However, Camber, Viking and the combined company cannot provide any assurance that these properties will contain economically viable reserves or that Camber, Viking or the combined company will not abandon their investments. Additionally, Camber, Viking and the combined company cannot provide any assurance that unproved reserves or undeveloped acreage that they acquire will be profitably developed, that new wells drilled on their properties will be productive or that they will recover all or any portion of their investments in their properties and reserves.

 

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Camber’s, Viking’s and the combined company’s lack of industry and geographical diversification may increase the risks to their operations.

 

Viking operates in the oil and gas sector, and its leases are located, in the United States in Kansas, Missouri, Texas, Louisiana, and Mississippi. Camber operates in the oil and gas sector, and its leases are located in Texas. The combined company will include the leases and operations of Viking and Camber. This lack of geographic diversification may make Camber’s, Viking’s and the combined company’s operations more sensitive to economic developments within a regional area, which may result in reduced rates of return or higher rates of default than might be incurred with a company that is more geographically diverse.

 

Camber’s, Viking’s and the combined company’s business depends on oil and natural gas transportation and processing facilities and other assets that are owned by third parties.

 

The marketability of Camber’s, Viking’s and the combined company’s oil and natural gas depends in part on the availability, proximity and capacity of pipeline systems, processing facilities, oil trucking fleets and rail transportation assets owned by third parties. The lack of available capacity on these systems and facilities, whether as a result of proration, physical damage, scheduled maintenance or other reasons, could result in the delay or discontinuance of development plans for Camber’s, Viking’s and the combined company’s properties. The curtailments arising from these and similar circumstances may last from a few days to several months.

 

Viking’s and the combined company’s leasehold acreage is subject to leases that will expire over the next several years unless production is established or maintained or the leases are extended.

 

Some of Viking’s and the combined company’s leasehold acreage is currently held by production or held by operations or is otherwise dependent on production commencing or being established. Unless production in paying quantities is established or operations are commenced on units containing these latter leases during their terms, those leases may expire. Likewise, if Viking or the combined company are unable to maintain production on acreage held by production or operations, those leases may expire. If Viking’s and the combined company’s leases expire and they are unable to renew the leases, Viking and the combined company will lose their right to develop or utilize the related properties, and Viking’s and the combined company’s operations would be harmed.

 

Deficiencies of title to leased interests could significantly affect Camber’s, Viking’s and the combined company’s financial condition.

 

Camber, Viking and the combined company or their contractual counterparties often incur the expense of a title examination prior to acquiring oil and natural gas leases or undivided interests in oil and natural gas leases or other developed rights. If an examination of the title history of a property reveals that an oil or natural gas lease or other developed rights have been purchased in error from a person who is not the owner of the mineral interest desired, Camber’s, Viking’s and the combined company’s interest would substantially decline in value or be eliminated. In such cases, the amount paid for the oil or natural gas lease or leases or other developed rights at issue may be lost.

 

Because of the inherent dangers involved in oil and gas exploration, there is a risk that Camber, Viking and the combined company incur certain costs to comply with government regulations, particularly regulations relating to environmental protection and safety, and could incur even greater costs in the future.

 

Camber’s and Viking’s operations are regulated extensively at the federal, state and local levels and are subject to interruption or termination by governmental and regulatory authorities based on environmental or other considerations. Moreover, Camber and Viking have incurred and (together with the combined company) will continue to incur costs in its efforts to comply with the requirements of environmental, safety and other regulations. Further, the regulatory environment in the oil and natural gas industry could change in ways that Camber, Viking and the combined company cannot predict and that might substantially increase their costs of compliance and, in turn, materially and adversely affect their business, results of operations and financial condition.

 

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Specifically, as an owner or lessee and operator of crude oil and natural gas properties, Camber, Viking and the combined company are subject to various federal, state, local and foreign regulations relating to the discharge of materials into, and the protection of, the environment. These regulations may, among other things, impose liability on it for the cost of pollution cleanup resulting from operations, subject Camber, Viking and the combined company to liability for pollution damages and require suspension or cessation of operations in affected areas. Moreover, Camber, Viking and the combined company are subject to the United States Environmental Protection Agency (“EPA”) rule requiring annual reporting of greenhouse gas (“GHG”) emissions. Changes in, or additions to, these regulations could lead to increased operating and compliance costs and, in turn, materially and adversely affect Camber’s, Viking’s and the combined company’s business, results of operations and financial condition.

 

Camber, Viking and the combined company are aware of the increasing focus of local, state, national and international regulatory bodies on GHG emissions and climate change issues. In addition to the U.S. EPA’s rule requiring annual reporting of GHG emissions, Camber, Viking and the combined company are also aware of legislation proposed by U.S. lawmakers to reduce GHG emissions.

 

Additionally, there have been various proposals to regulate hydraulic fracturing at the federal level, including possible regulations limiting the ability to dispose of produced waters. Currently, the regulation of hydraulic fracturing is primarily conducted at the state level through permitting and other compliance requirements. Any new federal regulations that may be imposed on hydraulic fracturing could result in additional permitting and disclosure requirements (such as the reporting and public disclosure of the chemical additives used in the fracturing process) and in additional operating restrictions. In addition to the possible federal regulation of hydraulic fracturing, some states and local governments have considered imposing various conditions and restrictions on drilling and completion operations, including requirements regarding casing and cementing of wells, testing of nearby water wells, restrictions on the access to and usage of water and restrictions on the type of chemical additives that may be used in hydraulic fracturing operations. Such federal and state permitting and disclosure requirements and operating restrictions and conditions could lead to operational delays and increased operating and compliance costs and, moreover, could delay or effectively prevent the development of crude oil and natural gas from formations which would not be economically viable without the use of hydraulic fracturing.

 

Camber, Viking and the combined company will continue to monitor and assess any new policies, legislation, regulations and treaties in the areas where they operate to determine the impact on their operations and take appropriate actions, where necessary. Camber, Viking and the combined company are unable to predict the timing, scope and effect of any currently proposed or future laws, regulations or treaties, but the direct and indirect costs of such laws, regulations and treaties (if enacted) could materially and adversely affect their business, results of operations and financial condition.

 

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 Camber’s, Viking’s and the combined company’s business, financial condition and results of operations which may adversely affect such entities’ ability to meet their capital expenditure obligations or targets and financial commitments.

 

The price Camber, Viking and the combined company receives for oil, natural gas and NGLs, heavily influences their revenue, profitability, cash flows, liquidity, access to capital, present value and quality of reserves, the nature and scale of their 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, Camber’s 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 over $40 per barrel prior to the filing of this joint proxy statement/prospectus. 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 Camber’s, Viking’s and the combined company’s business, financial condition and liquidity and their 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 Camber’s, Viking’s and the combined company’s stock price and indebtedness. Additionally, lower oil and natural gas prices have, and may in the future, cause, a decline in Camber’s, Viking’s or the combined company’s stock price. During the 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 six months ended June 30, 2020, the daily NYMEX WTI oil spot price ranged from a high of $63.27 per Bbl to a low of $(37.63) per Bbl in April 2020 and the NYMEX natural gas Henry Hub spot price ranged from a high of $2.03 per MMBtu to a low of $1.42 per MMBtu.

 

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Camber’s, Viking’s and the combined company’s oil and gas operations are substantially dependent on the availability of water. Restrictions on their ability to obtain water may have an adverse effect on their financial condition, results of operations and cash flows.

 

Water is an essential component of deep shale oil and natural gas production during both the drilling and hydraulic fracturing, or fracking processes. Camber’s, Viking’s and the combined company’s oil and gas operations and future operations could be adversely impacted if they are unable to locate sufficient amounts of water or dispose of or recycle water used in its exploration and production operations. Currently, the quantity of water required in certain completion operations, such as hydraulic fracturing, and changing regulations governing usage may lead to water constraints and supply concerns (particularly in some parts of the country). As a result, future availability of water from certain sources used in the past may be limited. Moreover, the imposition of new environmental initiatives and conditions could include restrictions on Camber’s, Viking’s and the combined company’s ability to conduct certain operations such as hydraulic fracturing or disposal of waste, including, but not limited to, produced water, drilling fluids and other wastes associated with the exploration, development or production of oil and natural gas. The CWA and analogous state laws impose restrictions and strict controls regarding the discharge of pollutants, including produced waters and other oil and natural gas waste, into navigable waters or other regulated federal and state waters. Permits or other approvals must be obtained to discharge pollutants to regulated waters and to conduct construction activities in such waters and wetlands. Uncertainty regarding regulatory jurisdiction over wetlands and other regulated waters has, and will continue to, complicate and increase the cost of obtaining such permits or other approvals. The CWA and analogous state laws provide for civil, criminal and administrative penalties for any unauthorized discharges of pollutants and unauthorized discharges of reportable quantities of oil and other hazardous substances. Many state discharge regulations, and the Federal National Pollutant Discharge Elimination System General permits issued by the EPA, prohibit the discharge of produced water and sand, drilling fluids, drill cuttings and certain other substances related to the oil and natural gas industry into coastal waters. While generally exempt under federal programs, many state agencies have also adopted regulations requiring certain oil and natural gas exploration and production facilities to obtain permits for storm water discharges. There has been recent nationwide concern over earthquakes associated with Class II underground injection control wells, a predominant storage method for crude oil and gas wastewater. It is likely that new rules and regulations will be developed to address these concerns, possibly eliminating access to Class II wells in certain locations, and increasing the cost of disposal in others. Finally, EPA studies have previously focused on various stages of water use in hydraulic fracturing operations. It is possible that, in the future, the EPA will move to more strictly regulate the use of water in hydraulic fracturing operations. While Camber, Viking and the combined company cannot predict the impact that these changes may have on its business at this time, they may be material to Camber’s, Viking’s and the combined company’s business, financial condition, and operations. Compliance with environmental regulations and permit requirements governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing of wells or the disposal or recycling of water will increase Camber’s, Viking’s and the combined company’s operating costs and may cause delays, interruptions or termination of its operations, the extent of which cannot be predicted. In addition, Camber’s, Viking’s and the combined company’s inability to meet water supply needs to conduct their operations may impact their business, and any such future laws and regulations could negatively affect their financial condition, results of operations and cash flows.

 

Government regulation and liability for environmental matters may adversely affect Camber’s, Viking’s and the combined company’s business and results of operations.

 

Crude oil and natural gas operations are subject to extensive federal, state and local government regulations, which may be changed from time to time. Matters subject to regulation include discharge permits for drilling operations, drilling bonds, reports concerning operations, the spacing of wells, unitization and pooling of properties and taxation. From time to time, regulatory agencies have imposed price controls and limitations on production by restricting the rate of flow of crude oil and natural gas wells below actual production capacity in order to conserve supplies of crude oil and natural gas. There are federal, state and local laws and regulations primarily relating to protection of human health and the environment applicable to the development, production, handling, storage, transportation and disposal of crude oil and natural gas, byproducts thereof and other substances and materials produced or used in connection with crude oil and natural gas operations. In addition, Camber, Viking or the combined company may inherit liability for environmental damages caused by previous owners of property it purchases or leases. As a result, such parties may incur substantial liabilities to third parties or governmental entities. The implementation of new, or the modification of existing, laws or regulations could have a material adverse effect on Camber, Viking or the combined company.   

 

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The unavailability or high cost of drilling rigs, completion equipment and services, supplies and personnel, including hydraulic fracturing equipment and personnel, could adversely affect Camber’s ability to establish and execute exploration and development plans within budget and on a timely basis, which could have a material adverse effect on Camber’s business, financial condition and results of operations.

 

Shortages or the high cost of drilling rigs, completion equipment and services, supplies or personnel could delay or adversely affect Camber’s operations. When drilling activity in the United States increases, associated costs typically also increase, including those costs related to drilling rigs, equipment, supplies and personnel and the services and products of other vendors to the industry. These costs may increase, and necessary equipment and services may become unavailable to Camber at economical prices. Should this increase in costs occur, Camber may delay drilling activities, which may limit its ability to establish and replace reserves, or Camber may incur these higher costs, which may negatively affect its business, financial condition and results of operations.

 

Federal and state legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.

 

Hydraulic fracturing is a common practice that is used to stimulate production of hydrocarbons from tight formations. The process involves the injection of water, sand and chemicals under pressure into rock formations to fracture the surrounding rock and stimulate production. There has been increasing public controversy regarding hydraulic fracturing with regard to the transportation and use of fracturing fluids, impacts on drinking water supplies, use of waters, and the potential for impacts to surface water, groundwater, air quality and the environment generally. A number of lawsuits and enforcement actions have been initiated implicating hydraulic fracturing practices. Additional legislation or regulation could make it more difficult to perform hydraulic fracturing, cause operational delays, increase Camber’s operating costs or make it easier for third parties opposing the hydraulic fracturing process to initiate legal proceedings. New legislation or regulations in the future could have the effect of prohibiting the use of hydraulic fracturing, which would prevent Camber from completing wells as planned and would have a material adverse effect on production from Camber’s wells. If these legislative and regulatory initiatives cause a material delay or decrease in Camber’s drilling or hydraulic fracturing activities, Camber’s business and profitability could be materially impacted.

 

The lack of availability or high cost of drilling rigs, equipment, supplies, insurance, personnel and oilfield services could adversely affect Camber’s ability to execute its exploration and development plans on a timely basis and within budget.

 

The oil and gas industry is cyclical and, from time to time, there is a shortage of drilling rigs, equipment, supplies or qualified personnel. During these periods, the costs and delivery times of rigs, equipment and supplies tend to increase, in some cases substantially. In addition, the demand for, and wage rates of, qualified drilling rig crews rise as the number of active rigs in service increases within a geographic area. If increasing levels of exploration and production result in response to strong prices of oil and natural gas, the demand for oilfield services will likely rise, and the costs of these services will likely increase, while the quality of these services may suffer. The future lack of availability or high cost of drilling rigs, as well as any future lack of availability or high costs of other equipment, supplies, insurance or qualified personnel, in the areas in which Camber operates could materially and adversely affect Camber’s business and results of operations.

 

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Crude oil and natural gas prices are highly volatile in general and low prices will negatively affect Camber’s financial results.

 

Camber’s oil and gas revenues, operating results, profitability, cash flow, future rate of growth and ability to borrow funds or obtain additional capital, as well as the carrying value of its oil and natural gas properties, are substantially dependent upon prevailing prices of crude oil and natural gas. Lower crude oil and natural gas prices also may reduce the amount of crude oil and natural gas that Camber can produce economically. Historically, the markets for crude oil and natural gas have been very volatile, and such markets are likely to continue to be volatile in the future. Prices for oil and natural gas fluctuate widely in response to a variety of factors beyond its control, such as:

 

  overall U.S. and global economic conditions;
     
  weather conditions and natural disasters;
     
  seasonal variations in oil and natural gas prices;
     
  price and availability of alternative fuels;
     
  technological advances affecting oil and natural gas production and consumption;
     
  consumer demand;
     
  domestic and foreign supply of oil and natural gas;
     
  variations in levels of production;
     
  regional price differentials and quality differentials of oil and natural gas; price and quantity of foreign imports of oil, NGLs and natural gas;
     
  the completion of large domestic or international exploration and production projects;
     
  restrictions on exportation of oil and natural gas;
     
  the availability of refining capacity;
     
  the impact of energy conservation efforts;
     
  political conditions in or affecting other oil producing and natural gas producing countries, including the current conflicts in the Middle East and conditions in South America and Russia; and
     
  domestic and foreign governmental regulations, actions and taxes.

 

Further, oil and natural gas prices do not necessarily fluctuate in direct relation to each other. Camber’s revenue, profitability, and cash flow depend upon the prices of supply and demand for oil and natural gas, and a drop in prices can significantly affect Camber’s financial results and impede its growth. In particular, declines in commodity prices may:

 

  negatively impact the value of Camber’s reserves, because declines in oil and natural gas prices would reduce the value and amount of oil and natural gas that it can produce economically;

 

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  reduce the amount of cash flow available for capital expenditures, repayment of indebtedness, and other corporate purposes; and
     
  limit Camber’s ability to borrow money or raise additional capital.

 

Camber’s oil and gas competitors may use superior technology and data resources than it may be able to afford or that would require a costly investment by Camber in order to compete with them more effectively.

 

The oil and gas industry is subject to rapid and significant advancements in technology, including the introduction of new products and services using new technologies and databases. As Camber’s competitors use or develop new technologies, Camber may be placed at a competitive disadvantage, and competitive pressures may force Camber to implement new technologies at a substantial cost. In addition, many of Camber’s competitors will have greater financial, technical and personnel resources that allow them to enjoy technological advantages and may in the future allow them to implement new technologies before Camber can. Camber cannot be certain that it will be able to implement technologies on a timely basis or at a cost that is acceptable to it. One or more of the technologies that Camber will use or that it may implement in the future may become obsolete, and Camber may be adversely affected.

 

Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect Camber’s, Viking’s and the combined company’s ability to conduct drilling activities in some of the areas where they operate.

 

Oil and natural gas operations in Camber’s, Viking’s and the combined company’s operating areas can be adversely affected by seasonal or permanent restrictions on drilling activities designed to protect various wildlife. Seasonal restrictions may limit their ability to operate in protected areas and can intensify competition for drilling rigs, oilfield equipment, services, supplies and qualified personnel, which may lead to periodic shortages when drilling is allowed. These constraints and the resulting shortages or high costs could delay its operations and materially increase their operating and capital costs. Permanent restrictions imposed to protect endangered species could prohibit drilling in certain areas or require the implementation of expensive mitigation measures. Specifically, applicable laws protecting endangered species prohibit the harming of endangered or threatened species, provide for habitat protection, and impose stringent penalties for noncompliance. The designation of previously unprotected species as threatened or endangered in areas where Camber, Viking and the combined company operate could cause them to incur increased costs arising from species protection measures or could result in limitations, delays, or prohibitions on Camber’s, Viking’s and the combined company’s exploration and production activities that could have an adverse impact on their ability to develop and produce reserves.

 

Camber, Viking and the combined company have limited control over activities in properties they do not operate, which could reduce their production and revenues, affect the timing and amounts of capital requirements and potentially result in a dilution of their respective ownership interest in the event they are unable to make any required capital contributions.

 

Camber does not currently operate any of the wells in which it has an interest. Viking and its subsidiaries do not currently operate all of the wells in which they have an interest. As a result, Camber, Viking and the combined company may have a limited ability to exercise influence over normal operating procedures, expenditures or future development of underlying properties and their associated costs. For all of the properties that are operated by others, they are dependent on their decision-making with respect to day-to-day operations over which they have little control. The failure of an operator of wells in which they have an interest to adequately perform operations, or an operator’s breach of applicable agreements, could reduce production and revenues they receive from that well. The success and timing of Camber’s, Viking’s and the combined company’s drilling and development activities on properties operated by others depend upon a number of factors outside of their control, including the timing and amount of capital expenditures, the available expertise and financial resources, the inclusion of other participants and the use of technology.

 

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THE CAMBER SPECIAL MEETING

 

This section contains information for Camber stockholders about the special meeting that Camber has called to allow Camber stockholders to consider and vote on the Camber share issuance, the Camber charter amendment, the Camber reverse split proposal, the Camber equity plan proposal and other related matters. This joint proxy statement/prospectus is accompanied by a notice of the special meeting of Camber stockholders and a form of proxy card that the Camber board is soliciting for use at the special meeting and at any adjournments or postponements of the special meeting.

 

Date, Time and Place of the Meeting

 

The Camber special meeting will be held on [●], 2020 at [●], at [●] local time.

 

Matters to Be Considered

 

At the Camber special meeting, Camber stockholders will be asked to consider and vote upon the following proposals:

 

  the Camber share issuance proposal;

 

  the Camber Series A preferred stock proposal;
     
  the Camber Series C preferred stock proposal;
     
  the Camber charter amendment proposal;
     
  the Camber reverse split proposal;
     
  the Camber equity plan proposal; and

 

  the Camber adjournment proposal.

 

Recommendation of the Camber Board

 

The Camber board recommends that you vote “FOR” the Camber share issuance proposal, “FOR” the Camber Series A preferred stock proposal, “FOR” the Camber Series C preferred stock proposal, “FOR” the Camber charter amendment proposal, “FOR” the Camber reverse split proposal, “FOR” the Camber equity plan proposal, and “FOR” the Camber adjournment proposal. See “The Merger—Camber’s Reasons for the Merger; Recommendation of the Camber Board” beginning on page 171 for a more detailed discussion of the Camber board’s recommendation.

 

Record Date and Quorum

 

The Camber board has fixed the close of business on [●], 2020 as the record date for determination of Camber stockholders entitled to notice of and to vote at the Camber special meeting. On the record date for the Camber special meeting, there were [●] shares of Camber common stock outstanding.

 

Holders of at least 33% of the shares of Camber common stock outstanding on the record date must be present, either in person or by proxy, to constitute a quorum at the Camber special meeting. If you fail to submit a proxy or to vote in person at the Camber special meeting, your shares of Camber common stock will not be counted towards a quorum. Abstentions are considered present for purposes of establishing a quorum.

 

Each share of Camber common stock is entitled to one (1) vote on all matters properly submitted to Camber stockholders at the Camber special meeting.

 

As of [●], 2020, the last date before the date of this joint proxy statement/prospectus for which it was practicable to obtain this information, Camber directors and executive officers and their affiliates owned and were entitled to vote no shares of Camber common stock.

 

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Vote Required; Treatment of Abstentions and Failure to Vote

 

Camber share issuance proposal:

 

  Vote required: Approval of the Camber share issuance proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber share issuance proposal present in person or by proxy at the Camber special meeting.

 

  Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Camber share issuance proposal. If you fail to submit a proxy or to vote in person at the Camber special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Camber share issuance proposal, your shares will not be deemed to be represented at the Camber special meeting, and it will have no effect on the Camber share issuance proposal.

 

Camber Series A preferred stock proposal:

 

  Vote required: Approval of the Camber Series A preferred stock proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber Series A preferred stock proposal present in person or by proxy at the Camber special meeting.

 

  Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Camber Series A preferred stock proposal. If you fail to submit a proxy or to vote in person at the Camber special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Camber Series A preferred stock proposal, your shares will not be deemed to be represented at the Camber special meeting, and it will have no effect on the Camber Series A preferred stock proposal.

 

Camber Series C preferred stock proposal:

 

  Vote required: Approval of the Camber Series C preferred stock proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber Series C preferred stock proposal present in person or by proxy at the Camber special meeting.

 

  Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Camber Series C preferred stock proposal. If you fail to submit a proxy or to vote in person at the Camber special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Camber Series C preferred stock proposal, your shares will not be deemed to be represented at the Camber special meeting, and it will have no effect on the Camber Series C preferred stock proposal.

 

Camber charter amendment proposal:

 

  Vote required: Approval of the Camber charter amendment proposal requires the affirmative vote of a majority of the outstanding shares of stock entitled to vote on the Camber adjournment proposal at the Camber special meeting.

 

  Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or to vote in person at the Camber special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Camber charter amendment proposal, it will have the same effect as a vote “AGAINST” the Camber charter amendment proposal.

 

Camber reverse split proposal:

 

  Vote required: Approval of the Camber reverse split proposal requires the affirmative vote of a majority of the outstanding shares of stock entitled to vote on the Camber reverse split proposal at the Camber special meeting.

 

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  Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, fail to submit a proxy or to vote in person at the Camber special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Camber reverse split proposal, it will have the same effect as a vote “AGAINST” the Camber reverse split proposal.

 

Camber equity plan proposal:

 

  Vote required: Approval of the Camber equity plan proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber equity plan proposal present in person or by proxy at the Camber special meeting.

 

  Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Camber equity plan proposal. If you fail to submit a proxy or to vote in person at the Camber special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Camber equity plan proposal, your shares will not be deemed to be represented at the Camber special meeting, and it will have no effect on the Camber equity plan proposal.

 

Camber adjournment proposal:

 

  Vote required: Approval of the Camber adjournment proposal requires the affirmative vote of the holders of a majority of the outstanding shares of stock entitled to vote on the Camber adjournment proposal present in person or by proxy at the Camber special meeting.

 

  Effect of abstentions and broker non-votes: If you mark “ABSTAIN” on your proxy, it will have the same effect as a vote “AGAINST” the Camber adjournment proposal. If you fail to submit a proxy or to vote in person at the Camber special meeting or fail to instruct your bank, broker or other nominee how to vote with respect to the Camber adjournment proposal, your shares will not be deemed to be represented at the Camber special meeting, and it will have no effect on the Camber adjournment proposal.

 

Attending the Special Meeting

 

Attendance at the special meeting will be limited to stockholders of Camber as of the record date and Camber’s invited guests. Your proxy card is your admission ticket. When you arrive at the Camber special meeting, you will be asked to present photo identification, such as a driver’s license. If you are a beneficial owner of Camber common stock held by a broker, bank or other nominee, you will need proof of ownership to be admitted to the meeting. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership. If you want to vote your Camber common stock held in nominee name in person, you must get a “legal proxy” in your name from the broker, bank or other nominee that holds your shares and present it with your identification at the meeting. You should indicate that you plan to attend the Camber special meeting when submitting your proxy card by checking the box under the caption “Meeting Attendance” on the proxy card. If you are a beneficial owner of Camber common stock held by a broker, bank or other nominee, or if you are a record holder and have not submitted your proxy card or did not indicate on your submitted proxy card that you plan to attend the Camber special meeting, please contact the office of the Corporate Secretary at Camber Energy, Inc., 1415 Louisiana, Suite 3500, Houston, Texas, 77002, (210) 998-4035, to request an admission ticket. If you do not have an admission ticket, you must present proof of ownership in order to be admitted to the meeting. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership.

 

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Proxies

 

A Camber stockholder may vote by proxy or in person at the Camber special meeting. If you hold your shares of Camber common stock in your name as a holder of record, to vote, you, as a Camber stockholder, may use one of the following methods:

 

  By telephone: by calling the toll-free number indicated on the accompanying proxy card and following the recorded instructions.

 

  Through the Internet: by visiting the website indicated on the accompanying proxy card and following the instructions.

 

  By mail: by completing and returning the accompanying proxy card in the enclosed postage-paid envelope. The envelope requires no additional postage if mailed in the United States.

 

Camber requests that Camber stockholders vote by telephone, over the Internet or by completing and signing the accompanying proxy card and returning it to Camber as soon as possible in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed, the shares of Camber common stock represented by it will be voted at the Camber special meeting in accordance with the instructions contained on the proxy card.

 

If a holder’s shares are held in “street name” by a broker, bank or other nominee, the holder should check the voting form used by that firm to determine whether the holder may vote by telephone or the Internet.

 

Every vote is important. Accordingly, you should sign, date and return the enclosed proxy card, or vote via the Internet or by telephone, whether or not you plan to attend the Camber special meeting in person. Sending in your proxy card or voting by telephone or on the Internet will not prevent you from voting your shares personally at the meeting because you may revoke your proxy at any time before it is voted at the meeting.

 

Shares Held in Street Name

 

If your shares are held in “street name” through a broker, bank or other nominee, you must instruct the broker, bank or other nominee on how to vote your shares. Your broker, bank or other nominee will vote your shares only if you provide specific instructions on how to vote by following the instructions provided to you by your broker, bank or other nominee.

 

You may not vote shares held in “street name” by returning a proxy card directly to Camber or by voting in person at the Camber special meeting unless you provide a “legal proxy” giving you the right to vote the shares, which you must obtain from your broker, bank or other nominee. If you choose to vote your shares in person at the Camber special meeting, please bring proof of identification and the proxy from your bank, broker or other nominee.

 

Further, brokers, banks or other nominees who hold shares of Camber common stock on behalf of their customers may not give a proxy to Camber to vote those shares with respect to any of the proposals without specific instructions from their customers, as brokers, banks, and other nominees do not have discretionary voting power on the proposals that will be voted upon at the Camber special meeting.

 

Revocability of Proxies

 

If you are a Camber stockholder of record, you may revoke your proxy at any time before it is voted by:

 

  submitting a written notice of revocation to Camber’s corporate secretary;

 

  granting a subsequently dated proxy;

 

  voting by telephone or the Internet at a later time; or

 

  attending in person and voting at the Camber special meeting.

 

If you hold your shares of Camber common stock through a broker, bank or other nominee, you should contact your broker, bank or other nominee to change your vote.

 

Attendance at the Camber special meeting will not in and of itself constitute revocation of a proxy. A revocation or later-dated proxy received by Camber after the vote will not affect the vote. Camber’s corporate secretary’s mailing address is: Corporate Secretary, Camber Energy, Inc., 1415 Louisiana, Suite 3500, Houston, Texas, 77002. If the Camber special meeting is postponed or adjourned, it will not affect the ability of Camber stockholders of record as of the record date to exercise their voting rights or to revoke any previously-granted proxy using the methods described above.

 

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Delivery of Proxy Materials

 

As permitted by applicable law, only one (1) copy of this joint proxy statement/prospectus is being delivered to Camber stockholders residing at the same address, unless such Camber stockholders have notified Camber of their desire to receive multiple copies of the joint proxy statement/prospectus.

 

Camber will promptly deliver, upon oral or written request, a separate copy of the joint proxy statement/prospectus to any Camber stockholder residing at an address to which only one (1) copy of such document was mailed. Requests for additional copies should be directed to Camber’s Secretary, Robert Schleizer at Info@camber.energy, or at the following address or phone number: 1415 Louisiana, Suite 3500, Houston, Texas 77002 | (210) 998-4035.

 

Solicitation of Proxies

 

Camber and Viking will share equally the expenses incurred in connection with the printing and mailing of this joint proxy statement/prospectus. To assist in the solicitation of proxies, Camber has retained [●], for a fee of $[●] plus reimbursement of out-of-pocket expenses for its services. Camber and its proxy solicitor may also request banks, brokers and other intermediaries holding shares of Camber common stock beneficially owned by others to send this joint proxy statement/prospectus to, and obtain proxies from, the beneficial owners and may reimburse such record holders for their reasonable out-of-pocket expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone and other electronic means, advertisements and personal solicitation by the directors, officers or employees of Camber. No additional compensation will be paid to our directors, officers or employees for solicitation.

 

Other Matters to Come Before the Camber Special Meeting

 

Camber management knows of no other business to be presented at the Camber special meeting, but if any other matters are properly presented to the meeting or any adjournments thereof, the persons named in the proxies will vote upon them in accordance with the Camber board’s recommendations.

 

Assistance

 

If you need assistance in completing your proxy card, have questions regarding Camber’s special meeting or would like additional copies of this joint proxy statement/prospectus, please contact Camber’s Secretary, Robert Schleizer at Info@camber.energy, or at the following address or phone number: 1415 Louisiana, Suite 3500, Houston, Texas 77002 | (210) 998-4035.

 

 

 

CAMBER PROPOSALS

 

Proposal 1: Camber Share Issuance Proposal

 

Camber is asking Camber stockholders to approve the issuance of shares of Camber common stock, pursuant to the terms of the merger agreement, in an amount necessary to complete the transactions contemplated thereby, including shares of Camber common stock issuable upon conversion of convertible securities, and issuable upon exercise of warrants and options, to be issued and assumed as part of the merger, approve the merger agreement and the transactions contemplated therein. Camber stockholders should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger, and the issuance of shares of Camber common stock in connection with the merger and the other transactions contemplated by the merger agreement. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

 

After careful consideration, the Camber board determined that the merger, the merger agreement and the transactions contemplated by the merger agreement are advisable and in the best interests of Camber and the Camber stockholders and adopted and approved the merger agreement, the merger (subject to stockholder approval) and the other transactions contemplated by the merger agreement. Accordingly, the Camber board directed that the Camber share issuance proposal be submitted to the Camber stockholders and recommended that Camber stockholders approve the Camber share issuance proposal. See “The Merger—Camber’s Reasons for the Merger; Recommendation of the Camber Board” beginning on page 171 in this joint proxy statement/prospectus for a more detailed discussion of the Camber board’s recommendation.

 

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The Camber board recommends a vote “FOR” the Camber share issuance proposal.

 

Proposal 2: Camber Series A Preferred Stock Proposal

 

Camber is asking Camber stockholders to approve and ratify the terms of Camber’s previously designated Series A Preferred Stock (described below), including the voting terms associated therewith (described below), the issuance of such shares of Series A Preferred Stock pursuant to the terms of the merger, and the issuance of shares of Camber common stock, exceeding 19.9% of Camber’s outstanding common stock on the effective date, upon the conversion of such Series A Preferred Stock.

 

Camber’s common stock is listed on the NYSE American. Section 713(a) of the NYSE American rules requires stockholder approval in connection with a transaction involving the sale, issuance, or potential issuance by the issuer of common stock (or securities convertible into common stock) equal to 20% or more of presently outstanding shares of common stock at a price less than the greater of book value or market value. Section 713(b) of the NYSE American rules requires stockholder approval in connection with a transaction involving the issuance or potential issuance of additional shares which would result in a change of control of the issuer.

 

Because (as discussed below), the Series A Preferred Stock will have the right to convert into a number of shares of common stock equal to (a) 4,900, multiplied by (b) the exchange ratio of the merger, such shares of common stock will represent greater than 20% of our outstanding common stock and may constitute a change in control (as defined by NYSE American), we are asking our stockholders to approve the issuance of such number of shares of common stock exceeding 19.99% of our outstanding common stock, issuable upon conversion of the shares of Series A Preferred Stock issuable in connection with the merger, the voting rights associated therewith, and issuance of such shares pursuant to the terms of the merger.

 

The 28,029 shares of Series A Preferred Stock of Camber, which were designated with the Secretary of State of Nevada on August 31, 2020, have substantially similar rights as the Series C Preferred Stock of Viking (as amended), as adjusted for the exchange ratio. 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 shareholder matters, voting together with the Camber 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)(described herein as the “voting shares”); will receive, upon the occurrence of a liquidation of Camber, the same amount of consideration that would have been due if such share of Series A Preferred Stock had been converted into common stock of Camber immediately prior to such liquidation; and provide rights for such share of Series A Preferred Stock to convert, at the option of the holder thereof, into a number of shares of Camber common stock equal to (a) 4,900 shares, multiplied by (b) the exchange ratio of the merger (which would have equaled the number of shares of Camber common stock which would have been issuable to the holder of the Series C Preferred of Viking in the merger, had such Series C Preferred Stock been converted into common stock of Viking immediately prior to the effective time)(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 stock holders, on an as-converted basis. James A. Doris, the Chief Executive Officer and director of Viking, currently holds all 28,092 outstanding shares of Series C Preferred Stock of Viking, and if the merger was to close as of the date of this joint proxy statement/prospectus, would receive 28,092 shares of Series A Preferred Stock of Camber in the merger. The designation of the Camber Series A Preferred Stock also provides that such number of voting shares and conversion shares as calculated as discussed above, shall be updated by Camber 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.

 

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Camber stockholders should read this joint proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger, and the issuance of shares of Series A Preferred stock in connection with the merger, and shares of Camber common stock upon conversion of the Series A Preferred, and the voting rights associated with such Series A Preferred Stock and the other transactions contemplated by the merger agreement. A copy of the merger agreement is attached to this joint proxy statement/prospectus as Annex A.

 

After careful consideration, the Camber board determined that the Series A Preferred Stock, the terms thereof (including the voting and conversion rights associated therewith), and the issuance of shares of common stock upon conversion of such Series A Preferred Stock, are advisable and in the best interests of Camber and the Camber stockholders and adopted and approved the terms of such Series A Preferred Stock (subject to stockholder approval). Accordingly, the Camber board directed that the Camber Series A preferred stock proposal be submitted to the Camber stockholders and recommended that Camber stockholders approve the Camber share issuance proposal. See “The Merger—Camber’s Reasons for the Merger; Recommendation of the Camber Board” beginning on page 171 in this joint proxy statement/prospectus for a more detailed discussion of the Camber board’s recommendation.

 

Please refer to the merger agreement and designation of Camber Series A Preferred Stock, which are attached as Annex A and Annex B to this proxy statement, for further details and more information regarding the terms and conditions of the Series A Preferred Stock as summarized above.

 

Risks Associated with the Series A Preferred Stock

 

The issuance of common stock upon conversion of the Series A Preferred Stock will cause immediate and substantial dilution.

 

The issuance of common stock upon conversion of the Series A Preferred Stock will result in immediate and substantial dilution to the interests of other stockholders. It is currently estimated that the shares of common stock issuable upon conversion of the shares of Series A Preferred Stock issuable as part of the merger will have rights to convert into approximately 30% of Camber’s total post-merger voting shares.

 

The Series A Preferred Stock will provide the holder thereof significant voting control over the combined company.

 

Viking’s CEO and director, James Doris, holds 28,092 shares of Viking Series C Preferred Stock, with each share of preferred stock entitling the holder thereof to 4,900 votes on all matters submitted to the vote of Viking’s security holders. By virtue of such stock ownership, Mr. Doris is able to control the election of the members of Viking’s Board of Directors and to generally exercise control over the affairs of Viking, including approving the merger.

 

Although such Viking Series C Preferred Stock will be exchanged for Camber Series A Preferred Stock as a result of the merger, such Camber Series A Preferred Stock will be able to vote, and be converted into, the same number of shares of Camber common stock as such preferred stock would have received, if such preferred stock was converted into Common Stock immediately prior to the effective time. As a result, it is currently anticipated that Mr. Doris (or his assigns) will control approximately 30% of the combined company’s voting shares following the merger, which number may be decreased by dilution to Viking stockholders and the voting rights of the Viking Series C Preferred Stock as a result of the sale of equity prior to closing and other issuances of Viking common stock which may occur prior to closing. As such, Mr. Doris will have significant control over the combined company following the closing, and the interests of Mr. Doris may differ from other stockholders. There can be no assurance that conflicts of interest will not arise with respect to Mr. Doris’s ownership of Camber Series A Preferred Stock, or that such conflicts will be resolved in a manner favorable to combined company stockholders. See “The Merger—Interests of Viking’s Directors and Executive Officers in the Merger” beginning on page 182 and “Security Ownership of Combined Company Beneficial Owners and Management Subsequent to Merger”, beginning on page 250.

 

The Camber board recommends a vote “FOR” the Camber Series A preferred stock proposal.

 

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Proposal 3: Camber Series C Preferred Stock Proposal

 

General

 

On and effective June 22, 2020, Camber and Discover entered into a Stock Purchase Agreement (the “June 2020 Purchase Agreement”).

 

Under the terms of the June 2020 Purchase Agreement, Discover purchased 630 shares of Camber Series C Preferred Stock, for $6 million, at a 5% original issue discount to the $10,000 face value of each such share of preferred stock (the “Face Value”).

 

Discover (and/or parties associated with Discover) had previously purchased shares of Series C Preferred Stock and other securities from Camber as discussed below under “Certain Relationships and Related Party Transactions - Discover Transactions”, beginning on page 208.

 

Camber has used a portion of the proceeds from the June 2020 sale of the Series C Preferred Stock to purchase the February 2020 Secured Note from Viking as discussed below under “Certain Relationships and Related Party Transactions - Discover Transactions”, beginning on page 208.

 

Pursuant to the June 2020 Purchase Agreement, as long as Discover holds any shares of Series C Preferred Stock, Camber agreed that, except as contemplated in connection with the merger, Camber would not issue or enter into or amend an agreement pursuant to which Camber may issue any shares of common stock, other than (a) for restricted securities with no registration rights, (b) in connection with a strategic acquisition, (c) in an underwritten public offering, or (d) at a fixed price; or issue or amend any debt or equity securities convertible into, exchangeable or exercisable for, or including the right to receive, shares of common stock (i) at a conversion price, exercise price or exchange rate or other price that is based upon or varies with, the trading prices of or quotations for the shares of common stock at any time after the initial issuance of the security or (ii) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of the security or upon the occurrence of specified or contingent events directly or indirectly related to the business of Camber or the market for the common stock.

 

Additionally, provided that Camber has not materially breached the terms of the June 2020 Purchase Agreement, Camber 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. 

 

Camber also agreed to provide Discover a right of first offer to match any offer for financing Camber receives from any person while the shares of Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement are outstanding, except for debt financings not convertible into common stock, which are excluded from such right to match.

 

Finally, Camber agreed that if Camber issues any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to Discover, then Camber would notify Discover of such additional or more favorable term and such term, at Discover’s option, may become a part of the transaction documents with Discover.

 

The June 2020 Purchase Agreement includes customary provisions requiring that Camber indemnify Discover against certain losses; representations and warranties and covenants. 

 

Camber also 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), Camber 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.

 

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Separately, as discussed below under “Certain Relationships and Related Party Transactions - Discover Transactions – June 2020 Purchase Agreement”, beginning on page 212, Viking agreed that if the merger agreement is terminated prior to the closing of the merger, Viking will owe Camber, in addition to the required repayment of the Secured Notes (defined below under “The Merger Agreement—Camber’s Elysium Interest” beginning on page 202), an additional amount equal to (i) 115.5% of the original principal amount of the Secured Notes, minus (ii) the amount due to Camber pursuant to the terms of the Secured Notes upon repayment thereof (the “Additional Payment”). As an example, if when the merger agreement is terminated, $9,200,000 were due to Camber under the Secured Notes (assuming all interest due thereunder had been paid as of the date due), Viking would owe Camber (i) $9,200,000 multiplied by 1.155 = $10,626,000, minus (ii) $9,200,000, or a total Additional Payment of $1,426,000, in addition to the amount due under the Secured Notes.

 

Finally, we agreed to include proposals relating to the approval of the June 2020 Purchase Agreement and the issuance of the shares of common stock upon conversion of the Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement, as well as an increase in authorized common stock to fulfill Camber’s obligations to issue such shares, at the meeting held to approve the merger or a separate meeting in the event the merger is terminated prior to stockholder approval, and to use commercially reasonable best efforts to obtain such approvals as soon as possible and in any event prior to December 31, 2020.

 

Camber loaned $4.2 million of the funds provided by the June 2020 Purchase Agreement to Viking in connection with the purchase of the June Secured Note, as discussed in greater detail below under “The Merger Agreement—Camber’s Elysium Interest” beginning on page 202.

 

The Camber Board has unanimously determined that it is advisable and in the best interests of Camber and its stockholders to be able to issue shares of its common stock upon the conversion of the Series C Preferred Stock (including shares issuable for dividends and conversion premiums thereon)(collectively, the “Series C Conversion Shares”), and unanimously recommends that the stockholders vote ”FOR” approval of the issuance of such number of shares of common stock exceeding 19.99% of its outstanding common stock, issuable upon conversion of the 630 shares of Series C Preferred Stock, including shares issuable for dividends and conversion premiums thereon sold pursuant to the June 2020 Purchase Agreement and ratification of the terms of such June 2020 Purchase Agreement.

 

A vote “FOR” this Proposal is a vote for issuance of the Series C Conversion Shares and approval of the February 2020 Purchase Agreement.

 

Please refer to the June 2020 Purchase Agreement and the designation of Camber’s Series C Preferred Stock (as amended), which are attached as Annex C and Annex D to this proxy statement, respectively, for further details and more information regarding the terms and conditions of the June 2020 Purchase Agreement and Series C Preferred Stock as summarized above.

 

Series C Redeemable Convertible Preferred Stock

 

The rights, privileges, and terms of Camber’s Series C Preferred Stock are described in greater detail below under “Description of Capital – Preferred Stock – Series C Redeemable Convertible Preferred Stock”, beginning on page 218.

 

Certain Prior Transactions Involving Discover

 

The June 2020 Purchase Agreement is one of several transactions Camber has completed with Discover since April 2016, all of which are described in greater detail below under “Certain Relationships and Related Party Transactions - Discover Transactions”, beginning on page 208.

 

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Reasons for the Issuance

 

The approval of its ability to issue shares of Camber’s common stock upon the conversion of the Series A Preferred Stock and the June 2020 Purchase Agreement was a required term and condition of the June 2020 Purchase Agreement.

 

Reasons for Stockholder Approval

 

Camber’s common stock is listed on the NYSE American. Section 713(a) of the NYSE American rules requires stockholder approval in connection with a transaction involving the sale, issuance, or potential issuance by the issuer of common stock (or securities convertible into common stock) equal to 20% or more of presently outstanding shares of common stock at a price less than the greater of book value or market value. Section 713(b) of the NYSE American rules requires stockholder approval in connection with a transaction involving the issuance or potential issuance of additional shares which would result in a change of control of the issuer.

 

Because the shares of its common stock issuable upon conversion of the 525 shares of Series C Preferred Stock (including shares issuable for dividends and conversion premiums thereon) represent greater than 20% of its outstanding common stock and may constitute a change in control (as defined by NYSE American), Camber is asking its stockholders to approve the issuance of such number of shares of common stock exceeding 19.99% of its outstanding common stock, issuable upon conversion of the 525 shares of Series C Preferred Stock sold pursuant to the terms of the February 2020 Purchase Agreement, including shares issuable for dividends and conversion premiums thereon and to ratify the terms of such February 2020 Purchase Agreement.

 

Stockholder approval of this Proposal is being sought solely to comply with the terms of the February 2020 Purchase Agreement and Section 713 of the NYSE American rules governing the issuance of securities when any such issuances in the aggregate would exceed 20% of an issuer’s outstanding capital stock or might be considered a change of control (as defined by NYSE American).

 

Effect upon Rights of Existing Stockholders

 

Camber’s current stockholders will continue to own their existing shares after the transaction described in this proposal. If stockholders approve this proposal, the Series C Preferred Stock (including dividends and conversion premiums thereon) sold pursuant to the June 2020 Purchase Agreement will be convertible into shares of common stock, pursuant to the terms thereof, without additional stockholder approval.

 

If Camber stockholders approve this proposal, the principal effect upon the rights of existing Camber stockholders upon the conversion of the Series C Preferred Stock will be a dilution in their current percentage ownership in Camber. Upon conversion of all 630 shares of Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement, Discover will be due in the aggregate a significant portion of Camber’s outstanding shares of common stock, not including any shares of common stock Discover can hold upon conversion of outstanding convertible securities of Camber which Discover already holds separate from the shares sold pursuant to the June 2020 Purchase Agreement (i.e., Discover already holds an additional 2,140 shares of Series C Preferred Stock which are convertible into shares of Camber on the same terms as the 630 shares of Series C Preferred Stock sold pursuant to the June 2020 Purchase Agreement). The issuance of shares of common stock pursuant to the conversion of the Series C Preferred Stock and the sale of such shares by such holders into the public market, also could materially and adversely affect the market price of Camber’s common stock.

 

Additionally, as discussed above, Camber 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), which date is currently September 30, 2020, but which may be extended until December 31, 2020, in the event that Camber has not fully resolved SEC comments on this registration statement on Form S-4 or other SEC filings related to the merger, and Camber is responding to such comments in a reasonable fashion, subject to certain exceptions or Camber has resolved such SEC comments and has scheduled a meeting to approve the merger, which meeting will occur after September 30, 2020, Camber 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.

 

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The total number of shares of common stock currently issuable in connection with this proposal is approximately 16,490,549, which consists of (i) 38,769 shares of common stock issuable upon conversion of the Series C Preferred Stock, and (ii) approximately 16,451,779 additional shares of common stock that Camber may issue, at its sole discretion in lieu of cash, as conversion premiums or in payment of interest or dividends on such Series C Preferred Stock, assuming the payment of dividends on the Series C Preferred Stock solely in shares of common stock, for a period of seven years, which is the maturity date of each of the securities, and not taking into account any decrease in the trading price of Camber’s common stock subsequent to the date hereof. The number of additional shares of common stock that Camber may issue as conversion premiums or in payment of dividends is dependent on the dividend rate and conversion premium rate which can range from 0% to 24.95% (or up to 34.95% upon a trigger event) depending on Camber’s underlying stock price at the time of conversion or maturity and assuming no trigger event has occurred, and which percentage is currently 24.95%, and is subject to true-ups in the event the price of its common stock decreases from the date of conversion through the applicable Measuring Period (defined and discussed below under “Description of Capital – Preferred Stock – Series C Redeemable Convertible Preferred Stock”, beginning on page 219). For purposes of the dividend and conversion premium calculations in the preceding sentences, Camber (i) assumed the dividend rate and conversion premium rate to be 24.95% per annum, and (ii) estimated, solely for the purposes of such hypothetical calculation, $0.6688 to be 95% of the average of the lowest 5 individual daily volume weighted average prices during the 30 trading day period immediately prior to payment of the interest, dividends and conversion premiums, as applicable, not to exceed 100% of the lowest sales prices on the last day of such period, less $0.05 per share of common stock (or $0.95 per share)(the “VWAP Measurement”) with respect to the Series C Preferred Stock. If the VWAP Measurement is, in any case, an amount less than the amount assumed in the preceding sentences and/or the interest rate, dividend rate and conversion premium rate is, in any case, higher than the rate assumed in the preceding sentences, or in the event the trading price of its common stock decreases from the date of issuance through the applicable Measurement Period, additional shares of common stock will be issuable, which may cause substantial dilution to existing stockholders.

 

The total maximum number of shares of common stock issuable in connection with this proposal is approximately 11,002,988,769, which consists of approximately (i) 38,769 shares of common stock issuable upon conversion of the Series C Preferred Stock, and (ii) approximately 11,002,950 additional shares of common stock issuable as conversion premiums on such Series C Preferred Stock, assuming the payment of dividends on the Series C Preferred Stock solely in shares of common stock, for a period of seven years, which is the maturity date of each of the securities, and assuming that the applicable conversion price of the conversion premiums due pursuant to the terms of the Series C Preferred Stock is equal to, or less than, the par value of Camber’s common stock, $0.001 per share, which is the lowest legally allowed conversion price for such Series C Preferred Stock conversion premiums.

 

Risks Relating to the Series C Preferred Stock

 

Risks relating to Camber’s Series C Preferred Stock are discussed above under “Risk Factors – Risks Relating to Camber’s Series C Preferred Stock”, beginning on page 53.

 

Interests of Directors, Officers and Affiliates

 

None of Camber’s current directors, officers or affiliates has an interest in the Series C Preferred Stock.

 

Registration Rights

 

Camber has agreed to provide piggy back registration rights for the resale of the shares of common stock issuable upon conversion of the Series C Preferred Stock. Upon such registration, these shares will be freely tradable in the public market without restriction (other than restrictions imposed on any affiliates of Camber).

 

Consequences of Not Approving this Proposal

 

If Camber does not obtain stockholder approval of this proposal at the special meeting, Camber may choose to seek stockholder approval of this proposal again at a later date, or may be required to redeem the Series C Preferred Stock sold in June 2020 at maturity for cash, which Camber estimate would total approximately $17.2 million (if redeemed prior to maturity).

 

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Recommendation of Camber’s Board

 

Camber’s board has unanimously determined that the issuance of shares of common stock upon the conversion of the Series C Preferred Stock (including shares issuable for dividends and conversion premiums thereon) is fair to, and advisable and in the best interests of, Camber and its stockholders. Camber’s Board unanimously recommends that stockholders vote “FOR” the issuance of such number of shares of common stock exceeding 19.99% of its outstanding common stock, issuable upon conversion of the 630 shares of Series C Preferred Stock sold under the June 2020 Purchase Agreement, including shares issuable for dividends and conversion premiums thereon and ratification of the terms of such June 2020 Purchase Agreement.

 

The Camber board recommends a vote “FOR” the Camber Series C Preferred Stock proposal.

 

Proposal 4: Camber Charter Amendment Proposal

 

In connection with the merger, Camber is asking its stockholders to approve an amendment to the Camber charter to increase the number of authorized shares of Camber common stock from 25 million to 250 million shares, effective only upon the completion of the merger. The increase will be affected by the filing of a Certificate of Amendment to Camber’s Articles of Incorporation in substantially the form of Annex E to this joint proxy statement/prospectus, which is subject to non-material technical, administrative or similar changes and modifications in order to comply with Nevada law. Camber stockholders should read the proposed amendment to the Camber charter in its entirety.

 

The Camber board approved and recommends that the Camber stockholders adopt the amendment to the Camber charter.

 

The Camber board recommends a vote “FOR” the Camber charter amendment proposal.

 

Proposal 5: Camber Reverse Split Proposal

 

The Camber board of directors has approved and has recommended that the Camber stockholders approve a proposal to authorize Camber’s board of directors to effect a reverse stock split of all of its outstanding common stock at a ratio of between one-for-five and one-for-twenty-five (the “Exchange Ratio”), with the Camber board of directors having the discretion as to whether or not the reverse split is to be effected, and with the exact Exchange Ratio of any reverse split to be set at a whole number within the above range as determined by the Camber board of directors in its sole discretion (the “Reverse Stock Split”). The proposal provides that the board of directors of Camber will have sole discretion to elect, at any time prior to or concurrently with, the merger, as it determines to be in Camber’s best interest, with the approval of Viking, whether or not to effect the Reverse Stock Split, and, if so, the number of Camber shares of common stock within the Exchange Ratio which will be combined into one share of Camber’s common stock.

 

The Reverse Stock Split will be implemented by the Camber board of directors, if the Camber reverse split proposal is approved by the Camber stockholders, in order for the combined company to meet the initial listing requirements of the NYSE American. Specifically, Camber and Viking currently anticipate that the NYSE American will determine that the merger constitutes, or will constitute, a “back-door listing”/“reverse merger” and as such, that Camber (and its common stock) will be required to qualify for initial listing on the NYSE American, pursuant to the applicable guidance and requirements of the NYSE as of the closing of the merger. One of the requirements for such initial listing approval (based on the listing standard that Camber anticipates meeting) is that Camber have a stock price above $3 per share.

 

The determination as to whether the Reverse Stock Split will be affected and, if so, pursuant to which Exchange Ratio, will be based upon those market or business factors deemed relevant by the Camber board of directors at that time, including, but not limited to:

 

  listing standards under the NYSE American;
     
  existing and expected marketability and liquidity of the Camber common stock;

         

 

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  prevailing stock market conditions;
     
  the historical trading price and trading volume of Camber’s common stock;
     
  the then prevailing trading price and trading volume of Camber’s common stock and the anticipated impact of the reverse split on the trading market for Camber’s common stock;
     
  the anticipated impact of the reverse split on Camber’s ability to raise additional financing;
     
  business developments affecting Camber;
     
  Camber’s actual or forecasted results of operations; and
     
  the likely effect on the market price of Camber’s common stock. 

 

The board of directors of Camber believes that stockholder approval granting the board discretion to set the actual exchange ratio within the range of the Exchange Ratio, rather than stockholder approval of a specified exchange ratio, provides Camber with maximum flexibility to react to then-current market conditions and volatility in the market price of Camber’s common stock in order to set an exchange ratio that is intended to result in a stock price in excess of $3.00 per share. If the Camber board of directors determines to implement the Reverse Stock Split, Camber intends to issue a press release announcing the terms and effective date of the Reverse Stock Split before it files the amendment with the Secretary of State of the State of Nevada.

 

If Camber’s board of directors determines that effecting the Reverse Stock Split is in its best interest, the Reverse Stock Split will become effective upon the filing of an amendment to Camber’s articles of incorporation with the Secretary of State of the State of Nevada. The form of the proposed amendment to Camber’s Articles of Incorporation to effect the Reverse Stock Split will be in substantially the form as attached to this joint proxy statement/prospectus as Annex F (which assumes the amendment set forth in proposal 2 is approved)(the “Amendment”), which is subject to non-material technical, administrative or similar changes and modifications in order to comply with Nevada law. The Amendment filed thereby will set forth the number of shares to be combined into one share of Camber’s common stock within the limits set forth in this proposal, but will not have any effect on the number of shares of common stock or preferred stock then authorized (or the effects of the Camber charter amendment), the ability of Camber’s board of directors to designate preferred stock, the par value of Camber’s common or preferred stock, or any series of preferred stock previously authorized (except to the extent such Reverse Stock Split adjusts the conversion ratio of such previously designated preferred stock).

 

Purpose of the Reverse Stock Split

 

The primary purpose of the Reverse Stock Split will be to increase proportionately the per share trading price of Camber’s common stock. As discussed above, in the event the combined company is required to meet the initial listing requirements of the NYSE American for the Camber common stock to trade on the NYSE American, we anticipate that Camber’s common stock price will need to be above $3.00 per share. Approval of the Camber reverse split proposal will be necessary to provide the Camber board of directors the ability to affect the Camber reverse stock split in order to make sure that such minimum stock price is met upon closing of the merger.

 

Camber Board of Directors Discretion to Implement the Reverse Stock Split

 

If the Camber reverse stock proposal is approved by the Camber stockholders, the Reverse Stock Split will be affected, if at all, only upon a determination by the board of directors of Camber that the Reverse Stock Split is in the best interests of Camber and its stockholders. The board’s determination as to whether the Reverse Stock Split will be affected and, if so, at which Exchange Ratio, will be based upon certain factors, including prevailing stock market conditions, trading prices of Camber’s common stock prior to such Reverse Stock Split, the timing of closing the merger, the likely effect on the market price of Camber’s common stock, and the listing standards of the NYSE American. If the board does not act to implement the Reverse Stock Split prior to closing the merger, the authorization granted by stockholders pursuant to this proposal would be deemed abandoned and without any further effect.

 

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Effect of the Reverse Stock Split

 

If approved by Camber stockholders and implemented by the board of directors of Camber, as of the effective time of the Amendment, each issued and outstanding share of Camber’s common stock would immediately and automatically be reclassified and reduced into a fewer number of shares of Camber common stock, depending upon the Exchange Ratio selected by the board, which could range between one-for-five and one-for-twenty-five. As discussed in further detail below, Camber will not issue any fractional shares of Camber common stock in connection with the Reverse Stock Split. Instead, holders of Camber common stock will have any fractional shares of Camber common stock which they would be due as a result of the Reverse Stock Split rounded up to the nearest whole share.

 

Except to the extent that the Reverse Stock Split would result in any stockholder having any fractional shares rounded up to the nearest whole share as a result of the Reverse Stock Split, as described below, the Reverse Stock Split will not:

 

  affect any stockholder’s percentage ownership interest in Camber;
     
  affect any stockholder’s proportionate voting power;
     
  substantially affect the voting rights or other privileges of any stockholder; or
     
  alter the relative rights of common stockholders, preferred stockholders, warrant holders or holders of equity compensation plan awards and options. 

 

Depending upon the Exchange Ratio selected by the board of directors, the principal effects of the Reverse Stock Split are:

 

  the number of shares of common stock issued and outstanding will be reduced by a factor ranging between five and twenty-five, notwithstanding any rounding;
     
  the per share exercise price will be increased by a factor between five and twenty-five, and the number of shares issuable upon exercise shall be decreased by the same factor, for all outstanding options, warrants and other convertible or exercisable equity instruments entitling the holders to purchase shares of Camber common stock;
     
  the number of shares authorized and reserved for issuance under Camber’s existing equity compensation plans will be reduced proportionately; and
     
   the conversion rates for holders of Camber’s preferred stock and other outstanding securities will be adjusted proportionately, subject to their terms.

 

Additionally, because the discounts set forth in Camber’s Series C Preferred Stock are provided in dollar amounts ($0.05 per share or $0.10 per share, depending on whether a trigger event under such Series C Preferred Stock has occurred)(and adjusted in connection with stock splits), it is likely that any ratio of reverse stock split will result in the conversion price of the Series C Preferred Stock decreasing substantially, for example, a 1-for-10 reverse stock split would result in the discount to the VWAP being $0.50 per share. As a result, there is a chance that the discount would exceed the VWAP conversion price, which would result in the conversion price of the Series C Preferred Stock decreasing to $0.001 per share, the par value of Camber’s common stock. See also the risk factor entitled “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 Camber’s stock price declines.”, on page 56.

 

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If the Reverse Stock Split is implemented, the Amendment will not reduce the number of shares of Camber’s common stock or preferred stock authorized under its Articles of Incorporation (including as a result of the Camber charter amendment proposal), as amended, the right of its board of directors to designate preferred stock, the par value of Camber’s common or preferred stock, or otherwise effect Camber’s designated series of preferred stock, except to affect the exchange ratio thereof.

 

Camber’s common stock is currently registered under Section 12(b) of the Exchange Act, and Camber is subject to the periodic reporting and other requirements thereof. Camber does not have any intent to seek any change in its status as a reporting company under the Exchange Act either before or after the Reverse Stock Split.

 

Fractional Shares

 

No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders of record who otherwise would be entitled to receive fractional shares because they hold a number of pre-split shares not evenly divisible by the number of pre-split shares for which each post-split share is to be reclassified (based on the final Exchange Ratio), will be entitled to have their fractional shares rounded up to the nearest whole share.

 

Effective Time of the Reverse Stock Split

 

The effective time for the Reverse Stock Split will be the date on which Camber files the Amendment with the office of the Secretary of State of the State of Nevada or such later date and time as specified in the Amendment, provided that the effective date must occur prior to or concurrently with, the merger.

 

Procedure for Effecting Reverse Stock Split and Exchange of Stock Certificates

 

If the Camber stockholders approve the Reverse Stock Split, and if the Camber board of directors believes that a reverse stock split is in the best interests of Camber and its stockholders, Camber will file the amendment to the Certificate of Incorporation with the Secretary of State of the State of Nevada at such time as the Camber board of directors has determined to be the appropriate split effective time. The amendment filed thereby will contain the final Exchange Ratio selected by the Camber board of directors within the limits set forth in this proposal to be combined and reclassified into one share of Camber common stock. The Camber board of directors may delay effecting the reverse stock split without resoliciting stockholder approval. Beginning at the split effective time, each stock certificate representing pre-split shares will be deemed for all corporate purposes to evidence ownership of post-split shares.

 

As soon as practicable after the split effective time, stockholders will be notified that the Reverse Stock Split has been affected. Camber expects that the Camber transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-split shares will be asked to surrender to the exchange agent stock certificates representing pre-split shares in exchange for stock certificates representing post-split shares in accordance with the procedures to be set forth in a letter of transmittal to be sent by Camber. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent. Any pre-split shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise, will automatically be exchanged for post-split shares. 

 

STOCKHOLDERS OF CAMBER SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATE(S) UNLESS REQUESTED TO DO SO

 

No Going-Private Transaction

 

Notwithstanding the decrease in the number of outstanding shares following the proposed Reverse Stock Split, Camber’s board of directors does not intend for the Reverse Stock Split to be the first step in a “going-private transaction” within the meaning of Rule 13e-3 of the Exchange Act.

 

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Accounting Matters

 

The Reverse Stock Split will not affect the par value of Camber’s common stock ($0.001 per share). However, at the effective time of the Reverse Stock Split, the stated capital attributable to common stock on Camber’s balance sheet will be reduced proportionately based on the Exchange Ratio (including a retroactive adjustment of prior periods), and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced. Reported per share net income or loss would be expected to be proportionally higher because there will be fewer shares of Camber’s common stock outstanding.

 

Appraisal Rights

 

Under the Nevada Revised Statutes, Camber stockholders are not entitled to appraisal rights with respect to the Reverse Stock Split.

 

Certain Risks Associated with the Reverse Stock Split

 

Before voting on this proposal, you should consider the following risks associated with the implementation of the Reverse Stock Split:

 

  The price per share of Camber’s common stock after the Reverse Stock Split may not reflect the Exchange Ratio implemented by the board of directors of Camber and the price per share following the effective time of the Reverse Stock Split may not be maintained for any period of time following the Reverse Stock Split. For example, based on the closing price of Camber’s common stock on [●], 2020 of $[●] per share, if the Reverse Stock Split was implemented at an Exchange Ratio of 1-for-10, there can be no assurance that the post-split trading price of Camber’s common stock would be $[●] or even that it would remain above the pre-split trading price. Accordingly, the total market capitalization of Camber’s common stock following a Reverse Stock Split may be lower than before the Reverse Stock Split.
     
  There is no assurance that following the Reverse Stock Split that combined company will, to the extent required, meet the initial listing criteria for companies trading on the NYSE American, which could cause Camber’s common stock to be delisted or subject to delisting.
     
  The trading liquidity of Camber’s common stock could be adversely affected by the reduced number of shares outstanding after the Reverse Stock Split.
     
   If a Reverse Stock Split is implemented by the board of directors, some stockholders may consequently own less than 100 shares of common stock. A purchase or sale of less than 100 shares (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own