UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x
x
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, ~~2017~~2019

¨	¨ TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~__________~~_______ to ~~__________.~~_______.

Commission file number: 000-29219

VIKING ENERGY GROUP, INC.
(Formerly Viking Investments Group, Inc.)
(Exact name of registrant as specified in its charter)

Nevada

98-0199508
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)

~~1330 Avenue of the Americas, Suite 23 A,~~
15915 Katy Freeway, Suite 450
Houston, TX 77094
(Address of principal executive offices)

~~New York, NY~~ ~~10019~~

~~(Address of principal executive offices)~~

~~(212) 653 0946~~
(281) 404 4387
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Not applicable.
Note applicable.
Not applicable.

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

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No ¨

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

Large Accelerated Filer
¨
Accelerated Filer
¨
Non-Accelerated Filer
¨
Smaller Reporting Company
x
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 13(a) of the Exchange Act. ¨

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

APPLICABLE ONLY TO CORPORATE ISSUERS

As of November ~~14, 2017,~~1, the registrant had ~~66,220,524~~96,276,947 shares of common stock outstanding.

VIKING ENERGY GROUP, INC.

Part I – Financial Information
Item 1
Financial Statements
3

Consolidated Balance Sheets as of September 30, ~~2017~~2019 (unaudited) and December 31, ~~2016~~2018

3

Consolidated Statements of Operations ~~and Comprehensive Loss~~ for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 (unaudited)

4

Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 (unaudited)

5

Consolidated Statements of Changes in Stockholders’ ~~Deficit~~Equity for the nine months ended September 30, 2019 and 2018 (unaudited)

6

Notes to Consolidated Financial Statements (unaudited)

7
Item 2
Management’s Discussion and Analysis ~~or Plan~~ of ~~Operation~~Financial Condition and Results of Operations

2322
Item 3
Quantitative and Qualitative Disclosures about Market Risk

2729
Item 4
Controls and Procedures

2829
Part II – Other Information
Item 1
Legal Proceedings

2830
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds

2830
Item 3
Defaults Upon Senior Securities

2830
Item 4
Mine Safety Disclosures

2830
Item 5
Other Information

2830
Item 6
Exhibits

2931

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VIKING ENERGY GROUP, INC.
Consolidated Balance Sheets
~~(Amounts expressed in US dollars)~~

	September 30,			December 31,			September 30,			December 31,
	2017			2016			2019			2018
	(unaudited)			(audited)			(unaudited)
ASSETS
Current assets:
Cash	$	568,222		$	18,605		$	1,555,390		$	4,009,892
Accounts receivable – oil and gas		63,257			66,176
Other receivable – related party		76,939			76,939
Restricted cash								6,088,859			-
Accounts receivable – oil and gas - net								2,653,653			258,300
Prepaid expenses		6,549			87,532			136,404			124,443
Total current assets		714,967			249,252			10,434,306			4,392,635

Oil and gas properties, full cost method
Proved developed producing oil and gas properties, net		2,254,925			1,765,373			75,675,548			81,331,986
Undeveloped and non-producing oil and gas properties, net		1,166,383			1,237,489
Proved undeveloped and non-producing oil and gas properties, net								48,143,115			50,492,906
Total oil and gas properties, net		3,421,308			3,002,862			123,818,663			131,824,892

Long term investment		-			106,930
Fixed assets, net								534,829			200,243
Derivative asset		683			-			101,726			681,776
Other assets								71,594			110,194
TOTAL ASSETS	$	4,136,958		$	3,359,044		$	134,961,118		$	137,209,740

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable							$	2,431,858		$	2,549,280
Accrued expenses and other current liabilities	$	253,491		$	179,421			2,145,033			1,014,661
Accounts payable		115,885			121,365
Undistributed revenues and royalties								1,746,255			1,207,605
Derivative liability		606,878			1,136,894			1,683,980			2,531,718
Amount due to directors		1,056,147			1,072,576
Current portion of long term debt – net of debt discount		1,518,464			1,302,476
Amount due to director								590,555			395,555
Current portion of long-term debt and other short-term borrowings – net of debt discount								40,241,800			11,805,582
Total current liabilities		3,550,865			3,812,732			48,839,481			19,504,401
Long term debt - net of current portion and debt discount		2,568,568			1,579,469			66,231,506			92,076,857
Operating lease liability								323,642			-
Asset retirement obligation		1,067,232			833,017			3,377,424			4,413,465
TOTAL LIABILITIES		7,186,665			6,225,218			118,772,053			115,994,723

Commitments and contingencies (Note 7)
Commitments and contingencies (Note 8)

STOCKHOLDERS’ DEFICIT
Capital Stock
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 28,092 shares issued and outstanding as of September 30, 2017 and December 31, 2016		28			28
Common stock, $0.001 par value, 100,000,000 shares authorized, 66,220,524 and 53,093,192 shares issued, issuable and outstanding as of September 30, 2017 and December 31, 2016 respectively.		66,221			53,093
Additional Paid-In Capital		14,011,458			11,526,847
Prepaid equity-based compensation		(50,072	)		(35,068	)
Accumulated other comprehensive loss		-			(1,446	)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 28,092 shares issued and outstanding as of September 30, 2019 and December 31, 2018								28			28
Common stock, $0.001 par value, 500,000,000 shares authorized, 96,276,947 and 90,989,025 shares issued and outstanding as of September 30, 2019 and December 31, 2018 respectively.								96,277			90,989
Additional paid-in capital								36,204,678			32,015,913
Accumulated deficit		(17,077,342	)		(14,409,628	)		(20,111,918	)		(10,891,913	)
TOTAL STOCKHOLDERS’ DEFICIT		(3,049,707	)		(2,866,174	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	4,136,958		$	3,359,044
TOTAL STOCKHOLDERS’ EQUITY								16,189,065			21,215,017
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY							$	134,961,118		$	137,209,740

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

3

Table of Contents

VIKING ENERGY GROUP, INC.
Consolidated Statements of Operations ~~and Comprehensive Loss~~
(Unaudited)
~~(Amounts expressed in US dollars)~~

	Three months ended,						Nine months ended,						Three months ended						Nine months ended
	September 30,						September 30,						September 30,						September 30,
	2017			2016			2017			2016			2019			2018			2019			2018

Revenue
Oil and gas sales	$	221,329		$	105,427		$	588,622		$	232,013			9,000,591		$	1,895,932		$	27,081,506		$	6,376,501

Operating expenses
Lease operating costs		172,893			66,456			437,477			165,773			3,547,662			913,331			9,004,334			2,957,073
General and administrative		180,400			186,508			666,323			439,604			1,076,287			1,364,779			3,367,591			3,391,240
Stock based compensation		153,155			172,219			1,304,175			578,363			402,451			680,156			444,533			1,898,255
Depreciation, depletion and amortization														2,379,725			412,669			6,978,604			1,362,306
Accretion - ARO		10,526			5,234			29,167			15,513			72,042			40,081			230,269			137,858
Depreciation, depletion and amortization		59,711			29,009			146,602			77,625
Total operating expenses		576,685			459,426			2,583,744			1,276,878			7,478,167			3,411,016			20,025,331			9,746,732

Loss from operations		(355,356	)		(353,999	)		(1,995,122	)		(1,044,865	)
Income (loss) from operations														1,522,424			(1,515,084	)		7,056,175			(3,370,231	)

Other income (expense)
Interest expense		(470,614	)		(542,107	)		(1,160,875	)		(1,966,015	)		(3,278,555	)		(255,999	)		(9,602,522	)		(1,217,383	)
Amortization of debt discount														(2,364,357	)		(1,420,459	)		(6,947,607	)		(4,059,563	)
Change in fair value of derivatives		40,370			2,765,013			495,468			833,418			5,539,255			(342,318	)		267,688			(1,330,102	)
Loss on sale of investments		-			-			(7,185	)		-
Gain on settlement of debt		-			-			-			75,000
Gain on disposal of assets														-			555,548			-			613,589
Interest and other income														363			-			6,261			-
Total other income (expense)		(430,244	)		2,222,906			(672,592	)		(1,057,597	)		(103,294	)		(1,463,228	)		(16,276,180	)		(5,993,459	)

Net income (loss) before income taxes		(785,600	)		1,868,907			(2,667,714	)		(2,102,462	)		1,419,130			(2,978,312	)		(9,220,005	)		(9,363,690	)
Income tax provision		-			(635,428	)		-			-
Benefit from utilization of net operating loss		-			635,428			-			-
Income tax benefit (expense)														-			33,548			-			910,827

Net income (loss)	$	(785,600	)	$	1,868,907		$	(2,667,714	)	$	(2,102,462	)

Other comprehensive income (loss)
Unrealized gain (loss) on securities available-for-sale		-			(3,394	)		1,446			148,663

Net Comprehensive income (loss)	$	(785,600	)	$	1,865,513		$	(2,666,268	)	$	(1,953,798	)
Net Income (loss)													$	1,419,130		$	(2,944,764	)	$	(9,220,005	)	$	(8,452,863	)
Earnings (loss) per common share
Basic	$	(0.01	)	$	0.04		$	(0.04	)	$	(0.05	)	$	0.02		$	(0.03	)	$	(0.10	)	$	(0.11	)
Diluted	$	(0.01	)	$	0.04		$	(0.04	)	$	(0.05	)
Weighted average number of common shares outstanding
Basic		64,051,015			45,837,636			60,723,535			43,584,699			92,586,983			84,561,061			91,632,904			79,979,011
Diluted		64,051,015			54,004,303			60,723,535			43,584,699

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

4

Table of Contents

VIKING ENERGY GROUP, INC.
Consolidated Statements of Cash Flows
(Unaudited)
~~(Amounts expressed in US dollars)~~

Nine Months Ended

September 30,

2017

2016

Cash flows from operating activities:

Net loss

$ (2,667,714 )

$ (2,102,462 )
Adjustments to reconcile net loss to cash used in operating activities:

Derivative gain

(495,468 )

(833,418 )
Amortization of prepaid expenses

180,983

-

Stock based compensation

1,304,175

578,363

Stock based interest payment

52,500

Loss on sale of investments

7,185

-

Depreciation, depletion and amortization

146,602

77,625

Accretion – Asset retirement obligation

29,167

15,513

Amortization of debt discount

817,431

1,626,062

Changes in operating assets and liabilities

Accounts receivable

2,919

(11,947 )
Accounts payable

(5,480 )

(89,282 )
Accrued expenses and other current liabilities

90,975

151,862

Amounts due to directors

121,755

197,280

Net cash used in operating activities

(467,470 )

(337,904 )

Cash flows from investing activities:

Purchase of oil and gas properties

(360,000 )

(1,350,000 )
Proceeds from sale of investments

101,191

-

Net cash used in investing activities

(258,809 )

(1,350,000 )

Cash flows from financing activities:

Proceeds from amount due to directors

5,350

-

Repayment of amount due to directors

(348,438 )

(56,056 )
Proceeds from sale of common stock

331,667

388,125

Common stock issuance costs

-

(37,500 )
Proceeds from long term debt

3,288,650

2,021,875

Debt issuance costs

(216,000 )

-

Repayment of long term debt

(1,785,333 )

(570,500 )
Net cash provided by financing activities

1,275,896

1,745,944

Net increase in cash

549,617

58,040

Cash, beginning of period

18,605

30,585

Cash, end of period

$ 568,222

$ 88,625

Supplemental Cash Flow Information:

Cash paid for:

Interest

$ 209,307

$ 125,431

Income taxes

$ -

$ -

Supplemental disclosure of Non-Cash Investing and Financing Activities:

Conversion of convertible note payable

$ -

$ 6,778

Issuance of shares for oil and gas property acquisition

$ -

$ 820,250

Issuance of warrants for 4,062,500 common shares as debt discount

$ -

$ 416,315

Loan from director to pay convertible debt

$ -

$ 100,000

Issuance of shares as deposit for oil and gas property acquisition

$ -

$ 288,000

Prepayment of contract through amounts due directors

$ 100,000

$ -

Long term debt paid through amounts due directors

$ 104,904

$ -

Issuance of shares for contract services

$ 700,920

$ -

Sale of shares through satisfaction of unrelated notes payable

$ 127,215

$ -

Accrued expenses exchanged for long term debt

$ 9,500

$ -

Increase in oil and gas properties due to asset retirement obligation

$ 205,048

$ -

Issuance of shares and warrants as discount on debt

$ 684,411

$ -

Nine Months Ended

September 30,

2019

2018

Cash flows from operating activities:

Net loss

$ (9,220,005 )

$ (8,452,863 )
Adjustments to reconcile net loss to cash provided by (used in) operating activities:

Change in fair value of derivative liability

(267,688 )

1,330,102

Stock based compensation

444,533

1,898,255

Depreciation, depletion and amortization

6,978,604

1,362,306

Amortization of operational right-of-use assets

2,997

-

Gain on disposal of assets

-

(613,589 )
Accretion – Asset retirement obligation

230,269

137,858

Amortization of debt discount

6,947,607

4,059,563

Changes in operating assets and liabilities

Accounts receivable

(2,307,266 )

(154,772 )
Prepaid expenses and other assets

26,639

(368,542 )
Other receivable

-

548,714

Accounts payable

(806,594 )

(1,198,555 )
Accrued expenses and other current liabilities

1,753,034

349,156

Deferred tax liability

-

(910,827 )
Undistributed revenues and royalties

538,650

77,167

Amounts due to directors

-

39,993

Net cash provided by (used) in operating activities

4,320,780

(1,896,034 )

Cash flows from investing activities:

Investment in and acquisition of oil and gas properties

(4,641,453 )

(3,600,528 )
Acquisition of fixed assets

-

(130,000 )
Proceeds from sale of fixed assets

-

45,000

Proceeds from sale of oil and gas interests

552,966

1,332,995

Net cash used in investing activities

(4,088,487 )

(2,352,533 )

Cash flows from financing activities:

Proceeds from amount due to director

195,000

583,000

Repayment of amount due to director

-

(1,312,908 )
Proceeds from long term debt

6,372,383

16,047,458

Debt issuance costs

(791,385 )
Short term advance

693,706

-

Repayment of long-term debt

(3,859,025 )

(8,199,989 )
Net cash provided by financing activities

3,402,064

6,326,176

Net increase (decrease) in cash

3,634,357

2,077,609

Cash and Restricted Cash, beginning of period

4,009,892

5,735,259

Cash and Restricted Cash, end of period

$ 7,644,249

$ 7,812,868

Supplemental Cash Flow Information:

Cash paid for:

Interest

$ 7,664,537

$ 1,059,616

Income taxes

$ -

$ -

Supplemental disclosure of Non-Cash Investing and Financing Activities:

Recognition of asset retirement obligation

$ 94,796

$ 231,053

Recognition of right-of-use asset and lease liability

$ 367,365

$ -

Amortization of right-of-use asset and lease liability

$ 43,723

$ -

Purchase of transportation equipment through direct financing

$ 56,760

$ -

Proceeds from sale of oil and gas properties paid directly to reduce debt

$ 3,800,000

$ -

Elimination of asset retirement obligation associated with sale of assets

$ 1,361,106

$ -

Issuance of shares as discount on debt

$ -

$ 2,231,331

Issuance of shares as payment of interest on debt

$ 620,508

$ -

Issuance of warrants for services

$ 167,151

$ -

Issuance of warrants as discount on debt

$ 3,129,012

$ 1,716,039

Accrual of debt issuance costs

$ -

$ 1,187,428

Debt refinanced through new credit facility

$ 3,310,000

$ 7,633,389

Private placement debt exchanged for new private placement

$ -

$ 5,314,000

Purchase of working interest through new debt

$ -

$ 165,000

Issuance of shares for contract services

$ -

$ 55,000

Cashless exercise of warrants

$ -

$ 447

Accrued expenses exchanged for long term debt

$ -

$ 177,771

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


5

Table of Contents

VIKING ENERGY GROUP, INC.
Consolidated Statements of Changes in Stockholders’ ~~Deficit~~
Equity (Unaudited)
~~(Amounts expressed in US dollars)~~

Accumulated

Additional

Prepaid

Other

Total

Common Stock

Shares to be Issued

Preferred Stock

Paid-in

Equity-Based

Comprehensive

Accumulated

Stockholders'

Number

Amount

Number

Amount

Number

Amount

Capital

Compensation

Loss

Deficit

Deficit

Balances at December 31, 2015

30,333,993

$ 30,334

-

$ -

28,092

$ 28

$ 7,960,372

$ (145,562 )

$ (158,424 )

$ (8,964,441 )

$ (1,277,693 )
Shares issued in satisfaction of debt

300,926

301

9,810

10,111

Derivative liability adjustments - satisfaction of convertible debt

685,668

685,668

Shares issued for consulting services

1,315,000

1,315

164,185

165,500

Shares issued in acquisition of oil and gas properties

14,862,021

14,862

1,430,829

1,445,691

Shares issued as prepaid equity-based compensation

5,000,000

5,000

795,000

(800,000 )

-

Cancellation of shares issued as prepaid equity-based compensation

(4,000,000 )

(4,000 )

(636,000 )

640,000

-

Sale of stock

2,841,667

2,842

423,408

426,250

Capital issuance costs

(37,500 )

(37,500 )
Shares issued as payment for interest expense

1,931,250

1,931

324,444

326,375

Shares issued as additional discount on debt

508,335

508

75,742

76,250

Warrants issued for services

330,889

330,889

Amortization of prepaid equity-based compensation

270,494

270,494

Unrealized gain (loss) on securities held for sale

156,978

156,978

Net loss for the year ended December 31, 2016

(5,445,187 )

(5,445,187 )
Balances at December 31, 2016

53,093,192

$ 53,093

-

$ -

28,092

$ 28

$ 11,526,847

$ (35,068 )

$ (1,446 )

$ (14,409,628 )

$ (2,866,174 )
Shares issued for consulting services

2,892,889

2,894

478,739

481,633

Shares issued as prepaid equity-based compensation

4,135,000

4,135

833,411

(837,546 )

-

Sale of stock

3,059,442

3,059

455,858

458,917

Derivative liability adjustments - satisfaction of convertible debt

35,232

35,232

Amortization of prepaid equity-based compensation

822,542

822,542

Unrealized gain (loss) on securities held for sale

1,446

1,446

Shares and warrants issued as discount on new debt

3,040,000

3,040

681,371

684,411

Net loss for the nine months ended September 30, 2017

(2,667,714 )

(2,667,714 )
Balances at September 30, 2017

66,220,523

$ 66,221

-

$ -

28,092

$ 28

$ 14,011,458

$ (50,072 )

$ -

$ (17,077,342 )

$ (3,049,707 )
For the nine months ended September 30, 2019

Retained

Preferred Stock

Common Stock

Additional
Paid-in

Prepaid
Equity-Based

Earnings (Accumulated

Total
Stockholders'

Number

Amount

Number

Amount

Capital

Compensation

Deficit)

Equity

Balances at December 31, 2018

28,092

$ 28

90,989,025

$ 90,989

$ 32,015,913

$ -

$ (10,891,913 )

$ 21,215,017

Shares issued for services

1,637,876

1,638

275,144

276,782

Shares issued for interest

3,650,046

3,650

616,858

620,508

Warrants issued for services

167,751

167,751

Warrants issued as debt discouint

3,129,012

3,129,012

Net loss for the nine months ended September 30, 2019

(9,220,005 )

(9,220,005 )

Balances at September 30, 2019

28,092

$ 28

96,276,947

$ 96,277

$ 36,204,678

$ -

$ (20,111,918 )

$ 16,189,065

For the nine months ended September 30, 2018

Retained

Preferred Stock

Common Stock

Additional
Paid-in

Prepaid
Equity-Based

Earnings
(Accumulated

Total
Stockholders'

Number

Amount

Number

Amount

Capital

Compensation

Deficit)

Equity

Balances at December 31, 2017

28,092

$ 28

72,347,990

$ 72,348

$ 19,029,892

$ (11,827 )

$ 3,417,872

$ 22,508,313.0

Accounting principle change relative to certain derivative liabilities - Note 2.

807,762

807,762

Shares issued for consulting services

5,029,443

5,030

1,172,979

1,178,009

Shares issued as prepaid equity-based compensation

250,000

250

54,750

(55,000 )

-

Shares issued as debt discount

10,323,356

10,323

2,221,008

2,231,331

Warrants issued for services

653,419

653,419

Shares issued in cashless exercise of warrants

447,591

447

(447 )

-

Warrants issued as debt discount

1,716,039

1,716,039

Amortization of prepaid equity-based compensation

66,827

66,827

Net loss for the nine months ended September 30, 2018

(8,452,863 )

(8,452,863 )

Balances at September 30, 2018

28,092

$ 28

88,398,380

$ 88,398

$ 24,847,640

$ -

$ (4,227,229 )

$ 20,708,837


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


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VIKING ENERGY GROUP, INC.
Notes to Consolidated Financial Statements
(Unaudited)
~~(Amounts expressed in US dollars)~~

Note 1 Nature of Business and Going Concern

Viking Energy Group, Inc. (“Viking” or the “Company”) was incorporated under the laws of the State of Florida on May 3, 1989, as Sparta Ventures Corp. and remained inactive until June 27, 1998. After several name changes, the Company merged with and into a wholly-owned subsidiary, SinoCubate, Inc., which remained the surviving entity of the merger. SinoCubate, Inc. was formed in the State of Nevada on September 11, 2008. The merger resulted in a change of name of the Company from Synthenol Inc. to SinoCubate, Inc., and a change in the state of incorporation of the Company from Florida to Nevada. On June 13, 2012, the Company changed its name to Viking Investments Group, Inc., and the Company’s ticker symbol was changed to “VKIN.” On March 17, 2017, the Company changed its name to Viking Energy Group, Inc.
~~The Company's business plan~~ is ~~to engage~~engaged in the acquisition, exploration, development and production of oil and natural gas properties, both individually and through collaborative partnerships with other companies in this field of endeavor. ~~On March 8, 2016,~~Since the beginning of 2018 the Company ~~incorporated a wholly owned subsidiary, Viking Oil & Gas (Canada) ULC, in Alberta, Canada, to hold its Canadian oil and gas interests. In November of 2014,~~has had the ~~Company entered into its first contract relative to oil and gas activities involving jointly controlled assets and~~following related liabilities by purchasing an undivided 50% interest in the Joffre project located in Alberta, Canada. On February 23, 2016, the Company closed on the acquisition of working interests in four leases with access to the mineral rights (oil and gas) concerning approximately 281 acres of property in Miami and Franklin Counties in eastern Kansas. On August 30, 2016, the Company created an additional wholly owned subsidiary, Mid-Con Petroleum, LLC (“Mid-Con”), in the State of Kansas to hold its current acquisitions in the central United States. On October 4, 2016, the Company, through Mid-Con, completed an acquisition whereby the Company (i) increased its working interest in three existing oil and gas leases in Miami and Franklin Counties in Eastern Kansas, and (ii) acquired a working interest in four new oil and gas leases in the same region, comprising approximately 660 acres of property. On August 25, 2017, the Company created an additional wholly owned subsidiary, Mid-Con Drilling, LLC. (“Mid-Con Drilling”), in the State of Kansas to hold additional acquisitions in the central United States. On September 11, 2017, the Company through Mid-Con Drilling, completed an acquisition of a 90% working interest in four new oil and gas leases in Anderson County in Eastern Kansas, comprising approximately 980 acres of property.activities:
· On January 12, 2018, the Company, through its subsidiary Mid-Con Drilling, LLC (“Mid-Con Drilling”) completed an acquisition of a 100% working interest in seven new oil and gas leases in Woodson and Allen Counties in Eastern Kansas.
· Effective February 1, 2018, the Company, through Mid-Con Drilling, closed on the acquisition of a working interest in a lease with access to the mineral rights (oil and gas) concerning approximately 80 acres of property in Douglas County in eastern Kansas.
· On December 28, 2018, the Company, through its subsidiary Ichor Energy, LLC (“Ichor Energy”) completed an acquisition (the “Ichor Energy Acquisition”) of working interests in certain oil and gas leases in Texas (primarily in Orange and Jefferson Counties) and Louisiana (primarily in Calcasiue Parish), which include 58 producing wells and 31 salt water disposal wells. The properties produce hydrocarbons from known reservoirs/sands in the on-shore Gulf Coast region, with an average well depth in excess of 10,600 feet.
· On May 1, 2019, the Company’s subsidiary, Mid-Con Development, LLC sold all of its interests in the oil and gas assets Mid-Con Development, LLC owned in Ellis and Rooks Counties, Kansas, consisting of working interests in approximately 41 oil leases comprising several thousand acres.
· On May 10, 2019, Petrodome Louisiana Pipeline LLC ("Petrodome LA"), a subsidiary of the Company’s subsidiary, Petrodome Energy, LLC, acquired a majority working interest in 6 gas wells (including 2 producing gas wells), 1 producing oil well and 1 salt water disposal well located in the East Mud Lake Field in Cameron Parish, Louisiana, with leases to mineral rights (oil and gas) concerning approximately 765 acres.

These accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. ~~The~~Although the Company had net income of $1,419,130 for the three months ended September 30, 2019, the Company had a net ~~comprehensive~~ loss of ~~$2,666,268, and $1,953,798~~$9,220,005 for the nine months ended September 30, ~~2017 and 2016, respectively. The Company has accumulated a stockholders’ deficit of $3,049,707~~2019. Furthermore, as of September 30, ~~2017.~~ 2019, the Company has a working capital deficiency in excess of $38,000,000. The largest components of current liabilities creating this deficiency are (a) notes payable with a face value aggregating approximately $15,000,000 due in August of 2020 and (b) a promissory note payable to the seller of the certain oil and gas interests purchased on December 28, 2018 in the amount of $23,777,948 with all principal and accrued interest due on the earlier of (i) the date the Company or one of its affiliates completes an acquisition with one or more of the Sellers for a purchase price equal to or greater than $50,000,000 or (ii) January 31, 2020.
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Management has evaluated these conditions and has developed a plan which, in part, address these obligations as follows:
·
The terms of the $15 million notes which were initially due in August 2019 allowed for 50% of the principal to be converted into shares of the Company’s common stock at $0.20 per share, and also contained a provision whereby the Company had the right to extend the Maturity Date for one additional year to August of 2020. Consideration for the one-year extension was payment of the accrued interest, an increase in the interest rate to 12% for the extension period and the issuance of a warrant to purchase an additional 115,000 common shares per $100,000 of outstanding principal of each note on a pro rata basis. The Company elected to extend the Maturity Date and accomplished the payment of the accrued interest through the issuance of approximately 3,650,000 common shares and approximately $900,000 in cash. Effective as of October 31, 2019, all the warrant holders associated with these notes consented to a modification to the exercise price of these warrants from $0.20 to $0.10. Multiple warrant holders then elected to exercise 20,416,350 warrants for an aggregate exercise price of $2,041,635. As to $1,860,635 of such exercise price consideration, the applicable warrant holders agreed to pay such exercise price by reducing the principal amount owing by the Company to the warrant holders under the Notes. As to the balance of $181,000 of such exercise price consideration, the applicable warrant holders agreed to pay such amount in cash to the Company.
·
The acquisition of oil and gas assets in Texas and Louisiana (the Ichor Energy Acquisition) at the end of 2018 is believed to provide cash flow sufficient to not only satisfy the Company’s debt service associated with this acquisition, but to also fund a $12,000,000 development program to increase this purchased production beyond its current average daily production of 2,300 BOE and provide a quicker principal reduction, resulting in an increased equity position relative to these assets. The acquisition of Petrodome Energy LLC in 2017 and the oil and gas expertise retained by Petrodome at the end of 2017 provided an internal lease operating company to efficiently evaluate development opportunities.
·
The Company has a revolving credit facility with CrossFirst Bank, which was approved for $30,000,000. The balance outstanding at September 30, 2019 is approximately $7,990,000. On May 10, 2019, the Company entered into an amendment to this revolving credit facility to extend the final maturity date from June 30, 2020 to May 10, 2021, which provides the Company with an additional year to meet the cash demands associated with maturity. Additional funds could be made available to the Company for projects reviewed and approved by the lender.
These conditions raise substantial doubt ~~about~~regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to utilize the resources in place to generate future profitable operations, ~~and/or~~to develop additional acquisition opportunities, and to obtain the necessary financing to meet its obligations and repay its liabilities arising from ~~normal~~ business operations when they come due. Management ~~has no formal plan in place~~believes the Company will be able to ~~address this concern but considers that the Company~~continue to develop new opportunities and will be able to obtain additional funds bythrough debt and / or equity ~~financing and/or related party advances;~~financings to facilitate its development strategy; however, there is no assurance of additional funding being available. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.
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Note 2 Summary of Significant Accounting Policies

a) Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in Viking’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. ~~Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.~~
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b) Basis of Consolidation

The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned ~~subsidiaries,~~subsidiaries: Viking Oil & Gas (Canada) ULC, a Canadian corporation formed ~~on March 8, 2016,~~ to provide a base of operations for properties in ~~Canada,~~Canada; Mid-Con Petroleum, LLC, ~~formed on August 30, 2016, and~~ Mid-Con Drilling, LLC, and Mid-Con Development, LLC, which were all formed ~~on August 25, 2017, both~~ to provide a base of operations for properties in the Central United ~~States.~~States; and Petrodome Energy, LLC (and its subsidiaries) and Ichor Energy Holdings, LLC, its subsidiary Ichor Energy, LLC (Ichor Energy”), and Ichor Energy’s subsidiaries, Ichor Energy (TX), LLC, and Ichor Energy (LA), LLC, which provide a base of operations to facilitate property acquisitions in Texas, Louisiana and Mississippi. All significant intercompany transactions and balances have been ~~eliminated upon consolidation.~~eliminated.

c) Use of Estimates in the Preparation of Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. ~~The Company's actual results could vary materially from management's estimates and assumptions.~~ Significant areas requiring the use of management estimates relate to impairment of long-lived assets, stock-based compensation, asset retirement obligations, and the determination of expected tax rates for future income tax ~~recoveries, stock-based compensation, embedded derivative liabilities, asset retirement obligations and impairment of long-lived assets.~~recoveries.

The estimates of proved ~~probable and possible~~ oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved ~~and unproved~~ oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved ~~probable and possible~~ reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved ~~and unproved~~ oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks.
Actual results could differ from the estimates and assumptions utilized.

d) Financial Instruments

ASC Topic 820-10, “Fair Value Measurement” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for other receivable – related party, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to directors, and convertible notes each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

·
Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

·
Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

·
Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Assets and liabilities measured at fair value as of September 30, 2019 are classified below based on the three fair value hierarchy described above:
Description

Quoted Prices in Active Markets for Identical Assets
(Level 1)

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Total Gains
(Losses)

Financial Assets

Commodity Derivative

$
-

$
101,726

$
-

$
(580,050 )

$ -

$ 101,726

$ -

$ (580,050 )

Financial liabilities

Commodity Derivative

$

$
1,683,980

$
-

$
847,738

$ -

$ 1,683,980

$ -

$ 847,738

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Assets and liabilities measured at fair value as of ~~September 30, 2017~~December 31, 2018, are classified below based on the ~~three~~three-level fair value hierarchy described above:

Description

Quoted Prices in Active Markets for Identical Assets
(Level 1)

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Total Gains
(Losses)

Financial Assets

Long term investment

$ -

$ -

$ -

$ 1,446

Commodity Derivative

-

683

-

61,744

$ -

$ 683

$ -

$ 69,190

Financial liabilities

Derivative liabilities

$ -

$ -

$ 606,878

$ 433,724

$ -

$ -

$ 606,878

$ 433,724

~~Assets and liabilities measured at fair value as of December 31, 2016 are classified below based on the three fair value hierarchy described above:~~
Description

Quoted Prices in Active Markets for Identical Assets
(Level 1)

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Total Gains
(Losses)

Financial Assets

Long term investment

$ 106,930

$ -

$ -

$ 156,978

$ 106,930

$ -

$ -

$ 156,978

Financial liabilities

Derivative liabilities

$ -

$ -

$ 1,075,833

$ 265,448

Commodity Derivative

-

61,061

-

(61,061 )

$ -

$ 61,061

$ 1,075,833

$ 204,387

The Company’s long-term investment consisted of 1,437,500 common shares of Tanager Energy Inc., as of December 31, 2016, which is traded on the TSX Venture Exchange (Toronto Stock Exchange). During the three months ended March 31, 2017, the Company sold these shares. The change in the fair value of this investment that has been recognized as an unrealized gain in other comprehensive income on the statement of operations and comprehensive loss was $1,446 for the nine months ended September 30, 2017, and $148,663 for the nine months ended September 30, 2016.
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Description

Quoted Prices in Active Markets for Identical Assets
(Level 1)

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)

Total Gains
(Losses)

Financial Assets

Commodity Derivative

$ -

$ 681,776

$ -

$ 926,802

$ -

$ 681,776

$ -

$ 926,802

Financial liabilities

Commodity Derivative

$
-

$
2,531,718

$
-

$
(2,531,718 )

$ -

$ 2,531,718

$ -

$ (2,531,718 )

The Company ~~had~~has entered into certain commodity ~~financial derivatives~~derivative instruments containing swaps and collars, which management believes are effective in ~~place at September 30, 2017.~~mitigating commodity price risk associated with a portion of its future monthly natural gas and crude oil production and related cash flows. The Company does not designate its commodities derivative instruments as hedges and therefore does not apply hedge accounting. Changes in fair value of derivative instruments subsequent to the initial measurement are recorded as change in fair value on derivative liability, in other income (expense). The estimated fair value amounts of the Company’s commodity derivative instruments have been determined at discrete points in time based on relevant market information which resulted in the Company classifying such derivatives as Level 2. Although the Company’s commodity derivative instruments are valued using public indices, as well as the Black-Sholes model, the instruments themselves are traded with unrelated counterparties and are not openly traded on an exchange.

In a commodities swap agreement, the Company trades the fluctuating market prices of oil or natural gas at specific delivery points over a specified period, for fixed prices. As a producer of oil and natural gas, the Company holds these commodity derivatives to protect the operating revenues and cash flows related to a portion of its future natural gas and crude oil sales from the risk of significant declines in commodity prices, which helps reduce exposure to price risk and improves the likelihood of funding its capital budget. If the price of a commodity rises above what the Company has agreed to receive in the swap agreement, the amount that it agreed to pay the counterparty is expected to be offset by the increased amount it received for its production.
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The Company ~~uses~~has also entered into collar agreements related to oil and gas production with established floors and ceilings. Upon settlement, if the ~~Black-Scholes model~~current market price of the commodity is below the floor, the Company receives the difference. Conversely, if the current market price of the commodity is above the ceiling at settlement, the Company pays the excess over the ceiling price.
Although the Company is exposed to ~~value~~credit risk to the extent of nonperformance by the counterparties to these derivative contracts, the Company does not anticipate such nonperformance and monitors the credit worthiness of its derivative liabilities. This model takes into account inputs such as contract terms, including maturity and market parameters, including assumptions associated with interest rates, volatility and credit worthiness. counterparties on an ongoing basis.
The derivative assets were $101,726 and ~~liabilities of the Company were $683 and $606,878 respectively~~$681,776 as of September 30, ~~2017,~~2019 and $0December 31, 2018, and ~~$1,075,833 respectively~~the derivative liabilities were $1,683,980 and $2,531,718 as of September 30, 2019 and December 31, ~~2016,~~2018 respectively. The change in the fair value of the derivative assets and liabilities for the nine months ended September 30, ~~2017~~2019 consisted of a decrease of $580,050 associated with existing commodity derivatives and an increase of ~~$61,744 associated with commodity derivatives, a decrease in derivative liabilities of $433,724 associated with warrants and the conversion features of convertible debt, and a reduction of $35,232~~$847,738 associated with the ~~satisfaction of certain convertible debt~~new commodity derivative related to the acquisition accomplished on December 28, 2018, and a gain recognized in the consolidated statement of operations ~~and comprehensive gain~~ in the amount of ~~$495,468.~~$267,688.
The table below is a summary of the Company’s commodity derivatives as of September 30, 2019:
Natural Gas

Period

Average MMBTU per Month

Fixed Price per MMBTU

Swap

Dec-18 to Dec-22

118,936

$2.715

Crude Oil

Period

Average BBL per Month

Price per BBL

Swap

Dec-18 to Dec- 22

24,600

$50.85
Swap

Dec-17 to Dec-19

1,400

$54.77
Swap

Jan-20 to Jun-20

1,400

$52.71
Collar

Dec-17 to Jun-20

4,000

$55.00 / $72.00
Collar

Sep-17 to Sep-19

1,100

$47.00 / $54.10
The carrying amounts reported in the consolidated balance sheets for accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to director each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest

e) Cash and Cash Equivalents

Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less. At September 30, ~~2017 and December 31, 2016,~~2019, the Company ~~does not have any~~has cash deposits ~~in Company accounts~~ in excess of FDIC insured ~~limits. At September 30, 2017,~~limits in the ~~Company had $82,500~~amounts of $6,314,524.
Restricted cash ~~held in escrow awaiting disbursement instructions from the estate of the noteholder of a secured promissory note~~ in the amount of ~~$75,000 plus interest, and $465,985~~$6,088,859 as of September 30, 2019 represents the balance of cash held by Ichor Energy, LLC (the “Borrower”) and/or its subsidiaries, generated through the operations of those subsidiaries. Pursuant to the Term Loan Credit Agreement to which the Borrower and its subsidiaries are parties, following March 31, 2019 the Borrower is required at all times to maintain a minimum cash balance of $2,000,000 (the “MLR”). Within 30 days of the end of each quarter, commencing with the quarter ended June 30, 2019, the Borrower is required to pay the lenders, as an additional principal payment on the debt, any cash in ~~escrow, which~~excess of (i) the MLR and (ii) any funds ~~were utilized~~necessary for the capital expenditures contemplated to be expended in the next six month period by an approved plan of development (“APOD Capex Amount”). At September 30, 2019, the ~~Company to facilitate~~restricted cash did not exceed the ~~oil~~MLR and ~~gas property acquisition in October 2017.~~the APOD Capex Amount.
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f) Accounts receivable

Accounts receivable consist of oil and gas receivables. ~~The Company has classified these as short-term assets in the balance sheet because the Company expects repayment or recovery within the next 12 months.~~ The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected unrecoverable amounts. The Company ~~deems all accounts receivable to be collectable, and~~ has ~~not~~ recorded ~~any~~an allowance for doubtful ~~accounts.~~accounts of $217,057 at September 30, 2019 and December 31, 2018 respectively.

g) ~~Prepaid equity based compensation~~
Prepaid equity-based expenses represent amounts paid in advance through the issuance of restricted shares of stock, for future contractual benefits to be received. These expenses paid in advance are recorded as prepaid equity-based compensation as a component of “Stockholders’ Deficit” and then amortized to the statements of operations and comprehensive loss over the life of the contract using the straight-line method. At September 30, 2017 and December 31, 2016, the balances of the prepaid equity-based compensation were comprised of the following:

September 30,
2017

December 31,
2016

In March 2016, three one-year consulting agreements with three unrelated parties for services related to the petroleum industry for a combined total amount of $800,000.

-

35,068

In February 2017, a one-year consulting agreement for services related to investor relations, market exposure and content development for a total amount of $44,160.

17,543

-

In April 2017, a one-year consulting agreement comprised of four quarterly incremental installments for services related to analysis of potential oil and gas acquisitions, for an initial quarterly amount of $40,250. In July 2017, the second quarterly installment was made in the amount of $28,000.

5,478

-

In June 2017, a six-month consulting agreement for services related to investor relations and social media for a total amount of $65,136.

27,051

-

$ 50,072

$ 35,068

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h) Oil and Gas Properties

The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred.

All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from ~~continuing~~ operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method.

Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Company’s oil and gas properties for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 were as follows:

Oil and Gas Properties by Geographical Cost Center

Three months ended

Nine months ended,

Three months ended

Nine months ended

September 30,

September 30,

September 30,

September 30,

Cost Center

2017

2016

2017

2016

2019

2018

2019

2018

Canada

$ 21,073

6,860

$ 38,301

$ 12,272

$ -

$ -

$ -

$ 21,387

United States

38,638

22,149

108,301

65,353

2,379,725

412,669

6,978,604

1,340,919

$ 59,711

$ 29,009

$ 146,602

$ 77,625

$ 2,379,725

$ 412,669

$ 6,978,604

$ 1,362,306


i)
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h) Limitation on Capitalized Costs

Under the full-cost method of accounting, ~~the Company is~~we are required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the ~~“Ceiling”~~Ceiling test). If the capitalized costs of ~~its~~our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of:

(a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus

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(b) the cost of properties not being amortized; plus

(c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of

(d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties.

j)i) Oil and Gas Reserves

Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices.

~~k) Loss~~j) Income (loss) per Share

Basic net ~~loss~~income (loss) per share is computed by dividing the net ~~loss~~income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net ~~loss~~income (loss) per share is computed by dividing the net ~~loss~~income (loss) by the weighted-average number of common shares outstanding and adjusted by any effects of warrants and options outstanding ~~if dilutive, that may add to the number of common shares~~ during the ~~period. At~~period, if dilutive. For the three months ended September 30, ~~2017 and 2016,~~2019 there were ~~10,145,834 and 12,229,167~~approximately 1,481 common stock equivalents ~~respectively,~~ that were ~~anti-dilutive~~dilutive; these dilutive shares were immaterial and ~~were not included in the calculation.~~
~~l) Revenue Recognition~~
All revenue is recognized when persuasive evidence of an arrangement exists, the service or sale is complete, the price is fixed or determinable and collectability is reasonably assured. Revenue is derivedomitted from the ~~sale~~calculation of crude oil and natural gas. Revenue from crude oil and natural gas sales is recognized when the product is delivered to the purchaser and collectability is reasonably assured. The Company follows the “sales method” of accountingincome per share for ~~oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers.~~
~~m) Comprehensive Loss~~
~~FASB ASC 220 “Comprehensive Income,” establishes standards for the reporting and presentation of comprehensive income and its components in the consolidated financial statements.~~such period. For the nine months ended September 30, ~~2017~~2019 and ~~2016, comprehensive income (loss) was $1,446~~2018 there were approximately 109,649,190 and ~~$148,663~~40,807,159 common stock equivalents respectively, ~~and consisted primarily of unrealized gains and (losses) on available for sale securities.~~that were anti-dilutive.

~~n) Income Taxes~~k) Revenue Recognition

Sales of crude oil, natural gas, and natural gas liquids (NGLs) are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million BTU (MMBtu) of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company ~~accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets~~considers a variety of facts and ~~liabilities~~circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax ratesdue is ~~recognized in income in the period that includes the enactment date. The Company provides a valuation allowance for deferred tax assets for which it does~~ not consider realization of such assets likely. The Company did not incur any material impact to its financial condition or results of operations due to the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is subject to U.S federal jurisdiction income tax examinations for the tax years 2007 through 2016. In addition, the Company is subject to state and local income tax examinations for the tax years 2007 through 2016.significant.

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o)The following table disaggregates the Company’s revenue by source for the nine months ended September 30, 2019 and 2018:

Three months ended

Nine months ended

September 30,

September 30,

2019

2018

2019

2018

Oil

$ 7,481,016

$ 1,872,636

$ 22,407,578

$ 6,145,546

Natural gas and natural gas liquids

1,519,575

23,296

4,673,928

230,955

$ 9,000,591

$ 1,895,932

$ 27,081,506

$ 6,376,501

l) Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse.
The Company recognizes deferred tax assets and liabilities to the extent that we believe that these assets and/or liabilities are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
In assessing the realizability of its deferred tax assets, management evaluated whether it is more likely than not that some portion, or all of its deferred tax assets, will be realized. The realization of its deferred tax assets relates directly to the Company’s ability to generate taxable income. The valuation allowance is then adjusted accordingly.
The Company has estimated net operating losses in excess of $12,000,000 at September 30, 2019. The potential benefit of these net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years. In December 2017, tax legislation was enacted limiting the deduction for net operating losses from taxable years beginning after December 31, 2017 to 80% of current year taxable income and eliminating net operating loss carrybacks for losses arising in taxable years ending after December 31, 2017 (though any such tax losses may be carried forward indefinitely). Net operating losses originating in taxable years beginning prior to January 1, 2018 are still subject to former carryover rules. The net operating loss carryforwards generated prior to this date of approximately $11,000,000, will expire between 2019 through 2038.
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Table of Contents
m) Stock-Based Compensation

The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. ~~In accordance with guidance in ASC Topic 718, the~~The cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period.

The fair value of stock options and warrants ~~was~~is determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends.

The following table represents stock warrant activity as of and for the nine months ended September 30, ~~2017:~~

Number of
Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual Life

Aggregate
Intrinsic
Value

Warrants Outstanding – December 31, 2016

5,720,834

0.19

3.6 years

-

Granted

1,475,000

0.30

-

-

Exercised

-

-

-

-

Forfeited/expired/cancelled

-

-

-

Warrants Outstanding – September 30, 2017

7,195,834

$ 0.21

3.8 years

$ -

Outstanding Exercisable – December 31, 2016

5,720,834

$ 0.19

3.6 years

$ -

Outstanding Exercisable – September 30, 2017

7,195,834

$ 0.21

3.8 years

$ -

~~p) Long-term Investment~~2019:

Management determines the appropriate classification of investment securities at the time of purchase. Securities are classified held-to-maturity when the Company has both the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Securities that are bought and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. Securities not classified as held-to-maturity or trading are classified as available-for-sale. Available-for-sale securities are stated at fair value, the changes in the market value of available-for-sale securities, excluding other-than-temporary impairments, are reflected in Other Comprehensive Income, with the impairment losses, net of income taxes, charged to net income in the period in which it occurs.

Number
of Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual Life

Aggregate
Intrinsic
Value

Warrants Outstanding – December 31, 2018

54,821,690

$
0.26

6.0 years

$
-

Granted

20,922,500

0.22

4.9 years

-

Exercised

-

-

-

-

Forfeited/expired/cancelled

-

-

-

Warrants Outstanding – September 30, 2019

75,744,190

$ 0.25

5.2 years

$ -

Outstanding Exercisable – September 30, 2019

73,244,190

$ 0.25

5.2 years

$ -

The fair value of securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. A decline in the market value of any available-for-sale or held-for-maturity security below cost that is deemed to be other-then-temporary results in a reduction in carrying amount to fair value.
Impairments that are considered other-than-temporary are recognized as a loss in the consolidated statements of operations and comprehensive loss. The Company considers various factors in reviewing impairments, including the length of time and extent to which fair value has been less than the Company’s cost basis, the financial condition and near-term prospects of the issuer, and the Company’s intent and ability to hold the investments for a period of time sufficient to allow for any anticipated recovery in market value.
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~~Table of Contents~~
~~As of September 30, 2017, and December 31, 2016, the Company had no trading and held-to-maturity securities.~~
The Company’s long-term investment consisted of 1,437,500 common shares of Tanager Energy Inc., as of December 31, 2016, which is traded on the TSX Venture Exchange (Toronto Stock Exchange). During the three months ended March 31, 2017, the Company sold these shares. The change in the fair value of this investment, recognized as an unrealized gain in other comprehensive income on the statement of operations and comprehensive loss was $1,446 and 148,663 for the nine months ended September 30, 2017 and 2016, respectively.
q)n) Impairment of long-lived assets

~~In accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets", the~~The Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset's expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There is no impairment of long-lived assets during the nine months ended September 30, ~~2017~~2019 and ~~2016.~~2018.

~~r) Foreign Currency Exchange~~
An entity's functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management's judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the parent company is the U.S. Dollar. The reporting currency of the Company is the U.S. Dollar. The Company has oil and gas operations in Alberta, Canada in which the Canadian Dollar (“CAD” or “CS” herein) is the primary economic environment. The reporting currency of these consolidated financial statements is the U.S. Dollar.
For financial reporting purposes, the operational results of the Company's oil and gas operations in Canada are prepared using the CAD, and are translated into the Company's reporting currency, the U.S. Dollar. Revenue and expenses applicable to the oil and gas operations in Alberta, Canada are translated using average rates prevailing during each reporting period. Gains or losses resulting from the settlement of foreign currency transactions are recorded as a separate component of accumulated other comprehensive loss in stockholders' deficit when realized. There have been no settlement transactions that resulted in the recognition of a foreign currency exchange gain or loss during the nine months ended September 30, 2017 and 2016.
~~s) Convertible Notes Payable~~
The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments.

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The Company has evaluated the terms and conditions of its convertible notes under the guidance of ASC 815. The conversion feature did not meet the definition of “indexed to a company’s own stock” provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4.
~~t) Derivative Liability~~
We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.
u)o) Accounting for Asset Retirement Obligations

Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties.

The following table describes the changes in the Company’s asset retirement obligations for the nine months ended September 30, ~~2017 and the year ended December 31, 2016:~~2019:

Nine months
ended
September 30,
2017

Year
ended
December 31,
2016

Nine months
ended
September 30,
2019

Asset retirement obligation – beginning

$ 833,017

$ 416,246

$ 4,413,465

Oil and gas purchases

205,048

393,808

94,796

Adjustments through disposals and settlements

(1,361,106 )
Accretion expense

29,167

22,963

230,269

Asset retirement obligation - ending

$ 1,067,232

$ 833,017

Asset retirement obligation – ending

$ 3,377,424

v)p) Undistributed Revenues and Royalties
The Company records a liability for cash collected from oil and gas sales that have not been distributed. The amounts get distributed in accordance with the working interests of the respective owners.
q) Recent Accounting Pronouncements

~~During the nine months ended September 30, 2017, there were several new accounting pronouncements issued by~~In February 2016, the Financial Accounting Standards ~~Board. Each~~Board (FASB) issued Accounting Standards Update No. 2016-02 “Leases” (ASU 2016-02) and subsequently issued supplemental adoption guidance and clarification (collectively, Topic 842). Topic 842 amends a number of ~~these pronouncements, as applicable, has been or will~~aspects of lease accounting, including requiring lessees to recognize right-of-use assets and lease liabilities for operating leases with a lease term greater than one year. Topic 842 supersedes Topic 840 “Leases.” On January 1, 2019, the Company adopted Topic 842 using the modified retrospective approach. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be ~~adopted by~~reported in accordance with our historical accounting under Topic 840. We elected the ~~Company. Management does not believe~~package of practical expedients permitted under the transition guidance within Topic 842, which allowed us to carry forward the historical lease classification, retain the initial direct costs for any leases that existed prior to the adoption of the standard and not reassess whether any contracts entered into prior to the adoption are leases. We also elected to account for lease and non-lease components in our lease agreements as a single lease component in determining lease assets and liabilities. In addition, we elected not to recognize the right-of-use assets and liabilities for leases with lease terms of ~~these accounting pronouncements has had~~one year or ~~will~~less. Upon adoption of Topic 842, we recorded $367,365 of right-of-use assets and operating lease liabilities as of January 1, 2019. The adoption did not have a material impact on ~~the Company’s consolidated financial statements.~~our Consolidated Statements of Operations or Consolidated Statements of Cash Flows

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In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. This standard permits early adoption and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations.
w)r) Subsequent events

The Company has evaluated all subsequent events from September 30, ~~2017,~~2019, through the date of filing this report, and determined there are no additional items to disclose other than those ~~disclosed~~described in Note ~~8 below.~~9.

Note 3.Business Acquisition
Proforma unaudited condensed selected financial data for the nine months ended September 30, 2018 as though the Ichor Energy Acquisition had taken place at January 1, 2018 are as follows:

Nine Months
Ended
September 30,
2018

Revenues

$ 36,869,285

Net Income (excludes unrealized gains / losses)

$ 2,819,852

Income per share

$ 0.03

~~Note 3.~~ ~~Related Party Transactions~~
During April 2015, the Company made an advance to Tanager Energy Inc., in conjunction with a joint investment in the second oil well of the Joffre Project. As of September 30, 2017, the balance owed by Tanager to the Company is $153,877. The Company has determined to reserve 50% of the balance and has reduced the amount shown as other receivable – related party to $76,939 on the consolidated balance sheet.
On May 16, 2017, Tom Simeo, formerly the Company’s Executive Chairman and a Director, resigned from all positions with the Company. During the nine months ended September 30, 2017, Tom Simeo did not accrue payroll and made no advances to the Company. The Company paid a total of $20,643 against prior advances. Concurrent with his resignation, Mr. Simeo waived any remaining balance of prior advances previously payable to him. As of September 30, 2017, there are no remaining balances payable to Mr. Simeo.
During the nine months ended September 30, 2017, the Company’s CEO and Director, James Doris incurred expenses on behalf of, and made advances to the Company in the amount of $159,614 in order to provide the Company with funds to carry on its operations, and the Company made repayments of $336,794. These advances do not bear interest, are unsecured and have no specific terms of repayment. As of September 30, 2017, the amount due for advances and expenses paid on behalf of the Company is $193,757. The Company has not imputed interest as the amount is deemed immaterial. Additionally, during the nine months ended September 30, 2017, Mr. Doris made several loans to the Company totaling $196,855, all accruing interest at 12%, and payable on demand. As of September 30, 2017, the total amount due to Mr. Doris for advances and expenses paid on behalf of the Company and loans is $1,056,147. Accrued interest of $149,120 is included in accrued expenses and other current liabilities at September 30, 2017.
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~~Table of Contents~~
~~Note 4.~~ ~~Oil and Gas Properties~~
Note 4.Oil and Gas Properties

The following table summarizes the Company’s oil and gas activities by classification and geographical cost center for the nine months ended September 30, ~~2017:~~2019:

December 31,
2016

Additions

Impairments

September 30,
2017

Proved developed producing oil and gas properties

Canada cost center

$ 34,733

$ -

$ -

$ 34,733

United States cost center

1,787,840

565,048

-

2,352,888

Accumulated depreciation, depletion and amortization

(57,200 )

(75,496 )

-

(132,696 )
Proved developed producing oil and gas properties, net

$ 1,765,373

$ 489,552

$ -

$ 2,254,925

Undeveloped and non-producing oil and gas properties

Canada cost center

$ 371,481

$ -

$ -

$ 371,481

United States cost center

917,184

-

-

917,184

Accumulated depreciation, depletion and amortization

(51,176 )

(71,106 )

-

(122,282 )
Undeveloped and non-producing oil and gas properties, net

$ 1,237,489

$ (71,106 )

$ -

$ 1,166,383

Total Oil and Gas Properties, Net

$ 3,002,862

$ 418,446

$ -

$ 3,421,308

~~The following table summarizes the Company’s oil and gas activities by classification for the year ended December 31, 2016:~~

December 31,
2015

Additions

Impairments

December 31,
2016

Proved developed producing oil and gas properties

Canada cost center

$ 33,082

$ 1,651

$ -

$ 34,733

United States cost center

-

2,838,943

(1,051,103 )

1,787,840

Accumulated depreciation, depletion and amortization

(2,093 )

(55,107 )

-

(57,200 )
Proved developed producing oil and gas properties, net

$ 30,989

$ 2,785,487

$ (1,051,103 )

$ 1,765,373

Undeveloped and non-producing oil and gas properties

Canada cost center

$ 518,269

$ (1,652 )

$ (145,136 )

$ 371,481

United States cost center

-

1,456,414

(539,230 )

917,184

Accumulated depreciation, depletion and amortization

(32,788 )

(43,464 )

25,076

(51,176 )
Undeveloped and non-producing oil and gas properties, net

$ 485,481

$ 1,411,298

$ (659,290 )

$ 1,237,489

Total Oil and Gas Properties, Net

$ 516,470

$ 2,092,625

$ (1,710,393 )

$ 3,002,862

On February 23, 2016, with an effective date of February 1, 2016, the Company closed on the acquisition of working interests in four leases with access to the mineral rights (oil and gas) concerning approximately 281 acres of property in Miami and Franklin Counties in eastern Kansas. This project produces oil from the Cherokee formation at a depth of approximately 600 feet. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by the Company.

December 31,
2018

Adjustments

Impairments

September 30,
2019

Proved developed producing oil and gas properties

United States cost center

$ 81,936,721

$ (578,384 )

$ -

$ 81,358,337

Accumulated depreciation, depletion and amortization

(604,735 )

(5,078,054 )

-

(5,682,789 )
Proved developed producing oil and gas properties, net

$ 81,331,986

$ (5,656,438 )

$ -

$ 75,675,548

Undeveloped and non-producing oil and gas properties

United States cost center

$ 51,973,719

$ (496,028 )

$ -

$ 51,477,691

Accumulated depreciation, depletion and amortization

(1,480,813 )

(1,853,763 )

-

(3,334,576 )
Undeveloped and non-producing oil and gas properties, net

$ 50,492,906

$ (2,349,791 )

$ -

$ 48,143,115

Total Oil and Gas Properties, Net

$ 131,824,892

$ (8,006,229 )

$ -

$ 123,818,663

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Table of Contents

~~As consideration for this transaction, the Company paid $1,350,000 plus 4,650,000 shares of common stock valued at $.085 per share, or $395,250.~~Note 5.Related Party Transactions

The Company also purchased a 100% working interest (Net Revenue Interest of 83%) in certain Non-Producing Leases as follows: (i) three leases with access to the mineral rights (oil and gas) concerning approximately 270 acres of property in Miami and Franklin Counties in eastern Kansas; and (ii) 31 leases with access to the mineral rights (oil and gas) concerning approximately 5,500 acres of property in Cass and Bates Counties in Missouri. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by Viking. As consideration for this transaction, Viking agreed to issue the vendors 5,000,000 shares of common stock valued at $.085 per share or $425,000.
To facilitate these acquisitions, the Company borrowed $1,625,000 from private lenders pursuant to a 15% Senior Secured Convertible Promissory Note (the "Note"), arranged through a licensed broker/dealer, with the primary terms of the loan being as follows: (i) ~~Term~~ ~~– 6 months; (ii)~~ ~~Rate~~ ~~– 15% per annum; (iii)~~ ~~Security~~ ~~– 1~~^st ~~ranking charge against company assets pursuant to a Security and Pledge Agreement (the "Security Agreement"); (iv)~~ ~~Conversion~~ ~~– the lenders have a right to convert all or part of the note into common stock of Viking at a price of $0.15 per share, subject to certain ownership restrictions; and (v)~~ ~~Warrants~~ – the lenders were given an option to purchase, within the next 5 years, 4,062,500 shares of common stock of Viking at an exercise price of $0.20 per share pursuant to a Common Stock Purchase Warrant. Viking'sCompany’s CEO and director, James Doris ~~also personally guaranteed repayment~~has incurred expenses on behalf of, ~~the loan~~ and ~~granted the lenders a security interest in his assets.~~
~~On October 4, 2016,~~made advances to, the Company ~~through Mid-Con Petroleum, LLC, completed an acquisition whereby~~in order to provide the Company ~~(i) increased~~with funds to carry on its working interest in three existing oil and gas leases in Miami and Franklin Counties in Eastern Kansas, and (ii) acquired a working interest in four new oil and gas leases in the same region, comprising approximately 660 acres of property.
~~As consideration for this transaction,~~operations. Additionally, Mr. Doris has made several loans through promissory notes to the Company, ~~paid $920,857 plus 5,212,021 shares of common stock valued~~all accruing interest at ~~$625,442.~~
~~On September 11, 2017, the Company through Mid-Con Drilling, LLC, completed an acquisition of a 90% working interest in four new oil~~12%, and gas leases in Anderson County in Eastern Kansas, comprising approximately 980 acres of property. To facilitate this acquisition, the Company executed a Promissory Note, dated September 8, 2017, through its wholly owned subsidiary, Mid-Con Drilling, LLC, in the amount of $256,982. The acquisition price for this acquisition was $360,000.
~~Note 5.~~ ~~Capital Stock and Additional Paid-in Capital~~
~~(a)~~
~~Preferred Stock~~
The Company is authorized to issue 5,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”), of which 50,000 have been designated as Series C Preferred Stock (the “Series C Preferred Stock”).
18
~~Table of Contents~~
~~Each share of Series C Preferred Stock entitles the holder to two thousand (2,000) votes~~payable on all matters submitted to a vote of the stockholders of the Company. In the event the Company shall at any time on or after the date that Preferred Stock has been issued declare or pay any dividend on common stock payable in shares of common stock, or effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the number of votes per share to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction of the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event.
~~Each share of Series C Preferred Stock shall be convertible, at the option of the holder, at any time after the date of issuance into one share of fully paid and non-assessable common stock.~~
~~(b)~~
~~Common Stock~~
~~The Company is authorized to issue 100,000,000 shares of common stock, par value $0.001 per share.~~
~~On January 12, 2016, the Company issued 300,926 common shares for convertible debt in the amount of $10,111.~~
~~On March 16, 2016, the Company issued 1,000,000 common shares for services, valued at $102,500.~~
~~On February 1, 2016, the Company authorized the issuance of 9,650,000 common shares as part of the consideration for the acquisition of the Oil and Gas properties made at that time.~~
On March 21, 2016, the Company executed a one-year advisory services agreement requiring the issuance of 1,000,000 common shares for the contract. The shares are to be issued as 375,002 upon execution of the contract, with 56,818 shares being issued at the beginning of each month for the remaining eleven months.
~~As of April 29, 2016, the Company, pursuant to a securities purchase agreement, sold 1,250,000 shares of its common stock at $0.15 per share.~~
~~On August 18, 2016, the Company authorized the issuance of 156,250 common shares pursuant to an extension agreement on certain convertible notes that had become due.~~
On September 28, 2016, the Company issued 2,400,000 common shares, at the current market value of $288,000 as part of the consideration for the acquisition of the Oil and Gas Properties acquired on October 4, 2016.
During September 2016, the Company negotiated the payment of certain convertible notes, and committed to the issuance of 375,000 common shares at the current market value of $52,500 as additional interest.
demand. As of September 30, ~~2016,~~2019, the ~~Company, pursuant~~total amount due to ~~a securities purchase agreement, sold $1,337,500 shares~~Mr. Doris for these loans is $590,555. Accrued interest of ~~its common stock at $0.15 per share.~~
~~On October 4, 2016, the Company authorized the issuance of 2,752,021 common shares as part of the consideration for the acquisition of the Oil~~$84,642 is included in accrued expenses and ~~Gas properties made at that time.~~
~~On October 4, 2016, the Company issued 60,000 common shares as part of the consideration for the acquisition of the Oil and Gas properties made at that time.~~
~~On October 21, 2016, the Company issued 1,400,000 common shares valued at $252,000 pursuant to an extension agreement on certain convertible notes that had become due.~~
~~On October 21, 2016, the Company sold 187,500 common shares, pursuant to a securities purchase agreement, at $0.15 per share.~~
~~During November 2016, the Company authorized the issuance of 508,335 common shares as additional discount on debt previously issued, and an amendment extending the due date of the debt.~~
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~~Table of Contents~~
~~On December 30, 2016, the Company sold 66,667 common shares pursuant to a securities purchase agreement, at $0.15 per share.~~
~~As of December 31, 2016, the Company, pursuant to a securities purchase agreement, sold $1,337,500 shares of its common stock at $0.15 per share.~~
~~As of December 31, 2016, the Company authorized the issuance of 315,000 common shares for services.~~
~~During January 2017, the Company issued 62,500 common shares for services.~~
~~On January 9, 2017, the Company issued 3,000,000 common shares upon the execution of a six-month services contract.~~
~~On January 25, 2017, the Company sold 333,333 common shares, pursuant to a securities purchase agreement, at $0.15 per share.~~
~~On February 16, 2017, the Company sold 666,666 common shares pursuant to a securities purchase agreement at $0.15 per share.~~
~~On March 23, 2017, the Company sold 2,059,443 common shares pursuant to a securities purchase agreement at $0.15 per share.~~
~~On April 1, 2017, the Company issued 77,777 common shares as compensation for an extended maturity date on debt.~~
~~On April 18, 2017, the Company issued 250,000 common shares pursuant to a one-year consulting agreement.~~
~~On May 3, 2017, the Company issued 1,000,000 common shares for services.~~
~~On May 3, 2017, the Company issued 59,625 common shares for services.~~
~~On May 4, 2017, the Company issued 340,292 common shares for services.~~
~~On May 4, 2017, the Company issued 21,750 common shares for services.~~
~~On May 12, 2017, the Company issued 1,000,000 common shares for services~~
~~On June 15, 2017, the Company issued 395,000 common shares upon the execution of a six-month consulting agreement.~~
~~On July 18, 2017, the Company issued 250,000 common shares as a second quarterly payment a consulting agreement executed in April of 2017.~~
~~On August 4, 2017, the Company issued 154,688 common shares for services.~~
~~During July and August of 2017, pursuant to a private placement, the Company issued 590,000 common shares concurrently with raising $1,475,000.~~
~~During August and September of 2017, pursuant to a separate private placement, the Company issued 1,837,500 common shares concurrently with raising $1,225,000.~~
~~On August 30, 2017, the Company issued 176,258 common shares for services~~
~~On September 30, 2017, the Company issued 612,500 common shares for services.~~
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~~Table of Contents~~
~~Note 6. Long Term Debt~~
~~Long term debt consisted of the following~~other current liabilities at September 30, ~~2017 and December 31, 2016:~~ 2019.

September 30,
2017

December 31,
2016

On February 19, 2016, the Company issued a total of $1,625,000 15% convertible notes with a term expiring August 18, 2016 (the “Maturity Date”). The principal amounts of each note and interest is payable on the maturity date. Placement fees of $145,000 were subtracted from proceeds. The notes are convertible into common stock at any time, at the holder’s option, the conversion price shall be the lowest of (i) $0.15, (ii) 58% of the price of the Company’s securities that are sold in any offering of the Company’s securities in excess of $100,000, of (iii) the conversion price of any Equity converted on or prior to the Conversion Date.

-

125,000

On April 29, 2016, the Company issued a total of $375,000 of 10% Secured Subordinated promissory notes with a term expiring January 12, 2017 (the “Maturity Date”), and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the Maturity Date. The balance shown is net of unamortized discount of $8,824 at December 31, 2016.

-

366,176

On July 27, 2016, the Company issued a promissory note in the amount of $20,000, bearing interest at 12%, with an initial maturity date of August 27, 2016, and a provision for an extension of six additional terms of 30 days.

-

20,000

As of December 31, 2016, the Company issued a total of $630,000 of 10% Secured promissory notes with a term expiring April 3, 2017 (the “Maturity Date”), and an original issue discount of thirty-seven and one-half percent (37.5%). The discount was modified to fifty percent (50%) retroactively with an extension of the maturity to June 2017. During the quarter ended March 31, 2017, the Company issued an additional $917,833 of 10% Secured promissory notes with terms expiring in June, August and September of 2017, and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the various maturity dates. The balance shown is net of unamortized discount of $0 and $208,064 at September 30, 2017 and December 31, 2016 respectively. At September 30, 2017, the funds necessary to satisfy this obligation are being held in escrow awaiting disbursement instructions from the estate of the noteholder.

75,000

421,936

On October 4, 2016, the Company issued a non-interest-bearing note, payable on demand in the amount of $203,000. This amount has been paid in full as of November 1, 2017.

203,000

203,000

On October 4, 2016, the Company closed on a revolver loan with Crossfirst Bank in the amount of $1,800,000, payable at $15,000 per month, interest at 10%, with all unpaid principal and accrued interest payable on September 30, 2018. The balance shown is net of unamortized discount of $13,826 and $24,167 at September 30, 2017 and December 31, 2016 respectively.

1,621,174

1,745,833

During July and August of 2017, the Company borrowed $1,475,000 from private lenders pursuant to a 10% Secured Convertible Promissory Note with a twelve-month maturity. The balance shown is net of unamortized discount of $400,710 and $0 at September 30, 2017 and December 31, 2016 respectively.

1,074,290

-

During August and September of 2017, the Company borrowed $1,225,000 from private lenders pursuant to a 10% Secured Promissory Note with all principal and accrued interest payable on the maturity date of October 31, 2018. The balance shown is net of unamortized discount of $368,415 and $0 at September 30, 2017 and December 31, 2016 respectively.

856,585

-

On September 8, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $256,983, payable interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 8, 2025.

256,983

-

4,087,032

2,881,945

Less current portion

(1,518,464 )

(1,302,476 )

$ 2,568,568

$ 1,579,469

The Company’s CFO, Frank W. Barker, Jr., renders professional services to the Company through FWB Consulting, Inc., an affiliate of Mr. Barker’s. As of September 30, 2019, the total amount due to FWB Consulting, Inc. is $173,216 and is included in accounts payable.
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Note 6.Capital Stock and Additional Paid-in Capital
(a) Preferred Stock
The Company is authorized to issue 5,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”), of which 50,000 have been designated as Series C Preferred Stock (the “Series C Preferred Stock”). Pursuant to the amended Certification of Designation of the Series C Preferred Stock filed on September 5, 2019, each share of Series C Preferred Stock entitles the holder thereof to 32,500 votes on all matters submitted to the vote of the stockholders of the Company. Each share of Series C Preferred Stock is convertible, at the option of the holder, at any time after the date of issuance of such share, at the office of the Company or any transfer agent for such stock, into one share of fully paid and non-assessable common stock.
(b) Common Stock
On November 5, 2018, the Company amended its Articles of Incorporation to increase the number of shares of common stock the Company is authorized to issue from 100,000,000 to 500,000,000.
During the nine months ended September 30, 2019, the Company issued shares of its common stock as follows:
~~Note 7.~~ ~~Commitments and contingencies~~
· 1,637,876 shares of common stock issued for services valued at fair market value on the date of the transactions, totaling $276,782.
· 3,650,046 shares of common stock issued for accrued interest on promissory notes.
During the nine months ended September 30, 2018, the Company issued shares of its common stock as follows:
· 5,029,443 shares of common stock issued for services valued at fair market value on the date of the transactions, totaling $1,178,009.
· 250,000 shares of common stock issued as prepaid equity-based compensation valued at fair market value at the date of the transaction, totaling $55,000.
· 10,323,356 shares of common stock issued as debt discount valued at fair market value on the date of each transactions, totaling $2,231,331.
· 447,591 shares of common stock issued in a cashless exercise of warrants.
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Note 7. Long Term Debt and other short-term borrowings
Long term debt and other short-term borrowings consisted of the following at September 30, 2019 and December 31, 2018:

September 30,
2019

December 31,
2018

Long-term debt:

During June through December of 2018, the Company borrowed $9,459,750 from private lenders, and exchanged $5,514,000 of amounts due lenders from prior borrowings as well as $191,250 in accrued interest, pursuant to a 10% Secured Promissory Note with 50% of the principal convertible into the Company’s common stock at $0.20 per share, all principal and accrued interest payable on the initial maturity date of August 31, 2019. Concurrently, the Company issued the Note holders 11,373,750 warrants (5-year term and an exercise price of $0.20 per share). On August 31, 2019, the Company, pursuant to the terms of the notes, elected to extend the maturity date to August 31, 2020, by increasing the interest rate to 12%, and issuing the Note holders an additional 115,000 warrants (5-year term and an exercise price of $0.20 per share) for every $100,000 invested, resulting in an additional 17,422,500 new warrants. The fair value of all these warrants was recorded as a debt discount and amortized over the life of the notes. The balance shown is net of unamortized discount of $2,872,536 at September 30, 2019 and $5,981,012 at December 31, 2018.

12,277,464

9,168,988

On June 13, 2018, the Company borrowed $12,400,000 pursuant to a revolving line of credit facility with a maximum principal amount of $30,000,000 from Crossfirst Bank, bearing interest 1.5% above a base rate equal to the prime rate of interest published by the Wall Street Journal, interest only for June and July of 2018, at which time Principal is payable at $100,000 monthly through the maturity date of May 10, 2021, at which time all remaining unpaid principal and accrued interest shall be due. The balance shown is net of unamortized discount of $51,805 at September 30, 2019 and $103,421 at December 31, 2018

7,938,195

11,728,911

On December 28, 2018, to facilitate the acquisition of certain oil and gas assets, the Company, through one of its subsidiaries, Ichor Energy LLC, entered into a Term Loan Credit Agreement with various lenders represented by ABC Funding, LLC as administrative agent. The agreement provides for a total loan amount of $63,592,000, bearing interest at a rate per annum equal to the greater of (i) a floating rate of interest equal to 10% plus LIBOR, and (ii) a fixed rate of interest equal to 12%, payable monthly on the last day of each calendar month, commencing January 31, 2019. Principal payments are made quarterly at 1.25% of the initial loan amount, commencing on the last business day of the fiscal quarter ending June 30, 2019. Cash generated from the operation of these assets is restricted to lease operating expenses, the payment of debt service on the Term Loan, approximately $12,000,000 of oil and gas development projects approved by the lender, and distributions to the Company of $65,000 per month for general and administrative expenses, and a quarterly tax distribution at the current statutory rates. Within 30 days of the end of each quarter, commencing with the quarter ended June 30, 2019, Ichor Energy, LLC is required to pay, as an additional principal payment on the debt, any cash in excess of the MLR and the APOD Capex Amount. To the extent not previously paid, all loans under the Loan Agreement shall be due and payable on the December 28, 2023 (the Maturity Date). The balance shown is net of unamortized discount of $3,728,679 at September 30, 2019 and $4,385,408 at December 31, 2018.

58,273,523

59,206,592

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On December 28, 2018, the Company issued a 10% secured promissory note in the amount of $23,777,948, payable to RPM Investments, secured by 100% of the membership interests of Ichor Energy Holdings, LLC. All accrued interest and unpaid principal are due on the earlier of (i) the date the Company or one of its affiliates completes an acquisition with one or more of the sellers for a purchase price equal to or greater than $50,000,000 or (ii) January 31, 2020.

23,777,948

23,777,948

On February14, 2019, the Company executed a promissory note payable to CrossFirst Bank in the amount of $56,760 for the purchase of transportation equipment, bearing interest at 7.15%, payable in 60 installments of $1,130, with a maturity date of February 14, 2024.

51,140

-

On July 24, 2019, the Company through its wholly owned subsidiary, Mid-Con Petroleum, LLC, executed a promissory note payable to Cornerstone Bank in the amount of $2,241,758, bearing interest at 6%, payable interest only for the first year, then payable in 59 installments of $43,438, with a final payment due on a maturity date of July 24, 2025. The balance shown is net of unamortized discount of $27,739 at September 30, 2019.

2,214,019

-

On July 24, 2019, the Company through its wholly owned subsidiary, Mid-Con Drilling, LLC, executed a promissory note payable to Cornerstone Bank in the amount of $1,109,341, bearing interest at 6%, payable interest only for the first year, then payable in 59 installments of $21,495, with a final payment due on a maturity date of July 24, 2025. The balance shown is net of unamortized discount of $27,662 at September 30, 2019.

1,031,017

-

105,563,306

103,882,439

Other short-term borrowings:

On September 30, 2019, the Company received $910,000 under an agreement that requires the Company to make 28 weekly payments aggregating $1,237,600 through April 13, 2020. The agreement provides discounts for early payment. The balance shown is net of the maximum discount of $327,600 at September 30, 2019.

910,000

-

Total long-term debt and other short-term borrowings

106,473,306

103,882,439

Less current portion

(40,241,800 )

(11,805,582 )

$ 66,231,506

$ 92,076,857

Note 8.Commitments and contingencies
In April 2018, the Company’s subsidiary, Petrodome Energy, LLC entered into a 66-month lease for 4,147 square feet of office space for the Company’s corporate office in Houston, Texas. The annual base rent commenced at $22.00 per square foot, and escalates at $0.50 per foot each year through expiration of the lease term. A right-of-use asset and operating lease liability has been recorded with the adoption of Topic 842, pertaining to this office lease. As this lease does not provide an implicit interest rate, we used a portfolio approach to determine a collateralized incremental borrowing rate of 10% based on the information available at the date of adoption of Topic 842 to determine the lease liability. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease expense was $24,096 and $72,228 for the three and nine months ended September 30, 2019.
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From time to time the Company may be a party to litigation ~~matters~~ involving commercial claims against the Company. Management believes that ~~there are no current~~the ultimate resolution of these matters ~~that would~~will not have a material effect on the Company’s ~~consolidated~~ financial position or results of operations.

~~Note 8.~~ ~~Subsequent Events~~
The ~~Company~~staff (the “Staff”) of the SEC’s Division of Enforcement has ~~evaluated subsequent events from September 30, 2017, through the date of filing this Form 10-Q, and determined there are no additional items to disclose other than the below.~~
~~On October 2, 2017,~~notified the Company, ~~through~~that the Staff has made a ~~wholly-owned subsidiary, Mid-Con Drilling, LLC (“Mid-Con Drilling”), executed a Promissory Note in favor~~preliminary determination to recommend that the SEC file an enforcement action against the Company, as well as against its CEO and it CFO, for alleged violations of ~~Cornerstone Bank (“Cornerstone”). The principal amount~~Section 17(a) of the ~~Note, which loan transaction formally closed on October 2, 2017, is $290,000,~~Securities Act of 1933 and ~~the maturity date~~Section 10(b) of the ~~Note~~Securities Exchange Act of 1934 and Rule 10b-5 thereunder during the period from early 2014 through late 2016. The Staff’s notice is ~~October 2, 2025. For the first 12 months, the Note bears interest at Cornerstone’s corporate base rate (currently 4.5%) plus 1.0%, and thereafter the interest rate shall be 6% per annum.~~
~~The Note is secured~~not a formal allegation or a finding of wrongdoing by ~~a first-ranking security interest and mortgage against the assets acquired by the Company described below, and a guaranty from each of~~ the Company, and the ~~Company’s President~~Company is in dialogue with the Staff regarding its preliminary determination. The Company believes it has adequate defenses and ~~Chief Executive Officer, James Doris.~~
$286,016 of the loan proceeds were used on October 2, 2017, as payment of a portion of the purchase price for a 100% working interest in six new oil and gas leases in Miami and Franklin Counties in Eastern Kansas purchased by Mid-Con Drilling effective October 1, 2017. Existing production from the acquired interests at closing was approximately twenty-two barrels of oil per day. The purchase included an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributableintends to the working interests purchased by Mid-Con Drilling. The leases produce oil from the Cherokee formation and offer the potential for several future drilling locations. The acquisition price for this transaction was $530,000. The balance of the purchase price was providedvigorously defend any enforcement action that may be initiated by the ~~Company from cash on-hand via a recently completed private placement.~~SEC.
On October 3, 2017, Mid-Con Drilling executed an additional Promissory Note in favor of Cornerstone Bank. The principal amount of the Note is $204,000, and the maturity date of the Note is October 3, 2025. For the first 12 months, the Note bears interest at Cornerstone’s corporate base rate (currently 4.5%) plus 1.0%, and thereafter the interest rate shall be 6% per annum. The Note is secured by a first-ranking security interest and mortgage against the assets acquired by the Company described below, and a guaranty from each of the Company and the Company’s President and Chief Executive Officer, James Doris.
$200,441 of the loan proceeds were used on October 4, 2017, as payment of a portion of the purchase price for an 80% working interest in six new oil and gas leases in Riley, Geary and Wabaunsee Counties in Kansas by Mid-Con Drilling. Existing production from the acquired interests at closing was approximately thirteen barrels of oil per day. The purchase included an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by Mid-Con Drilling. The leases produce oil from various zones, including the Conglomerate (at depths of 1,650 to 1,800 feet), Viola and Simpson Sandstone (at depths of 2,917 to 3,063 feet), and offer the potential for several future drilling locations. The acquisition price for this transaction was $400,000. The balance of the purchase price was provided by the Company from cash on-hand via a recently completed private placement.
On or about October 19, 2017 the Company executed a consulting agreement pursuant to which the consultant agreed to among other things: (i) assess potential acquisition and investment opportunities; (ii) interview and provide input with respect to persons considered by the Company for advisory, director or officer positions; and (iii) review, critique and provide guidance with respect to the Company’s strategic plan. In exchange for the services the consultant is to receive an equivalent of $5,000 per month in common shares in the capital stock of the Company. The number of common shares earned each month is to be calculated based on the average daily traded value of the common stock for the last 5 business days of the particular month, as reported on the exchange on which Company’s shares are traded or any exchange upon which the common stock may be traded in the future. All common shares earned by the consultant pursuant to the agreement are to be issued by the Company on a quarterly basis. The Company may terminate the agreement for any reason upon 60 days’ written notice to the consultant, and the consultant may terminate the agreement at any time upon 30 days’ notice to the Company.
On or about October 25, 2017 the Company executed a consulting agreement pursuant to which the consultant agreed to among other things: (i) assess potential acquisition and investment opportunities; (ii) interview and provide input with respect to persons considered by the Company for advisory, director or officer positions; (iii) review, critique and provide guidance with respect to the Company’s strategic plan. In exchange for the services the consultant is to receive 50,000 common shares in the capital stock of the Company per month during the term of the agreement. All common shares earned by the consultant pursuant to the agreement are to be issued by the Company on a quarterly basis. The Company may terminate the agreement for any reason upon 60 days’ written notice to the consultant, and the consultant may terminate the agreement at any time upon 30 days’ notice to the Company.
On November 10, 2017, Viking Energy Group, Inc. (the “Company”) entered into a Membership Interest Purchase Agreement with Black Rhino, LP (the “Seller”), to acquire some of the oil and gas business membership interests owned by the Seller in exchange for (i) making a $3,000,000 cash payment to the Seller at closing; (ii) issuing to the Seller 2,000,000 shares of the Company’s common stock at closing; and (iii) granting the Seller a 1.5% over-riding royalty interest in (a) all existing oil and gas leases associated with the purchased interests, and (b) all new oil and gas wells drilled on some of the prospects identified by the Seller which expire on October 31, 2020. The scheduled closing date of the transaction is on or before December 22, 2017. The completion of the transaction is conditional upon the Company securing financing to satisfy the cash component to be paid to the Seller at closing, and there is no guaranty that such condition will be satisfied.
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~~ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Note 9.Subsequent Events

~~You should read~~Subsequent to September 30, 2019, the Company organized the following ~~discussion~~additional subsidiaries in Nevada, Texas and ~~analysis in conjunction with the financial statements~~Louisiana: Elysium Energy Holdings, LLC, a Nevada limited liability company; Elysium Energy, LLC, a Nevada limited liability company; Elysium Energy TX, LLC, a Texas limited liability company; and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. In preparing the management’s discussion and analysis, the registrant presumes that you have read or have access to the discussion and analysis for the preceding fiscal year.Elysium Energy LA, LLC, a Louisiana limited liability company.

~~SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENT~~S
~~This document includes “forward-looking statements” within~~On October 3, 2019, the meaning of the Private Securities Litigation Reform Act of 1995 or the Reform Act.   All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earning, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions of performance; and statements of belief; and any statements of assumptions underlying any of the foregoing.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements ofCompany received $480,200 under an agreement that requires the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: our ability to raise capital and the terms thereof; ability to gain an adequate player base to generate the expected revenue; competition with established gaming websites; adverse changes in government regulations or polices; and other factors referenced in this Form 10-Q.make 28 weekly payments aggregating $666,400 through April 13, 2020. The agreement contains early payment discounts.

~~The use in this Form 10-Q of such words as “believes”, “plans”, “anticipates”, “expects”, “intends”,~~On October 10, 2019, Elysium Energy, LLC (“Purchaser”) entered into a Purchase and ~~similar expressions are intended to identify forward-looking statements, but are not~~Sale Agreement with several selling entities (collectively the ~~exclusive means of identifying such statements. These forward-looking statements present the Company’s estimates and assumptions only as~~“Sellers”). Certain of the date of this Report.  Except for the Company’s ongoing obligation to disclose material information as required by the federal securities laws, the Company does not intend, and undertakes no obligation, to update any forward-looking statements.
Although the Company believes that the expectations reflected in any of the forward-looking statements are reasonable, actual results could differ materially from those projected or assumed or any of the Company’s forward-looking statements.  The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
~~PLAN OF OPERATIONS~~
~~Overview~~
~~The Company's business plan is to engage~~Sellers were also sellers in the ~~acquisition, exploration, development~~Ichor Energy acquisition. The Purchaser agreed to purchase from Sellers (the “Acquisition”) their working interests and ~~production of oil and natural gas properties, both individually and through collaborative partnerships with other companies~~over-riding royalty interests in ~~this field of endeavor. On March 8, 2016, the Company incorporated a wholly owned subsidiary, Viking Oil & Gas (Canada) ULC, in Alberta, Canada, to hold its Canadian~~ oil and gas ~~interests. In November~~properties in Texas (approximately 71 wells in 11 counties) and Louisiana (approximately 52 wells in 6 parishes), along with associated wells and equipment. The purchase price is $40,000,000, as adjusted pursuant to the terms of ~~2014,~~the Purchase Agreement, in cash at closing (the “Purchase Price”). The Purchaser paid a deposit of $1,000,000 into escrow, which deposit will be applied toward the Purchase Price at closing or be released: (i) to the Sellers if the transaction does not close under certain circumstances; or (ii) to the Purchaser if the transaction does not close under certain circumstances. The Company is pursuing financing alternatives for the Acquisition with various lenders. Consequently, there is no assurance that the Company ~~entered into its first contract relative to oil and gas activities involving jointly controlled assets and related liabilities by purchasing an undivided 50% interest in~~will complete the ~~Joffre project located in Alberta, Canada.~~ Acquisition.
On ~~February 23, 2016,~~October 24, 2019, the Company ~~closed on~~made a $4,000,000 voluntary principal payment under the ~~acquisition~~Ichor Energy Term Loan Credit Agreement.
Effective as of ~~working interests in four leases~~October 31, 2019, all the warrant holders associated with ~~access~~the 2018 10% Secured Promissory Notes (the “Notes”) consented to a limited time modification to the ~~mineral rights (oil and gas) concerning approximately 281 acres~~exercise price of ~~property in Miami and Franklin Counties in eastern Kansas. On August 30, 2016,~~their 28,796,250 warrants from $0.20 to $0.10. Multiple warrant holders then elected to exercise 20,416,350 of these warrants for an aggregate exercise price of $2,041,635. As to $1,860,635 of such exercise price consideration, the applicable warrant holders agreed to pay such exercise price by reducing the principal amount owing by the Company ~~created an additional wholly owned subsidiary, Mid-Con Petroleum, LLC (“Mid-Con”),~~to the warrant holders under the Notes. As to the balance of $181,000 of such exercise price consideration, the applicable warrant holders agreed to pay such amount in cash to the State of Kansas to hold its current acquisitions in the central United States. On October 4, 2016, the Company, through Mid-Con, completed an acquisition whereby the Company (i) increased its working interest in three existing oil and gas leases in Miami and Franklin Counties in Eastern Kansas, and (ii) acquired a working interest in four new oil and gas leases in the same region, comprising approximately 660 acres of property. On August 25, 2017, the Company created an additional wholly owned subsidiary, Mid-Con Drilling, LLC. (“Mid-Con Drilling”), in the State of Kansas to hold additional acquisitions in the central United States. On September 11, 2017, the Company through Mid-Con Drilling completed an acquisition of a 90% working interest in four new oil and gas leases in Anderson County in Eastern Kansas, comprising approximately 980 acres of property. On October 2, 2017, the Company through Mid-Con Drilling completed an acquisition of a 100% working interest in six new oil and gas leases in Miami and Franklin Counties in Eastern Kansas, andCompany. This limited time modification offer expired at 5:00pm on October ~~4, 2017,~~31, 2019, and the ~~Company through Mid-Con Drilling completed an acquisition of an 80% working interest in six new oil and gas leases in Riley, Geary and Wabaunsee Counties in Kansas.~~8,379,900 warrants that were not exercised remain subject to their original terms.

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~~Going Concern Qualification~~
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however, there is no assurance of additional funding being available.
~~RESULTS OF CONTINUING OPERATIONS~~
The following discussion of the financial condition and results of operation of the Company for the three and nine months ended September 30, 2017 and 2016, should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on April 17, 2017.
~~Liquidity and Capital Resources~~
~~As of September 30, 2017, and December 31, 2016, the Company had $568,222 and $18,605 in cash holdings, respectively.~~
~~Three months ended September 30, 2017, compared to the three months ended September 30, 2016~~
~~Revenue~~
The Company had gross revenues of $221,329 for the three months ended September 30, 2017, as compared to $105,427 for the three months ended September 30, 2016, representing its share of revenue from its operations in Canada and the central United States.
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~~Expenses~~
The Company’s operating expenses increased by $117,259 to $576,685 for the three-month period ended September 30, 2017, from $459,426 in the corresponding period in 2016. The increase is mainly attributable to increased lease operating costs commensurate with increased production during the three-month period ended September 30, 2017, as compared to the three-month period ended September 30, 2016.
~~Other income (expense)~~
The Company had other income (expense) of $(430,244) for the three months ended September 30, 2017, as compared to $2,222,906 for the three months ended September 30, 2016. This significant difference is primarily a result of a large derivative gain during the three months ended September 30, 2016 of $2,765,013 as compared to $40,370 for the three months ended September 30, 2017.
~~Net Income (Loss)~~
The Company incurred a net (loss) of $(785,600) during the three-month period ended September 30, 2017, compared with a net income of $1,868,907 for the three-month period ended September 30, 2016.  The decrease in net loss was mainly due to the items referred to in the analysis of operating expenses and other income (expense).
~~Nine months ended September 30, 2017, compared to the nine months ended September 30, 2016~~
~~Revenue~~
The Company had gross revenues of $588,622 for the nine months ended September 30, 2017, as compared to $232,013 for the nine months ended September 30, 2017, representing its share of revenue from its operations in Canada and the central United States.
~~Expenses~~
The Company’s operating expenses increased by $1,306,866 to $2,583,744 for the nine-month period ended September 30, 2017, from $1,276,878 in the corresponding period in 2016. The increase is mainly attributable to increased lease operating costs commensurate with increased production, an increase in general and administrative expenses, and a significant increase in stock-based compensation during the nine-month period ended September 30, 2017, as compared to the nine-month period ended September 30, 2016.
~~Other income (expense)~~
The Company had other income (expense) of $(672,592) for the nine months ended September 30, 2017, as compared to ($1,057,597) for the nine months ended September 30, 2016. This increase in other income is a result of a reduced interest expense of $1,160,875 for the nine months ended September 30, 2017, as compared to $1,966,015 for the nine months ended September 30, 2016, offset by a derivative gain of $495,468 for the nine months ended September 30, 2017, as compared to a derivative gain of $833,418 for the nine months ended September 30, 2016.
~~Net Income (Loss)~~
The Company incurred a net (loss) of $(2,667,714) during the nine-month period ended September 30, 2017, compared with a net (loss) of $(2,102,462) for the nine-month period ended September 30, 2016.  The decrease in net loss was mainly due to the items referred to in the analysis of operating expenses and other income (expense).
~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES~~
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared and actual results could differ from our estimates and such differences could be material. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our financial statements, as well as the sufficiency of the disclosures pertaining to our accounting policies in the footnotes accompanying our financial statements. Described below are the most significant policies we apply in preparing our consolidated financial statements, some of which are subject to alternative treatments under GAAP. We also describe the most significant estimates and assumptions we make in applying these policies. See “Note 3 - Summary of Significant Accounting Policies” to our consolidated financial statements.
~~Oil and Gas Property Accounting~~
The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas properties (including such costs as leasehold acquisition costs, geological expenditures, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred.
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The full cost method requires the Company to calculate quarterly, by cost center, a "ceiling," or limitation on the amount of properties that can be capitalized on the balance sheet. To the extent capitalized costs of oil and natural gas properties, less accumulated depletion and related deferred taxes exceed the sum of the discounted future net revenues of proved oil and natural gas reserves, the lower of cost or estimated fair value of unproved properties subject to amortization, the cost of properties not being amortized, and the related tax amounts, such excess capitalized costs are charged to expense.
~~Proved Reserves~~
Estimates of our proved reserves included in this report are prepared in accordance with U.S. SEC guidelines for reporting corporate reserves and future net revenue. The accuracy of a reserve estimate is a function of:
i.
~~the quality and quantity of available data;~~
~~ii.~~
~~the interpretation of that data;~~
~~iii.~~
~~the accuracy of various mandated economic assumptions; and~~
~~iv.~~
~~the judgment of the persons preparing the estimate.~~
Our proved reserve information included in this report was predominately based on estimates. Because these estimates depend on many assumptions, all of which may substantially differ from future actual results, reserve estimates will be different from the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production after the date of an estimate may justify material revisions to the estimate.
In accordance with SEC requirements, we based the estimated discounted future net cash flows from proved reserves on the unweighted arithmetic average of the prior 12-month commodity prices as of the first day of each of the months constituting the period and costs on the date of the estimate.
The estimates of proved reserves materially impact depreciation, depletion, amortization and accretion (“DD&A”) expense. If the estimates of proved reserves decline, the rate at which we record DD&A expense will increase, reducing future net income. Such a decline may result from lower market prices, which may make it uneconomic to drill for and produce from higher-cost fields.
~~Asset Retirement Obligation~~
Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. We determined our ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties. Periodic accretion of discount of the estimated liability is recorded as accretion expense in the accompanying consolidated statements of operations and comprehensive income.
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ARO liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive lives of wells and a risk-adjusted interest rate. Changes in any of these assumptions can result in significant revisions to the estimated ARO.
Revenues from oil and gas properties are recognized under the entitlements method of accounting, whereby revenue is recognized on the amount the Company is entitled to, based on its interest in the property after all costs associated with exploration, gathering, marketing and sales relative to the volumes of product sold.
Although these estimates are based on management’s knowledge of current events and actions the Company may undertake in the future, the final results may ultimately differ from actual results. Certain accounting policies involve significant judgments and assumptions, which have a material impact on the Company’s financial condition and results. Management believes its critical accounting policies reflect its most significant estimates and assumptions used in the presentation of the Company’s financial statements. The Company does not have off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities.”
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with the financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. In preparing the management’s discussion and analysis, the registrant presumes that you have read or have access to the discussion and analysis for the preceding fiscal year.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 or the Reform Act. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earning, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions of performance; and statements of belief; and any statements of assumptions underlying any of the foregoing. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: our ability to raise capital and the terms thereof; ability to gain an adequate player base to generate the expected revenue; competition with established gaming websites; adverse changes in government regulations or polices; and other factors referenced in this Form 10-Q.
The use in this Form 10-Q of such words as “believes”, “plans”, “anticipates”, “expects”, “intends”, and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. These forward-looking statements present the Company’s estimates and assumptions only as of the date of this Report. Except for the Company’s ongoing obligation to disclose material information as required by the federal securities laws, the Company does not intend, and undertakes no obligation, to update any forward-looking statements.
Although the Company believes that the expectations reflected in any of the forward-looking statements are reasonable, actual results could differ materially from those projected or assumed or any of the Company’s forward-looking statements. The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.
PLAN OF OPERATIONS
Overview
The Company's business plan is to engage in the acquisition, exploration, development and production of oil and natural gas properties, both individually and through collaborative partnerships with other companies in this field of endeavor. Viking has relationships with industry experts and formulated an acquisition strategy, with emphasis on acquiring under-valued, producing properties from distressed vendors or those deemed as non-core assets by larger sector participants. The Company does not focus on speculative exploration programs, but rather targets properties with current production and untapped reserves. The Company’s growth strategy includes the following key initiatives:
· Acquisition of under-valued producing oil and gas assets
· Employ enhanced recovery techniques to maximize production
· Implement responsible, lower-risk drilling programs on existing assets
· Aggressively pursue cost-efficiencies
· Opportunistically explore strategic mergers and/or acquisitions
· Actively hedge mitigating commodity risk
The following overview provides a background for the current strategy being implemented by management.
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Kansas
· On January 12, 2018, the Company, through its subsidiary Mid-Con Drilling, LLC (“Mid-Con Drilling”), completed an acquisition of a 100% working interest in seven new oil and gas leases in Woodson and Allen Counties in Eastern Kansas.
· Effective February 1, 2018, the Company, through Mid-Con Drilling, closed on the acquisition of a working interest in a lease with access to the mineral rights (oil and gas) concerning approximately 80 acres of property in Douglas County in eastern Kansas.
· On May 1, 2019, the Company’s subsidiary, Mid-Con Development, LLC sold to an independent third party all of its interests in the oil and gas assets Mid-Con Development, LLC owned in Ellis and Rooks Counties, Kansas, consisting of working interests in approximately 41 oil leases comprising several thousand acres.
These Kansas properties are operated by third party contractors.
Acquisitions – Texas, Louisiana and Mississippi
On December 22, 2017, the Company completed an acquisition of 100% of the membership interests of Petrodome Energy, LLC, a privately-owned company, with working interests in multiple oil and gas fields across Texas, Louisiana and Mississippi, comprising approximately 11,700 acres.
As a part of this acquisition, the Company retained an operational office in Houston, Texas that includes several senior level professionals with over 100 years of combined oil and gas experience which provides the Company the capability of operating many of its own wells internally. This expertise has since been utilized to evaluate additional oil and gas acquisitions, evaluate the profitable management of all of the Company’s oil and gas assets, and evaluate and develop new drilling prospects.
Acquisitions – Texas and Louisiana
On December 28, 2018, the Company, through its newly formed Ichor Energy subsidiaries completed an acquisition (the “Ichor Energy Acquisition”) of working interests in certain oil and gas leases in Texas (primarily in Orange and Jefferson Counties) and Louisiana (primarily in Calcasiue Parish), which include 58 producing wells and 31 salt water disposal wells. The properties produce hydrocarbons from known reservoirs/sands in the on-shore Gulf Coast region, with an average well depth in excess of 10,600 feet, and daily production volumes averaging in excess of 2,300 BOE. This acquisition of these assets is consistent with the location of our Petrodome assets and are effectively managed from our Houston office.
On October 10, 2019, the Company, through its newly formed subsidiary Elysium Energy, LLC, entered into a Purchase and Sale Agreement to purchase working interests and over-riding royalty interests in oil and gas properties in Texas (approximately 71 wells in 11 counties) and Louisiana (approximately 52 wells in 6 parishes), along with associated wells and equipment. The Company paid a deposit of $1,000,000 into escrow, which deposit will be applied toward the Purchase Price at closing or be released: (i) to the sellers if the transaction does not close under certain circumstances; or (ii) to the Purchaser if the transaction does not close under certain circumstances. The Company is pursuing financing alternatives for the Acquisition with various lenders. Consequently, there is no assurance that the Company will complete the Acquisition.
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Acquisitions – Louisiana
On May 10, 2019, Petrodome Louisiana Pipeline LLC, a subsidiary of the Company’s subsidiary, Petrodome Energy, LLC, acquired a majority working interest in 6 gas wells (including 2 producing gas wells), 1 producing oil well and 1 salt water disposal well located in the East Mud Lake Field in Cameron Parish, Louisiana, with leases to mineral rights (oil and gas) concerning approximately 765 acres.
Going Concern Qualification
These accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Although the Company had net income of $1,419,130 for the three months ended September 30, 2019, the Company had a net loss of $9,220,005 for the nine months ended September 30, 2019. Furthermore, as of September 30, 2019, the Company has a working capital deficiency in excess of $38,000,000. The largest components of current liabilities creating this deficiency are (a) notes payable with a face value aggregating approximately $15,000,000 due in August of 2020 and (b) a promissory note payable to the seller of the certain oil and gas interests purchased on December 28, 2018 in the amount of $23,777,948 with all principal and accrued interest due on the earlier of (i) the date the Company or one of its affiliates completes an acquisition with one or more of the Sellers for a purchase price equal to or greater than $50,000,000 or (ii) January 31, 2020.
Management has evaluated these conditions and has developed a plan which, in part, address these obligations as follows:
·
The terms of the $15 million notes which were initially due in August 2019 allowed for 50% of the principal to be converted into shares of the Company’s common stock at $0.20 per share, and also contained a provision whereby the Company had the right to extend the Maturity Date for one additional year to August of 2020. Consideration for the one-year extension was payment of the accrued interest, an increase in the interest rate to 12% for the extension period and the issuance of a warrant to purchase an additional 115,000 common shares per $100,000 of outstanding principal of each note on a pro rata basis. The Company elected to extend the Maturity Date and accomplished the payment of the accrued interest through the issuance of approximately 3,650,000 common shares and approximately $900,000 in cash. Effective as of October 31, 2019, all the warrant holders associated with these notes consented to a modification to the exercise price of these warrants from $0.20 to $0.10. Multiple warrant holders then elected to exercise 20,416,350 warrants for an aggregate exercise price of $2,041,635. As to $1,860,635 of such exercise price consideration, the applicable warrant holders agreed to pay such exercise price by reducing the principal amount owing by the Company to the warrant holders under the Notes. As to the balance of $181,000 of such exercise price consideration, the applicable warrant holders agreed to pay such amount in cash to the Company.
·
The acquisition of oil and gas assets in Texas and Louisiana (the Ichor Energy Acquisition) at the end of 2018 is believed to provide cash flow sufficient to not only satisfy the Company’s debt service associated with this acquisition, but to also fund a $12,000,000 development program to increase this purchased production beyond its current average daily production of 2,300 BOE and provide a quicker principal reduction, resulting in an increased equity position relative to these assets. The acquisition of Petrodome Energy LLC in 2017 and the oil and gas expertise retained by Petrodome at the end of 2017 provided an internal lease operating company to efficiently evaluate development opportunities.
·
The Company has a revolving credit facility with CrossFirst Bank, which was approved for $30,000,000. The balance outstanding at September 30, 2019 is approximately $7,990,000. On May 10, 2019, the Company entered into an amendment to this revolving credit facility to extend the final maturity date from June 30, 2020 to May 10, 2021, which provides the Company with an additional year to meet the cash demands associated with maturity. Additional funds could be made available to the Company for projects reviewed and approved by the lender.
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These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to utilize the resources in place to generate future profitable operations, to develop additional acquisition opportunities, and to obtain the necessary financing to meet its obligations and repay its liabilities arising from business operations when they come due. Management believes the Company will be able to continue to develop new opportunities and will be able to obtain additional funds through debt and / or equity financings to facilitate its development strategy; however, there is no assurance of additional funding being available. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.
RESULTS OF CONTINUING OPERATIONS
The following discussion of the financial condition and results of operation of the Company for the three and nine months ended September 30, 2019 and 2018, should be read in conjunction with the audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on April 1, 2019.
Liquidity and Capital Resources
As of September 30, 2019, and December 31, 2018, the Company had $7,644,249 (of which $6,088,859 is restricted) and $4,009,892 in cash holdings, respectively. Restricted cash as of September 30, 2019 represents the balance of cash held by Ichor Energy, LLC (the “Borrower”) and/or its subsidiaries, generated through the operations of those subsidiaries. Pursuant to the Term Loan Credit Agreement to which the Borrower and its subsidiaries are parties, following March 31, 2019 the Borrower is required at all times to maintain a minimum cash balance of $2,000,000 (the “MLR”). Within 30 days of the end of each quarter, commencing with the quarter ended September 30, 2019, the Borrower is required to pay the lenders, as an additional principal payment on the debt, any cash in excess of (i) the MLR and (ii) any funds necessary for the capital expenditures contemplated to be expended in the next six month period by an approved plan of development (“APOD Capex Amount”). At September 30, 2019, the restricted cash did not exceed the MLR and the APOD Capex Amount
As of September 30, 2019, the Company has total long term debt and other short-term borrowings of $106,473,306, with a current portion of $40,241,800. This current portion consists primarily of notes payable with a face value approximating $15,000,000 and a promissory note payable to the seller of the certain oil and gas interests acquired in December 2018, in the amount of $23,777,948 (see Going Concern Qualification).
Three months ended September 30, 2019, compared to the three months ended September 30, 2018
Revenue
The Company had gross revenues of $9,000,591 for the three months ended September 30, 2019, as compared to $1,895,932 for the three months ended September 30, 2018, reflecting an increase in excess of 375% or $7,104,659. This substantial increase in revenue is primarily a result of the increased production from the oil and gas assets acquired at the end of 2018, and to a lesser extent new drilling and enhancements to existing wells.
Expenses
The Company’s operating expenses increased by approximately 119%, or $4,067,151 to $7,478,167 for the three-month period ended September 30, 2019, from $3,411,016 in the corresponding prior period. Lease operating costs increased by approximately 254%, or $2,634,331, to 3,547,662 from $913,331 as compared to the three months ended September 30, 2018. DD&A expense, a non-cash expense, increased by $1,967,056, to $2,379,725 from $412,669 for the corresponding period in 2018. These expense increases were primarily the result of acquiring additional oil and gas assets at the end of 2018. General and administrative expenses reflected a decrease of approximately 15%, to $1,076,287, when compared to $1,364,779 in the corresponding prior period.
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Income (loss) from Operations
The Company, through the increased production coming from its latest acquisition, and controlling the cost of operations and administration, has generated an income from operations for the three months ended September 30, 2019 of $1,522,424, when compared to a loss from operations of $1,515,084 for the three months ended September 30, 2018.
Other Income (Expense)
The Company had other income (expense) of $(103,294) for the three months ended September 30, 2019, as compared to $(1,463,228) for the three months ended September 30, 2018. This significant difference is primarily a result of a gain on the Company’s commodity derivatives offset by increased interest expense and amortization of debt discount due to increased debt associated with acquisitions.
Net Income (Loss)
The Company incurred a net income of $1,419,130 during the three-month period ended September 30, 2019, compared with a net loss of $(2,944,764) for the three-month period ended September 30, 2018, a $4,363,894 difference primarily as a result of items discussed above.
Nine months ended September 30, 2019, compared to the nine months ended September 30, 2018
Revenue
The Company had gross revenues of $27,081,506 for the nine months ended September 30, 2019, as compared to $6,376,501 or the nine months ended September 30, 2018, reflecting an increase in excess of 300% or $20,705,005. This substantial increase in revenue is primarily a result of the increased production from the certain oil and gas assets acquired at the end of 2018, and to a lesser extent new drilling and enhancements to existing wells.
Expenses
The Company’s operating expenses increased by more than 100%, or $10,278,599 to $20,025,331 for the nine-month period ended September 30, 2019, from $9,746,732 in the corresponding prior period primarily as a result of increased production. Lease operating costs increased by approximately 205%, or $6,047,261, to 9,004,334 from $2,957,073 as compared to the nine months ended September 30, 2018. DD&A expense, a non-cash expense, increased by $5,616,298 from $1,362,306 for the corresponding period in 2018. General and administrative expenses reflected a small decrease of approximately $23,649, to $3,367,591 when compared to $3,391,240 in the corresponding prior period.
Income (loss) from Operations
The Company, through the increased production coming from its latest acquisition, and controlling the cost of operations and administration, has generated an income from operations for the nine months ended September 30, 2019 of $7,056,175, when compared to a loss from operations of $(3,370,231) for the nine months ended September 30, 2018.
Other Income (Expense)
The Company had other income (expense) of $(16,276,180) for the nine months ended September 30, 2019, as compared to $(5,993,459) for the nine months ended September 30, 2018. This significant difference is primarily a result of increased interest expense and amortization of debt discount due to increased debt associated with acquisitions, and loss on commodity derivatives.
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Net Income (Loss)
The Company incurred a net (loss) of $(9,220,005) during the nine-month period ended September 30, 2019, compared with a net loss of $(8,452,863) for the nine-month period ended September 30, 2018. The increase in net loss was mainly due to the items referred to in the analysis of operating expenses and other income (expense).
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our financial statements in conformity with GAAP, which requires management to make certain estimates and assumptions and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared and actual results could differ from our estimates and such differences could be material. Due to the need to make estimates about the effect of matters that are inherently uncertain, materially different amounts could be reported under different conditions or using different assumptions. On a regular basis, we review our critical accounting policies and how they are applied in the preparation of our financial statements, as well as the sufficiency of the disclosures pertaining to our accounting policies in the footnotes accompanying our financial statements. Described below are the most significant policies we apply in preparing our consolidated financial statements, some of which are subject to alternative treatments under GAAP. We also describe the most significant estimates and assumptions we make in applying these policies. See “Note 2 - Summary of Significant Accounting Policies” to our consolidated financial statements.
Oil and Gas Property Accounting
The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas properties (including such costs as leasehold acquisition costs, geological expenditures, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas properties when incurred.
The full cost method requires the Company to calculate quarterly, by cost center, a “ceiling,” or limitation on the amount of properties that can be capitalized on the balance sheet. To the extent capitalized costs of oil and natural gas properties, less accumulated depletion and related deferred taxes exceed the sum of the discounted future net revenues of proved oil and natural gas reserves, the lower of cost or estimated fair value of unproved not properties subject to amortization, the cost of properties not being amortized, and the related tax amounts, such excess capitalized costs are charged to expense.
Proved Reserves
Estimates of our proved reserves included in this report are prepared in accordance with U.S. SEC guidelines for reporting corporate reserves and future net revenue. The accuracy of a reserve estimate is a function of:
i.
the quality and quantity of available data;
ii.
the interpretation of that data;
iii.
the accuracy of various mandated economic assumptions; and
iv.
the judgment of the persons preparing the estimate.
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Our proved reserve information included in this report was predominately based on estimates. Because these estimates depend on many assumptions, all of which may substantially differ from future actual results, reserve estimates will be different from the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production after the date of an estimate may justify material revisions to the estimate.
In accordance with SEC requirements, we based the estimated discounted future net cash flows from proved reserves on the unweighted arithmetic average of the prior 12-month commodity prices as of the first day of each of the months constituting the period and costs on the date of the estimate.
The estimates of proved reserves materially impact depreciation, depletion, amortization and accretion (“DD&A”) expense. If the estimates of proved reserves decline, the rate at which we record DD&A expense will increase, reducing future net income. Such a decline may result from lower market prices, which may make it uneconomic to drill for and produce from higher-cost fields.
Asset Retirement Obligation
Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. We determined our ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties. Periodic accretion of discount of the estimated liability is recorded as accretion expense in the accompanying consolidated statements of operations.
ARO liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive lives of wells and a risk-adjusted interest rate. Changes in any of these assumptions can result in significant revisions to the estimated ARO.
Commodity derivatives
The Company does not designate its commodities derivative instruments as hedges and therefore does not apply hedge accounting. Changes in fair value of derivative instruments subsequent to the initial measurement are recorded as change in fair value on derivative liability, in other income (expense). The estimated fair value amounts of the Company’s commodity derivative instruments have been determined at discrete points in time based on relevant market information which resulted in the Company classifying such derivatives as Level 2. Although the Company’s commodity derivative instruments are valued using public indices, as well as the Black-Sholes model, the instruments themselves are traded with unrelated counterparties and are not openly traded on an exchange.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company does not currently maintain controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms. Disclosure controls and procedures would include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of management, including the Company’s Chief Executive Officer, the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, ~~2017,~~2019, have been evaluated, and, based upon this evaluation, the Company’s Chief Executive Officer has concluded that these controls and procedures are not effective in providing reasonable assurance of compliance.

Changes in Internal Control over Financial Reporting

Management and directors will continue to monitor and evaluate the effectiveness of the Company's internal controls and procedures and the Company's internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. There were no changes in Internal Control ~~over~~Over Financial Reporting during the quarter ended September 30, ~~2017.~~2019.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may be involved in litigation relating to claims arising out of commercial operations in the normal course of business. As of September 30, ~~2017,~~2019, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of operations.
In April of 2019, the staff (the “Staff”) of the SEC’s Division of Enforcement notified the Company that the Staff has made a preliminary determination to recommend that the SEC file an enforcement action against the Company, as well as against its CEO and its CFO, for alleged violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder during the period from early 2014 through late 2016. The Staff’s notice is not a formal allegation or a finding of wrongdoing by the Company, and the Company is in dialogue with the Staff regarding its preliminary determination. The Company believes it has adequate defenses and intends to vigorously defend any enforcement action that may be initiated by the SEC.

ITEM 1A. RISK FACTORS

As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, the Company is not required to provide the information under this item.

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

~~On July 18, 2017,~~During the quarter ended September 30, 2019, the Company issued ~~250,000~~1,426,947 common shares to ~~a third-party consultant as a second quarterly payment a consulting agreement executed in April of 2017.~~
~~On August 4, 2017, the Company issued 154,688 common shares to a third-party consultant for services.~~
~~During July and August of 2017, pursuant to a private placement, the Company issued 590,000 common shares to various third-party investors concurrently with raising $1,475,000.~~
~~During August and September of 2017, pursuant to a separate private placement, the Company issued 1,837,500 common shares to various third-party investors concurrently with raising $1,225,000.~~
~~On August 30, 2017, the Company issued 176,258 common shares to a third-party consultant for services~~
~~On September 30, 2017, the Company issued 612,500 common shares to a third-party placement agent~~business consultants for services.

The ~~share issuances~~shares described above were issued pursuant to ~~exemptions~~the exemption from registration requirements relying on Section 4(a)(2) of the Securities Act of 1933 and/or Rule 506 of Regulation D promulgated thereunder as there was no general solicitation, and the transactions did not involve a public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

~~None.~~

2830

Table of Contents

ITEM 6. EXHIBITS~~EXHIBITS~~

Number
Description
3.1
Articles of Incorporation (incorporated by reference to our Definitive Information Statement on Schedule 14C filed on October 14, 2008)
3.2
Bylaws (incorporated by reference to our Definitive Information Statement on Schedule 14C filed on October 14, 2008)
3.3
Certificate of Amendment to Articles of Incorporation (incorporated by reference to our ~~Definitive Information Statement~~Current Report on ~~Schedule 14C~~Form 8-K filed on ~~May 23, 2012)~~November 6, 2018)
3.4
Certificate of Amendment to Designation - After Issuance of Class or Series (incorporated by reference to our Current Report on Form 8-K filed on September 5, 2019)
10.1
Membership Interest Purchase Agreement, dated November 10, 2017, by Viking Energy Group, Inc. and Black Rhino, LP (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2017)

10.2
First Amendment to Membership Interest Purchase Agreement, dated November 30, 2017, by Viking Energy Group, Inc. and Black Rhino, LP (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2017)
10.3
Second Amendment to Membership Interest Purchase Agreement, dated December 22, 2017, by Viking Energy Group, Inc., Black Rhino, LP, and Petrodome Energy, LLC (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2017)
10.4
Term Loan Agreement, dated December 22, 2017, by the Borrowers listed therein, 405 Petrodome LLC, as Administrative Agent, and 405 Petrodome LLC and Cargill, Incorporated, as Lenders (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2017)
10.5
Purchase and Sale ~~Petroleum~~Agreement, executed as of September 1, 2018, by and ~~Natural Gas Conveyance~~among Viking Energy Group, Inc. and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on September 5, 2018)
10.6
First Amendment to Purchase and Sale Agreement, ~~with Tanager~~executed as of November 1, 2018, by and among Viking Energy Group, Inc. ~~dated November 3, 2014~~and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on November ~~10, 2014)~~5, 2018)
~~10.2~~

~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Annual Report on Form 10-K/A filed on May 16, 2016)~~
~~10.3~~
~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2017)~~
~~10.4~~
~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2017)~~
~~10.5~~
~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2017)~~
~~10.6~~
~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2017)~~
10.7
Second Amendment to Purchase and Sale Agreement, executed as of November 1, 2018, by and among Viking Energy Group, Inc. and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)
10.8
Collateral Agreement to Purchase and Sale Agreement, executed as of December 26, 2018, by and among Viking Energy Group, Inc. and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)
10.9
Term Loan Credit Agreement, dated as of December 28, 2018, by and among Ichor Energy Holdings, LLC, Ichor Energy, LLC, ABC Funding, LLC, as Administrative Agent, and the Lender Parties (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)
31
Table of Contents
10.10
10% Secured Promissory Note, dated December 27, 2018, issued by Viking Energy Group, Inc. to RPM Investments, a Division of Opus Bank, in favor of Sellers (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)
10.11
Security and Pledge Agreement, executed as of December 27, 2018, by and among Viking Energy Group, Inc. and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)
10.12

~~Acknowledgment~~Purchase and Sale Agreement, dated as of October 10, 2019, by and among Elysium Energy, LLC, 5Jabor, LLC, Bass Petroleum, L.L.C., Bodel Holdings, LLC, Delbo Holdings, L.L.C., James III Investments, L.L.C., JamSam Energy, LLC, Lake Boeuf Investments, LLC, Oakley Holdings, L.L.C., and Plaquemines Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on October 11, 2019)
10.13
Employment Agreement with Timothy Swift dated as of March 19, 2018 (incorporated by reference to our Quarterly Report on Form 10-Q filed on May ~~15, 2017)~~21, 2018)
~~10.8~~10.14
Restricted Stock Agreement with Timothy Swift dated as of April 1, 2018 (incorporated by reference to our Quarterly Report on Form 10-Q filed on May 21, 2018)
10.15*

~~Purchase and Sale~~Employment Agreement ~~(incorporated by reference to our Current Report on Form 8-K filed on~~with Mark Finckle dated as of September ~~12, 2017)~~9, 2019+
~~10.9~~10.16*

~~Purchase and Sale~~Restricted Stock Agreement ~~(incorporated by reference to our Current Report on Form 8-K filed on October 3, 2017)~~with Mark Finckle dated as of September 9, 2019+
~~10.10~~21.1*

~~Purchase and Sale Agreement~~ ~~(incorporated by reference to our Current Report on Form 8-K filed on October 4, 2017)~~Subsidiaries of Viking Energy Group, Inc.
31.1*
Certification of Principal Executive Officer ~~and~~required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification of Principal Financial and Accounting Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
32.2*
Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
101.INS*

99.1
Purchase, Sale and Capital Contribution Agreement effective February 1, 2016 (incorporated by reference to our Annual Report on Form 10-K/A filed on May 16, 2016)
99.2
Purchase and Sale Agreement (incorporated by reference to our Current Report on Form 8-K filed on September 12, 2017)
99.3
Purchase and Sale Agreement (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2017)
99.4
Purchase and Sale Agreement (incorporated by reference to our Current Report on Form 8-K filed on October 4, 2017)
99.5
Purchase and Sale Agreement (incorporated by reference to our Current Report on Form 8-K filed on December 8, 2017)
101.INS**
XBRL Instance Document
101.SCH*

101.SCH**
XBRL Taxonomy Extension Schema Document
101.CAL*

101.CAL**
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*

101.DEF**
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*

101.LAB**
XBRL Taxonomy Extension Label Linkbase Document
101.PRE*

101.PRE**
XBRL Taxonomy Extension Presentation Linkbase Document
~~________~~______________
* Filed ~~herewith.~~herewith
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
+ Portions of Mr. Finckle’s employment agreement and restricted stock agreement with personally identifying information have been redacted.

ITEM 7. OFF BALANCE-SHEET ARRANGEMENTS

None.

2932

Table of Contents

SIGNATURES

In accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VIKING ENERGY GROUP, INC.
(Registrant)
~~Date: November 14, 2017~~
~~By:~~
/s/ James Doris
Date: November 11, 2019

Principal Executive Officer ~~and~~
/s/ Frank W. Barker, Jr.
Date: November 11, 2019
Principal Financial and
Accounting Officer

3033

Nevada		98-0199508
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Not applicable.	Note applicable.	Not applicable.

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller Reporting Company	x
		Emerging Growth Company	¨

Part I – Financial Information

Item 1	Financial Statements	3
	Consolidated Balance Sheets as of September 30, ~~2017~~2019 (unaudited) and December 31, ~~2016~~2018	3
	Consolidated Statements of Operations ~~and Comprehensive Loss~~ for the three and nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 (unaudited)	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2019 and ~~2016~~2018 (unaudited)	5
	Consolidated Statements of Changes in Stockholders’ ~~Deficit~~Equity for the nine months ended September 30, 2019 and 2018 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2	Management’s Discussion and Analysis ~~or Plan~~ of ~~Operation~~Financial Condition and Results of Operations	2322
Item 3	Quantitative and Qualitative Disclosures about Market Risk	2729
Item 4	Controls and Procedures	2829

Part II – Other Information

Item 1	Legal Proceedings	2830
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	2830
Item 3	Defaults Upon Senior Securities	2830
Item 4	Mine Safety Disclosures	2830
Item 5	Other Information	2830
Item 6	Exhibits	2931

																					Accumulated
															Additional			Prepaid			Other						Total
	Common Stock						Shares to be Issued				Preferred Stock				Paid-in			Equity-Based			Comprehensive			Accumulated			Stockholders'
	Number			Amount			Number		Amount		Number		Amount		Capital			Compensation			Loss			Deficit			Deficit

Balances at December 31, 2015		30,333,993		$	30,334			-	$	-		28,092	$	28	$	7,960,372		$	(145,562	)	$	(158,424	)	$	(8,964,441	)	$	(1,277,693	)
Shares issued in satisfaction of debt		300,926			301											9,810												10,111
Derivative liability adjustments - satisfaction of convertible debt																685,668												685,668
Shares issued for consulting services		1,315,000			1,315											164,185												165,500
Shares issued in acquisition of oil and gas properties		14,862,021			14,862											1,430,829												1,445,691
Shares issued as prepaid equity-based compensation		5,000,000			5,000											795,000			(800,000	)								-
Cancellation of shares issued as prepaid equity-based compensation		(4,000,000	)		(4,000	)										(636,000	)		640,000									-
Sale of stock		2,841,667			2,842											423,408												426,250
Capital issuance costs																(37,500	)											(37,500	)
Shares issued as payment for interest expense		1,931,250			1,931											324,444												326,375
Shares issued as additional discount on debt		508,335			508											75,742												76,250
Warrants issued for services																330,889												330,889
Amortization of prepaid equity-based compensation																			270,494									270,494
Unrealized gain (loss) on securities held for sale																						156,978						156,978
Net loss for the year ended December 31, 2016																									(5,445,187	)		(5,445,187	)
Balances at December 31, 2016		53,093,192		$	53,093			-	$	-		28,092	$	28	$	11,526,847		$	(35,068	)	$	(1,446	)	$	(14,409,628	)	$	(2,866,174	)
Shares issued for consulting services		2,892,889			2,894											478,739												481,633
Shares issued as prepaid equity-based compensation		4,135,000			4,135											833,411			(837,546	)								-
Sale of stock		3,059,442			3,059											455,858												458,917
Derivative liability adjustments - satisfaction of convertible debt																35,232												35,232
Amortization of prepaid equity-based compensation																			822,542									822,542
Unrealized gain (loss) on securities held for sale																						1,446						1,446
Shares and warrants issued as discount on new debt		3,040,000			3,040											681,371												684,411
Net loss for the nine months ended September 30, 2017																									(2,667,714	)		(2,667,714	)
Balances at September 30, 2017		66,220,523		$	66,221			-	$	-		28,092	$	28	$	14,011,458		$	(50,072	)	$	-		$	(17,077,342	)	$	(3,049,707	)

													Retained
	Preferred Stock				Common Stock				Additional Paid-in		Prepaid Equity-Based		Earnings (Accumulated			Total Stockholders'
	Number		Amount		Number		Amount		Capital		Compensation		Deficit)			Equity


Balances at December 31, 2018		28,092	$	28		90,989,025	$	90,989	$	32,015,913	$	-	$	(10,891,913	)	$	21,215,017

Shares issued for services						1,637,876		1,638		275,144							276,782
Shares issued for interest						3,650,046		3,650		616,858							620,508
Warrants issued for services										167,751							167,751
Warrants issued as debt discouint										3,129,012							3,129,012
Net loss for the nine months ended September 30, 2019														(9,220,005	)		(9,220,005	)

Balances at September 30, 2019		28,092	$	28		96,276,947	$	96,277	$	36,204,678	$	-	$	(20,111,918	)	$	16,189,065

	·	On January 12, 2018, the Company, through its subsidiary Mid-Con Drilling, LLC (“Mid-Con Drilling”) completed an acquisition of a 100% working interest in seven new oil and gas leases in Woodson and Allen Counties in Eastern Kansas.

	·	Effective February 1, 2018, the Company, through Mid-Con Drilling, closed on the acquisition of a working interest in a lease with access to the mineral rights (oil and gas) concerning approximately 80 acres of property in Douglas County in eastern Kansas.

	·	On December 28, 2018, the Company, through its subsidiary Ichor Energy, LLC (“Ichor Energy”) completed an acquisition (the “Ichor Energy Acquisition”) of working interests in certain oil and gas leases in Texas (primarily in Orange and Jefferson Counties) and Louisiana (primarily in Calcasiue Parish), which include 58 producing wells and 31 salt water disposal wells. The properties produce hydrocarbons from known reservoirs/sands in the on-shore Gulf Coast region, with an average well depth in excess of 10,600 feet.

	·	On May 1, 2019, the Company’s subsidiary, Mid-Con Development, LLC sold all of its interests in the oil and gas assets Mid-Con Development, LLC owned in Ellis and Rooks Counties, Kansas, consisting of working interests in approximately 41 oil leases comprising several thousand acres.

	·	On May 10, 2019, Petrodome Louisiana Pipeline LLC ("Petrodome LA"), a subsidiary of the Company’s subsidiary, Petrodome Energy, LLC, acquired a majority working interest in 6 gas wells (including 2 producing gas wells), 1 producing oil well and 1 salt water disposal well located in the East Mud Lake Field in Cameron Parish, Louisiana, with leases to mineral rights (oil and gas) concerning approximately 765 acres.

	·	The terms of the $15 million notes which were initially due in August 2019 allowed for 50% of the principal to be converted into shares of the Company’s common stock at $0.20 per share, and also contained a provision whereby the Company had the right to extend the Maturity Date for one additional year to August of 2020. Consideration for the one-year extension was payment of the accrued interest, an increase in the interest rate to 12% for the extension period and the issuance of a warrant to purchase an additional 115,000 common shares per $100,000 of outstanding principal of each note on a pro rata basis. The Company elected to extend the Maturity Date and accomplished the payment of the accrued interest through the issuance of approximately 3,650,000 common shares and approximately $900,000 in cash. Effective as of October 31, 2019, all the warrant holders associated with these notes consented to a modification to the exercise price of these warrants from $0.20 to $0.10. Multiple warrant holders then elected to exercise 20,416,350 warrants for an aggregate exercise price of $2,041,635. As to $1,860,635 of such exercise price consideration, the applicable warrant holders agreed to pay such exercise price by reducing the principal amount owing by the Company to the warrant holders under the Notes. As to the balance of $181,000 of such exercise price consideration, the applicable warrant holders agreed to pay such amount in cash to the Company.

	·	The acquisition of oil and gas assets in Texas and Louisiana (the Ichor Energy Acquisition) at the end of 2018 is believed to provide cash flow sufficient to not only satisfy the Company’s debt service associated with this acquisition, but to also fund a $12,000,000 development program to increase this purchased production beyond its current average daily production of 2,300 BOE and provide a quicker principal reduction, resulting in an increased equity position relative to these assets. The acquisition of Petrodome Energy LLC in 2017 and the oil and gas expertise retained by Petrodome at the end of 2017 provided an internal lease operating company to efficiently evaluate development opportunities.

	·	The Company has a revolving credit facility with CrossFirst Bank, which was approved for $30,000,000. The balance outstanding at September 30, 2019 is approximately $7,990,000. On May 10, 2019, the Company entered into an amendment to this revolving credit facility to extend the final maturity date from June 30, 2020 to May 10, 2021, which provides the Company with an additional year to meet the cash demands associated with maturity. Additional funds could be made available to the Company for projects reviewed and approved by the lender.

Description	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)

Financial Assets
Commodity Derivative	$	-	$	101,726	$	-	$	(580,050	)
	$	-	$	101,726	$	-	$	(580,050	)

Financial liabilities
Commodity Derivative	$		$	1,683,980	$	-	$	847,738
	$	-	$	1,683,980	$	-	$	847,738

Natural Gas	Period	Average MMBTU per Month	Fixed Price per MMBTU

Swap	Dec-18 to Dec-22	118,936	$2.715

Crude Oil	Period	Average BBL per Month	Price per BBL

Swap	Dec-18 to Dec- 22	24,600	$50.85
Swap	Dec-17 to Dec-19	1,400	$54.77
Swap	Jan-20 to Jun-20	1,400	$52.71
Collar	Dec-17 to Jun-20	4,000	$55.00 / $72.00
Collar	Sep-17 to Sep-19	1,100	$47.00 / $54.10

	September 30, 2017		December 31, 2016

In March 2016, three one-year consulting agreements with three unrelated parties for services related to the petroleum industry for a combined total amount of $800,000.		-		35,068

In February 2017, a one-year consulting agreement for services related to investor relations, market exposure and content development for a total amount of $44,160.		17,543		-

In April 2017, a one-year consulting agreement comprised of four quarterly incremental installments for services related to analysis of potential oil and gas acquisitions, for an initial quarterly amount of $40,250. In July 2017, the second quarterly installment was made in the amount of $28,000.		5,478		-

In June 2017, a six-month consulting agreement for services related to investor relations and social media for a total amount of $65,136.		27,051		-

	$	50,072	$	35,068

Oil and Gas Properties by Geographical Cost Center
	Three months ended				Nine months ended,				Three months ended				Nine months ended
	September 30,				September 30,				September 30,				September 30,
Cost Center	2017		2016		2017		2016		2019		2018		2019		2018

Canada	$	21,073		6,860	$	38,301	$	12,272	$	-	$	-	$	-	$	21,387
United States		38,638		22,149		108,301		65,353		2,379,725		412,669		6,978,604		1,340,919

	$	59,711	$	29,009	$	146,602	$	77,625	$	2,379,725	$	412,669	$	6,978,604	$	1,362,306

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value

Warrants Outstanding – December 31, 2016		5,720,834		0.19	3.6 years			-
Granted		1,475,000		0.30		-		-
Exercised		-		-		-		-
Forfeited/expired/cancelled		-				-		-
Warrants Outstanding – September 30, 2017		7,195,834	$	0.21		3.8 years	$	-
Outstanding Exercisable – December 31, 2016		5,720,834	$	0.19		3.6 years	$	-
Outstanding Exercisable – September 30, 2017		7,195,834	$	0.21		3.8 years	$	-

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Warrants Outstanding – December 31, 2018		54,821,690	$	0.26	6.0 years		$	-
Granted		20,922,500		0.22	4.9 years			-
Exercised		-		-		-		-
Forfeited/expired/cancelled		-				-		-
Warrants Outstanding – September 30, 2019		75,744,190	$	0.25	5.2 years		$	-

Outstanding Exercisable – September 30, 2019		73,244,190	$	0.25	5.2 years		$	-

	Nine months ended September 30, 2017		Year ended December 31, 2016		Nine months ended September 30, 2019

Asset retirement obligation – beginning	$	833,017	$	416,246	$	4,413,465
Oil and gas purchases		205,048		393,808		94,796
Adjustments through disposals and settlements						(1,361,106	)
Accretion expense		29,167		22,963		230,269

Asset retirement obligation - ending	$	1,067,232	$	833,017
Asset retirement obligation – ending					$	3,377,424

	Nine Months Ended September 30, 2018

Revenues	$	36,869,285

Net Income (excludes unrealized gains / losses)	$	2,819,852

Income per share	$	0.03

	December 31, 2016			Additions			Impairments		September 30, 2017

Proved developed producing oil and gas properties
Canada cost center	$	34,733		$	-		$	-	$	34,733
United States cost center		1,787,840			565,048			-		2,352,888
Accumulated depreciation, depletion and amortization		(57,200	)		(75,496	)		-		(132,696	)
Proved developed producing oil and gas properties, net	$	1,765,373		$	489,552		$	-	$	2,254,925

Undeveloped and non-producing oil and gas properties
Canada cost center	$	371,481		$	-		$	-	$	371,481
United States cost center		917,184			-			-		917,184
Accumulated depreciation, depletion and amortization		(51,176	)		(71,106	)		-		(122,282	)
Undeveloped and non-producing oil and gas properties, net	$	1,237,489		$	(71,106	)	$	-	$	1,166,383

Total Oil and Gas Properties, Net	$	3,002,862		$	418,446		$	-	$	3,421,308

	December 31, 2015			Additions			Impairments			December 31, 2016

Proved developed producing oil and gas properties
Canada cost center	$	33,082		$	1,651		$	-		$	34,733
United States cost center		-			2,838,943			(1,051,103	)		1,787,840
Accumulated depreciation, depletion and amortization		(2,093	)		(55,107	)		-			(57,200	)
Proved developed producing oil and gas properties, net	$	30,989		$	2,785,487		$	(1,051,103	)	$	1,765,373

Undeveloped and non-producing oil and gas properties
Canada cost center	$	518,269		$	(1,652	)	$	(145,136	)	$	371,481
United States cost center		-			1,456,414			(539,230	)		917,184
Accumulated depreciation, depletion and amortization		(32,788	)		(43,464	)		25,076			(51,176	)
Undeveloped and non-producing oil and gas properties, net	$	485,481		$	1,411,298		$	(659,290	)	$	1,237,489

Total Oil and Gas Properties, Net	$	516,470		$	2,092,625		$	(1,710,393	)	$	3,002,862

	December 31, 2018			Adjustments			Impairments		September 30, 2019

Proved developed producing oil and gas properties
United States cost center	$	81,936,721		$	(578,384	)	$	-	$	81,358,337
Accumulated depreciation, depletion and amortization		(604,735	)		(5,078,054	)		-		(5,682,789	)
Proved developed producing oil and gas properties, net	$	81,331,986		$	(5,656,438	)	$	-	$	75,675,548

Undeveloped and non-producing oil and gas properties
United States cost center	$	51,973,719		$	(496,028	)	$	-	$	51,477,691
Accumulated depreciation, depletion and amortization		(1,480,813	)		(1,853,763	)		-		(3,334,576	)
Undeveloped and non-producing oil and gas properties, net	$	50,492,906		$	(2,349,791	)	$	-	$	48,143,115

Total Oil and Gas Properties, Net	$	131,824,892		$	(8,006,229	)	$	-	$	123,818,663

	September 30, 2017			December 31, 2016

On February 19, 2016, the Company issued a total of $1,625,000 15% convertible notes with a term expiring August 18, 2016 (the “Maturity Date”). The principal amounts of each note and interest is payable on the maturity date. Placement fees of $145,000 were subtracted from proceeds. The notes are convertible into common stock at any time, at the holder’s option, the conversion price shall be the lowest of (i) $0.15, (ii) 58% of the price of the Company’s securities that are sold in any offering of the Company’s securities in excess of $100,000, of (iii) the conversion price of any Equity converted on or prior to the Conversion Date.		-			125,000

On April 29, 2016, the Company issued a total of $375,000 of 10% Secured Subordinated promissory notes with a term expiring January 12, 2017 (the “Maturity Date”), and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the Maturity Date. The balance shown is net of unamortized discount of $8,824 at December 31, 2016.		-			366,176

On July 27, 2016, the Company issued a promissory note in the amount of $20,000, bearing interest at 12%, with an initial maturity date of August 27, 2016, and a provision for an extension of six additional terms of 30 days.		-			20,000

As of December 31, 2016, the Company issued a total of $630,000 of 10% Secured promissory notes with a term expiring April 3, 2017 (the “Maturity Date”), and an original issue discount of thirty-seven and one-half percent (37.5%). The discount was modified to fifty percent (50%) retroactively with an extension of the maturity to June 2017. During the quarter ended March 31, 2017, the Company issued an additional $917,833 of 10% Secured promissory notes with terms expiring in June, August and September of 2017, and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the various maturity dates. The balance shown is net of unamortized discount of $0 and $208,064 at September 30, 2017 and December 31, 2016 respectively. At September 30, 2017, the funds necessary to satisfy this obligation are being held in escrow awaiting disbursement instructions from the estate of the noteholder.		75,000			421,936

On October 4, 2016, the Company issued a non-interest-bearing note, payable on demand in the amount of $203,000. This amount has been paid in full as of November 1, 2017.		203,000			203,000

On October 4, 2016, the Company closed on a revolver loan with Crossfirst Bank in the amount of $1,800,000, payable at $15,000 per month, interest at 10%, with all unpaid principal and accrued interest payable on September 30, 2018. The balance shown is net of unamortized discount of $13,826 and $24,167 at September 30, 2017 and December 31, 2016 respectively.		1,621,174			1,745,833

During July and August of 2017, the Company borrowed $1,475,000 from private lenders pursuant to a 10% Secured Convertible Promissory Note with a twelve-month maturity. The balance shown is net of unamortized discount of $400,710 and $0 at September 30, 2017 and December 31, 2016 respectively.		1,074,290			-

During August and September of 2017, the Company borrowed $1,225,000 from private lenders pursuant to a 10% Secured Promissory Note with all principal and accrued interest payable on the maturity date of October 31, 2018. The balance shown is net of unamortized discount of $368,415 and $0 at September 30, 2017 and December 31, 2016 respectively.		856,585			-

On September 8, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $256,983, payable interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 8, 2025.		256,983			-
		4,087,032			2,881,945
Less current portion		(1,518,464	)		(1,302,476	)
	$	2,568,568		$	1,579,469

~~Note 7.~~ ~~Commitments and contingencies~~	·	1,637,876 shares of common stock issued for services valued at fair market value on the date of the transactions, totaling $276,782.

	·	3,650,046 shares of common stock issued for accrued interest on promissory notes.

	·	5,029,443 shares of common stock issued for services valued at fair market value on the date of the transactions, totaling $1,178,009.

	·	250,000 shares of common stock issued as prepaid equity-based compensation valued at fair market value at the date of the transaction, totaling $55,000.

	·	10,323,356 shares of common stock issued as debt discount valued at fair market value on the date of each transactions, totaling $2,231,331.

	·	447,591 shares of common stock issued in a cashless exercise of warrants.

	September 30, 2019		December 31, 2018

Long-term debt:

During June through December of 2018, the Company borrowed $9,459,750 from private lenders, and exchanged $5,514,000 of amounts due lenders from prior borrowings as well as $191,250 in accrued interest, pursuant to a 10% Secured Promissory Note with 50% of the principal convertible into the Company’s common stock at $0.20 per share, all principal and accrued interest payable on the initial maturity date of August 31, 2019. Concurrently, the Company issued the Note holders 11,373,750 warrants (5-year term and an exercise price of $0.20 per share). On August 31, 2019, the Company, pursuant to the terms of the notes, elected to extend the maturity date to August 31, 2020, by increasing the interest rate to 12%, and issuing the Note holders an additional 115,000 warrants (5-year term and an exercise price of $0.20 per share) for every $100,000 invested, resulting in an additional 17,422,500 new warrants. The fair value of all these warrants was recorded as a debt discount and amortized over the life of the notes. The balance shown is net of unamortized discount of $2,872,536 at September 30, 2019 and $5,981,012 at December 31, 2018.		12,277,464		9,168,988

On June 13, 2018, the Company borrowed $12,400,000 pursuant to a revolving line of credit facility with a maximum principal amount of $30,000,000 from Crossfirst Bank, bearing interest 1.5% above a base rate equal to the prime rate of interest published by the Wall Street Journal, interest only for June and July of 2018, at which time Principal is payable at $100,000 monthly through the maturity date of May 10, 2021, at which time all remaining unpaid principal and accrued interest shall be due. The balance shown is net of unamortized discount of $51,805 at September 30, 2019 and $103,421 at December 31, 2018		7,938,195		11,728,911

On December 28, 2018, to facilitate the acquisition of certain oil and gas assets, the Company, through one of its subsidiaries, Ichor Energy LLC, entered into a Term Loan Credit Agreement with various lenders represented by ABC Funding, LLC as administrative agent. The agreement provides for a total loan amount of $63,592,000, bearing interest at a rate per annum equal to the greater of (i) a floating rate of interest equal to 10% plus LIBOR, and (ii) a fixed rate of interest equal to 12%, payable monthly on the last day of each calendar month, commencing January 31, 2019. Principal payments are made quarterly at 1.25% of the initial loan amount, commencing on the last business day of the fiscal quarter ending June 30, 2019. Cash generated from the operation of these assets is restricted to lease operating expenses, the payment of debt service on the Term Loan, approximately $12,000,000 of oil and gas development projects approved by the lender, and distributions to the Company of $65,000 per month for general and administrative expenses, and a quarterly tax distribution at the current statutory rates. Within 30 days of the end of each quarter, commencing with the quarter ended June 30, 2019, Ichor Energy, LLC is required to pay, as an additional principal payment on the debt, any cash in excess of the MLR and the APOD Capex Amount. To the extent not previously paid, all loans under the Loan Agreement shall be due and payable on the December 28, 2023 (the Maturity Date). The balance shown is net of unamortized discount of $3,728,679 at September 30, 2019 and $4,385,408 at December 31, 2018.		58,273,523		59,206,592


On December 28, 2018, the Company issued a 10% secured promissory note in the amount of $23,777,948, payable to RPM Investments, secured by 100% of the membership interests of Ichor Energy Holdings, LLC. All accrued interest and unpaid principal are due on the earlier of (i) the date the Company or one of its affiliates completes an acquisition with one or more of the sellers for a purchase price equal to or greater than $50,000,000 or (ii) January 31, 2020.	23,777,948	23,777,948

On February14, 2019, the Company executed a promissory note payable to CrossFirst Bank in the amount of $56,760 for the purchase of transportation equipment, bearing interest at 7.15%, payable in 60 installments of $1,130, with a maturity date of February 14, 2024.	51,140	-

On July 24, 2019, the Company through its wholly owned subsidiary, Mid-Con Petroleum, LLC, executed a promissory note payable to Cornerstone Bank in the amount of $2,241,758, bearing interest at 6%, payable interest only for the first year, then payable in 59 installments of $43,438, with a final payment due on a maturity date of July 24, 2025. The balance shown is net of unamortized discount of $27,739 at September 30, 2019.	2,214,019	-

On July 24, 2019, the Company through its wholly owned subsidiary, Mid-Con Drilling, LLC, executed a promissory note payable to Cornerstone Bank in the amount of $1,109,341, bearing interest at 6%, payable interest only for the first year, then payable in 59 installments of $21,495, with a final payment due on a maturity date of July 24, 2025. The balance shown is net of unamortized discount of $27,662 at September 30, 2019.	1,031,017	-

	105,563,306	103,882,439

Other short-term borrowings:

On September 30, 2019, the Company received $910,000 under an agreement that requires the Company to make 28 weekly payments aggregating $1,237,600 through April 13, 2020. The agreement provides discounts for early payment. The balance shown is net of the maximum discount of $327,600 at September 30, 2019.	910,000	-

Total long-term debt and other short-term borrowings		106,473,306			103,882,439
Less current portion		(40,241,800	)		(11,805,582	)
	$	66,231,506		$	92,076,857

	·	Acquisition of under-valued producing oil and gas assets
	·	Employ enhanced recovery techniques to maximize production
	·	Implement responsible, lower-risk drilling programs on existing assets
	·	Aggressively pursue cost-efficiencies
	·	Opportunistically explore strategic mergers and/or acquisitions
	·	Actively hedge mitigating commodity risk

Number	Description

3.1	Articles of Incorporation (incorporated by reference to our Definitive Information Statement on Schedule 14C filed on October 14, 2008)

3.2	Bylaws (incorporated by reference to our Definitive Information Statement on Schedule 14C filed on October 14, 2008)

3.3	Certificate of Amendment to Articles of Incorporation (incorporated by reference to our ~~Definitive Information Statement~~Current Report on ~~Schedule 14C~~Form 8-K filed on ~~May 23, 2012)~~November 6, 2018)

3.4	Certificate of Amendment to Designation - After Issuance of Class or Series (incorporated by reference to our Current Report on Form 8-K filed on September 5, 2019)

10.1	Membership Interest Purchase Agreement, dated November 10, 2017, by Viking Energy Group, Inc. and Black Rhino, LP (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2017)

10.2	First Amendment to Membership Interest Purchase Agreement, dated November 30, 2017, by Viking Energy Group, Inc. and Black Rhino, LP (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2017)

10.3	Second Amendment to Membership Interest Purchase Agreement, dated December 22, 2017, by Viking Energy Group, Inc., Black Rhino, LP, and Petrodome Energy, LLC (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2017)

10.4	Term Loan Agreement, dated December 22, 2017, by the Borrowers listed therein, 405 Petrodome LLC, as Administrative Agent, and 405 Petrodome LLC and Cargill, Incorporated, as Lenders (incorporated by reference to our Current Report on Form 8-K filed on December 29, 2017)

10.5	Purchase and Sale ~~Petroleum~~Agreement, executed as of September 1, 2018, by and ~~Natural Gas Conveyance~~among Viking Energy Group, Inc. and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on September 5, 2018)

10.6	First Amendment to Purchase and Sale Agreement, ~~with Tanager~~executed as of November 1, 2018, by and among Viking Energy Group, Inc. ~~dated November 3, 2014~~and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on November ~~10, 2014)~~5, 2018)
~~10.2~~		~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Annual Report on Form 10-K/A filed on May 16, 2016)~~
~~10.3~~	~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2017)~~
~~10.4~~	~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2017)~~
~~10.5~~	~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2017)~~
~~10.6~~	~~Purchase, Sale and Capital Contribution Agreement~~ ~~(incorporated by reference to our Quarterly Report on Form 10-Q filed on May 15, 2017)~~
10.7	Second Amendment to Purchase and Sale Agreement, executed as of November 1, 2018, by and among Viking Energy Group, Inc. and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)

10.8	Collateral Agreement to Purchase and Sale Agreement, executed as of December 26, 2018, by and among Viking Energy Group, Inc. and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)

10.9	Term Loan Credit Agreement, dated as of December 28, 2018, by and among Ichor Energy Holdings, LLC, Ichor Energy, LLC, ABC Funding, LLC, as Administrative Agent, and the Lender Parties (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)

10.10		10% Secured Promissory Note, dated December 27, 2018, issued by Viking Energy Group, Inc. to RPM Investments, a Division of Opus Bank, in favor of Sellers (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)

10.11		Security and Pledge Agreement, executed as of December 27, 2018, by and among Viking Energy Group, Inc. and Bodel Holdings, L.L.C., Cleveland Holdings, L.L.C., Delbo Holdings, L.L.C., DeQuincy Holdings, L.L.C., Gulf Coast Working Partners, L.L.C., Oakley Holdings, L.L.C., SamJam Energy, L.L.C., and Perry Point Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on December 31, 2018)

10.12		~~Acknowledgment~~Purchase and Sale Agreement, dated as of October 10, 2019, by and among Elysium Energy, LLC, 5Jabor, LLC, Bass Petroleum, L.L.C., Bodel Holdings, LLC, Delbo Holdings, L.L.C., James III Investments, L.L.C., JamSam Energy, LLC, Lake Boeuf Investments, LLC, Oakley Holdings, L.L.C., and Plaquemines Holdings, L.L.C. (incorporated by reference to our Current Report on Form 8-K filed on October 11, 2019)

10.13		Employment Agreement with Timothy Swift dated as of March 19, 2018 (incorporated by reference to our Quarterly Report on Form 10-Q filed on May ~~15, 2017)~~21, 2018)

~~10.8~~10.14		Restricted Stock Agreement with Timothy Swift dated as of April 1, 2018 (incorporated by reference to our Quarterly Report on Form 10-Q filed on May 21, 2018)

10.15*		~~Purchase and Sale~~Employment Agreement ~~(incorporated by reference to our Current Report on Form 8-K filed on~~with Mark Finckle dated as of September ~~12, 2017)~~9, 2019+

~~10.9~~10.16*		~~Purchase and Sale~~Restricted Stock Agreement ~~(incorporated by reference to our Current Report on Form 8-K filed on October 3, 2017)~~with Mark Finckle dated as of September 9, 2019+

~~10.10~~21.1*		~~Purchase and Sale Agreement~~ ~~(incorporated by reference to our Current Report on Form 8-K filed on October 4, 2017)~~Subsidiaries of Viking Energy Group, Inc.

31.1*		Certification of Principal Executive Officer ~~and~~required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial and Accounting Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63

32.2*		Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63
101.INS*
99.1		Purchase, Sale and Capital Contribution Agreement effective February 1, 2016 (incorporated by reference to our Annual Report on Form 10-K/A filed on May 16, 2016)

99.2		Purchase and Sale Agreement (incorporated by reference to our Current Report on Form 8-K filed on September 12, 2017)

99.3		Purchase and Sale Agreement (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2017)

99.4		Purchase and Sale Agreement (incorporated by reference to our Current Report on Form 8-K filed on October 4, 2017)

99.5		Purchase and Sale Agreement (incorporated by reference to our Current Report on Form 8-K filed on December 8, 2017)

101.INS**		XBRL Instance Document
101.SCH*
101.SCH**		XBRL Taxonomy Extension Schema Document
101.CAL*
101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
101.LAB**		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document

	VIKING ENERGY GROUP, INC. (Registrant)

		~~Date: November 14, 2017~~	~~By:~~
/s/ James Doris
Date: November 11, 2019
Principal Executive Officer ~~and~~