Attached files
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| EX-99.1 - PRESS RELEASE DATED SEPTEMBER 4, 2018 - PEDEVCO CORP | ped_ex991.htm |
| EX-10.2 - WARRANT REPURCHASE AGREEMENT - PEDEVCO CORP | ped_ex102.htm |
| EX-10.1 - WARRANT REPURCHASE AGREEMENT - PEDEVCO CORP | ped_ex101.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 8-K
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of
Report (Date of Earliest Event Reported): August 31, 2018
001-35922
(Commission file number)
PEDEVCO CORP.
(Exact name of registrant as specified in its charter)
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Texas
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22-3755993
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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1250 Wood Branch Park Dr., Suite 400
Houston, Texas 77079
(Address of principal executive offices)
(855)
733-3826
(Issuer’s telephone number)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
[
] Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[
] Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
[
] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this
chapter).
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. ☐
Item 1.01 Entry Into a Material Definitive Agreement.
Warrant Repurchase Agreements
On
August 31, 2018, PEDEVCO Corp. (the “Company”,
“PEDEVCO”,
“we”
and “us”) entered into Warrant
Repurchase Agreements with certain former holders of the
Company’s Tranche B Secured Promissory Notes (which notes
were repaid by the Company pursuant to a Debt Repayment Agreement
dated June 25, 2018), namely Senior Health Insurance Company of
Pennsylvania, Principal Growth Strategies, LLC, and RJ Credit LLC
(collectively, the “Warrant Holders”).
Pursuant to the Warrant Repurchase Agreements, the Company
repurchased warrants to purchase an aggregate of 1,105,935 shares
of the Company’s common stock (the “Warrants”, and the shares
of common stock issuable upon exercise of such Warrants, the
“Warrant
Shares”) held by the Warrant Holders, which warrants
had a term of three years (through August 25, 2021) and an exercise
price equal to $0.322 per share. The Warrant were repurchased for
an aggregate of $1,094,875.65 or $0.99 per Warrant Share, which
amount the Company plans to pay to the Warrant Holders prior to
September 17, 2018. Effective on the date of payment of the warrant
purchase amounts, the Warrants and the agreements evidencing such
Warrants will be deemed to have been repurchased by the Company and
cancelled. The Warrant Repurchase Agreements also included a
release by which the Warrant Holders released the Company from any
liability or claims associated with the Warrants and certain of the
Warrant Repurchase Agreements included a release by which we
released the applicable Warrant Holders party thereto. The terms of
the Warrant Repurchase Agreements were individually negotiated with
each associated group of Warrant Holders.
The
foregoing description of the Warrant Repurchase Agreements does not
purport to be complete and is qualified in its entirety by
reference to the form of Warrant Repurchase Agreements, copies of
which are attached as Exhibits 10.1 and 10.2 to this
Current Report on Form 8-K and incorporated herein by
reference.
Item 2.01 Completion of Acquisition or Disposition of
Assets.
Hunter Oil Purchase and Sale Agreement and Stock Purchase
Agreement
As previously disclosed in the Current Report on
Form 8-K filed by the Company with the Securities and Exchange
Commission on August 1, 2018 (the “Form
8-K”), on August 1, 2018,
PEDCO (defined below) entered into a Purchase and Sale Agreement
with Milnesand Minerals Inc., a Delaware corporation, Chaveroo
Minerals Inc., a Delaware corporation, Ridgeway Arizona Oil Corp.,
an Arizona corporation (“RAOC”),
and EOR Operating Company, a Texas corporation
(“EOR”)(collectively “Seller”)(the
“Purchase
Agreement”). Pursuant to
the Purchase Agreement, we (through our wholly-owned
subsidiary Pacific Energy Development Corp.
(“PEDCO”)) agreed to acquire certain oil and gas assets
described in greater detail below (the “Assets”)
from the Seller in consideration for $18,500,000 (of which $500,000
is to be held back to provide for potential indemnification of
PEDCO under the Purchase Agreement and Stock Purchase Agreement
(described below), with one-half ($250,000) to be released to
Seller 90 days after closing and the balance ($250,000) to be
released 180 days after closing (provided that if a court of
competent jurisdiction determines that any part of the amount
withheld by PEDCO subsequent to 180 days after closing was in fact
due to the Seller, PEDCO is required to pay Seller 200%, instead of
100%, of the amount so retained)).
On
August 31, 2018, we closed the transactions contemplated by the
Purchase Agreement and acquired the Assets for an aggregate of
$18,500,000. The effective date of the acquisition was September 1,
2018.
The Purchase Agreement contains customary
representations and warranties of the parties, and indemnification
requirements (subject to a $25,000 aggregate minimum threshold and
a $1,000,000 cap as to each of us and Seller).
The Purchase Agreement allows PEDCO to
audit the revenues and expenses of the Seller attributable to the
Assets for the period of three years prior to the closing, among
other things, and requires the Seller to provide assistance to
PEDCO in connection with such audit for the first 180 days
following closing (with such Seller’s reasonable costs
associated with such audit being reimbursed by PEDCO at the rate of
150% of such costs).
The
Assets represent approximately 23,000 net leasehold acres, current
operated production, and all of Seller’s leases and related
rights, oil and gas and other wells, equipment, easements, contract
rights, and production (effective as of the effective date) as
described in the Purchase Agreement. The Assets are located in the
San Andres play in the Permian Basin situated in west Texas and
eastern New Mexico, with all acreage and production 100% operated
and substantially all acreage held by production.
Also on August 31, 2018, PEDCO closed the
transactions contemplated by the August 1, 2018 Stock Purchase
Agreement with Hunter Oil Production Corp.
(“Hunter
Oil”), as described in
greater detail in the Form 8-K. Pursuant to the Stock Purchase
Agreement, PEDCO acquired all of the stock of RAOC and EOR (the
“Acquired
Companies”) for a net of
$500,000 (an aggregate purchase price of $2,815,636, less
$2,315,636 in restricted cash which the Acquired Companies are
required to maintain as of the closing date). The Stock Purchase
Agreement contains customary representations and warranties of the
parties, post-closing adjustments, and indemnification requirements
requiring Hunter Oil to indemnify us for certain items (subject to
the $25,000 aggregate minimum threshold and $1,000,000 cap provided
for in the Purchase Agreement) and us to indemnify Hunter Oil for
certain items (which requirement does not include a threshold or
cap).
* * * *
* * * * *
The
foregoing description of the Purchase Agreement and Stock Purchase
Agreement does not purport to be complete and is qualified in its
entirety by reference to the Purchase Agreement and Stock Purchase
Agreement, copies of which are incorporated by reference herein
as Exhibits
2.1 and 10.3, respectively, to this
Current Report on Form 8-K and incorporated herein by
reference.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The
disclosures in Item
1.01 above regarding the Warrant Repurchase Agreements
and the amounts due in connection therewith are incorporated by
reference in this Item 2.03 in their
entirety.
Item 7.01 Regulation FD Disclosure.
The Company issued a press release on September 4,
2018 regarding the matter discussed in Item
2.01 above . A copy of the press release is furnished
herewith as Exhibit
99.1 and is incorporated
by reference herein.
Item 8.01 Other Events.
As
disclosed in greater detail in the August 1, 2018 Form 8-K, on
August 1, 2018, we raised $23,600,000 through the sale of
$23,600,000 in Convertible Promissory Notes (the
“Convertible
Notes”). A total of $22,000,000 in Convertible Notes
was purchased by SK Energy LLC (“SK Energy”), a company
wholly-owned by our Chief Executive Officer and director, Dr. Simon
Kukes; $200,000 in Convertible Notes was purchased by an executive
officer of SK Energy; $500,000 in Convertible Notes was purchased
by a trust affiliated with John J. Scelfo, a director of the
Company; and $500,000 in Convertible Notes was purchased by an
entity affiliated with Ivar Siem, our director, and J. Douglas
Schick, our President; and $400,000 in Convertible Notes were
purchased by unaffiliated parties.
The
Convertible Notes and all accrued interest thereon are convertible
into shares of our common stock, from time to time following August
29, 2018, at the option of the holders thereof, at a conversion
price equal to the greater of (x) $0.10 above the greater of the
book value of the Company’s common stock and the closing
sales price of the Company’s common stock on the date the
Convertible Notes were entered into (the “Book/Market Price”)
(which was $2.03 per share); (y) $1.63 per share; and (z) the
“VWAP
Price”, defined as the volume weighted average price
(calculated by aggregate trading value on each trading day) of the
Company’s common stock for the 20 trading days subsequent to,
but not including, the date that the Form 8-K was filed (i.e.,
through August 29, 2018). The VWAP Price was lower than $2.13 per
share, and as such, the fixed conversion price of the Convertible
Notes, which became convertible, pursuant to their terms, on August
30, 2018, is $2.13 per share.
Item 9.01 Financial Statements and Exhibits.
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(a) Financial Statements of Business Acquired
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The
Company intends to file the historical financial statements of the
Assets and/or the Acquired Companies, to the extent required under
applicable rules and regulations, for the periods specified in Rule
8-04(b) of Regulation S-X in an amendment to this report under
cover of Form 8-K/A no later than 71 calendar days after the date
this Current Report on Form 8-K was required to be
filed.
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(b) Pro Forma Financial Information
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The
Company intends to furnish pro forma financial information relating
to the Assets and/or the Acquired Companies, to the extent required
under applicable rules and regulations, required pursuant to
Article 11 of Regulation S-X in an amendment to this report under
cover of Form 8-K/A no later than 71 calendar days after the date
this Current Report on Form 8-K was required to be
filed.
(d) Exhibits.
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Exhibit No.
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Description
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2.1#
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Purchase and Sale
Agreement dated August 1, 2018, by and between Milnesand Minerals
Inc., Chaveroo Minerals Inc., Ridgeway Arizona Oil Corp., and EOR
Operating Company, as sellers and Pacific Energy Development Corp.,
as purchaser (incorporated by reference to Exhibit 2.1 to the
Current Report on Form 8-K filed by PEDEVCO Corp. with the
Securities and Exchange Commission on August 1, 2018)(File No.
001-35922)
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10.1*
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Warrant Repurchase
Agreement between PEDEVCO Corp., Principal Growth Strategies, LLC,
and RJ Credit LLC dated August 31, 2018
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10.2*
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Warrant Repurchase
Agreement between PEDEVCO Corp. and Senior Health Insurance Company
of Pennsylvania dated August 31, 2018
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10.3#
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Stock Purchase Agreement dated August 1,
2018, by and between Pacific Energy Development Corp. and Hunter
Oil Production Corp. (incorporated by reference to Exhibit
10.3 to the Current Report on Form 8-K filed by PEDEVCO Corp. with
the Securities and Exchange Commission on August 1, 2018)(File No.
001-35922)
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99.1**
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Press Release dated September 4, 2018
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*
Filed
herewith.
**
Furnished
herewith.
#
Schedules
and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. A copy of any omitted schedule or exhibit will be
furnished supplementally to the Securities and Exchange Commission
upon request; provided, however that PEDEVCO Corp. may request
confidential treatment pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended, for any schedule or exhibit so
furnished.
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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PEDEVCO CORP.
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Date: September
4, 2018
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By:
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/s/ Simon
G. Kukes
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Simon G. Kukes
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Chief
Executive Officer
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EXHIBIT INDEX
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Exhibit No.
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Description
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2.1#
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Purchase and Sale
Agreement dated August 1, 2018, by and between Milnesand Minerals
Inc., Chaveroo Minerals Inc., Ridgeway Arizona Oil Corp., and EOR
Operating Company, as sellers and Pacific Energy Development Corp.,
as purchaser (incorporated by reference to Exhibit 2.1 to the
Current Report on Form 8-K filed by PEDEVCO Corp. with the
Securities and Exchange Commission on August 1, 2018)(File No.
001-35922)
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10.1*
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Warrant Repurchase
Agreement between PEDEVCO Corp., Principal Growth Strategies, LLC,
and RJ Credit LLC dated August 31, 2018
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10.2*
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Warrant Repurchase
Agreement between PEDEVCO Corp. and Senior Health Insurance Company
of Pennsylvania dated August 31, 2018
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10.3#
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Stock Purchase Agreement dated August 1,
2018, by and between Pacific Energy Development Corp. and Hunter
Oil Production Corp. (incorporated by reference to Exhibit
10.3 to the Current Report on Form 8-K filed by PEDEVCO Corp. with
the Securities and Exchange Commission on August 1, 2018)(File No.
001-35922)
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99.1**
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Press Release dated September 4, 2018
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*
Filed
herewith.
**
Furnished
herewith.
#
Schedules
and exhibits have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. A copy of any omitted schedule or exhibit will be
furnished supplementally to the Securities and Exchange Commission
upon request; provided, however that PEDEVCO Corp. may request
confidential treatment pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended, for any schedule or exhibit so
furnished.