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):
February 15, 2019
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):
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[
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
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[
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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[
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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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.
On February 15, 2019,
PEDEVCO Corp. (the
“
Company
”,
“
PEDEVCO
”,
“
we
”
and “
us
”) and SK Energy LLC
(“
SK
Energy
”), a company wholly-owned by our Chief
Executive Officer and director, Dr. Simon Kukes, entered into a
First Amendment to Convertible Promissory Notes (the
“
Amendment
”) which amended
(i) the Convertible Promissory Note, in the principal amount of
$22,000,000, issued by the Company to SK Energy on August 1, 2018
(the “
August 2018
Note
”) and the other $1,600,000 in Convertible
Promissory Notes sold by the Company on August 1, 2018 (the
“
Other
Notes
”), (ii) the Convertible Promissory Note, in the
principal amount of $7,000,000, issued by the Company to SK Energy
on October 25, 2018 (the “
October 2018 Note
”), and
(iii) the Convertible Promissory Note, in the principal amount of
$15,000,000, issued by the Company to SK Energy on January 11, 2019
(the “
January 2019
Note
,” and together with the August 2018 Note and the
October 2018 Note, the “
Convertible Notes
”).
Pursuant to the Amendment, each of the Convertible Notes and each
of the Other Notes was amended to remove the conversion limitation
that previously prevented SK Energy from converting any portion of
the Convertible Notes (or Other Notes) into common stock of the
Company if such conversion would have resulted in SK Energy
beneficially owning (as such term is defined in the Securities
Exchange Act of 1934, as amended) (“
Beneficially Owning
”)
more than 49.9% of the Company’s outstanding shares of common
stock.
Immediately
following the entry into the Amendment, on February 15, 2019, SK
Energy elected to convert (i) all $15,000,000 of the outstanding
principal and all $125,729 of accrued interest under the January
2019 Note into common stock of the Company at a conversion price of
$1.50 per share as set forth in the January 2019 Note into
10,083,819 shares of restricted common stock of the Company, and
(ii) all $7,000,000 of the outstanding principal and all $186,776
of accrued interest under the October 2018 Note into common stock
of the Company at a conversion price of $1.79 per share as set
forth in the October 2018 Note into 4,014,959 shares of restricted
common stock of the Company, which shares in aggregate represent
approximately 47.1% of the Company’s now 29,907,223 shares of
issued and outstanding Company common stock after giving effect to
the conversions.
* * * *
* * * * *
The
foregoing description of the Amendment does not purport to be
complete and is qualified in its entirety by reference to the
Amendment, a copy of which is attached as
Exhibit 10.4
to this Current
Report on Form 8-K and incorporated herein by
reference.
Item 3.02 Unregistered Sales of Equity Securities.
We claim an exemption from registration provided
by Section 3(a)(9) of the Securities Act of 1933, as amended
(“
Securities
Act
”), for the conversion
of the January 2019 Note and the October 2018 Note and the issuance
of shares of restricted common stock to SK Energy in connection
therewith, each as described above, as the common stock was
exchanged by us with SK Energy (our existing security holder) in a
transaction where no commission or other remuneration was paid or
given directly or indirectly for soliciting such
exchange.
Item 5.01 Changes in Control of Registrant.
As
described above in Item 1.01 (which information is incorporated
into this Item 5.01 in its entirety, by reference), on February 15,
2019, SK Energy converted all (i) $15,000,000 of the outstanding
principal and all $125,729 of accrued interest under the January
2019 Note into 10,083,819 shares of restricted common stock of the
Company, and (ii) all $7,000,000 of the outstanding principal and
all $186,776 of accrued interest under the October 2018 Note into
4,014,959 shares of restricted common stock of the Company.
The shares of common stock issued upon
conversion of the January 2019 Note and the October 2018 Note,
together with the 7,865,618 shares of common stock beneficially
owned by Dr. Kukes prior to the conversion, total 73.4% of our
currently issued, outstanding and voting shares of common stock. As
a result, effective on February 15, 2019, a change in control of
the Company was deemed to have occurred, with Dr. Kukes (through
his control of SK Energy) obtaining majority control over the
Company’s voting shares. As discussed above, SK Energy is
wholly-owned and controlled by Dr. Simon Kukes,
our Chief
Executive Officer and director
. As
described above in Item 1.01, Dr. Kukes was the Company’s
largest shareholder prior to the conversion as well, holding
approximately 49% of our outstanding voting shares; however, due to
the note conversion, Dr. Kukes has the right, voting individually,
to exercise majority voting control over the
Company.
Additionally,
as a result of the Amendment described above, Dr. Kukes is deemed
to beneficially own approximately 10,328,638 shares of common stock
issuable upon conversion of the August 2018 Note at a fixed
conversion price of $2.13 per share (excluding interest), which
together with the issued and outstanding shares of common stock
which he currently beneficially owns, totals an aggregate of
32,293,034 shares of common stock of the Company, representing
80.3% of the Company’s outstanding common stock, assuming the
conversion of the August 2018 Note in full (excluding
interest).
Item 7.01 Regulation FD Disclosure.
The Company issued a press release on February 19,
2019 regarding the matters discussed in
Items 1.01
,
3.02
and
5.01
above
.
A copy of the press release is furnished
herewith as
Exhibit
99.1
and is incorporated
by reference herein.
Item 9.01 Financial Statements and
Exhibits.
(d) Exhibits.
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Exhibit
No.
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Description
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Form of
Convertible Promissory Note between PEDEVCO Corp., as borrower and
various lenders (including SK Energy LLC), dated August 1, 2018
(Filed as Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed by the Company with the Securities and Exchange
Commission on August 1, 2018)(File No. 001-35922)
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Convertible
Promissory Note between PEDEVCO Corp., as borrower and SK Energy
LLC, dated October 25, 2018 (Filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed by the Company
with the Securities and Exchange Commission on October 26,
2018)(File No. 001-35922)
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$15,000,000
Convertible Promissory Note between PEDEVCO Corp., as borrower and
SK Energy LLC as lender, dated January 11, 2019 (Filed as Exhibit
10.2 to the Company’s Current Report on Form 8-K filed by the
Company with the Securities and Exchange Commission on January 14,
2018)(File No. 001-35922)
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First
Amendment to Convertible Promissory Notes, dated February 15, 2019,
entered into by and between PEDEVCO Corp. and SK Energy
LLC
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Press Release dated February 19, 2019
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* Filed herewith.
** Furnished herewith.
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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By:
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/s/ Dr. Simon Kukes
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Dr. Simon Kukes
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Chief
Executive Officer
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Date: February
19, 2019
EXHIBIT INDEX
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Exhibit
No.
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Description
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Form of
Convertible Promissory Note between PEDEVCO Corp., as borrower and
various lenders (including SK Energy LLC), dated August 1, 2018
(Filed as Exhibit 10.1 to the Company’s Current Report on
Form 8-K filed by the Company with the Securities and Exchange
Commission on August 1, 2018)(File No. 001-35922)
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Convertible
Promissory Note between PEDEVCO Corp., as borrower and SK Energy
LLC, dated October 25, 2018 (Filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed by the Company
with the Securities and Exchange Commission on October 26,
2018)(File No. 001-35922)
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$15,000,000
Convertible Promissory Note between PEDEVCO Corp., as borrower and
SK Energy LLC as lender, dated January 11, 2019 (Filed as Exhibit
10.2 to the Company’s Current Report on Form 8-K filed by the
Company with the Securities and Exchange Commission on January 14,
2018)(File No. 001-35922)
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First
Amendment to Convertible Promissory Notes, dated February 15, 2019,
entered into by and between PEDEVCO Corp. and SK Energy
LLC
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Press Release dated February 19, 2019
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* Filed herewith.
** Furnished herewith.
Exhibit 10.4
FIRST AMENDMENT TO CONVERTIBLE PROMISSORY NOTES
THIS
FIRST AMENDMENT TO CONVERTIBLE PROMISSORY NOTES (the
“
First
Amendment
”) is executed and effective as of February
15, 2019 (the “
Effective
Date
”) by and between PEDEVCO
CORP., a Texas corporation (“
Company
”), and SK Energy, LLC, a
Delaware limited liability company (“
Holder
”). Capitalized terms used
below and otherwise not defined herein shall have the meanings
given to them in the Notes (as defined below).
W I T N E S S E T H
WHEREAS,
on August 1, 2018, the Company
issued a convertible promissory note number CN-1 with a principal
amount of $22,000,000 to the Holder
1
(the “
August 2018 Note
”);
WHEREAS,
on October 25, 2018, the
Company issued a convertible promissory note number CN-7 with a
principal amount of $7,000,000 to the Holder
2
(the “
October 2018 Note
”);
WHEREAS,
on January 11, 2019, the
Company issued a convertible promissory note number CN-8 with a
principal amount of $15,000,000 to the Holder
3
(the “
January 2019 Note
,” and together
with the August 2018 Note and the October 2018 Note, the
“
Notes
”);
WHEREAS,
each of the Notes include a
beneficial ownership “blocker” provision in Section
3(e) thereof that prohibits the Holder from converting any of the
Notes to the extent that the shares issuable to the Holder upon
such conversion, when added to all Company Common Stock held by the
Holder, would make the Holder’s beneficial ownership exceed
49.9% of (i) the number of shares of Common Stock of the Company or
(ii) the voting rights of the security holders of the Company,
outstanding immediately after giving effect to the issuance of the
shares upon conversion of such Notes by the Holder (the
“
Blocker
Provision
”);
WHEREAS,
the Company and the Holder
desire to amend the Notes to remove the Blocker Provision in each
Note to permit the Holder to convert each Note in accordance with
its terms without any limitations with respect to beneficial
ownership by the Holder;
WHEREAS
, the August 2018 Note may be
amended and any term thereof waived, with such amendment applicable
to all of the Note Holders’ Notes (without any required
action by any of the non-consenting Note Holders) upon the approval
of the Company and the written consent of Note Holders holding at
least a majority in interest of the then aggregate dollar value of
the Note Holders’ Notes outstanding at such time of
determination;
WHEREAS
, the Holder holds a majority in
interest of the aggregate dollar value of the Note Holders’
Notes outstanding as of the Effective Date; and
WHEREAS,
the October 2018 Note and
January 2019 Note may be amended and any term thereof waived upon
the approval of the Holder and the Company.
NOW THEREFORE
, in consideration of the
premises and the mutual promises and covenants herein contained,
and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be
legally bound, the parties hereto agree as follows:
1.
Amendment of Notes to Revise Section
3(e)
. Each of the Notes (and each of the other Note
Holders’ Notes) are hereby amended to replace Section 3(e)
thereto with the following new Section 3(e):
“3(e)
Reserved
.”
2.
Limited Effect
. Except as
amended hereby, each of the Notes and all of the other Note
Holders’ Notes shall remain in full force and effect, and the
valid and binding obligation of the parties thereto. Upon the
effectiveness of this First Amendment, each reference in the Notes
and other Note Holders’ Notes to “Note,”
“Agreement,” “hereunder,”
“hereof,” “herein” or words of like import
shall mean and be a reference to such Note and other Note
Holders’ Notes as amended and modified by the First Amendment
and hereby. Effective upon the Effective Date, each of the Notes
and each of the other Note Holders’ Notes shall automatically
represent and evidence each Note and each other Note Holders’
Notes, respectively as amended to date, and it shall not be
necessary for the Company to provide the Holder or any other Note
Holders a replacement or amended Note or other Note Holders’
Note evidencing the provisions hereof.
3.
Consideration
. Each of the
parties agrees and confirms by signing below that they have
received valid consideration in connection with this First
Amendment and the transactions contemplated herein.
4.
Written Consent
. For the sake
of clarity, the Company and the Holder desire for this First
Amendment to be treated as a ‘written consent’ of the
Required Note Holders for all purposes under the August 2018 Note
and the other Note Holders’ Notes.
5.
Effective Time
. This First
Amendment shall be deemed effective from and after due execution
and delivery by each party hereto, as of the Effective
Date.
6.
Further Assurances
. The parties
agree that, from time to time, each of them will take such other
action and to execute, acknowledge and deliver such contracts,
deeds, or other documents as may be reasonably requested and
necessary or appropriate to carry out the purposes and intent of
this First Amendment and the transactions contemplated
herein.
7.
Counterparts
. This First
Amendment may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this
First Amendment or any counterpart hereof to produce or account for
any of the other counterparts. A copy of this First Amendment
signed by one party and faxed to another party shall be deemed to
have been executed and delivered by the signing party as though an
original. A photocopy of this First Amendment shall be effective as
an original for all purposes.
[Remainder
of page left intentionally blank. Signature page
follows.]
1
https://www.sec.gov/Archives/edgar/data/1141197/000165495418008318/ped_ex10-1.htm
2
https://www.sec.gov/Archives/edgar/data/1141197/000165495418011628/ped_ex101.htm
3
https://www.sec.gov/Archives/edgar/data/1141197/000165495419000412/ped_101.htm
First
Amendment to Convertible Promissory Notes
Page
1
of
2
IN WITNESS WHEREOF
, the parties hereto,
have caused this First Amendment to Convertible Promissory Notes to
be duly executed and delivered as of the date first written above
to be effective as of the Effective Date.
PEDEVCO CORP
.
Clark
R. Moore
Executive
Vice President and General Counsel
HOLDER:
SK ENERGY, LLC
First
Amendment to Convertible Promissory Notes
Page
2
of
2
Exhibit 99.1
Pacific Energy Development Announces Conversion of $22 Million of
Debt into Equity
Houston,
Texas, February 19, 2019 – PEDEVCO Corp. d/b/a
Pacific Energy
Development
(NYSE American: PED) (the “Company”)
announced today that it has converted $15 million in convertible
debt held by SK Energy LLC, an investment firm owned by Dr. Simon
Kukes, the Company’s Chief Executive Officer, into common
stock of the Company at a price of $1.50 per share, and an
additional $7 million in convertible debt held by SK Energy at a
price of $1.79 per share.
John J.
Scelfo, Chairman of the Company’s Board of Directors,
commented, “The Board appreciates the continued support and
confidence of SK Energy in the Company and our ability to deliver
results, as demonstrated by its decision to convert $22 million of
debt into our common stock. This debt conversion reduces the
Company’s outstanding debt by over 40%, positioning us for
future growth and enhancing our access to capital to more
effectively develop our assets, acquire additional assets in the
Permian Basin, and deliver returns to our
shareholders.”
About Pacific Energy Development (PEDEVCO Corp.)
PEDEVCO
Corp, d/b/a Pacific Energy Development (NYSE American: PED), is a
publicly-traded energy company engaged in the acquisition and
development of strategic, high growth energy projects in the United
States. The Company’s principal assets are its San Andres
Asset located in the Northwest Shelf of the Permian Basin in
eastern New Mexico, and its D-J Basin Asset located in the D-J
Basin in Weld and Morgan Counties, Colorado. Pacific Energy
Development is headquartered in Houston, Texas.
Cautionary Statement Regarding Forward Looking
Statements
All
statements in this press release that are not based on historical
fact are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and the provisions
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Acts”). In particular, when used in the preceding
discussion, the words "estimates," "believes," "hopes," "expects,"
"intends," "plans," "anticipates," or "may," and similar
conditional expressions are intended to identify forward-looking
statements within the meaning of the Act, and are subject to the
safe harbor created by the Act. Any statements made in this news
release other than those of historical fact, about an action, event
or development, are forward-looking statements. While management
has based any forward-looking statements contained herein on its
current expectations, the information on which such expectations
were based may change. These forward-looking statements rely on a
number of assumptions concerning future events and are subject to a
number of risks, uncertainties, and other factors, many of which
are outside of the Company's control, that could cause actual
results to materially differ from such statements. Such risks,
uncertainties, and other factors include, but are not necessarily
limited to, those set forth under Item 1A "Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended December
31, 2017 and subsequently filed Quarterly Reports on Form 10-Q
under the heading "Risk Factors". The Company operates in a highly
competitive and rapidly changing environment, thus new or
unforeseen risks may arise. Accordingly, investors should not place
any reliance on forward-looking statements as a prediction of
actual results. The Company disclaims any intention to, and
undertakes no obligation to, update or revise any forward-looking
statements, except as otherwise required by law, and also takes no
obligation to update or correct information prepared by third
parties that are not paid for by the Company. Readers are also
urged to carefully review and consider the other various
disclosures in the Company's public filings with the Securities
Exchange Commission (SEC).
Contacts
Pacific
Energy Development
1-855-733-3826
PR@pacificenergydevelopment.com