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Prospectus
Supplement
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Filed
Pursuant to Rule 424b(5)
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(To
prospectus dated November 5, 2013)
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Registration
File No. 333-191869
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Up
to $2,000,000 of Shares of Common Stock
PEDEVCO
Corp.
We have
entered into an At Market Issuance Sales Agreement, or sales
agreement, with National Securities Corporation, or NSC, relating
to shares of our common stock offered by this prospectus supplement
and the accompanying prospectus. In accordance with the terms of
the sales agreement, we may offer and sell shares of our common
stock from time to time through NSC, acting as agent, having an
aggregate offering price of up to $2,000,000.
Our
common stock is listed on the NYSE MKT under the symbol
“PED.” On September 27, 2016, the last reported sales
price of our common stock was $0.21.
Sales
of our common stock, if any, under this prospectus supplement and
the accompanying prospectus, may be made in sales deemed to be
“at the market offerings” as defined in Rule 415
promulgated under the Securities Act of 1933, as amended, or the
Securities Act, including sales made directly on or through the
NYSE MKT, the existing trading market for our common stock, sales
made to or through a market maker other than on an exchange or
otherwise, in negotiated transactions at market prices prevailing
at the time of sale or at prices related to such prevailing market
prices, and/or any other method permitted by law. NSC will act as a
sales agent using commercially reasonable efforts consistent with
its normal trading and sales practices, on mutually agreed terms
between NSC and us. There is no arrangement for funds to be
received in any escrow, trust or similar arrangement.
The
compensation to NSC for sales of common stock sold pursuant to the
sales agreement is equal to 3.0% of the gross proceeds we receive
from the sales of our common stock. In connection with the sale of
the common stock on our behalf, NSC may be deemed to be an
“underwriter” within the meaning of the Securities Act,
and the compensation of NSC may be deemed to be underwriting
commissions or discounts. We have also agreed to provide
indemnification and contribution to NSC with respect to certain
liabilities, including liabilities under the Securities
Act.
The
aggregate market value of our outstanding common stock held by
non-affiliates, or public float, is approximately $10.2 million,
based on approximately 49.85 million shares of outstanding common
stock, of which approximately 9.07 million shares are held by
affiliates, and a price of $0.25 per share, which was the closing
price of our common stock on the NYSE MKT on August 25, 2016. We
have sold no securities pursuant to General Instruction I.B.6 of
Form S-3 during the prior 12 calendar month period that ends on and
includes the date of this prospectus supplement. Pursuant to
General Instruction I.B.6 of Form S-3, in no event will we sell
securities in public primary offerings on Form S-3 with a value
exceeding more than one-third of our public float in any 12
calendar month period so long as our public float remains below
$75.0 million.
Investing
in our securities involves a high degree of risk. Please read the
information contained in, and incorporated by reference under, the
heading “Risk
Factors” beginning on page S-10 of this prospectus
supplement, and under similar headings in the other documents that
are filed after the date hereof and incorporated by reference into
this prospectus.
The net
proceeds from sales under this prospectus supplement will be used
as described under “Use of
Proceeds.”
You should carefully read and consider the
information under “Forward-Looking
Statements” and “Risk Factors” beginning
on pages S-9 and S-10 of this prospectus supplement and on pages 17
and 11 of the accompanying prospectus, respectively.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined that this prospectus supplement or the accompanying
prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
National Securities Corporation
The
date of this prospectus supplement is September 29,
2016
TABLE
OF CONTENTS
Prospectus
Supplement
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Page
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About
This Prospectus Supplement
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S-1
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Prospectus
Supplement Summary
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S-3
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The
Offering
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S-8
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Forward-Looking
Statements
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S-9
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Risk
Factors
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S-10
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Use of
Proceeds
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S-14
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Price
Range of Common Stock
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S-15
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Dividend
Policy
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S-15
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Dilution
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S-15
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Plan of
Distribution
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S-17
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Legal
Matters
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S-18
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Experts
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S-18
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Where
You Can Find More Information
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S-18
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Incorporation of
Certain Documents by Reference
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S-19
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Prospectus
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Page
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About
This Prospectus
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1
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Prospectus
Summary
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2
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Securities
Registered Hereby That We May Offer
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9
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Risk
Factors
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11
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Forward-Looking
Statements
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17
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Use of
Proceeds
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18
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Description of
Capital Stock
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18
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Description of
Preferred Stock
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22
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Description of
Warrants
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23
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Description of
Units
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26
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Plan of
Distribution
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27
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Legal
Matters
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30
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Experts
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30
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Where
You Can Find More Information
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31
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Incorporation of
Certain Documents by Reference
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32
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ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus, dated
November 5, 2013, are part of a registration statement on Form S-3
(File No. 333-191869) that we filed with the Securities and
Exchange Commission (the “SEC”), utilizing a
“shelf”
registration process on October 23, 2013 and that was declared
effective on November 5, 2013. Under this process, we may sell from
time to time in one or more offerings up to an aggregate of
$100,000,000 in our securities described in the accompanying
prospectus.
You
should rely only on the information contained or incorporated by
reference into this prospectus supplement, the accompanying
prospectus and any free writing prospectus. We have not, and NSC
has not, authorized anyone to provide you with different
information. If anyone provides you with different or additional
information, you should not rely on it. We are not, and NSC is not,
making an offer to sell these securities in any state or
jurisdiction where the offer or sale is not permitted. You should
not assume that the information contained in this prospectus
supplement, the accompanying prospectus and any free writing
prospectus is accurate on any date subsequent to the date set forth
on the front of the document or that any information we have
incorporated by reference is correct on any date subsequent to the
date of the document incorporated by reference, even though this
prospectus supplement, the accompanying prospectus and any free
writing prospectus is delivered or securities are sold on a later
date. We have filed with the SEC a registration statement on Form
S-3 with respect to the securities offered hereby. This prospectus
supplement and the accompanying prospectus do not contain all of
the information set forth in the registration statement, parts of
which are omitted in accordance with the rules and regulations of
the SEC. For further information with respect to us and the
securities offered hereby, reference is made to the registration
statement and the exhibits that are a part of the registration
statement. We will disclose any material changes in our affairs in
a post-effective amendment to the registration statement and the
accompanying prospectus of which this prospectus supplement is a
part, a future prospectus supplement, a free writing prospectus or
a future filing with the Securities and Exchange Commission
incorporated by reference in this prospectus supplement. It is
important for you to read and consider all the information
contained in this prospectus supplement and the accompanying
prospectus, including the documents incorporated by reference
therein, in making your investment decision.
This
document is in two parts. The first part is this prospectus
supplement, which adds to and updates information contained in the
accompanying prospectus and the documents incorporated by reference
into the accompanying prospectus. The second part is the
accompanying prospectus, which gives more general information, some
of which may not apply to this offering of Shares. This prospectus
supplement adds, updates and changes information contained in the
accompanying prospectus and the information incorporated by
reference. To the extent the information contained in this
prospectus supplement differs or varies from the information
contained in the accompanying prospectus or any document
incorporated by reference, the information in this prospectus
supplement shall control.
We further note that the
representations, warranties and covenants made by us or the
underwriter in any agreement that is filed as an exhibit to any
document that is incorporated by reference in the accompanying
prospectus were made solely for the benefit of the parties to such
agreement, including, in some cases, for the purpose of allocating
risk among the parties to such agreements, and should not be deemed
to be a representation, warranty or covenant to you. Moreover, such
representations, warranties or covenants were accurate only as of
the date when made. Accordingly, such representations, warranties
and covenants should not be relied on as accurately representing
the current state of our affairs. We and NSC take no responsibility for,
and can provide no assurance as to the reliability of, any other
information that others may give you. We are not, and NSC is not,
making an offer to sell these securities in any jurisdiction where
the offer or sale is not permitted.
Persons outside the United States who come into possession of this
prospectus supplement or the accompanying prospectus must inform
themselves about, and observe any restrictions relating to, the
offering of the securities and the distribution of this prospectus
supplement and accompanying prospectus outside of the United
States.
Our
logo and other trade names, trademarks, and service marks of
PEDEVCO Corp. appearing in this prospectus supplement and the
accompanying prospectus are the property of our company. Other
trade names, trademarks, and service marks appearing in this
prospectus supplement and the accompanying prospectus are the
property of their respective holders.
S-1
The
market data and certain other statistical information used
throughout this prospectus supplement and the accompanying
prospectus are based on independent industry publications,
government publications and other published independent sources.
Although we believe that these third-party sources are reliable and
that the information is accurate and complete, we have not
independently verified the information. Some data is also based on
our good faith estimates. While we believe the market data included
in this prospectus supplement, the accompanying prospectus and the
information incorporated herein and therein by reference is
generally reliable and is based on reasonable assumptions, such
data involves risks and uncertainties and is subject to change
based on various factors, including those contained in and
incorporated by reference under the heading “Risk Factors” beginning
on page S-10 of this prospectus supplement and on page 11 of the
accompanying prospectus, and under similar headings in the other
documents that are filed after the date hereof and incorporated by
reference into this prospectus supplement.
All
references to “we”, “our”,
“us”, the “Company”, and
“PEDEVCO” in this prospectus supplement mean PEDEVCO
Corp. and all entities owned or controlled by us except where it is
made clear that the term means only the parent company. The term
“you” refers to a prospective investor.
“Securities Act” means the Securities Act of 1933, as
amended; “Exchange Act” means the Securities Exchange
Act of 1934, as amended; and “SEC” or the
“Commission” means the United States Securities and
Exchange Commission.
Please
carefully read this prospectus supplement, the prospectus, any free
writing prospectus and any pricing supplement, in addition to the
information contained in the documents we refer to under the
headings “Where You
Can Find More Information” and
“Incorporation of
Certain Documents by Reference”, on pages S-18 and
S-19, respectively.
S-2
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PROSPECTUS
SUPPLEMENT SUMMARY
The
following summary highlights material information found in more
detail elsewhere in, or incorporated by reference in, this
prospectus supplement. It does not contain all of the information
you should consider. As such, before you decide to buy our common
stock, in addition to the following summary, we urge you to
carefully read this entire prospectus supplement and documents
incorporated by reference herein, and any other prospectus
supplements or free writing prospectuses, especially the risks of
investing in our common stock as discussed under
“Risk
Factors.” The following summary is qualified in its
entirety by the detailed information appearing elsewhere in this
prospectus supplement.
Overview
We
are an energy company engaged primarily in the acquisition,
exploration, development and production of oil and natural gas
shale plays in the Denver-Julesberg Basin (“D-J Basin”)
in Colorado, which contains hydrocarbon bearing deposits in several
formations, including the Niobrara, Codell, Greenhorn, Shannon,
J-Sand, and D-Sand. As of June 30, 2016, we held approximately
11,784 net D-J Basin acres located in Weld County, Colorado through
our wholly-owned operating subsidiary, Red Hawk Petroleum, LLC
(“Red Hawk”), which asset we refer to as our “D-J
Basin Asset.” As of June 30, 2016, we hold interests in 61
gross (17.4 net) wells in our D-J Basin Asset, of which 14 gross
(12.5 net) wells are operated by Red Hawk and currently producing,
25 gross (4.9 net) wells are non-operated and 22 wells have an
after-payout interest.
On December 29, 2015, the Company entered into an
Agreement and Plan of Merger and Reorganization (as amended to
date, the “GOM Merger Agreement”) with White Hawk
Energy, LLC (“White Hawk”) and GOM Holdings, LLC
(“GOM”), each a Delaware limited liability company. The
GOM Merger Agreement provides for the
Company’s acquisition of GOM
through an exchange of (i) an aggregate of 1,551,552 shares of our
restricted common stock and (ii) 698,448 restricted shares of our
to-be-designated Series B Convertible Preferred Stock (which will
be convertible into common stock on a 1,000:1 basis)(the
“Consideration Shares”), for 100% of the limited
liability company membership units of GOM (the “GOM
Units”), with the GOM Units being received by White Hawk and
GOM receiving the Consideration Shares from the Company (the
“GOM Merger”). On February 29, 2016, the parties entered into an
amendment to the GOM Merger Agreement, which amended the merger
agreement in order to provide GOM additional time to meet certain
closing conditions contemplated by the GOM Merger Agreement, and on
April 25, 2016, the parties further amended the merger agreement to
remove the deadline for closing the merger and agreed to work
expeditiously in good faith toward closing. The Company and GOM
continue to move forward with the merger, and the Company is
hopeful that closing will occur as early as the end of the third
quarter of 2016, subject to satisfaction of closing
conditions.
Below
is the total production volumes and total revenue net to the
Company for the six months ended June 30, 2016 and 2015
attributable to our D-J Basin Asset, including the calculated
production volumes and revenue numbers for our D-J Basin Asset held
indirectly through Condor Energy Technology, LLC
(“Condor”), a joint venture owned 20% by the Company
(which ownership interest the Company divested in February 2015),
that would be net to our interest if reported on a consolidated
basis and production realized from our recent D-J Basin Acquisition
beginning February 23, 2015 (described in greater detail below in
“D-J Basin Asset Acquisition”).
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Three
Months Ended
June
30,
2016
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Three
Months Ended
June
30,
2015
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Oil volume (barrels
(Bbl))
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29,167
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36,220
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Gas volume
(thousand cubic feet (Mcf))
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56,973
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67,951
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Volume equivalent
(barrel of oil equivalent (Boe)) (1)
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38,663
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47,545
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Revenue
(000’s)
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$1,203
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$1,787
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S-3
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*Represents
percentage of voting power based on 49,849,297 shares of common
stock and 66,625 shares of Series A Convertible Preferred Stock
outstanding as of September 27, 2016, and excludes voting power to
be acquired upon exercise of outstanding options or warrants or
other convertible securities.
Oil
and Gas Properties
We believe that the D-J Basin shale play represents among the
most promising unconventional oil and natural gas plays in the U.S.
We plan to continue to opportunistically seek additional acreage
proximate to our currently held core acreage. Our strategy is to be
the operator, directly or through our subsidiaries and joint
ventures, in the majority of our acreage so we can dictate the pace
of development in order to execute our business plan. The majority
of our capital expenditure budget for the period from January 2016
to December 2016 will be focused on the development of these
formations. However, if the Company consummates its
merger with GOM, the Company will work with GOM to prepare a
projected drilling and completion schedule and budget, with
the final schedule and budget anticipated to be disclosed by the
Company if the GOM Merger is consummated and once they
are available, which could impact our current 2016 drilling and
completion plans.
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S-4
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Unless otherwise noted,
the following table presents summary data for our leasehold acreage
in our core D-J Basin Asset as of December 31, 2015 and our
drilling capital budget with respect to this acreage from January
1, 2016 to December 31, 2016, of which $5.1 million has been deployed to acquire
interests in 2.1 net short lateral wells. If commodity prices
do not increase significantly, we may delay drilling activities.
The ultimate amount of capital we will expend may fluctuate
materially based on, among other things, market conditions,
commodity prices, asset monetizations, the success of our drilling
results as the year progresses, availability of capital and whether
we consummate the GOM Merger. In the event the GOM Merger is
consummated, the Company plans to expand this development plan to
incorporate development of assets held by GOM, with the final
schedule and budget anticipated to be disclosed by the Company once
they are available.
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S-5
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Drilling
Capital Budget
January
1, 2016 - December 31,
2016
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Current
Core Assets:
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Net
Acres
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Acre
Spacing
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Potential
Gross -Drilling
Locations
(1)
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Net
Wells (2)
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Gross
Costs per Well (3)
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Capital
Cost to
the
Company (2)(3)
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D-J Basin
Asset
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11,784
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80
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147
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Long
lateral
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6.4
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$ 4,700,000
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$ 30,080,000
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Short
lateral
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2.1
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$ 2,600,000
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$ 5,557,510
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Total
Assets
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11,784
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147
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8.5
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$ 35,637,510
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(1) Potential gross
drilling locations are conservatively calculated using 80 acre
spacing, and not taking into account additional wells that could be
drilled as a result of forced pooling in Niobrara, Colorado, where
the D-J Basin Asset is located, which allows for forced pooling,
and which may create more potential gross drilling locations than
acre spacing alone would otherwise indicate.
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(2) The
Company has deployed $5.1 million in capital to date in 2016 to
acquire interests in 2.1 net short lateral wells, which are
included in the “Net Wells” and “Capital Cost to
the Company” figures.
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(3) Costs per well are
gross costs while capital costs presented are net to our working
interests.
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D-J Basin Asset
We directly hold all of
our interests in the D-J Basin Asset through our wholly-owned
subsidiary, Red Hawk. These interests are located in Weld County,
Colorado. Red Hawk is currently the operator of 14 gross (12.5 net)
wells located in our D-J Basin Asset. Our D-J Basin Asset acreage
is shown in the map below.
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S-6
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Additional Information
Additional
information about us can be obtained from the documents
incorporated by reference herein. See “Where You Can Find More
Information” beginning on page S-18.
Our
Contact Information
Our
principal office is located at 4125 Blackhawk Plaza Circle, Suite
201, Danville, California 94506. Our phone number is (855)
733-2685. Our website address is www.pacificenergydevelopment.com.
Information on our website or any other website is not, and will
not be, a part of this prospectus supplement or the accompanying
prospectus and is not, and will not be, incorporated by reference
into this prospectus supplement or the accompanying
prospectus.
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S-7
THE
OFFERING
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Issuer:
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PEDEVCO
Corp.
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Common stock offered hereby:
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Shares of our
common stock having an aggregate offering price of up to $2.0
million. In no event will
we sell securities with a value exceeding more than one-third of
our “public float” (the market value of our common
stock and any other equity securities that we may issue in the
future that are held by non-affiliates) in any 12-calendar month
period.
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Common stock to be outstanding after this offering:
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Up to 9,523,809
shares, assuming sales at a price of $0.21 per share, which was the
closing price of our common stock on the NYSE MKT on September 27,
2016. The actual number of shares issued will vary depending on the
sales price under this offering.
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Manner of offering:
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“At the
market offering” that may be made from time to time through
our sales agent, National Securities Corporation. See the section
captioned “Plan of Distribution” beginning on page S-17
of this prospectus supplement.
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Use of proceeds:
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We intend to use
the net proceeds from this offering, if any, to fund development
and for working capital and general corporate purposes, including
general and administrative expenses. See the section captioned
“Use of Proceeds” beginning on page S-14 of this
prospectus supplement.
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Risk factors:
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An investment in
our common stock involves a significant degree of risk. You should
read the “Risk Factors” section beginning on page S-10
of this prospectus supplement and in the documents incorporated by
reference in this prospectus supplement and the accompanying
prospectus for a discussion of factors to consider before deciding
to purchase shares of our common stock.
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NYSE MKT Symbol:
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PED
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Unless
otherwise indicated, our
common stock and other securities, and the other information based
thereon, is as of September 27, 2016 and the number of shares of
common stock outstanding after the offering, assumes the sale of
9,523,809 shares of common stock at an assumed offering price of
$0.21 per share, the last reported sale price of our common stock
on the NYSE MKT on September 27, 2016, and excludes as of such
date:
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●
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4,418,890 shares of
common stock that are issuable upon the exercise of outstanding
options, with exercise prices ranging from $0.22 to $67.20 per
share, with a weighted-average exercise price of $0.61 per
share;
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●
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12,566,079 shares
of common stock that are issuable upon the exercise of outstanding
warrants to purchase capital stock, with exercise prices ranging
from $1.25 to $2.34 per share, with a weighted-average exercise
price of $0.81 per share;
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66,625
shares of Series A Convertible Preferred Stock that have the right
to convert into 66,625,000 shares of common stock; and
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10,000,000 shares
of common stock that are authorized for future awards under our
employee equity incentive plans, of which 683,830 shares
remain available for future awards.
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Additionally,
unless otherwise stated, all information in this prospectus
supplement:
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●
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assumes
no exercise of outstanding options and warrants to purchase common
stock, no issuance of shares available for future issuance under
our equity compensation plans, and no conversion of our convertible
preferred stock or other convertible securities; and
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●
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reflects all
currency in United States dollars.
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S-8
FORWARD-LOOKING
STATEMENTS
Certain
information included in this prospectus supplement, the prospectus,
any free writing prospectus we may file, the documents or
information incorporated by reference herein, other reports filed
by us under the Securities Exchange Act and any other written or
oral statement by or on our behalf contain forward-looking
statements and information that are based on management’s
beliefs, expectations and conclusions, drawn from certain
assumptions and information currently available.
This
prospectus supplement, the accompanying prospectus, any free
writing prospectus we may file, and the documents or information
incorporated by reference herein contain forward-looking statements
within the meaning of Section 27A of the Securities Act, Section
21E of the Exchange Act, and the Private Securities Litigation
Reform Act of 1995, as amended. These forward-looking statements
are subject to risks and uncertainties and other factors that may
cause our actual results, performance or achievements to be
materially different from the results, performance or achievements
expressed or implied by the forward-looking statements. You should
not unduly rely on these statements. Forward-looking statements may
include statements about our:
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business
strategy;
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reserves;
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technology;
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cash
flows and liquidity;
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financial strategy,
budget, projections and operating results;
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oil and
natural gas realized prices;
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timing
and amount of future production of oil and natural
gas;
|
|
●
|
availability of oil
field labor;
|
|
●
|
the
amount, nature and timing of capital expenditures, including future
exploration and development costs;
|
|
●
|
availability and
terms of capital;
|
|
●
|
drilling of
wells;
|
|
●
|
government
regulation and taxation of the oil and natural gas
industry;
|
|
●
|
marketing of oil
and natural gas;
|
|
●
|
exploitation
projects or property acquisitions;
|
|
●
|
costs
of exploiting and developing our properties and conducting other
operations;
|
|
●
|
general
economic conditions;
|
|
●
|
competition in the
oil and natural gas industry;
|
|
●
|
effectiveness of
our risk management activities;
|
|
●
|
environmental
liabilities;
|
|
●
|
counterparty credit
risk;
|
|
●
|
developments in
oil-producing and natural gas-producing countries;
|
|
●
|
future
operating results;
|
|
●
|
planned
combination transaction with GOM Holdings, LLC; and
|
|
●
|
estimated future
reserves and the present value of such reserves.
|
We
identify forward-looking statements by use of terms such as
“may,” “will,” “expect,”
“anticipate”, “estimate”,
“hope”, “plan”, “believe”,
“predict”, “envision”,
“intend”, “continue”,
“potential”, “should”,
“confident”, “could” and similar words and
expressions, although some forward-looking statements may be
expressed differently. You should be aware that our actual results
could differ materially from those contained in the forward-looking
statements. You should consider carefully the statements included
in and incorporated by reference in this prospectus supplement and
accompanying prospectus and any free writing prospectus, which
describe factors that could cause our actual results to differ from
those set forth in the forward-looking statements.
The
above statements are not the exclusive means of identifying
forward-looking statements herein. Although forward-looking
statements contained or incorporated by reference in this
prospectus supplement reflect our good faith judgment, such
statements can only be based on facts and factors currently known
to us. Consequently, forward-looking statements are inherently
subject to risks and uncertainties, including known and unknown
risks and uncertainties incidental to the exploration for, and the
acquisition, development, production and marketing of oil and
natural gas, and actual outcomes may differ materially from the
results and outcomes discussed in the forward-looking
statements.
S-9
Important factors
that could cause actual results to differ materially from the
forward-looking statements include, but are not limited
to:
●
changes in
production volumes and worldwide demand, including economic
conditions that might impact demand;
●
volatility of
commodity prices for oil and natural gas;
●
the impact of
governmental policies and/or regulations, including changes in
environmental and other laws, the interpretation and enforcement
related to those laws and regulations, liabilities arising
thereunder and the costs to comply with those laws and
regulations;
●
changes in
estimates of proved reserves;
●
inaccuracy of
reserve estimates and expected production rates;
●
risks incidental to
the production of oil and natural gas;
●
our future cash
flows, liquidity and financial condition;
●
competition in the
oil and gas industry;
●
availability and
cost of capital;
●
impact of
environmental events, governmental and other third-party responses
to such events, and our ability to insure adequately against such
events;
●
cost of pending or
future litigation;
●
the effect that
acquisitions we may pursue have on our capital
expenditures;
●
purchase price or
other adjustments relating to asset acquisitions or dispositions
that may be unfavorable to us;
●
our ability to
retain or attract senior management and key technical employees;
and
●
success of
strategic plans, expectations and objectives for our future
operations.
Forward-looking
statements speak only as of the date of this prospectus supplement
or the date of any document incorporated by reference in this
prospectus supplement or any free writing prospectus, as
applicable. Except to the extent required by applicable law or
regulation, we do not undertake any obligation to update
forward-looking statements to reflect events or circumstances after
the date of this prospectus supplement or any free writing
prospectus or to reflect the occurrence of unanticipated
events.
You
should also consider carefully the statements under and
incorporated by reference in “Risk Factors” in this
prospectus supplement and the prospectus, and other sections of
this prospectus supplement, and the documents we incorporate by
reference or file as part of any free writing prospectus, which
address additional facts that could cause our actual results to
differ from those set forth in the forward-looking
statements. We caution investors not to place significant
reliance on the forward-looking statements contained in this
prospectus supplement, any free writing prospectus, and the
documents we incorporate by reference. We undertake no obligation
to publicly update or review any forward-looking statements,
whether as a result of new information, future developments or
otherwise, except as otherwise required by law.
RISK
FACTORS
Before
making an investment decision, you should consider the
“Risk
Factors” discussed in the section entitled
“Risk
Factors”
contained under Item 1A of Part I of our most recent annual report
on Form 10-K, under “Risk
Factors” under
Item 1A of Part II of our subsequent quarterly reports on Form
10-Q, and all other information contained in this prospectus
supplement and the accompanying prospectus and incorporated by
reference in this prospectus supplement and the accompanying
prospectus, and in any free writing prospectus, as the same may be
amended, supplemented or superseded from time to time by our
subsequent filings and reports under the Securities Act or the
Exchange Act. For more information, see “Incorporation
of Certain Documents by Reference” beginning on page
S-19. The market or trading price of our securities could
decline due to any of these risks. In addition, please read
“Forward-Looking
Statements” beginning on page S-9 of this prospectus
supplement, where we describe additional uncertainties associated
with our business and the forward-looking statements included or
incorporated by reference in this prospectus
supplement.
S-10
The
securities offered herein are highly speculative and should only be
purchased by persons who can afford to lose their entire investment
in us. You should carefully consider the following risk factors and
the aforementioned risk factors that are incorporated herein by
reference and other information in this prospectus supplement
before deciding to become a holder of our common stock. The risks
and uncertainties described in these incorporated documents and
described below are not the only risks and uncertainties that we
face. Additional risks and uncertainties not presently known to us
may also impair our business operations. If any of these risks
actually occur, our business and financial results could be
negatively affected to a significant extent. In that event, the
trading price of our common stock could decline, and you may lose
all or part of your investment in our common stock.
Risks Related To This Offering
Management will have broad discretion as to the use of the proceeds
from this offering and may not use the proceeds
effectively.
Because
we have not designated the amount of net proceeds from this
offering to be used for any particular purpose, our management will
have broad discretion as to the application of the net proceeds
from this offering and could use them for purposes other than those
contemplated at the time of the offering. Our management may use
the net proceeds for corporate purposes that may not improve our
financial condition or market value.
Resales of
our common stock in the public market during this offering by our
stockholders may cause the market price of our common stock to
fall.
We
may issue common stock from time to time in connection with this
offering. This issuance from time to time of these new shares of
our common stock, or our ability to issue these shares of common
stock in this offering, could result in resales of our common stock
by our current stockholders concerned about the potential dilution
of their holdings. In turn, these resales could have the effect of
depressing the market price for our common stock.
The shares of common stock offered under this prospectus supplement
and the accompanying prospectus may be sold in “at the market
offerings,” and investors who buy shares at different times
will likely pay different prices.
Investors
who purchase shares under this prospectus supplement and the
accompanying prospectus at different times will likely pay
different prices, and so may experience different outcomes in their
investment results. We will have discretion, subject to market
demand, to vary the timing, prices, and numbers of shares sold, and
there is no minimum or maximum sales price. Investors may
experience declines in the value of their shares as a result of
share sales made at prices lower than the prices they
paid.
We currently have an illiquid and volatile market for our common
stock, and the market for our common stock is and may remain
illiquid and volatile in the future.
We currently have a highly sporadic,
illiquid and volatile market for our common stock, which market is
anticipated to remain sporadic, illiquid and volatile in the
future. Factors that could affect our stock price or
result in fluctuations in the market price or trading volume of our
common stock include:
|
●
|
our
actual or anticipated operating and financial performance and
drilling locations, including reserve estimates;
|
|
●
|
quarterly
variations in the rate of growth of our financial indicators, such
as net income per share, net income and cash flows, or those of
companies that are perceived to be similar to us;
|
|
●
|
changes
in revenue, cash flows or earnings estimates or publication of
reports by equity research analysts;
|
|
●
|
speculation in the
press or investment community;
|
S-11
|
●
|
public
reaction to our press releases, announcements and filings with the
SEC;
|
|
●
|
sales
of our common stock by us or other shareholders, or the perception
that such sales may occur;
|
|
●
|
the
limited amount of our freely tradable common stock available in the
public marketplace;
|
|
●
|
general
financial market conditions and oil and natural gas industry market
conditions, including fluctuations in commodity
prices;
|
|
●
|
the
realization of any of the risk factors presented in this prospectus
supplement, the accompanying prospectus and the filings
incorporated by reference herein and therein;
|
|
●
|
the
recruitment or departure of key personnel;
|
|
●
|
commencement of, or
involvement in, litigation;
|
|
●
|
the
prices of oil and natural gas;
|
|
●
|
the
success of our exploration and development operations, and the
marketing of any oil and natural gas we produce;
|
|
●
|
changes
in market valuations of companies similar to ours; and
|
|
●
|
domestic and
international economic, legal and regulatory factors unrelated to
our performance.
|
Our common stock is listed on the NYSE
MKT under the symbol “PED.” Our stock price may be
impacted by factors that are unrelated or disproportionate to our
operating performance. The stock markets in general
have experienced extreme volatility that has often been unrelated
to the operating performance of particular companies. These broad
market fluctuations may adversely affect the trading price of our
common stock. Additionally, general economic, political and market
conditions, such as recessions, interest rates or international
currency fluctuations may adversely affect the market price of our
common stock. Due to the limited volume of our shares which trade,
we believe that our stock prices (bid, ask and closing prices) may
not be related to our actual value, and not reflect the actual
value of our common stock. Shareholders and potential investors in
our common stock should exercise caution before making an
investment in us.
Additionally, as a
result of the illiquidity of our common stock, investors may not be
interested in owning our common stock because of the inability to
acquire or sell a substantial block of our common stock at one
time. Such illiquidity could have an adverse effect on the market
price of our common stock. In addition, a shareholder may not be
able to borrow funds using our common stock as collateral because
lenders may be unwilling to accept the pledge of securities having
such a limited market. We cannot assure you that an active trading
market for our common stock will develop or, if one develops, be
sustained.
An active liquid trading market for our common stock may not
develop in the future.
Our
common stock currently trades on the NYSE MKT, although our common
stock’s trading volume is very low. Liquid and active
trading markets usually result in less price volatility and more
efficiency in carrying out investors’ purchase and sale
orders. However, our common stock may continue to have limited
trading volume, and many investors may not be interested in owning
our common stock because of the inability to acquire or sell a
substantial block of our common stock at one time. Such illiquidity
could have an adverse effect on the market price of our common
stock. In addition, a shareholder may not be able to borrow funds
using our common stock as collateral because lenders may be
unwilling to accept the pledge of securities having such a limited
market. We cannot assure you that an active trading market for our
common stock will develop or, if one develops, be
sustained.
S-12
We do not presently intend to pay any cash dividends on or
repurchase any shares of our common stock.
We do
not presently intend to pay any cash dividends on our common stock
or to repurchase any shares of our common stock. Any payment of
future dividends will be at the discretion of the Board of
Directors and will depend on, among other things, our earnings,
financial condition, capital requirements, level of indebtedness,
statutory and contractual restrictions applying to the payment of
dividends and other considerations that our Board of Directors
deems relevant. Cash dividend payments in the future may only be
made out of legally available funds and, if we experience
substantial losses, such funds may not be available. Accordingly,
you may have to sell some or all of your common stock in order to
generate cash flow from your investment, and there is no guarantee
that the price of our common stock that will prevail in the market
will ever exceed the price paid by you.
We are subject to the Continued Listing Criteria of the NYSE MKT
and our failure to satisfy these criteria may result in delisting
of our common stock.
Our common stock is currently listed on the NYSE
MKT. In order to maintain this listing, we must maintain certain
share prices, financial and share distribution targets, including
maintaining a minimum amount of shareholders’ equity and a
minimum number of public shareholders. In addition to these
objective standards, the NYSE MKT may delist the securities of any
issuer if, in its opinion, the issuer’s financial condition
and/or operating results appear unsatisfactory; if it appears that
the extent of public distribution or the aggregate market value of
the security has become so reduced as to make continued listing on
the NYSE MKT inadvisable; if the issuer sells or disposes of
principal operating assets or ceases to be an operating company; if
an issuer fails to comply with the NYSE MKT’s listing
requirements; if an issuer’s common stock sells at what the
NYSE MKT considers a “low selling price” (generally
trading below $0.20 per share for an extended period of time) and
the issuer fails to correct this via a reverse split of shares
after notification by the NYSE MKT (provided that issuers can also
be delisted if any shares of the issuer trade below $0.06 per
share); or if any other event occurs or any condition exists which
makes continued listing on the NYSE MKT, in its opinion,
inadvisable.
If
the NYSE MKT delists our common stock, investors may face material
adverse consequences, including, but not limited to, a lack of
trading market for our securities, reduced liquidity, decreased
analyst coverage of our securities, and an inability for us to
obtain additional financing to fund our operations.
If we are delisted from the NYSE MKT, your ability to sell your
shares of our common stock may be limited by the penny stock
restrictions, which could further limit the marketability of your
shares.
If
our common stock is delisted, it could come within the definition
of “penny stock” as defined in the Exchange Act and
could be covered by Rule 15g-9 of the Exchange Act. That
Rule imposes additional sales practice requirements on
broker-dealers who sell securities to persons other than
established customers and accredited investors. For transactions
covered by Rule 15g-9, the broker-dealer must make a special
suitability determination for the purchaser and receive the
purchaser’s written agreement to the transaction prior to the
sale. Consequently, Rule 15g-9, if it were to become
applicable, would affect the ability or willingness of
broker-dealers to sell our securities, and accordingly would affect
the ability of stockholders to sell their securities in the public
market. These additional procedures could also limit our ability to
raise additional capital in the future.
Due to the fact that our common stock is listed on the NYSE MKT, we
are subject to financial and other reporting and corporate
governance requirements which increase our costs and
expenses.
We are currently required to file annual and quarterly information
and other reports with the Securities and Exchange Commission that
are specified in Sections 13 and 15(d) of the Exchange Act.
Additionally, due to the fact that our common stock is listed on
the NYSE MKT, we are also subject to the requirements to maintain
independent directors, comply with other corporate governance
requirements and are required to pay annual listing and stock
issuance fees. These obligations require a commitment of additional
resources including, but not limited, to additional expenses, and
may result in the diversion of our senior management’s time
and attention from our day-to-day operations. These obligations
increase our expenses and may make it more complicated or time
consuming for us to undertake certain corporate actions due to the
fact that we may require NYSE approval for such transactions and/or
NYSE rules may require us to obtain shareholder approval for such
transactions.
S-13
You will experience immediate dilution in the book value per share
of the common stock you purchase.
The offering prices per share in this
offering may exceed the net tangible book value per share of our
common stock. Assuming that an aggregate of 9,523,809
shares of our common stock
are sold at a price of $0.21
per share pursuant to this
prospectus, which was the last reported sale price of our common
stock on the NYSE MKT on September 27, 2016, for aggregate gross proceeds of
$2.0 million, and excluding the deduction of commissions and
estimated aggregate offering expenses payable by us, you would
experience immediate dilution of $0.05
per share, representing the
difference between our as adjusted net tangible book value per
share as of June 30, 2016 after giving effect to this offering and
the assumed offering price. The exercise of outstanding stock
options and warrants may result in further dilution of your
investment. See the section entitled “Dilution”
beginning on page S-15 below for a more detailed illustration
of the dilution you would incur if you participate in this
offering.
You may experience future dilution as a result of future equity
offerings or other equity issuances.
We may
in the future issue additional shares of our common stock or other
securities convertible into or exchangeable for our common stock.
We cannot assure you that we will be able to sell shares or other
securities in any other offering or other transactions at a price
per share that is equal to or greater than the price per share paid
by investors in this offering. The price per share at which we sell
additional shares of our common stock or other securities
convertible into or exchangeable for our common stock in future
transactions may be higher or lower than the price per share
paid by any investors in this
offering.
In
addition, we have a significant number of stock options and
warrants outstanding. To the extent that outstanding stock options
or warrants have been or may be exercised or other shares issued,
investors purchasing our common stock in this offering may
experience further dilution.
Future sales of our common stock could cause our stock price to
decline.
If our shareholders sell substantial amounts of our common stock in
the public market, the market price of our common stock could
decrease significantly. The perception in the public market that
our shareholders might sell shares of our common stock could also
depress the market price of our common stock. Up to $100,000,000 in
total aggregate value of securities have been registered by us on a
“shelf” registration statement on Form S-3 (File No.
333-191869) that we filed with the Securities and Exchange
Commission on October 23, 2013, and which was declared effective on
November 5, 2013. To date, an aggregate of $17,888,000 in
securities have been sold by us under the Form S-3, leaving
$82,112,000 in securities which will be eligible for sale in the
public markets from time to time, when sold and issued by us,
subject to the requirements of Form S-3, which limits us, until
such time, if ever, as our public float exceeds $75 million, from
selling securities in a public primary offering under Form S-3 with
a value exceeding more than one-third of the aggregate market value
of the common stock held by non-affiliates of the Company every
twelve months. Additionally, if our existing shareholders sell, or
indicate an intention to sell, substantial amounts of our common
stock in the public market, the trading price of our common stock
could decline significantly. The market price for shares of our
common stock may drop significantly when such securities are sold
in the public markets. A decline in the price of shares of our
common stock might impede our ability to raise capital through the
issuance of additional shares of our common stock or other equity
securities.
USE
OF PROCEEDS
Except
as described in any free writing prospectus that we may authorize
to be provided to you, we currently intend to use the net proceeds
from this offering, if any, to fund development and working
capital, and for general corporate purposes. Because there is no
minimum offering amount required as a condition to close this
offering, the actual total public offering amount, commissions and
proceeds to us, if any, are not determinable at this
time.
The amounts and timing of our actual expenditures will depend on
numerous factors. We may find it necessary or advisable to use
portions of the net proceeds for other purposes, and we will have
broad discretion in the application and allocation of the net
proceeds from this offering. Pending the use of the net
proceeds from this offering as described above, we intend to invest
the proceeds in investment grade, interest-bearing
instruments.
S-14
PRICE
RANGE OF COMMON STOCK
Our common stock is listed on the NYSE
MKT under the ticker symbol
“PED.” The
following high and low per share sale prices of our common stock,
reflects inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual
transactions.
|
Quarter
Ended
|
High
|
Low
|
|
|
|
|
|
March 31,
2016
|
$0.32
|
$0.15
|
|
June 30,
2016
|
0.41
|
0.16
|
|
September 30, 2016
(through September 27, 2016)
|
0.32
|
0.16
|
|
|
|
|
|
March 31,
2015
|
$0.95
|
$0.31
|
|
June 30,
2015
|
0.78
|
0.42
|
|
September 30,
2015
|
0.48
|
0.22
|
|
December 31,
2015
|
0.31
|
0.10
|
|
|
|
|
|
March 31,
2014
|
$2.83
|
$1.84
|
|
June 30,
2014
|
2.44
|
1.65
|
|
September 30,
2014
|
2.24
|
1.41
|
|
December 31,
2014
|
1.72
|
0.38
|
As of
September 27, 2016, we had 911 holders of record of our common
stock. The actual number of stockholders is greater than this
number of record holders and includes stockholders who are
beneficial owners but whose shares are held in street name by
brokers and other nominees.
For a
description of our common stock, see “Description of Capital
Stock” in the accompanying prospectus dated November
5, 2013.
DIVIDEND POLICY
We have
never declared or paid any dividends on our common stock and do not
anticipate that we will pay dividends in the foreseeable future.
Any payment of cash dividends on our common stock in the future
will be dependent upon the amount of funds legally available, our
earnings, if any, our financial condition, our anticipated capital
requirements and other factors that the board of directors may
think are relevant. However, we currently intend for the
foreseeable future to follow a policy of retaining all of our
earnings, if any, to finance the development and expansion of our
business and, therefore, do not expect to pay any dividends on our
common stock in the foreseeable future.
DILUTION
If you
invest in our common stock offered hereby, your ownership interest
will be diluted to the extent of the difference between the
offering price per share of common stock in this offering and the
net tangible book value per share of our common stock immediately
after this offering. Net tangible book value per share represents
total tangible assets less total liabilities, divided by the number
of shares of common stock outstanding. Dilution in net tangible
book value per share represents the difference between the amount
per share paid by purchasers of shares in this offering and the net
tangible book value per share of common stock immediately after the
closing of this offering.
After
giving effect to the sale of our common stock pursuant to this
prospectus in the aggregate amount of $2.0 million at an assumed
offering price of $0.21 per share, the last reported sale price of
our common stock on the NYSE MKT on September 27, 2016, and
excluding the deduction of commissions and estimated aggregate
offering expenses payable by us, our net tangible book value as of
June 30, 2016 would have been $9.36 million, or $0.16 per share of
common stock. This represents an immediate increase in the net
tangible book value of $0.01 per share to our existing stockholders
and an immediate dilution in net tangible book value of $0.05 per
share to new investors. The following table illustrates this per
share dilution:
S-15
|
Assumed offering
price per share:
|
$0.21
|
|
Historical net
tangible book value per share at June 30, 2016
|
$0.15
|
|
Increase per share
attributable to investors purchasing shares in this
offering:
|
$0.01
|
|
As adjusted net
tangible book value per share as of June 30, 2016 after giving
effect to this offering:
|
$0.16
|
|
Dilution per share
to new investors purchasing shares in this offering:
|
$0.05
|
The
foregoing table is based on 49,768,007 shares of our common stock
outstanding as of June 30, 2016.
The
table above assumes for illustrative purposes that an aggregate of
9,523,809 shares of our common stock are sold pursuant to this
prospectus supplement at a price of $0.21 per share, the last
reported sale price of our common stock on the NYSE MKT on
September 27, 2016, for aggregate gross proceeds of $2.0 million.
The shares sold in this offering, if any, will be sold from time to
time at various prices. An increase of $0.05 per share in the price
at which the shares are sold from the assumed offering price to
$0.26 per share, assuming all of our common stock in the aggregate
amount of $2.0 million is sold at that price, would result in an
adjusted net tangible book value per share after the offering of
$0.16 per share and would increase the dilution in net tangible
book value per share to new investors in this offering to $0.10 per
share, excluding the deduction of commissions and estimated
aggregate offering expenses payable by us. A decrease of $0.05 per
share in the price at which the shares are sold from the assumed
offering price to $0.16 per share, assuming all of our common stock
in the aggregate amount of $2.0 million is sold at that price,
would result in an adjusted net tangible book value per share after
the offering of $0.15
per share and would decrease the dilution in net tangible book
value per share to new investors in this offering to $0.01 per
share, excluding the deduction of commissions and estimated
aggregate offering expenses payable by us. This information is
supplied for illustrative purposes only.
To the
extent that any of our outstanding options or warrants are
exercised, our convertible preferred stock is converted, we grant
additional options under our stock option plans or grant additional
warrants, we issue additional convertible securities, or we issue
additional shares of common stock in the future, there may be
further dilution to new investors.
S-16
PLAN
OF DISTRIBUTION
We have
entered into an At Market Issuance Sales Agreement, or sales
agreement, with National Securities Corporation, or NSC, under
which we may issue and sell shares of our common stock having
aggregate sales proceeds of up to $2,000,000 from time to time
through NSC acting as agent. Sales of our common stock, if any,
under this prospectus supplement may be made in sales deemed to be
“at the market offerings” as defined in Rule 415
promulgated under the Securities Act of 1933, as amended, including
sales made directly on or through the NYSE MKT, the existing
trading market for our common stock, sales made to or through a
market maker other than on an exchange or otherwise, in negotiated
transactions at market prices prevailing at the time of sale or at
prices related to such prevailing market prices, and/or any other
method permitted by law.
NSC
will offer our common stock subject to the terms and conditions of
the sales agreement as agreed upon by us and NSC. Each time we wish
to issue and sell common stock under the sales agreement, we will
notify NSC of the number of shares to be issued, the dates on which
such sales are anticipated to be made and any minimum price below
which sales may not be made. Once we have so instructed NSC, unless
NSC declines to accept the terms of such notice, NSC has agreed to
use its commercially reasonable efforts consistent with its normal
trading and sales practices to sell such shares up to the amount
specified on such terms. The obligations of NSC under the sales
agreement to sell our common stock are subject to a number of
conditions that we must meet.
The
settlement between us and NSC is generally anticipated to occur on
the third trading day following the date on which the sale was
made. Sales of our common stock as contemplated in this prospectus
will be settled through the facilities of The Depository Trust
Company or by such other means as we and NSC may agree upon. There
is no arrangement for funds to be received in an escrow, trust or
similar arrangement.
We will
pay NSC a commission equal to 3.0% of the gross proceeds we receive
from the sales of our common stock. We also agreed to reimburse NSC
for legal expenses incurred by it up to $30,000 in the aggregate,
payable in three (3) installments as follows: (i) $10,000 on the
date of the sales agreement; (ii) $10,000 on the date that is
thirty (30) days from the date of the sales agreement; and (iii)
the balance due (not to exceed $10,000) on the date that is sixty
(60) days from the date of the sales agreement. Because there is no
minimum offering amount required as a condition to close this
offering, the actual total public offering amount, commissions and
proceeds to us, if any, are not determinable at this
time.
In
connection with the sale of the common stock on our behalf, NSC
may, and will with respect to sales effected in an “at the
market offering,” be deemed to be an
“underwriter” within the meaning of the Securities Act
of 1933, as amended, and the compensation of NSC may, and will with
respect to sales effected in an “at the market
offering,” be
deemed to be underwriting commissions or discounts. We have agreed
to provide indemnification and contribution to NSC with respect to
certain civil liabilities, including liabilities under the
Securities Act. We estimate that the total expenses for the
offering, excluding compensation payable to NSC under the terms of
the sales agreement, will be less than $50,000.
The
offering of our common stock pursuant to the sales agreement will
terminate upon the earlier of (i) the sale of all of our common
stock provided for in this prospectus supplement, or (ii)
termination of the sales agreement as permitted
therein.
This
summary of the material provisions of the sales agreement does not
purport to be a complete statement of its terms and conditions. A
copy of the sales agreement has been filed with the SEC as an
exhibit to a Current Report on Form 8-K and is incorporated by
reference into the registration statement of which this prospectus
supplement is a part. See “Where You Can Find More
Information” beginning on page S-18 below.
To the
extent required by Regulation M under the Exchange Act, NSC will
not engage in any market making activities involving our common
stock while the offering is ongoing under this prospectus
supplement.
NSC may
distribute this prospectus supplement electronically.
S-17
LEGAL
MATTERS
The
validity of the issuance of the securities offered hereby will be
passed upon by The Loev Law Firm, PC, Bellaire, Texas.
Certain legal matters in connection with this offering will be
passed upon for NSC by Duane Morris LLP, Newark, New
Jersey.
EXPERTS
GBH
CPAs, PC, independent registered public accounting firm, has
audited our consolidated financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2015, as
set forth in their report (which
report expresses an unqualified opinion and includes an explanatory
paragraph relating to the Company’s ability to continue as a
going concern), which is incorporated by reference in this
prospectus supplement and elsewhere in the registration statement.
Our financial statements are incorporated by reference in reliance
on GBH CPAs, PC’s reports, given on their authority as
experts in accounting and auditing.
Certain
of our oil and gas reserve estimates that are incorporated herein
by reference were based upon a report prepared by South Texas
Reservoir Alliance LLC, an independent professional engineering
firm specializing in the technical evaluation of oil and gas assets
and estimates of future net income. These estimates are included
and incorporated by reference herein in reliance on the authority
of such firm as an expert in such matters.
No
expert or counsel named in this prospectus as having prepared or
certified any part of this prospectus or having given an opinion
upon the validity of the securities being registered or upon other
legal matters in connection with the registration or offering of
the securities was employed on a contingency basis, or had, or is
to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its
parents or subsidiaries. Nor was any such person connected with the
registrant or any of its parents or subsidiaries as a promoter,
managing or principal underwriter, voting trustee, director,
officer or employee.
WHERE
YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current
reports, proxy statements and other information with the SEC. Our
SEC filings are available to the public over the Internet at the
SEC’s web site at www.sec.gov and on the
“Investors,”
“SEC
Filings” page
of our website at www.pacificenergydevelopment.com.
Information on our website is not part of this prospectus
supplement or the accompanying prospectus, and we do not desire to
incorporate by reference such information herein. You may also read
and copy any document we file with the SEC at the SEC’s
Public Reference Room at 100 F Street N.E., Washington, D.C. 20549.
You can also obtain copies of the documents upon the payment of a
duplicating fee to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the Public Reference
Room. The SEC maintains an Internet site that contains reports,
proxy and information statements, and other information regarding
issuers that file electronically with the SEC like us. Our SEC
filings are also available to the public from the SEC’s
website at http://www.sec.gov.
This
prospectus supplement is part of the registration statement and
prospectus contained therein and does not contain all of the
information included in the registration statement or prospectus.
Whenever a reference is made in this prospectus supplement or the
accompanying prospectus to any of our contracts or other documents,
the reference may not be complete and, for a copy of the contract
or document, you should refer to the exhibits that are a part of
the registration statement. You should rely only on the information
contained or incorporated by reference in this prospectus
supplement, the accompanying prospectus and any supplement or
amendment hereto. We have not authorized anyone to provide you with
information different from that contained in this prospectus
supplement and the accompanying prospectus. The securities offered
under this prospectus supplement and the accompanying prospectus
are offered only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus supplement
and the accompanying prospectus, and any free writing prospectus,
is accurate only as of the date of this prospectus supplement, the
accompanying prospectus and any such free writing prospectus,
regardless of the time of delivery of this prospectus supplement,
the accompanying prospectus, or any free writing prospectus, or any
sale of the securities.
This
prospectus supplement, the accompanying prospectus and any free
writing prospectus, constitute a part of a registration statement
we filed with the SEC under the Securities Act. This prospectus
supplement, the accompanying prospectus and any free writing
prospectus, do not contain all of the information set forth in the
registration statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC. For further
information with respect to the Company and the Shares, reference
is hereby made to the registration statement. The registration
statement may be inspected at the public reference facilities
maintained by the SEC at the addresses set forth in the paragraph
above. Statements contained herein concerning any document filed as
an exhibit are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an exhibit
to the registration statement. Each such statement is qualified in
its entirety by such reference.
S-18
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The SEC
allows us to “incorporate by reference” into this
prospectus supplement and the accompanying prospectus the
information we file with it, which means that we can disclose
important information to you by referring you to those documents.
The information incorporated by reference is considered to be part
of this prospectus supplement and the accompanying prospectus from
the date on which we file that document. Any reports filed by us
with the SEC (i) on or after the date of filing of the registration
statement and the accompanying prospectus and (ii) on or after the
date of this prospectus supplement and before the termination of
the offering of the securities by means of this prospectus
supplement will automatically update and, where applicable,
supersede information contained in this prospectus supplement, the
accompanying prospectus or incorporated by reference into this
prospectus supplement or the prospectus supplement.
We
incorporate by reference the documents listed below, all filings
filed by us pursuant to the Exchange Act after the date of the
registration statement of which this prospectus supplement forms a
part, and any future filings we make with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the time
that all securities covered by this prospectus supplement have been
sold or this offering has been terminated; provided, however, that
we are not incorporating any information furnished under either
Item 2.02 or Item 7.01 of any current report on Form
8-K:
●
Our Annual Report
on Form 10-K for the fiscal year ended December 31, 2015, filed
with the SEC on March 29, 2016;
●
Our Definitive
Proxy Statement on Schedule 14A for our 2015 Annual Meeting of
Shareholders, filed with the SEC on August 25, 2015;
●
Our Quarterly
Reports on Form 10-Q for the quarters ended March 30, 2016 and June
30, 2016 filed with the SEC on May 19, 2016 and August 11, 2016,
respectively;
●
Our Current Reports
on Forms 8-K (other than information furnished rather than filed)
filed with the SEC on February 4, 2016, March 2, 2016, March 11,
2016, March 31, 2016, April 13, 2016, April 27, 2016 and May 17,
2016; and
●
The description of
our common stock contained in our Registration Statement on Form
8-A/A, filed with the SEC on September 5, 2013 (File No. 001-35922)
pursuant to Section 12(b) of the Exchange Act, including any
amendment or report filed for the purpose of updating such
description.
These
documents contain important information about us, our business and
our financial condition. You may request a copy of these filings,
at no cost, by writing or telephoning us at:
PEDEVCO
Corp.
4125
Blackhawk Plaza Circle, Suite 201
Danville,
California 94506
Phone:
(855) 733-2685
Fax: (925)
403-0703
S-19
All
documents filed by us pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Act or the Exchange Act, excluding any
information in those documents that are deemed by the rules of the
SEC to be furnished but not filed, after the date of this filing
and before the termination of this offering shall be deemed to be
incorporated in this prospectus supplement and to be a part hereof
from the date of the filing of such document. Any statement
contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent
that a statement contained in this prospectus supplement or in any
other subsequently filed document which is also incorporated or
deemed to be incorporated by reference, modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this prospectus supplement. You will be deemed to have notice of
all information incorporated by reference in this prospectus
supplement as if that information was included in this prospectus
supplement.
We
maintain an Internet website at www.pacificenergydevelopment.com where
the incorporated reports listed above can be accessed. Neither this
website nor the information on this website is included or
incorporated in, or is a part of, this prospectus
supplement.
S-20
PROSPECTUS
PEDEVCO
Corp.
$100,000,000
Common
Stock
Preferred
Stock
Warrants
Units
________________________________________________________________________
We may from time to
time, in one or more offerings at prices and on terms that we will
determine at the time of each offering, sell common stock,
preferred stock, warrants, or a combination of these securities or
units (collectively referred to as “securities”) for an
aggregate initial offering price of up to $100 million. This
prospectus describes the general manner in which our securities may
be offered using this prospectus. Each time we offer and sell
securities, we will provide you with a prospectus supplement that
will contain specific information about the terms of that offering.
We may also authorize one or more free writing prospectuses to be
provided to you in connection with these offerings. Any
prospectus supplement and any related free writing prospectus may
also add, update, or change information contained in this
prospectus. You should carefully read this prospectus, the
applicable prospectus supplement and any related free writing
prospectus as well as the documents incorporated or deemed to be
incorporated by reference herein or therein before you purchase any
of the securities offered hereby.
This
prospectus may not be used to offer or sell our securities unless
accompanied by a prospectus supplement. The information contained
or incorporated in this prospectus or in any prospectus supplement
is accurate only as of the date of this prospectus, or such
prospectus supplement, as applicable, regardless of the time of
delivery of this prospectus or any sale of our
securities.
Securities may be
sold by us to or through underwriters or dealers, directly to
purchasers or through agents designated from time to time. For
additional information on the methods of sale, you should refer to
the section entitled “Plan of Distribution” in
this prospectus. If any underwriters are involved in the sale of
any securities with respect to which this prospectus is being
delivered, the names of such underwriters and any applicable
discounts or commissions and over-allotment options will be set
forth in a prospectus supplement. The price to the public of such
securities and the net proceeds we expect to receive from such sale
will also be set forth in a prospectus supplement.
Our common stock is listed on the NYSE
MKT under the symbol “PED.” On
October 22, 2013, the last reported sales price of our common stock
was $3.85. There is currently no market for the other
securities we may offer. You are urged to obtain current
market quotations of our common stock before purchasing any of the
shares being offered for sale pursuant to this prospectus or any
prospectus supplement. The prospectus supplement will
contain information, where applicable, as to any other listing of
the securities on the NYSE MKT or any other securities market or
exchange covered by the prospectus supplement. Pursuant to General
Instruction I.B.6 of Form S-3, in no event will we sell our common
stock in a public primary offering with a value exceeding more than
one-third of our public float in any 12-month period so long as our
public float remains below $75 million. As of the date of this
prospectus, the aggregate market value of our outstanding voting
and nonvoting common equity held by non-affiliates of the Company
(i.e., our public float) was $53,616,879 and the total value of our
entire voting and nonvoting common equity was $101,390,157, each
based on the closing price of the Company’s common stock on
September 6, 2013, which closing price was $4.50. We
have offered and sold no securities pursuant to General Instruction
I.B.6 of Form S-3 during the twelve calendar months prior to and
including the date of this prospectus.
Investing
in our securities involves risks. You should carefully consider
the risk factors beginning on page 11 of this prospectus
and set forth in the documents incorporated by reference herein
before making any decision to invest in our
securities.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
The
date of this prospectus is November 5, 2013.
TABLE
OF CONTENTS
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Page
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About
This Prospectus
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1
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Prospectus
Summary
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2
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Securities
Registered Hereby That We May Offer
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9
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Risk
Factors
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11
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Forward-Looking
Statements
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17
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Use
of Proceeds
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18
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Description
of Capital Stock
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18
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Description
of Preferred Stock
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22
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Description
of Warrants
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23
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Description
of Units
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26
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Plan
of Distribution
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27
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Legal
Matters
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30
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Experts
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30
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Where
You Can Find More Information
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31
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Incorporation
of Certain Documents By Reference
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32
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ABOUT
THIS PROSPECTUS
This prospectus is
a part of a registration statement that we filed with the
Securities and Exchange Commission, or the Commission, utilizing a
“shelf”
registration process. Under this shelf registration process, we may
offer to sell any combination of the securities described in this
prospectus, either individually or in units, in one or more
offerings up to a total dollar amount of $100,000,000. This
prospectus provides you with a general description of the
securities we may offer. Each time we sell securities under this
shelf registration, we will provide a prospectus supplement that
will contain specific information about the terms of that offering.
We may also authorize one or more free writing prospectuses to be
provided to you that may contain material information about the
terms of that offering. The prospectus supplement and any related
free writing prospectus that we may authorize to be provided to you
may also add, update or change information contained in this
prospectus. To the extent that any statement that we make in a
prospectus supplement and any related free writing prospectus that
we may authorize to be provided to you is inconsistent with
statements made in this prospectus, the statements made in this
prospectus will be deemed modified or superseded by those made in
the prospectus supplement. You should read this prospectus and any
prospectus supplement and free writing prospectus, including all
documents incorporated herein or therein by reference, together
with additional information described under “Where You Can Find More
Information” and “Information Incorporated by
Reference” before making an investment decision. We
may only use this prospectus to sell the securities if it is
accompanied by a prospectus supplement.
You should rely
only on the information included or incorporated by reference in
this prospectus and any accompanying prospectus supplement or free
writing prospectus. We have not authorized any dealer,
salesman or other person to provide you with additional or
different information. This prospectus and any
accompanying prospectus supplement and free writing prospectus are
not an offer to sell or the solicitation of an offer to buy any
securities other than the securities to which they relate and are
not an offer to sell or the solicitation of an offer to buy
securities in any jurisdiction to any person to whom it is unlawful
to make an offer or solicitation in that
jurisdiction. You should not assume that the information
contained in this prospectus and the accompanying prospectus
supplement, and any free writing prospectus, is accurate on any
date subsequent to the date set forth on the front of the document
or that any information we have incorporated by reference is
correct on any date subsequent to the date of the document
incorporated by reference, even though this prospectus and any
accompanying prospectus supplement and free writing prospectus is
delivered or securities are sold on a later date. We will disclose
any material changes in our affairs in a post-effective amendment
to the registration statement of which this prospectus is a part, a
prospectus supplement, free writing prospectus or a future filing
with the Securities and Exchange Commission incorporated by
reference in this prospectus. We do not imply or represent by
delivering this prospectus that PEDEVCO Corp., or its business,
financial condition or results of operations, are unchanged after
the date on the front of this prospectus or that the information in
this prospectus is correct at any time after such
date.
Persons outside the
United States who come into possession of this prospectus must
inform themselves about, and observe any restrictions relating to,
the offering of the securities and the distribution of this
prospectus outside of the United States.
The market data and
certain other statistical information used throughout this
prospectus are based on independent industry publications,
government publications and other published independent
sources. Although we believe that these third-party
sources are reliable and that the information is accurate and
complete, we have not independently verified the
information. Some data are also based on our good faith
estimates.
Unless the context
otherwise requires, references in this prospectus and the
accompanying prospectus supplement to “we,” “us,” “our,” the
“Company,” and
“PEDEVCO” refer to PEDEVCO
Corp. and its subsidiaries.
1
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PROSPECTUS
SUMMARY
The following
summary highlights material information found in more detail
elsewhere in, or incorporated by reference in, the prospectus. It
does not contain all of the information you should consider. As
such, before you decide to buy our securities, in addition to the
following summary, we urge you to carefully read the entire
prospectus and documents incorporated by reference herein, the
prospectus supplement, and any free writing prospectus, especially
the risks of investing in our securities as discussed under
"Risk Factors"
herein and therein. The following summary is qualified in its
entirety by the detailed information appearing elsewhere in this
prospectus.
General
Overview
We are an energy
company engaged in the acquisition, exploration, development and
production of oil and natural gas resources in the United States,
with a primary focus on oil and natural gas shale plays and a
secondary focus on conventional oil and natural gas
plays. Our current operations are located primarily in
the Niobrara Shale play in the Denver-Julesburg Basin in Weld and
Morgan Counties, Colorado, the Eagle Ford Shale play in McMullen
County, Texas, and the Mississippian Lime play in Comanche,
Harper, Barber and Kiowa Counties, Kansas. We also hold
an interest in the North Sugar Valley Field in Matagorda County,
Texas, though we consider this a non-core asset. We also
hope to utilize the Company’s strategic relationships for
acquisition, exploration, development and production in Asia, with
a particular focus on China and Kazakhstan. We have
entered into an agreement to acquire an approximate 34% indirect
working interest in a production license covering a 380,000
acre oil and gas producing asset located in the Pre-Caspian Basin
in Kazakhstan, which we plan to close upon receipt of required
approvals from the Kazakhstan government, anticipated to be
received no later than the third quarter of 2014, as described in
greater detail below under “Recent
Developments”.
We have
approximately 9,293 gross (2,451 net) acres of oil and gas
properties in our Niobrara core area. Our current Eagle
Ford position is a 3.97% non-operated working interest in 1,331
gross (53 net) acres. We also recently acquired an
average 98% working interest in 7,006 gross (6,885 net) acres in
the Mississippian Lime play, which we operate. Condor Energy
Technology LLC (“Condor”), which we
jointly own and manage with an affiliate of MIE Holdings
Corporation as described below, operates our Niobrara interests,
including five producing wells in the Niobrara asset with
production during the past quarter of approximately 22,573 gross
barrels (Bbl) of oil (4,492 net) and gross 21,894 thousand cubic
feet (Mcf) of natural gas (5,135 net) or 3,649 gross barrels of oil
equivalent (“BOE”) (856 net),
(utilizing a conversion factor for gas sales of 6 Mcf per 1 Bbl),
for total aggregate gross production during the past quarter of
approximately 26,222 BOE (5,348 net). We believe our current assets
could contain a gross total of over 400 drilling locations,
assuming 80 acre spacing on our Niobrara asset.
We believe that the
Niobrara, Eagle Ford and Mississippian Lime plays represent among
the most promising unconventional oil and natural gas plays in the
United States. We will continue to seek additional acreage
proximate to our currently held core acreage. Our strategy is to be
the operator, directly or through our subsidiaries and joint
ventures, in the majority of our acreage so we can dictate the pace
of development in order to execute our business plan. The majority
of our capital expenditure budget for the remainder of 2013 will
continue to be focused on the acquisition, development and
expansion of these formations. In addition, we believe
our pending acquisition of the interests in Kazakhstan’s
largest and most prolific producing basin will provide the Company
with opportunities to increase its net oil and gas production while
expanding its global footprint and international
presence.
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2
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Total
Gross
Acreage
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Ownership
Interest
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Net
Acres
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Acre
Spacing
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Potential
Gross -Drilling Locations (3)
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Niobrara
(1)
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9,293
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26.37
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%
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2,451
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80
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360
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Eagle Ford
(2)
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1,331
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3.97
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%
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53
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60
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17
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Mississippian
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7,006
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98.27
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%
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6,885
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160
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42
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Current
Core Assets
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17,630
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9,389
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419
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(1) We have a
26.37% net ownership interest in the leased acreage in the Niobrara
asset (10.87% of the acreage held directly by us plus 15.50% of the
acreage is held by virtue of our 20% interest in Condor Energy
Technology LLC, which in turn holds a 77.52% working interest in
the leased acreage in the Niobrara asset).
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(2) We
have a 3.97% ownership in the leased acreage in the Eagle Ford
asset (held through our 50% interest in White Hawk Petroleum, LLC,
which holds a 7.939% working interest in the Eagle Ford
asset).
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(3)
Potential gross
drilling locations are calculated using the acre spacings specified
for each area in the table and adjusted assuming forced pooling in
the Niobrara. Colorado, where the Niobrara asset is
located, allows for forced pooling, which may create more
potential gross drilling locations than acre spacing alone would
otherwise indicate.
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Recent
Developments
Kazakhstan Acquisition
On September 16,
2013, we announced the entry into Kazakhstan through an agreement
to acquire an approximate 34% indirect interest in Aral Petroleum
Capital Limited Partnership (“Aral”), a Kazakhstan
entity which holds a 100% operated working interest in a
production license covering a contract area issued by the Republic
of Kazakhstan that expires in 2035 in western Kazakhstan (the
“Contract
Area”), from Asia Sixth Energy Resources Limited
(“Asia
Sixth”), which Contract Area covers 380,000 acres
within the North Block located in the Pre-Caspian Basin. The
Pre-Caspian Basin is one of the largest currently producing basins
in Kazakhstan.
Under the
agreement, we plan to effectively take control of Aral through
acquisition of a 51% controlling interest in Asia Sixth by way of
subscription of shares of Asia Sixth, which currently holds a 60%
controlling interest in Aral. Asia Sixth’s interest in
Aral is scheduled to increase to 66.5% following the completion of
certain transactions to occur between Asia Sixth and Asia
Sixth’s partner in Aral that currently holds the remaining
40% interest in Aral (the “Aral
Transactions”). Upon closing and completion of
the Aral Transactions and consummation of the transactions
contemplated by our agreement, Aral will be owned 66.5% by Asia
Sixth, which will be controlled and managed by us. Thus, we,
through our 51% majority ownership in Asia Sixth, will own an
approximate 34% interest in Aral and have control of Aral through
Asia Sixth’s controlling interest.
We have paid an
initial deposit of $8 million and a subsequent deposit of $2
million to Asia Sixth, and shall increase our deposit by up to $10
million, to up to a total of $20 million, contingent upon receipt
of payment in full by us from an investor under a promissory
note. In the event the final $10 million due under the
outstanding $10 million promissory note maturing in December 2013
is not received by us, we are not obligated to increase our deposit
amount to Asia Sixth. The deposit is subject to full
refund to us in the event the transaction does not close, other
than as a result of our material uncured breach, and we have no
obligation to repay any of our investors any amounts previously
paid under the promissory notes or otherwise if we receive any refunds
from Asia Sixth. This money will also be used, in part, to
recomplete and rework currently producing wells with the hope of
significantly increasing their production rates. Based on how these
wells perform, at closing, we shall owe to Asia Sixth a final
closing payment equal to an additional: (i) $20 million if
the daily average volume of oil produced by Aral over a specified
30 day period (the “Target Volume”) equals or
exceeds 1,500 barrels of oil per day (“BOPD”); (ii) $15 million
if the Target Volume equals or exceeds 1,000 BOPD but is less than
1,500 BOPD; or (iii) $0 due if the Target Volume is less than 1,000
BOPD. In the event we are required to make a final
closing payment to Asia Sixth based on well performance, we will
need to raise the funds required through debt and/or equity
financings.
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3
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Business
Strategy
Our goal is to
increase shareholder value by building reserves, production and
cash flows at an attractive return on invested
capital. We intend to primarily engage in the
acquisition, exploration, development and production of oil and
natural gas resources in the United States, primarily shale oil and
natural gas and secondarily conventional oil and natural gas
opportunities in the United States (U.S.), and utilizing our
strategic relationships for acquisition, exploration, development
and production in Asia, with a particular focus on China and
Kazakhstan. We intend to achieve our objectives as
follows:
Aggressively drill and develop our
existing acreage positions. We plan to aggressively
drill our core assets, drilling at least two gross wells on the
Niobrara asset, at least one gross well on the Eagle Ford asset,
and three gross wells in the Mississippian Lime through the end of
2014. We believe our planned drilling schedules will
allow us to begin converting our undeveloped acreage to developed
acreage with production, cash flow and proved
reserves.
Acquire additional oil and natural gas
opportunities. We plan to leverage our relationships
and experienced acquisition team to pursue additional leasehold
assets in our core areas as well as continue to pursue additional
oil and natural gas interests. We have an
agreement in place (subject to customary closing conditions) for
the acquisition of an approximate 34% indirect interest in Aral (as
described above under “Recent Developments”), a
Kazakhstan entity which holds a 100% operated working interest
in a production license covering a contract area issued by the
Republic of Kazakhstan that expires in 2035 in western
Kazakhstan from Asia Sixth, which Contract Area covers 380,000
acres within the North Block located in the Pre-Caspian
Basin. This basin is one of the largest currently producing
basins in Kazakhstan. We plan to close this acquisition
upon receipt of required approvals from the government of
Kazakhstan, anticipated to be received no later than the third
quarter of 2014. We are also exploring additional oil
and natural gas opportunities in our core areas, and in other areas
of the United States and Pacific Rim countries, with a particular
focus on China.
Leverage expertise of management and
external resources. We plan to focus on
profitable investments that provide a platform for our management
expertise. We have also engaged South Texas Reservoir
Alliance LLC (“STXRA”) and other
industry veterans as key advisors, and recently jointly formed
Pacific Energy Technology Services, LLC with STXRA, for the purpose
of providing acquisition, engineering and oil drilling and
completion technology services to third parties in the United
States and Pacific Rim countries. As necessary, we intend to enlist
external resources and talent to operate and manage our properties
during peak operations.
Engage and leverage strategic
alliances in Asia. We have already entered into a
strategic alliance with MIE Holdings, and we intend to partner with
additional Chinese energy companies to (a) acquire producing oil
field assets that could provide cash flow to help fund our U.S.
development program, (b) provide technical horizontal drilling
expertise for a fee, thus acquiring valuable experience and data in
regards to the China shale formations and successful engineering
techniques, and (c) acquire interests in Asian producing
assets.
Limit exposure and increase
diversification through engaging in joint
ventures. We own various oil and natural gas
interests through joint ventures with MIE Holdings, and may in the
future enter into similar joint ventures with respect to other oil
and gas interests either with MIE Holdings or other
partners. We believe that
conducting many of our activities through partially owned joint
venture will enable us to lower our risk exposure while increasing
our ability to invest in multiple ventures.
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4
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Leverage partnerships for financial
strength and flexibility. Our joint venture partner,
MIE Holdings, has been a strong financial partner. They have loaned
us $6.17 million through a short-term note to fund operations and
development of the Niobrara asset and $432,433 toward the
acquisition of the Mississippian asset. We expect that
proceeds from future equity offerings, internally generated cash
flow, and future debt financings will provide us with the financial
resources to pay off these amounts due MIE Holdings and pursue our
leasing and drilling and development programs through
2014. We have also met with financial institutions,
introduced to us by MIE Holdings, seeking to secure a line of
credit that could be used for both acquisition and development
costs where needed. We cannot assure you, however, that
we will be able to secure any such financing on terms acceptable to
us, on a timely basis, or at all.
Strategic Alliances
MIE
Holdings
Through the
relationships developed by our founder and Chief Executive Officer,
Frank Ingriselli, we formed a strategic relationship with MIE
Holdings Corporation (Hong Kong Stock Exchange code: 1555.HK), one
of the largest independent upstream onshore oil companies in China,
which we refer to as MIE Holdings, to assist us with our plans to
develop unconventional shale properties. According to
information provided by MIE Holdings, MIE Holdings has drilled and
currently operates over 2,000 oil wells in China and brings
extensive drilling and completion experience and expertise, as well
as a strong geological team. MIE Holdings has also been
a significant investor in our operations, and our Niobrara and
Eagle Ford assets are held all or in part by the following joint
ventures which we jointly own with affiliates of MIE
Holdings:
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Condor Energy
Technology LLC, which we refer to as Condor, which is a Nevada
limited liability company owned 20% by us and 80% by an affiliate
of MIE Holdings; and
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White Hawk
Petroleum, LLC, which we refer to as White Hawk, which is a
Nevada limited liability company owned 50% by us and 50% by an
affiliate of MIE Holdings.
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Although our
initial focus is on oil and natural gas opportunities in the United
States, we plan to use our strategic relationship with MIE Holdings
and our experience in operating U.S.-based shale oil and natural
gas interests to acquire, explore, develop and produce oil and
natural gas resources in Pacific Rim countries, with a particular
focus on China. We intend to use our existing or future
joint ventures with MIE Holdings to acquire additional shale
properties in the United States and in China, where MIE Holdings
and other partners have extensive experience working in the energy
sector.
STXRA
On October 4, 2012,
we established a technical services subsidiary, Pacific Energy
Technology Services, LLC, which is 70% owned by us and 30% owned by
STXRA, through which we plan to provide acquisition, engineering,
and oil drilling and completion technology services in joint
cooperation with STXRA in the United States and Pacific Rim
countries, particularly in China. While Pacific Energy
Technology Services, LLC currently has no operations, only
nominal assets and liabilities and limited capitalization,
we anticipate actively developing this venture in
2014.
STXRA
is a consulting firm specializing in the delivery of petroleum
resource acquisition services and practical engineering solutions
to clients engaged in the acquisition, exploration and development
of petroleum resources. In April 2011, we entered into
an agreement of joint cooperation with STXRA in an effort to
identify suitable energy ventures for acquisition by us, with a
focus on plays in shale oil and natural gas bearing regions in the
United States. According to information provided by
STXRA, the STXRA team has experience in their collective careers of
drilling and completing horizontal wells, including over 100
horizontal wells with lengths exceeding 4,000 feet from 2010 to
2012, as well as experience in both slick water
and hybrid multi-stage hydraulic fracturing technologies and in the
operation of shale wells and fields. We believe
that our relationship with STXRA, both directly and through our
jointly-owned Pacific Energy Technology Services LLC services
company, will supplement the core competencies of our management
team and provide us with petroleum and reservoir engineering,
petrophysical, and operational competencies that will help us to
evaluate, acquire, develop and operate petroleum resources in the
future.
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5
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Merger
with Pacific Energy Development
On July 27, 2012,
in order to carry out our business plan, we acquired through a
reverse acquisition, Pacific Energy Development Corp., a privately
held Nevada corporation, which we refer to as Pacific Energy
Development or PEDCO. As described below, pursuant to the
acquisition, the shareholders of Pacific Energy Development gained
control of approximately 95% of the voting securities of our
company. Since the transaction resulted in a change of control,
Pacific Energy Development was the acquirer for accounting
purposes. In connection with the merger, which we refer
to as the Pacific Energy Development merger, Pacific Energy
Development became our wholly owned subsidiary and we changed our
name from Blast Energy Services, Inc. to PEDEVCO CORP.
As part of the
Pacific Energy Development merger, we issued to the shareholders of
Pacific Energy Development (a) 5,972,421 shares of our common
stock, (b) 6,538,892 shares of our then newly created Series A
preferred stock, (c) warrants to purchase an aggregate of 373,334
shares of our common stock and 230,862 shares of our Series A
preferred stock at various exercise prices, and (d) options to
purchase an aggregate of 1,411,667 shares of our common stock at
various exercise prices. Pursuant to the Pacific Energy
Development merger, we also converted all of our shares of
preferred stock that were outstanding prior to the Pacific Energy
Development merger into shares of common stock on a one-for-one
basis and effected a reverse stock split of our common stock on a
1-for-112 shares basis. All share and per share amounts
used in this prospectus have been restated to reflect this reverse
stock split, as well as a subsequent reverse stock split of our
common stock on a 1-for-3 shares basis effected on April 23,
2013.
At the effective
time of the Pacific Energy Development merger, (a) Pacific Energy
Development owned the Niobrara and Eagle Ford assets and had begun
discussions regarding the Mississippian acquisition opportunity,
and (b) our primary business was developing the North Sugar Valley
Field asset. As a result of our acquisition of Pacific
Energy Development in the Pacific Energy Development merger, we
acquired these assets and opportunities of Pacific Energy
Development.
In connection with
the Pacific Energy Development merger, the directors and executive
officers of Pacific Energy Development became our directors and
executive officers.
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6
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The following chart
reflects our current organizational structure:
 * Represents
percentage of voting power as of October 23, 2013, based on
ownership of outstanding common stock, but not including
outstanding options or warrants.
Additional
Information
Additional
information about us can be obtained from the documents
incorporated by reference herein. See “Where You Can Find More
Information”.
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7
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Our
Contact Information
Our
principal office is located at 4125 Blackhawk Plaza Circle, Suite
201, Danville, California 94506. Our phone number is (855)
733-2685. Our website address is www.pacificenergydevelopment.com.
Information on our website or any other website is not, and will
not be, a part of this prospectus and is not, and will not be,
incorporated by reference into this prospectus.
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8
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SECURITIES
REGISTERED HEREBY THAT WE MAY OFFER
We may offer any of
the following securities, either individually or in combination,
with a total value of up to $100,000,000 from time to time under
this prospectus at prices and on terms to be determined by market
conditions at the time of the offering:
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common
stock;
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preferred stock, in
one or more series;
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warrants to
purchase shares of common stock, or shares of preferred stock;
or
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any combination of
the foregoing securities, in units.
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We
refer to our common stock, preferred stock, warrants, and units
collectively in this prospectus as the “securities.” This
prospectus provides you with a general description of the
securities we may offer. Each time we offer a type or series of
securities, we will provide a prospectus supplement that will
describe the specific amounts, prices and other important terms of
the securities, including, to the extent applicable:
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designation
or classification;
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aggregate
offering price;
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rates
and times of payment of dividends, if any;
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redemption,
conversion or sinking fund terms, if any;
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voting
or other rights, if any;
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conversion prices,
if any; and
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important federal
income tax considerations.
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We may
sell the securities to or through underwriters or dealers, directly
to purchasers or through agents designated from time to time. We
and our agents, underwriters and dealers reserve the right to
accept or reject all or part of any proposed purchase of
securities. If we do offer securities to or through agents,
underwriters or dealers, we will include in the applicable
prospectus supplement:
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the
names of those agents, underwriters or dealers;
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applicable
fees, discounts and commissions to be paid to them;
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details regarding
over-allotment options, if any; and
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the net proceeds to
us.
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Common Stock. We may offer shares of our common stock. Our
common stock currently is listed on the NYSE MKT under the symbol
“PED.” Shares
of common stock that may be offered in this offering will, when
issued and paid for, be fully paid and non-assessable.
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Preferred Stock. We may offer shares of our preferred stock,
in one or more series. Prior to the issuance of shares of each
series, our Board of Directors will determine the rights,
preferences, privileges and restrictions of such preferred stock
series, and will adopt resolutions and file a certificate of
designation with the Secretary of State of the State of Texas. The
certificate of designation fixes for each class or series the
designations, powers, preferences, rights, qualifications,
limitations and restrictions, including, but not limited to, the
following: any dividend rights, conversion rights, voting rights,
rights and terms of redemption, liquidation preferences, sinking
fund terms and the number of shares constituting any series or the
designation of any series. Convertible preferred stock will be
convertible into shares of our common stock. Conversion may be
mandatory or at your option and would be at prescribed
conversion rates. Shares of preferred stock that may be offered in
this offering will, when issued and paid for, be fully paid and
non-assessable. If we elect to issue preferred stock, we will
describe the specific terms of a particular series of preferred
stock in the prospectus supplement relating to that series. We will
file as an exhibit to the registration statement of which this
prospectus is a part, or will incorporate by reference from another
report that we file with the SEC, the certificate of designation
that describes the terms of any series of preferred stock we offer
under this prospectus before the issuance of shares of that series
of preferred stock. You should read any prospectus supplement and
any free writing prospectus that we may authorize to be provided to
you related to the series of preferred stock being offered. We have
summarized certain general features of the preferred stock under
“Description of
Preferred Stock”. We urge you to read the complete
certificate of designations containing the terms of the applicable
series of preferred stock, as well as the applicable prospectus
supplement, and any related free writing prospectus that we may
authorize to be provided to you, related to such
series.
Warrants. We may issue warrants for the purchase of
common stock or preferred stock in one or more series. We may issue
warrants independently or in combination with common stock or
preferred stock. In this prospectus, we have summarized certain
general features of the warrants under “Description of
Warrants.” We urge you, however, to read the
applicable prospectus supplement, and any related free writing
prospectus that we may authorize to be provided to you, related to
the particular series of warrants being offered, as well as the
form of warrant and/or the warrant agreement and warrant
certificate, as applicable, that contain the terms of the warrants.
We will file as exhibits to the registration statement of which
this prospectus is a part, or will incorporate by reference from
reports that we file with the SEC, the form of warrant and/or the
warrant agreement and warrant certificate, as applicable, that
describe the terms of the particular series of warrants we are
offering, and any supplemental agreements, before the issuance of
such warrants.
Warrants may be
issued under a warrant agreement that we enter into with a warrant
agent. We will indicate the name and address of the warrant agent,
if any, in the applicable prospectus supplement relating to a
particular series of warrants.
Units. We may issue units representing any combination
of common stock, preferred stock, and/or warrants from time to
time. The units may be issued under one or more unit
agreements. In this prospectus, we have summarized certain general
features of the units.
We will incorporate
by reference into the registration statement, of which this
prospectus is a part, the form of unit agreement under which the
units are designated, if any, describing the terms of the units we
are offering before the issuance of the related units. We have
summarized certain general features of the units under
“Description of
Units.” We urge you to read the prospectus supplements
related to any units being offered, as well as the complete unit
agreement, if any, designating the units.
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10
RISK
FACTORS
Except for the
historical information contained in this prospectus or incorporated
by reference, this prospectus (and the information incorporated by
reference in this prospectus) and any prospectus supplement or free
writing prospectus contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially
from those discussed herein or incorporated by reference or as set
forth in any prospectus supplement or free writing prospectus.
Factors that could cause or contribute to such differences include,
but are not limited to the following risks, as well as those
discussed in the section entitled “Risk Factors” contained
under Item 1A of Part I of our most recent Annual Report on Form
10-K, and under “Risk Factors” under Item
1A of Part II of our subsequent Quarterly Reports on Form 10-Q, as
the same may be amended, supplemented or superseded from time to
time by our subsequent filings and reports under the Securities
Exchange Act of 1934, as amended, or the Exchange Act, each of
which are incorporated by reference in this prospectus. For more
information, see “Information Incorporated by
Reference.”
Investing in our
securities involves a high degree of risk. You should carefully
review the risks and uncertainties described below and under the
heading “Risk
Factors” contained in the applicable prospectus
supplement and any related free writing prospectus, and under
similar headings in the other documents that are incorporated by
reference into this prospectus, before deciding whether to purchase
any of the securities being registered pursuant to the registration
statement of which this prospectus is a part. Each of the risk
factors could adversely affect our business, operating results and
financial condition, as well as adversely affect the value of an
investment in our securities, and the occurrence of any of these
risks might cause you to lose all or part of your investment.
Moreover, the risks described are not the only ones that we face.
Additional risks not presently known to us or that we currently
believe are immaterial may also significantly impair our business
operations.
RISKS
RELATED TO THE OFFERING AND OUR SECURITIES
We currently have a
sporadic, illiquid and volatile market for our common stock, and
the market for our common stock is and may remain sporadic,
illiquid and volatile in the future.
We currently have a highly sporadic,
illiquid and volatile market for our common stock, which market is
anticipated to remain sporadic, illiquid and volatile in the
future. Factors that could affect our stock price or result
in fluctuations in the market price or trading volume of our common
stock include:
●
our actual or
anticipated operating and financial performance and drilling
locations, including reserves estimates;
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quarterly
variations in the rate of growth of our financial indicators, such
as net income per share, net income and cash flows, or those of
companies that are perceived to be similar to us;
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changes in revenue,
cash flows or earnings estimates or publication of reports by
equity research analysts;
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speculation in the
press or investment community;
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public reaction to
our press releases, announcements and filings with the
SEC;
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sales of our common
stock by us or other shareholders, or the perception that such
sales may occur;
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the limited amount
of our freely tradable common stock available in the public
marketplace;
11
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general financial
market conditions and oil and natural gas industry market
conditions, including fluctuations in commodity
prices;
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the realization of
any of the risk factors presented in this prospectus;
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the recruitment or
departure of key personnel;
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commencement of, or
involvement in, litigation;
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the prices of oil
and natural gas;
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the success of our
exploration and development operations, and the marketing of any
oil and natural gas we produce;
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changes in market
valuations of companies similar to ours; and
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domestic and
international economic, legal and regulatory factors unrelated to
our performance.
Our common stock is listed on the NYSE
MKT under the symbol “PED.” Our
stock price may be impacted by factors that are unrelated or
disproportionate to our operating performance. The stock
markets in general have experienced extreme volatility that has
often been unrelated to the operating performance of particular
companies. These broad market fluctuations may adversely affect the
trading price of our common stock. Additionally,
general economic, political
and market conditions, such as recessions, interest rates or
international currency fluctuations may adversely affect the market
price of our common stock. Due to the limited volume of our shares
which trade, we believe that our stock prices (bid, ask and closing
prices) may not be related to our actual value, and not reflect the
actual value of our common stock. Shareholders and potential
investors in our common stock should exercise caution before making
an investment in us.
Additionally, as a
result of the illiquidity of our common stock, investors may not be
interested in owning our common stock because of the inability to
acquire or sell a substantial block of our common stock at one
time. Such illiquidity could have an adverse effect on
the market price of our common stock. In addition, a
shareholder may not be able to borrow funds using our common stock
as collateral because lenders may be unwilling to accept the pledge
of securities having such a limited market. We cannot
assure you that an active trading market for our common stock will
develop or, if one develops, be sustained.
An active liquid trading market for our common stock may not
develop in the future.
Our common stock
currently trades on the NYSE MKT, although our common stock’s
trading volume is very low. Liquid and active
trading markets usually result in less price volatility and more
efficiency in carrying out investors’ purchase and sale
orders. However, our common stock may continue to have limited
trading volume, and many investors may not be interested in owning
our common stock because of the inability to acquire or sell a
substantial block of our common stock at one time. Such
illiquidity could have an adverse effect on the market price of our
common stock. In addition, a shareholder may not be able
to borrow funds using our common stock as collateral because
lenders may be unwilling to accept the pledge of securities having
such a limited market. We cannot assure you that an
active trading market for our common stock will develop or, if one
develops, be sustained.
We do not presently intend to pay any cash dividends on or
repurchase any shares of our common stock.
We do not presently
intend to pay any cash dividends on our common stock or to
repurchase any shares of our common stock. Any payment
of future dividends will be at the discretion of the Board of
Directors and will depend on, among other things, our earnings,
financial condition, capital requirements, level of indebtedness,
statutory and contractual restrictions applying to the payment of
dividends and other considerations that our Board of Directors
deems relevant. Cash dividend payments in the future may
only be made out of legally available funds and, if we experience
substantial losses, such funds may not be
available. Accordingly, you may have to sell some or all
of your common stock in order to generate cash flow from your
investment, and there is no guarantee that the price of our common
stock that will prevail in the market will ever exceed the price
paid by you.
12
Our management has wide
discretion in the use of the offering proceeds and may not apply
these proceeds in a manner that will increase our revenue or market
value.
Our management will have considerable
discretion in the application of the proceeds of this offering, and
you will not have the opportunity, as part of your investment
decision, to assess whether the proceeds are being used
appropriately. The proceeds may be used for corporate purposes that
do not increase our revenue or our market
value.
Because we are a small company, the requirements of being a public
company, including compliance with the reporting requirements of
the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”) and the requirements of the Sarbanes-Oxley Act
and the Dodd-Frank Act, may strain our resources, increase our
costs and distract management, and we may be unable to comply with
these requirements in a timely or cost-effective
manner.
As a public company
with listed equity securities, we must comply with the federal
securities laws, rules and regulations, including certain corporate
governance provisions of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley
Act”) and the Dodd-Frank Act, related rules and
regulations of the SEC and the NYSE MKT, with which a private
company is not required to comply. Complying with these laws, rules
and regulations will occupy a significant amount of time of our
Board of Directors and management and will significantly increase
our costs and expenses, which we cannot estimate accurately at this
time. Among other things, we must:
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establish and
maintain a system of internal control over financial reporting in
compliance with the requirements of Section 404 of the
Sarbanes-Oxley Act and the related rules and regulations of the SEC
and the Public Company Accounting Oversight Board;
●
comply with rules
and regulations promulgated by the NYSE MKT;
●
prepare and
distribute periodic public reports in compliance with our
obligations under the federal securities laws;
●
maintain various
internal compliance and disclosures policies, such as those
relating to disclosure controls and procedures and insider trading
in our common stock;
●
involve and retain
to a greater degree outside counsel and accountants in the above
activities;
●
maintain a
comprehensive internal audit function; and
●
maintain an
investor relations function.
In addition, being
a public company subject to these rules and regulations may require
us to accept less director and officer liability insurance coverage
than we desire or to incur substantial costs to obtain
coverage. These factors could also make it more
difficult for us to attract and retain qualified members of our
Board of Directors, particularly to serve on our audit committee,
and qualified executive officers.
13
Future sales of our common stock could cause our stock price to
decline.
If our shareholders
sell substantial amounts of our common stock in the public market,
the market price of our common stock could decrease significantly.
The perception in the public market that our shareholders might
sell shares of our common stock could also depress the market price
of our common stock. Up to $100,000,000 in total
aggregate value of securities which are being registered by us in
this offering will be eligible for sale in the public markets from
time to time, when sold and issued by us. Additionally,
if our existing shareholders sell, or indicate an intent to sell,
substantial amounts of our common stock in the public market, the
trading price of our common stock could decline
significantly. The market price for shares of our common
stock may drop significantly when such securities are sold in the
public markets. A decline in the price of shares of our common
stock might impede our ability to raise capital through the
issuance of additional shares of our common stock or other equity
securities.
Our outstanding options, warrants and convertible
securities may adversely affect the trading price of our
common stock.
As of October 23,
2013, there were outstanding stock options to purchase
approximately 1,477,062 shares of our common stock and outstanding
warrants to purchase approximately 3,093,362 shares of common
stock. For the life of the options and warrants, the
holders have the opportunity to profit from a rise in the market
price of our common stock without assuming the risk of
ownership. The issuance of shares upon the
exercise of outstanding securities will also dilute the ownership
interests of our existing stockholders, including purchasers of
common stock in this offering.
The availability of
these shares for public resale, as well as any actual resales of
these shares, could adversely affect the trading price of our
common stock. Prior to or immediately following the effectiveness
of the registration statement of which this prospectus is a part,
we intend to file a registration statement with the SEC on Form S-8
providing for the registration of approximately 2,118,386 shares of
our common stock issuable or reserved for issuance under our equity
incentive plans. Subject to the satisfaction of vesting conditions,
the expiration of lockup agreements, any management 10b5-1 plans
and certain restrictions on sales by affiliates, shares registered
under registration statements on Form S-8 will be available for
resale immediately in the public market without
restriction.
We cannot predict
the size of future issuances of our common stock pursuant to the
exercise of outstanding options or warrants or conversion of other
securities, or the effect, if any, that future issuances and sales
of shares of our common stock may have on the market price of our
common stock. Sales or distributions of substantial amounts of
our common stock (including shares issued in connection with
an acquisition), or the perception that such sales could occur, may
cause the market price of our common stock to decline.
Six of our directors and executive officers own approximately 17.5%
of our common stock, and two of our major shareholders own
approximately 40.2% of our common stock, which may give them
influence over important corporate matters in which their interests
are different from your interests.
Six of our
directors and executive officers beneficially own approximately
17.5% of our outstanding shares of common stock, and our largest
two non-director or officer shareholders own approximately 40.2% of
our outstanding shares of common stock (assuming exercise of
warrants held thereby) based on a total of 22,531,146 shares of
common stock outstanding as of October 23, 2013. These directors,
executive officers and major shareholders will be positioned to
influence or control to some degree the outcome of matters
requiring a shareholder vote, including the election of directors,
the adoption of amendments to our certificate of formation or
bylaws and the approval of mergers and other significant corporate
transactions. These directors, executive officers and
major shareholders, subject to any fiduciary duties owed to the
shareholders generally, may have interests different than the rest
of our shareholders. Their influence or control
of our company may have the effect of delaying or preventing a
change of control of our company and may adversely affect the
voting and other rights of other shareholders. In
addition, due to the ownership interest of these directors and
officers in our common stock, they may be able to remain entrenched
in their positions.
14
Furthermore, one of
our major shareholders, MIE Holdings, is an independent oil company
in China with its own oil and natural gas operations separate from
its relationship with us. Potential conflicts of
interest could arise as a result, either in the terms of our
relationship with MIE Holdings or in MIE Holdings competing with
us in its operations outside of its relationship with
us.
Provisions of Texas law may have anti-takeover effects that could
prevent a change in control even if it might be beneficial to our
shareholders.
Provisions of Texas
law may discourage, delay or prevent someone from acquiring or
merging with us, which may cause the market price of our common
stock to decline. Under Texas law, a shareholder who
beneficially owns more than 20% of our voting stock, or any
“affiliated
shareholder,” cannot acquire us for a period of three
years from the date this person became an affiliated shareholder,
unless various conditions are met, such as approval of the
transaction by our Board of Directors before this person became an
affiliated shareholder or approval of the holders of at least
two-thirds of our outstanding voting shares not beneficially owned
by the affiliated shareholder. See “Description of Capital Stock —
Business Combinations Under Texas Law.”
Our Board of Directors can authorize the issuance of preferred
stock, which could diminish the rights of holders of our common
stock and make a change of control of our company more
difficult even if it might benefit our shareholders.
Our Board of
Directors is authorized to issue shares of preferred stock in one
or more series and to fix the voting powers, preferences and other
rights and limitations of the preferred stock. Shares
of preferred stock may be issued by our Board of Directors without
shareholder approval, with voting powers and such preferences and
relative, participating, optional or other special rights and
powers as determined by our Board of Directors, which may be
greater than the shares of common stock currently
outstanding. As a result, shares of preferred stock may
be issued by our Board of Directors which cause the holders to have
majority voting power over our shares, provide the holders of the
preferred stock the right to convert the shares of preferred stock
they hold into shares of our common stock, which may cause
substantial dilution to our then common stock shareholders and/or
have other rights and preferences greater than those of our common
stock shareholders including having a preference over our common
stock with respect to dividends or distributions on liquidation or
dissolution.
Investors should
keep in mind that the Board of Directors has the authority to issue
additional shares of common stock and preferred stock, which could
cause substantial dilution to our existing
shareholders. Additionally, the dilutive effect of any
preferred stock which we may issue may be exacerbated given the
fact that such preferred stock may have voting rights and/or other
rights or preferences which could provide the preferred
shareholders with substantial voting control over us subsequent to
the date of this prospectus and/or give those holders the power to
prevent or cause a change in control, even if that change in
control might benefit our shareholders. As a result, the
issuance of shares of common stock and/or Preferred Stock may cause
the value of our securities to decrease.
Securities analysts may not
cover our common stock and this may have a negative impact on our
common stock’s market price.
The trading market for our common stock
will depend, in part, on the research and reports that securities
or industry analysts publish about us or our business. We do not
have any control over independent analysts (provided that we have
engaged various non-independent analysts). We do not currently have
and may never obtain research coverage by independent securities
and industry analysts. If no independent securities or industry
analysts commence coverage of us, the trading price for our common
stock would be negatively impacted. If we obtain independent
securities or industry analyst coverage and if one or more of the
analysts who covers us downgrades our common stock, changes their
opinion of our shares or publishes inaccurate or unfavorable
research about our business, our stock price would likely decline.
If one or more of these analysts ceases coverage of us or fails to
publish reports on us regularly, demand for our common stock could
decrease and we could lose visibility in the financial markets,
which could cause our stock price and trading volume to
decline.
15
Shareholders may be diluted
significantly through our efforts to obtain financing and satisfy
obligations through the issuance of securities.
Wherever possible, our Board of
Directors will attempt to use non-cash consideration to satisfy
obligations. In
many instances, we believe that the non-cash consideration will
consist of shares of our common stock, preferred stock or warrants
to purchase shares of our common stock. Our Board of Directors has
authority, without action or vote of the shareholders,
subject to the requirements of the NYSE MKT Equities Exchange
(which generally require shareholder approval for any transactions
which would result in the issuance of more than 20% of our then
outstanding shares of common stock or voting rights representing
over 20% of our then outstanding shares of stock), to issue all or part of the authorized
but unissued shares of common stock, preferred stock or warrants to
purchase such shares of common stock. In addition, we may attempt
to raise capital by selling shares of our common stock, possibly at
a discount to market in the future. These actions will result in
dilution of the ownership interests of existing shareholders and
may further dilute common stock book value, and that dilution may
be material. Such issuances may also serve to enhance existing
management’s ability to maintain control of us, because the
shares may be issued to parties or entities committed to supporting
existing management.
If we
are delisted from the NYSE MKT, your ability to sell your shares of
our common stock may be limited by the penny stock restrictions,
which could further limit the marketability of your
shares.
If our common stock
is delisted, it could come within the definition of
“penny
stock” as defined in the Exchange Act and could be
covered by Rule 15g-9 of the Exchange Act. That
Rule imposes additional sales practice requirements on
broker-dealers who sell securities to persons other than
established customers and accredited investors. For transactions
covered by Rule 15g-9, the broker-dealer must make a special
suitability determination for the purchaser and receive the
purchaser’s written agreement to the transaction prior to the
sale. Consequently, Rule 15g-9, if it were to become
applicable, would affect the ability or willingness of
broker-dealers to sell our securities, and accordingly would affect
the ability of stockholders to sell their securities in the public
market. These additional procedures could also limit our ability to
raise additional capital in the future.
Due to the fact that our
common stock is listed on the NYSE MKT, we are subject to financial
and other reporting and corporate governance requirements which
increase our cost and expenses.
We are currently required to file
annual and quarterly information and other reports with the
Securities and Exchange Commission that are specified in Sections
13 and 15(d) of the Securities Exchange Act of 1934, as
amended. Additionally, due to the fact that our common
stock is listed on the NYSE MKT, we are also subject to the
requirements to maintain independent directors, comply with other
corporate governance requirements and are required to pay annual
listing and stock issuance fees. These obligations require a
commitment of additional resources including, but not limited, to
additional expenses, and may result in the diversion of our senior
management’s time and attention from our day-to-day
operations. These obligations increase our expenses and may make it
more complicated or time consuming for us to undertake certain
corporate actions due to the fact that we may require NYSE approval
for such transactions and/or NYSE rules may require us to obtain
shareholder approval for such transactions.
16
FORWARD-LOOKING
STATEMENTS
This prospectus and
the documents or information incorporated by reference herein and
any prospectus supplement or free writing prospectus contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), Section
21E of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”), and the Private Securities Litigation Reform
Act of 1995, as amended. These forward-looking statements are
subject to risks and uncertainties and other factors that may cause
our actual results, performance or achievements to be materially
different from the results, performance or achievements expressed
or implied by the forward-looking statements. You should not unduly
rely on these statements. Forward-looking statements may include
statements about our:
●
business
strategy;
●
reserves;
●
technology;
●
cash flows and
liquidity;
●
financial strategy,
budget, projections and operating results;
●
oil and natural gas
realized prices;
●
timing and amount
of future production of oil and natural gas;
●
availability of oil
field labor;
●
the amount, nature
and timing of capital expenditures, including future exploration
and development costs;
●
availability and
terms of capital;
●
drilling of
wells;
●
government
regulation and taxation of the oil and natural gas
industry;
●
marketing of oil
and natural gas;
●
exploitation
projects or property acquisitions;
●
costs of exploiting
and developing our properties and conducting other
operations;
●
general economic
conditions;
●
competition in the
oil and natural gas industry;
●
effectiveness of
our risk management and hedging activities;
●
environmental
liabilities;
●
counterparty credit
risk;
●
developments in
oil-producing and natural gas-producing countries;
●
future operating
results;
●
estimated future
reserves and the present value of such reserves; and
●
plans, objectives,
expectations and intentions contained in this prospectus that are
not historical.
17
We identify
forward-looking statements by use of terms such as
“may,”
“will,”
“expect,”
“anticipate,”
“estimate,”
“hope,”
“plan,”
“believe,”
“predict,”
“envision,”
“intend,”
“will,”
“continue,”
“potential,”
“should,”
“confident,”
“could”
and similar words and expressions, although some forward-looking
statements may be expressed differently. We disclose important
factors that could cause our actual results to differ materially
from our expectations under “Risk Factors” and
elsewhere in this prospectus. These cautionary
statements qualify all forward-looking statements attributable to
us or persons acting on our behalf. You should consider
carefully the statements included in and incorporated by reference
in this prospectus and any prospectus supplement or free writing
prospectus which describe factors that could cause our actual
results to differ from those set forth in the forward-looking
statements.
Forward-looking
statements speak only as of the date of this prospectus or the date
of any document incorporated by reference in this prospectus or any
prospectus supplement or free writing prospectus, as applicable.
Except to the extent required by applicable law or regulation, we
do not undertake any obligation to update forward-looking
statements to reflect events or circumstances after the date of
this prospectus and any prospectus supplement or free writing
prospectus, or to reflect the occurrence of unanticipated
events.
You should also
consider carefully the statements under “Risk Factors” and other
sections of this prospectus, and the documents we incorporate by
reference and any prospectus supplement or free writing prospectus,
which address additional facts that could cause our actual results
to differ from those set forth in the forward-looking statements.
We caution investors not to place significant reliance on the
forward-looking statements contained in this prospectus, and the
documents we incorporate by reference. We undertake no obligation
to publicly update or review any forward-looking statements,
whether as a result of new information, future developments or
otherwise, except as otherwise required by law.
USE
OF PROCEEDS
Unless otherwise
indicated in the applicable prospectus supplement, we intend to use
the net proceeds from the sale of the securities offered in the
prospectus and any prospectus supplement for future drilling and
development, additional leasehold acquisitions, repayment of debt,
working capital and general corporate purposes. We may also use a
portion of the net proceeds to acquire or invest in businesses and
assets that are complementary to our own, although we have no
current plans, commitments or agreements with respect to any
acquisitions as of the date of this prospectus. Pending
the uses described above, we intend to invest the net proceeds in
short-term, interest bearing, investment-grade
securities.
DESCRIPTION
OF CAPITAL STOCK
In connection with
the Pacific Energy Development merger (described above under
“Prospectus
Summary”), all shares of our preferred stock that were
outstanding prior to the Pacific Energy Development merger were
converted into shares of common stock on a one-for-one basis, and
we effected a reverse stock split of our common stock on a
1-for-112 shares basis. On April 23, 2013, we effected
an additional reverse stock split of our common stock on a
1-for-3 shares basis. We are currently authorized to issue 200
million shares of $0.001 par value common stock and 100 million
shares of $0.001 par value preferred stock, of which 25 million
shares have been designated as Series A preferred
stock. As of the date of this prospectus, we had
22,531,146 shares of common stock issued and outstanding and no
shares of preferred stock issued and outstanding.
Common
Stock
The holders of our
common stock are entitled to equal dividends and distributions per
share with respect to the common stock when, as and if declared by
the Board of Directors from funds legally available
therefore. No holder of any shares of common stock has a
preemptive right to subscribe for any of our securities, nor are
any common shares subject to redemption or convertible into other
securities. Upon liquidation, dissolution or winding-up
of our company, and after payment of creditors and preferred
shareholders, if any, the assets will be divided pro rata on a
share-for-share basis among the holders of the shares of common
stock. All shares of common stock now outstanding are,
and all shares that we are selling in this offering, upon their
issuance and sale, will be, fully paid, validly issued and
non-assessable. Each share of our common stock is
entitled to one vote with respect to the election of any director
or any other matter upon which shareholders are required or
permitted to vote.
18
Preferred
Stock
Under our amended
and restated certificate of formation, our Board of Directors has
the power, without further action by the holders of the common
stock, to designate the relative rights and preferences of the
preferred stock, and to issue the preferred stock in one or more
series as designated by our Board of Directors. The
designation of rights and preferences could include preferences as
to liquidation, redemption and conversion rights, voting rights,
dividends or other preferences, any of which may be dilutive of the
interest of the holders of the common stock or the preferred stock
of any other series. The issuance of preferred stock may
have the effect of delaying or preventing a change in control of
our company without further shareholder action and may adversely
affect the rights and powers, including voting rights, of the
holders of the common stock.
Business
Combinations under Texas Law
A number of
provisions of Texas law, our certificate of formation and bylaws
could make more difficult the acquisition of our company by means
of a tender offer, a proxy contest or otherwise and the removal of
incumbent officers and directors. These provisions are intended to
discourage coercive takeover practices and inadequate takeover bids
and to encourage persons seeking to acquire control of our company
to negotiate first with our Board of Directors.
We are subject to
the provisions of Title 2, Chapter 21, Subchapter M of the Texas
Business Organizations Code (the “Texas Business Combination
Law”). That law provides that a Texas corporation may
not engage in specified types of business combinations, including
mergers, consolidations and asset sales, with a person, or an
affiliate or associate of that person, who is an
“affiliated
shareholder”, for a period of three years from
the date that person became an affiliated shareholder, subject to
certain exceptions (described below). An “affiliated shareholder”
is generally defined as the holder of 20% or more of the
corporation’s voting shares. The law’s prohibitions do
not apply if the business combination or the acquisition of shares
by the affiliated shareholder was approved by the Board of
Directors of the corporation before the affiliated shareholder
became an affiliated shareholder; or the business combination was
approved by the affirmative vote of the holders of at least
two-thirds of the outstanding voting shares of the corporation not
beneficially owned by the affiliated shareholder, at a meeting of
shareholders called for that purpose, not less than six months
after the affiliated shareholder became an affiliated
shareholder.
Because we have
more than 100 of record shareholders, we are considered an
“issuing public
corporation” for purposes of this law. The Texas
Business Combination Law does not apply to the
following:
●
the business
combination of an issuing public corporation: where the
corporation’s original charter or bylaws contain a provision
expressly electing not to be governed by the Texas Business
Combination Law; or that adopts an amendment to its charter or
bylaws, by the affirmative vote of the holders, other than
affiliated shareholders, of at least two-thirds of the outstanding
voting shares of the corporation, expressly electing not to be
governed by the Texas Business Combination Law and so long as the
amendment does not take effect for 18 months following the date of
the vote and does not apply to a business combination with an
affiliated shareholder who became affiliated on or before the
effective date of the amendment;
●
a business
combination of an issuing public corporation with an affiliated
shareholder that became an affiliated shareholder inadvertently, if
the affiliated shareholder divests itself, as soon as possible, of
enough shares to no longer be an affiliated shareholder and would
not at any time within the three-year period preceding the
announcement of the business combination have been an affiliated
shareholder but for the inadvertent acquisition;
19
●
a business
combination with an affiliated shareholder who became an affiliated
shareholder through a transfer of shares by will or intestacy and
continuously was an affiliated shareholder until the announcement
date of the business combination; or
●
a business
combination of a corporation with its wholly owned Texas subsidiary
if the subsidiary is not an affiliate or associate of the
affiliated shareholder other than by reason of the affiliated
shareholder’s beneficial ownership of voting shares of the
corporation.
Neither our
certificate of formation nor our bylaws contain any provision
expressly providing that we will not be subject to the Texas
Business Combination Law. The Texas Business Combination Law may
have the effect of inhibiting a non-negotiated merger or other
business combination involving our company, even if that event
would be beneficial to our shareholders.
Anti-Takeover
Provisions of Our Charter Documents
Our certificate of
formation and bylaws contain various provisions intended to promote
the stability of our stockholder base and render more difficult
certain unsolicited or hostile attempts to take us over, that could
disrupt us, divert the attention of our directors, officers and
employees and adversely affect the independence and integrity of
our business. These provisions include:
●
Special Meetings of
Stockholders — Our
bylaws provide that special meetings of the stockholders may only
be called by our Chairman, our President, or upon written notice to
our Board of Directors by our stockholders holding not less than
30% of our outstanding voting capital stock.
●
Advance Notice Procedures
— Our bylaws establish
an advance notice procedure for stockholder proposals to be brought
before an annual meeting of our stockholders. At an annual meeting,
our stockholders elect a Board of Directors and transact such other
business as may properly be brought before the meeting. By
contrast, at a special meeting, our stockholders may transact only
the business for the purposes specified in the notice of the
meeting.
●
No cumulative voting
— Our certificate of formation
and bylaws do not include a provision for cumulative voting in the
election of directors.
●
Vacancies — Our bylaws provide that vacancies on our
board may be filled by a majority of directors in office, although
less than a quorum, and not by the
stockholders.
●
Preferred Stock
— Our certificate of formation
allows us to issue up to 100,000,000 shares of preferred stock, of
which 25 million shares have been designated as Series A preferred
stock. The undesignated preferred stock may have rights
senior to those of the common stock and that otherwise could
adversely affect the rights and powers, including voting rights, of
the holders of common stock. In some circumstances, this issuance
could have the effect of decreasing the market price of the common
stock as well as having an anti-takeover
effect.
●
Authorized but Unissued
Shares — Our Board of
Directors may cause us to issue our authorized but unissued shares
of common stock in the future without stockholders' approval. These
additional shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional
capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued shares of common stock could
render more difficult or discourage an attempt to obtain control of
a majority of our common stock by means of a proxy contest, tender
offer, merger or otherwise.
20
Limitation
of Liability and Indemnification of Officers and
Directors
Our certificate of
formation provides that our directors are not personally liable to
us or our shareholders for monetary damages for an act or omission
in their capacity as a director. A director may, however, be found
liable for, and we may be prohibited from indemnifying them
against:
●
any breach of the
director’s duty of loyalty to us or our
shareholders;
●
acts or omissions
not in good faith that constitute a breach of the director’s
duty to us;
●
acts or omissions
that involve intentional misconduct or a knowing violation of
law;
●
any transaction
from which the director receives an improper benefit;
or
●
acts or omissions
for which the liability is expressly provided by an applicable
statute.
Our certificate of
formation also provides that we will indemnify our directors, and
may indemnify our agents, to the fullest extent permitted by
applicable Texas law from any expenses, liabilities or other
matters. Insofar as indemnification for liabilities arising under
the Securities Act of 1933, as amended (the “Securities Act”) may
be permitted for directors, officers and controlling persons of our
company under our certificate of formation, it is the position of
the SEC that such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable.
Subchapter C of
Title 1 of Chapter 8 of the Texas Business Organizations Code
describes the terms and conditions under which a corporation is
authorized to indemnify its directors, officers and other agents
against judgments, penalties, fines, settlements and expenses that
they may incur in connection with proceedings brought against them,
or in which they are otherwise involved, as a result of their
service as directors, officers or other agents of the
corporation.
Indemnification
Agreements
We
have entered into indemnification agreements with each of our
officers and directors pursuant to which we have agreed, to the
maximum extent permitted by applicable law and subject to the
specified terms and conditions set forth in each agreement, to
indemnify a director or officer who acts on our behalf and is made
or threatened to be made a party to any action or proceeding
against expenses, judgments, fines and amounts paid in settlement
that are incurred by such officer or director in connection with
the action or proceeding. The indemnification provisions apply
whether the action was instituted by a third party or by
us. We also maintain insurance on behalf of our officers
and directors that provides coverage for expenses and liabilities
incurred by them in their capacities as officers and
directors.
Transfer
Agent and Registrar
The transfer agent
and registrar for our common stock is First American Stock
Transfer, Inc., located at 4747 N. 7th Street, Suite 170, Phoenix,
Arizona 85014.
21
DESCRIPTION
OF PREFERRED STOCK
A prospectus
supplement relating to any series of preferred stock being offered
will include specific terms relating to the offering. Such
prospectus supplement will include:
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●
|
the title and
stated or par value of the preferred stock;
|
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●
|
the number of
shares of the preferred stock offered, the liquidation preference
per share and the offering price of the preferred
stock;
|
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●
|
the dividend
rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to the preferred stock;
|
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●
|
whether dividends
shall be cumulative or non-cumulative and, if cumulative, the date
from which dividends on the preferred stock shall
accumulate;
|
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●
|
the provisions for
a sinking fund, if any, for the preferred stock;
|
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●
|
any voting rights
of the preferred stock;
|
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●
|
the provisions for
redemption, if applicable, of the preferred stock and any
restriction on the repurchase or redemption of shares by the
Company while there is any arrearage in the payment of dividends or
sinking fund installments;
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●
|
any listing of the
preferred stock on any securities exchange;
|
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●
|
the terms and
conditions, if applicable, upon which the preferred stock will be
convertible into our common stock, including the conversion price
or the manner of calculating the conversion price and conversion
period;
|
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●
|
if appropriate, a
discussion of Federal income tax consequences applicable to the
preferred stock; and
|
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●
|
any other specific
terms, preferences, rights, limitations or restrictions of the
preferred stock.
|
The terms, if any,
on which the preferred stock may be convertible into or
exchangeable for our common stock will also be stated in the
preferred stock prospectus supplement. The terms will include
provisions as to whether conversion or exchange is mandatory, at
the option of the holder or at our option, and may include
provisions pursuant to which the number of shares of our common
stock to be received by the holders of preferred stock would be
subject to adjustment.
When we issue
shares of preferred stock, the shares will be fully paid and
non-assessable, which means the full purchase price of the shares
will have been paid and holders of the shares will not be assessed
any additional monies for the shares. Unless the applicable
prospectus supplement indicates otherwise, each series of the
preferred stock will rank equally with any outstanding shares of
our preferred stock and each other series of the preferred stock.
Unless the applicable prospectus supplement states otherwise, the
preferred stock will have no preemptive rights to subscribe for any
additional securities which are issued by us, meaning, the holders
of shares of preferred stock will have no right to buy any portion
of the issued securities.
In addition, unless
the applicable prospectus indicates otherwise, we will have the
right to “reopen” a previous issue
of a series of preferred stock by issuing additional preferred
stock of such series.
The transfer agent,
registrar, dividend disbursing agent and redemption agent for
shares of each series of preferred stock will be named in the
prospectus supplement relating to such series.
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DESCRIPTION
OF WARRANTS
General
The following
description, together with the additional information we may
include in any applicable prospectus supplements and free writing
prospectuses, summarizes the material terms and provisions of the
warrants that we may offer under this prospectus, which may consist
of warrants to purchase common stock or preferred stock and may be
issued in one or more series. Warrants may be offered independently
or in combination with common stock or preferred stock, or as a
part of units, offered by any prospectus supplement. While the
terms we have summarized below will apply generally to any warrants
that we may offer under this prospectus, we will describe the
particular terms of any series of warrants in more detail in the
applicable prospectus supplement. The following description of
warrants will apply to the warrants offered by this prospectus
unless we provide otherwise in the applicable prospectus
supplement. The applicable prospectus supplement for a particular
series of warrants may specify different or additional
terms.
We will file as
exhibits to the registration statement of which this prospectus is
a part, or will incorporate by reference from reports that we file
with the SEC, the form of warrant and/or the warrant agreement and
warrant certificate, as applicable, that describe the terms of the
particular series of warrants we are offering, and any supplemental
agreements, before the issuance of such warrants. The following
summaries of material terms and provisions of the warrants are
subject to, and qualified in their entirety by reference to, all
the provisions of the form of warrant and/or the warrant agreement
and warrant certificate, as applicable, and any supplemental
agreements applicable to a particular series of warrants that we
may offer under this prospectus. We urge you to read the applicable
prospectus supplement related to the particular series of warrants
that we may offer under this prospectus, as well as any related
free writing prospectuses, and the complete form of warrant and/or
the warrant agreement and warrant certificate, as applicable, and
any supplemental agreements, that contain the terms of the
warrants.
The prospectus
supplement relating to a particular series of warrants to purchase
our common stock or preferred stock will describe the terms of the
warrants, including the following:
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the title of the
warrants;
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the offering price
for the warrants, if any;
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the aggregate
number of the warrants;
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the designation and
terms of the common stock or preferred stock that may be purchased
upon exercise of the warrants;
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if applicable, the
designation and terms of the securities with which the warrants are
issued and the number of warrants issued with each
security;
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if applicable, the
date from and after which the warrants and any securities issued
with the warrants will be separately transferable;
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the number of
shares of common stock or preferred stock that may be purchased
upon exercise of a warrant and the exercise price for the
warrants;
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the dates on which
the right to exercise the warrants shall commence and
expire;
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if applicable, the
minimum or maximum amount of the warrants that may be exercised at
any one time;
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the currency or
currency units in which the offering price, if any, and the
exercise price are payable;
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if applicable, a
discussion of material U.S. federal income tax
considerations;
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the anti-dilution
provisions of the warrants, if any;
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the redemption or
call provisions, if any, applicable to the warrants;
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any provisions with
respect to a holder’s right to require us to repurchase the
warrants upon a change in control; and
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any additional
material terms of the warrants, including terms, procedures, and
limitations relating to the exchange, exercise and settlement of
the warrants.
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Holders of warrants
will not be entitled to:
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vote, consent or
receive dividends;
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receive notice as
shareholders with respect to any meeting of shareholders for the
election of our directors or any other matter; or
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exercise any rights
as shareholders of the Company.
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Exercise
of Warrants
Each warrant will
entitle the holder to purchase the securities that we specify in
the applicable prospectus supplement or free writing prospectus at
the exercise price that we describe in the applicable prospectus
supplement. Unless we otherwise specify in the applicable
prospectus supplement, holders of the warrants may exercise the
warrants at any time up to the specified time on the expiration
date that we set forth in the applicable prospectus supplement.
After the close of business on the expiration date, unexercised
warrants will become void.
Holders of the
warrants may exercise the warrants by delivering the warrant or
warrant certificate representing the warrants to be exercised
together with specified information, and paying the required amount
to the warrant agent, if applicable, in immediately available
funds, as provided in the applicable prospectus supplement. We will
set forth on the reverse side of any warrant certificate and in the
applicable prospectus supplement the information that the holder of
the warrant will be required to deliver to any warrant
agent.
Upon receipt of the
required payment and any warrant certificate properly completed and
duly executed at the corporate trust office of any warrant agent or
any other office indicated in the applicable prospectus supplement,
we will issue and deliver the securities purchasable upon such
exercise. If fewer than all of the warrants represented by a
warrant certificate are exercised, then we will issue a new warrant
certificate for the remaining amount of warrants. If we so indicate
in the applicable prospectus supplement, holders of the warrants
may surrender securities as all or part of the exercise price for
warrants.
Enforceability
of Rights by Holders of Warrants
Each warrant agent,
if any, will act solely as our agent under the applicable warrant
agreement and will not assume any obligation or relationship of
agency or trust with any holder of any warrant. A single bank or
trust company may act as warrant agent for more than one issue of
warrants. A warrant agent will have no duty or responsibility in
case of any default by us under the applicable warrant agreement or
warrant, including any duty or responsibility to initiate any
proceedings at law or otherwise, or to make any demand upon us. Any
holder of a warrant may, without the consent of the related warrant
agent or the holder of any other warrant, enforce by appropriate
legal action its right to exercise, and receive the securities
purchasable upon exercise of, its warrants.
Amendments
and Supplements to Warrant Agreements
We and the relevant
warrant agent may, with the consent of the holders of at least a
majority in number of the outstanding unexercised warrants
affected, modify or amend the warrant agreement and the terms of
the warrants. However, the warrant agreements may be amended or
supplemented without the consent of the holders of the warrants
issued thereunder to effect changes that are not inconsistent with
the provisions of the warrants and that do not adversely affect the
interests of the holders of the warrants. Notwithstanding the
foregoing, no such modification or amendment may, without the
consent of the holders of each warrant affected:
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reduce the amount
receivable upon exercise, cancellation or expiration;
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shorten the period
of time during which the warrants may be exercised;
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otherwise
materially and adversely affect the exercise rights of the
beneficial owners of the warrants; or
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reduce the
percentage of outstanding warrants whose holders must consent to
modification or amendment of the applicable warrant agreement or
the terms of the warrants.
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Anti-dilution
and Other Adjustments
Unless otherwise
indicated in the applicable prospectus supplement, the exercise
price of, and the number of shares of common stock covered by a
warrant, are subject to adjustment in certain events,
including:
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the issuance of
common stock as a dividend or distribution on the common
stock;
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subdivisions and
combinations of the common stock (or as applicable to warrants to
purchase preferred stock and the preferred stock);
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the issuance to all
holders of common stock of capital stock rights entitling them to
subscribe for or purchase common stock within 45 days after the
date fixed for the determination of the stockholders entitled to
receive such capital stock rights, at less than the current market
price; and
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the distribution to
all holders of common stock of evidence of our indebtedness or
assets (excluding certain cash dividends and distributions
described below) or rights or warrants (excluding those referred to
above).
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We may, in lieu of
making any adjustment in the exercise price of, and the number of
shares of common stock covered by, a warrant, make proper provision
so that each holder of such warrant who exercises such warrant (or
any portion thereof):
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before the record
date for such distribution of separate certificates, shall be
entitled to receive upon such exercise, shares of common stock
issued with capital stock rights; and
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after such record
date and prior to the expiration, redemption or termination of such
capital stock rights, shall be entitled to receive upon such
exercise, in addition to the shares of common stock issuable upon
such exercise, the same number of such capital stock rights as
would a holder of the number of shares of common stock that such
warrants so exercised would have entitled the holder thereof to
acquire in accordance with the terms and provisions applicable to
the capital stock rights if such warrant was exercised immediately
prior to the record date for such distribution.
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Common stock owned
by or held for our account or for the account of any of our
majority owned subsidiaries will not be deemed outstanding for the
purpose of any adjustment.
No adjustment in
the exercise price of, and the number of shares of common stock
covered by, a warrant will be made for regular quarterly or other
periodic or recurring cash dividends or distributions of cash
dividends or distributions to the extent paid from retained
earnings. Except as stated above, the exercise price of, and the
number of shares of common stock covered by, a warrant will not be
adjusted for the issuance of common stock or any securities
convertible into or exchangeable for common stock, or securities
carrying the right to purchase any of the foregoing.
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In the case of a
reclassification or change of the common stock, a consolidation or
merger involving us or sale or conveyance to another corporation of
our property and assets as an entirety or substantially as an
entirety, in each case as a result of which holders of our common
stock shall be entitled to receive stock, securities, other
property or assets (including cash) with respect to or in exchange
for such common stock, the holders of the warrants then outstanding
will be entitled thereafter to convert such warrants into the kind
and number of shares of stock and amount of other securities or
property which they would have received upon such reclassification,
change, consolidation, merger, sale or conveyance had such warrants
been exercised immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance.
Governing
Law
Unless we provide
otherwise in the applicable prospectus supplement, the warrants and
warrant agreements will be governed by and construed in accordance
with the laws of the State of Texas.
DESCRIPTION
OF UNITS
We may issue, in
one more series, units consisting of common stock, preferred stock
and/or warrants for the purchase of common stock and/or preferred
stock in any combination in such amounts and in such numerous
distinct series as we determine. While the terms we have summarized
below will apply generally to any units that we may offer under
this prospectus, we will describe the particular terms of any
series of units in more detail in the applicable prospectus
supplement. The terms of any units offered under a prospectus
supplement may differ from the terms described below.
We will file as
exhibits to the registration statement of which this prospectus is
a part, or will incorporate by reference from reports that we file
with the SEC, the form of unit agreement that describes the terms
of the series of units we are offering, and any supplemental
agreements, before the issuance of the related series of units. The
following summaries of material terms and provisions of the units
are subject to, and qualified in their entirety by reference to,
all the provisions of the unit agreement and any supplemental
agreements applicable to a particular series of units. We urge you
to read the applicable prospectus supplements related to the
particular series of units that we may offer under this prospectus,
as well as any related free writing prospectuses and the complete
unit agreement and any supplemental agreements that contain the
terms of the units.
Each unit will be
issued so that the holder of the unit is also the holder of each
security included in the unit. Thus, the holder of a unit will have
the rights and obligations of a holder of each included security.
The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or transferred
separately, at any time or at any time before a specified
date.
We will describe in
the applicable prospectus supplement the terms of the series of
units being offered, including:
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the designation and
terms of the units and of the securities comprising the units,
including whether and under what circumstances those securities may
be held or transferred separately;
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any provisions of
the governing unit agreement that differ from those described
below; and
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any provisions for
the issuance, payment, settlement, transfer or exchange of the
units or of the securities comprising the units.
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The provisions
described in this section, as well as those described under
"Description of Capital
Stock," and "Description of Warrants" will
apply to each unit and to any common stock, preferred stock, or
warrant included in each unit, respectively.
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Each unit agent
will act solely as our agent under the applicable unit agreement
and will not assume any obligation or relationship of agency or
trust with any holder of any unit. A single bank or trust company
may act as unit agent for more than one series of units. A unit
agent will have no duty or responsibility in case of any default by
us under the applicable unit agreement or unit, including any duty
or responsibility to initiate any proceedings at law or otherwise,
or to make any demand upon us. Any holder of a unit may, without
the consent of the related unit agent or the holder of any other
unit, enforce by appropriate legal action its rights as holder
under any security included in the unit.
We, and any unit
agent and any of their agents, may treat the registered holder of
any unit certificate as an absolute owner of the units evidenced by
that certificate for any purpose and as the person entitled to
exercise the rights attaching to the units so requested, despite
any notice to the contrary.
Issuance
in Series
We may issue units
in such amounts and in as many distinct series as we wish. This
section summarizes terms of the units that apply generally to all
series. Most of the financial and other specific terms of a
particular series will be described in the prospectus
supplement.
Governing
Law
Unless we provide
otherwise in the applicable prospectus supplement, the units and
unit agreements will be governed by and construed in accordance
with the laws of the State of Texas.
PLAN
OF DISTRIBUTION
We may sell the
securities offered by this prospectus in any one or more of the
following ways from time to time:
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directly to
investors, including through a specific bidding, auction or other
process or in privately negotiated transactions;
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to investors
through agents;
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directly to
agents;
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to or through
brokers or dealers;
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to the public
through underwriting syndicates led by one or more managing
underwriters;
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to one or more
underwriters acting alone for resale to investors or to the
public;
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through a block
trade in which the broker or dealer engaged to handle the block
trade will attempt to sell the securities as agent, but may
position and resell a portion of the block as principal to
facilitate the transaction;
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through agents on a
best-efforts basis; and
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through a
combination of any such methods of sale.
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We may also sell
the securities offered by this prospectus in "at the market offerings" within
the meaning of Rule 415(a)(4) of the Securities Act, to or
through a market maker or into an existing trading market, on an
exchange or otherwise.
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Sales may be
effected in transactions:
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on any national
securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale, including the NYSE MKT
in the case of shares of our common stock;
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in transactions
otherwise than on such exchanges or services or in the
over-the-counter market;
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through the writing
of options; or
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through the
settlement of short sales.
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We will provide in
the applicable prospectus supplement the terms of the offering and
the method of distribution and will identify any firms acting as
underwriters, dealers or agents in connection with the offering,
including:
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the name or names
of any underwriters, dealers or agents;
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the amount of
securities underwritten;
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the purchase price
of the securities and the proceeds to us from the
sale;
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any over-allotment
options under which underwriters may purchase additional securities
from us;
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any underwriting
discounts and other items constituting compensation to
underwriters, dealers or agents;
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any public offering
price;
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any discounts or
concessions allowed or reallowed or paid to dealers;
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any material
relationships between the underwriters and the Company;
and
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any securities
exchange or market on which the securities offered in the
prospectus supplement may be listed.
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In connection with
the sale of the securities, we or the purchasers of securities for
whom the underwriter may act as agent, may compensate the
underwriter in the form of underwriting discounts or
commissions.
Any underwritten
offering may be on a best efforts or a firm commitment basis.
Underwriters, dealers and agents participating in the securities
distribution may be deemed to be underwriters, and any discounts
and commissions they receive and any profit they realize on the
resale of the securities may be deemed to be underwriting discounts
and commissions under the Securities Act. Underwriters and their
controlling persons, dealers and agents may be entitled, under
agreements entered into with us, to indemnification against and
contribution toward specific civil liabilities, including
liabilities under the Securities Act.
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The distribution of
the securities may be effected from time to time in one or more
transactions at a fixed price or prices, which may be changed, at
varying prices determined at the time of sale, or at prices
determined as the applicable prospectus supplement
specifies.
In connection with
the sale of the securities, underwriters, dealers or agents may be
deemed to have received compensation from us in the form of
underwriting discounts or commissions and also may receive
commissions from securities purchasers for whom they may act as
agent. Underwriters may sell the securities to or through dealers,
and the dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters or commissions
from the purchasers for whom they may act as agent.
Unless otherwise
specified in the related prospectus supplement, each series of
securities will be a new issue with no established trading market,
other than shares of common stock of the Company, which are listed
on the NYSE MKT. Any common stock sold pursuant to a prospectus
supplement will be listed on the NYSE MKT, subject to official
notice of issuance and where applicable, subject to the
requirements of the NYSE MKT (which generally require shareholder
approval for any transactions which would result in the issuance of
more than 20% of our then outstanding shares of common stock or
voting rights representing over 20% of our then outstanding shares
of stock). We may elect to list any series of preferred stock, on
an exchange, but we are not obligated to do so. It is possible that
one or more underwriters may make a market in the securities, but
such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of, or the trading
market for, any offered securities.
In connection with
an offering, the underwriters may purchase and sell securities in
the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created
by short sales. Short sales involve the sale by the underwriters of
a greater number of securities than they are required to purchase
in an offering. Stabilizing transactions consist of bids or
purchases made for the purpose of preventing or retarding a decline
in the market price of the securities while an offering is in
progress. The underwriters also may impose a penalty bid. This
occurs when a particular underwriter repays to the underwriters a
portion of the underwriting discount received by it because the
underwriters have repurchased securities sold by or for the account
of that underwriter in stabilizing or short-covering transactions.
These activities by the underwriters may stabilize, maintain or
otherwise affect the market price of the securities. As a result,
the price of the securities may be higher than the price that
otherwise might exist in the open market. If these activities are
commenced, they may be discontinued by the underwriters at any
time. Underwriters may engage in overallotment. If any underwriters
create a short position in the securities in an offering in which
they sell more securities than are set forth on the cover page of
the applicable prospectus supplement, the underwriters may reduce
that short position by purchasing the securities in the open
market.
Underwriters,
dealers or agents that participate in the offer of securities, or
their affiliates or associates, may have engaged or engage in
transactions with and perform services for, us or our affiliates in
the ordinary course of business for which they may have received or
receive customary fees and reimbursement of expenses.
We may enter into
derivative transactions with third parties, or sell securities not
covered by this prospectus to third parties in privately negotiated
transactions. If the applicable prospectus supplement so indicates,
in connection with any derivative transaction, the third parties
may sell securities covered by this prospectus and the applicable
prospectus supplement, including in short sale transactions. If so,
the third party may use securities pledged by us or borrowed from
us or others to settle those sales or to close out any related open
borrowings of stock, and may use securities received from us in
settlement of those derivatives to close out any related open
borrowings of stock. The third party in such sale transactions will
be an underwriter and, if not identified in this prospectus, will
be identified in the applicable prospectus supplement or a
post-effective amendment to the registration statement of which
this prospectus is a part. In addition, we may otherwise loan or
pledge securities to a financial institution or other third party
that in turn may sell the securities short using this prospectus.
Such financial institution or other third party may transfer its
economic short position to investors in our securities or in
connection with a concurrent offering of other
securities.
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The specific terms
of any lock-up provisions in respect of any given offering will be
described in the applicable prospectus supplement.
The underwriters,
dealers and agents may engage in transactions with us, or perform
services for us, in the ordinary course of business for which they
receive compensation.
LEGAL
MATTERS
The validity of the
securities offered by this prospectus has been passed upon for us
by The Loev Law Firm, PC. Additional legal matters may
be passed upon for us, any underwriters, dealers or agents, by
counsel that we will name in the applicable prospectus
supplement.
EXPERTS
The consolidated
balance sheets of the Company as of December 31, 2012, and the
related consolidated statements of operations, stockholders'
equity, and cash flows for the year then ended, appearing in the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2012 (“Form 10-K”), as amended
by the Company’s filing of Amendments to the Form 10-K on
April 19, 2013 and April 25, 2013, have been audited by GBH
CPAs, PC, as set forth in their report thereon, and incorporated
herein by reference. Such consolidated financial statements
are incorporated herein by reference in reliance upon such reports
given on the authority of such firms as experts in accounting and
auditing.
The balance sheets
of Condor as of December 31, 2012 and December 31, 2011, and the
related statements of operations, members' equity, and cash flows
for the year ended December 31, 2012 and for the period from
October 31, 2011 (inception) to December 31, 2011, appearing in the
Company’s Form 10-K, as amended by the Company’s filing
of an Amendment to the Form 10-K on April 25, 2013 have been
audited by GBH CPAs, PC, as set forth in their report thereon,
and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon
such reports given on the authority of such firms as experts in
accounting and auditing.
The balance sheets
of White Hawk as of December 31, 2012, and the related statements
of operations, members' equity, and cash flows for the period from
May 11, 2012 (inception) to December 31, 2012, appearing in the
Company’s Form 10-K have been audited by GBH CPAs, PC,
as set forth in their report thereon, and incorporated herein by
reference. Such financial statements are incorporated herein
by reference in reliance upon such reports given on the authority
of such firms as experts in accounting and auditing.
The consolidated
financial statements of the Company as of December 31, 2011 and for
the period from February 9, 2011 (inception) to December 31, 2011,
appearing in the Company’s Form 10-K, as restated in the
Company’s Current Report on Form 8-K filed with the SEC on
April 9, 2013, have been audited by SingerLewak LLP, as set
forth in their report thereon, and incorporated herein by
reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such reports
given on the authority of such firms as experts in accounting and
auditing.
The consolidated
financial statements of Blast Energy Services, Inc. as of December
31, 2011 and 2010 and for each of the two fiscal years ended
December 31, 2011 appearing in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2011 have been audited by
GBH CPAs, PC, an independent registered public accounting firm, as
stated in their report thereon, and incorporated herein by
reference. Such financial statements are included in this
prospectus in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
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Certain of our oil
and gas reserve estimates that are incorporated herein by reference
were based upon a report prepared by Ryder Scott Company, L.P., an
independent professional engineering firm specializing in the
technical evaluation of oil and gas assets and estimates of future
net income. These estimates are included and incorporated by
reference herein in reliance on the authority of such firm as an
expert in such matters.
No expert or
counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the
validity of the securities being registered or upon other legal
matters in connection with the registration or offering of the
securities was employed on a contingency basis, or had, or is to
receive, in connection with the offering, a substantial interest,
direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant
or any of its parents or subsidiaries as a promoter, managing or
principal underwriter, voting trustee, director, officer or
employee.
WHERE
YOU CAN FIND MORE INFORMATION
We file annual,
quarterly, and current reports, proxy statements and other
information with the Securities and Exchange Commission
(“SEC”). Our SEC filings
are available to the public over the Internet at the SEC’s
web site at www.sec.gov and on the
“Investors,”
“SEC
Filings” page of our website at www.pacificenergydevelopment.com.
Information on our web site is not part of this prospectus, and we
do not desire to incorporate by reference such information herein.
You may also read and copy any document we file with the SEC at the
SEC’s Public Reference Room at 100 F Street N.E., Washington,
D.C. 20549. You can also obtain copies of the documents upon the
payment of a duplicating fee to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the
Public Reference Room. The SEC maintains an Internet site that
contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC
like us. Our SEC filings are also available to the public from the
SEC’s website at http://www.sec.gov.
This prospectus is
part of the registration statement and does not contain all of the
information included in the registration statement. Whenever a
reference is made in this prospectus to any of our contracts or
other documents, the reference may not be complete and, for a copy
of the contract or document, you should refer to the exhibits that
are a part of the registration statement.
This prospectus
omits some information contained in the registration statement in
accordance with SEC rules and regulations. You should review the
information and exhibits included in the registration statement for
further information about us and the securities we are offering.
Statements in this prospectus concerning any document we filed as
an exhibit to the registration statement or that we otherwise filed
with the SEC are not intended to be comprehensive and are qualified
by reference to these filings and documents. You should review the
complete document to evaluate these statements.
31
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and
Exchange Commission allows us to “incorporate by reference”
into this prospectus the information we file with it, which means
that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is
considered to be part of this prospectus from the date on which we
file that document. Any reports filed by us with the SEC (i) on or
after the date of filing of the registration statement and (ii) on
or after the date of this prospectus and before the termination of
the offering of the securities by means of this prospectus will
automatically update and, where applicable, supersede information
contained in this prospectus or incorporated by reference into this
prospectus.
We incorporate by
reference the documents listed below, all filings filed by us
pursuant to the Exchange Act after the date of the registration
statement of which this prospectus forms a part prior to
effectiveness of such registration statement, and any future
filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, prior to
the time that all securities covered by this prospectus have been
sold; provided, however, that we are not incorporating any
information furnished under either Item 2.02 or Item 7.01 of any
current report on Form 8-K:
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Our Annual Report
on Form 10-K for the fiscal year ended December 31, 2012, filed
with the SEC on March 25, 2013, as amended on April 19, 2013 and
April 25, 2013;
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Our Quarterly
Reports on Form 10-Q for the quarterly periods ended March 31, 2013
and June 30, 2013, filed with the SEC on May 20, 2013 and August
14, 2013 (as amended on August 14, 2013 and August 21, 2013),
respectively;
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Our Current Reports
on Form 8-K and Form 8-K/A (other than information furnished rather
than filed) filed with the SEC on April 9, 2013; April 23, 2013;
July 15, 2013; August 13, 2013; September 5, 2013; September 10,
2013; and September 16, 2013; and
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The description of
our common stock contained in our Registration Statement on Form
8-A/A, filed with the SEC on September 5, 2013 (File No. 001-35922)
pursuant to Section 12(b) of the Exchange Act, including any
amendment or report filed for the purpose of updating such
description.
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These documents
contain important information about us, our business and our
financial condition. You may request a copy of these filings, at no
cost, by writing or telephoning us at:
PEDEVCO
Corp.
4125 Blackhawk
Plaza Circle, Suite 201
Danville,
CALIFORNIA 94506
Phone: (855)
733-2685
Fax: (925)
403-0703
All documents filed
by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities Act or the Exchange Act, excluding any information in
those documents that are deemed by the rules of the SEC to be
furnished but not filed, after the date of the filing of this
prospectus and before the termination of this offering shall be
deemed to be incorporated in this prospectus and to be a part
hereof from the date of the filing of such document. Any statement
contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent
that a statement contained in this prospectus, or in any other
subsequently filed document which is also incorporated or deemed to
be incorporated by reference, modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this prospectus. You will be deemed to have notice of all
information incorporated by reference in this prospectus as if that
information was included in this prospectus.
We maintain an
Internet website at www.pacificenergydevelopment.com where
the incorporated reports listed above can be accessed. Neither this
website nor the information on this website is included or
incorporated in, or is a part of, this prospectus.
32
Up
to $2,000,000 of Shares of Common Stock
PEDEVCO
Corp.
___________
PROSPECTUS
SUPPLEMENT
___________
National Securities Corporation
September
29, 2016