PEDEVCO CORP. Form 8-K Summary
Business Context and Reporting Period
This Form 8-K, filed on January 15, 2013, reports on events occurring between May 23, 2012, and December 12, 2012. The filing addresses the non-reliance on previously issued financial statements for the year ended December 31, 2011, due to the discovery of accounting errors requiring two separate restatements.
Key Financial Metrics and Restatement Impacts
The filing details adjustments to the consolidated balance sheet and statement of operations for the period from inception (February 9, 2011) through December 31, 2011. No current revenue, cash flow, or debt figures are provided for the 2013 period; the data reflects historical corrections.
| Financial Item | As Originally Reported | After First Restatement | After Second Restatement |
|---|---|---|---|
| Total Assets | $3,045,496 | $2,938,628 | $2,938,628 |
| Total Stockholders' Equity | $995,121 | $888,553 | $818,886 |
| Accumulated Deficit | $(587,142) | $(694,010) | $(763,677) |
| Net Loss (Inception to 12/31/11) | $(587,142) | $(694,010) | $(763,677) |
| Loss from Operations | $(560,457) | $(648,125) | $(717,792) |
Material Changes and Accounting Errors
The filing identifies two distinct accounting errors necessitating the restatements:
- First Restatement (May 23, 2012): Corrected $87,668 of improperly deferred costs related to the Eagle Ford Asset acquisition and $19,200 of improper intercompany profit eliminations involving Condor Energy Technology LLC. These errors resulted in an understatement of the net loss by $106,868.
- Second Restatement (December 12, 2012): Corrected the accounting treatment of a $69,667 fully vested, non-forfeitable stock award issued to investor relations consultants. The company originally recorded this as a stock service receivable but determined it should have been expensed in full, increasing the net loss by an additional $69,667.
Management Commentary and Risks
The Board of Directors concluded that the previously issued financial statements should no longer be relied upon. The company intends to file a further amendment to its Form 8-K (originally filed August 2, 2012) to reflect these restated figures. The Board discussed these restatements with both the former auditor, Singer Lewak, LLP, and the current auditor, GBH CPAs, PC. A letter from Singer Lewak, LLP regarding their agreement with the statements is included as Exhibit 7.1.
Investor Verification Checklist
- Verify the upcoming amended Form 8-K filing to confirm the final restated financial statements.
- Review the letter from Singer Lewak, LLP (Exhibit 7.1) to ensure the former auditor agrees with the restatement rationale.
- Confirm the impact of the $69,667 stock award expense on the company's current liquidity and cash position, as the filing does not explicitly state current cash balances.
- Monitor for any additional disclosures regarding the Eagle Ford Asset acquisition costs and intercompany transactions with Condor Energy Technology LLC.