PEDEVCO CORP. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed on February 19, 2013, by PEDEVCO CORP. (the "Company") regarding events occurring on February 14, 2013. The Company, incorporated in Texas, operates through its wholly-owned Nevada subsidiary, Pacific Energy Development Corp. ("PEDCO"), focusing on energy assets including the Niobrara Asset in Weld and Morgan Counties, Colorado.
Key Financial Metrics and Obligations
The filing details a new material definitive agreement involving debt financing rather than operational revenue or profit metrics.
- Total Principal Outstanding: $4.17 million.
- Maximum Borrowing Capacity: $5 million.
- Interest Rate: 10.0% per annum on drawn amounts.
- Security: The note is secured by PEDCO's ownership and working interest in the FFT2H well and all future wells drilled in the Niobrara Asset.
- Liquidity Impact: The Company received an additional $2 million advance on February 14, 2013, bringing the total outstanding balance to $4.17 million (including $2.17 million in prior advances).
Material Changes and Transaction Details
On February 14, 2013, PEDCO entered into a Secured Subordinated Promissory Note with MIE Jurassic Energy Corporation ("MIEJ"). This agreement formalized prior advances and provided new funding.
- Use of Proceeds: Funds are designated to pay fees and expenses allocable to PEDCO's operations in the Niobrara Asset.
- Repayment Terms: Principal and accrued interest are due within 10 business days of the earlier of (i) December 31, 2013, or (ii) the closing of a debt or equity financing transaction with gross proceeds of at least $10 million.
- Re-borrowing: Repaid amounts cannot be re-borrowed.
- Prepayment: The Company may prepay the note in full without penalty.
Related Parties and Risks
MIEJ is a subsidiary of MIE Holdings Corporation ("MIE"), which holds approximately 10% of the Company's outstanding capital stock. MIE is also a joint venture partner with the Company in Condor Energy Technology LLC and White Hawk Petroleum, LLC.
Risks and Contingencies: The debt obligation is secured by specific oil and gas assets (the FFT2H well and future wells). Failure to repay by the maturity date or the failure to secure a $10 million financing transaction could trigger default conditions, potentially resulting in the loss of the secured assets. The filing does not provide specific liquidity ratios or cash flow statements beyond the debt transaction details.
Investor Verification Checklist
- Verify the current status of the FFT2H well and the operational viability of the Niobrara Asset, as these serve as collateral.
- Confirm whether the Company has initiated or secured a debt or equity financing transaction with gross proceeds of at least $10 million to satisfy the early repayment trigger.
- Review the full text of the Secured Subordinated Promissory Note (Exhibit 10.1) for specific default clauses and covenants not summarized here.
- Assess the Company's ability to service the 10% interest rate on the $4.17 million principal given current operational cash flows.