PEDEVCO CORP. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K covers events occurring on December 27 and December 28, 2016. The primary focus is the receipt of a delisting notice from the NYSE MKT LLC regarding non-compliance with continued listing standards and the results of the Company's Annual Meeting of Stockholders held on December 28, 2016.
Key Financial Metrics and Status
The filing does not provide current revenue, profit, or cash flow figures. However, it discloses specific financial conditions triggering regulatory action:
- Stockholders' Equity: Reported less than $6,000,000 as of September 30, 2016.
- Net Losses: The Company incurred net losses in its five most recent fiscal years ended December 31, 2015.
- Debt Instrument: An outstanding Convertible Promissory Note (the "MIEJ Note") held by MIE Jurassic Energy Corporation in the principal amount of $4.925 million.
- Outstanding Shares: Approximately 49,849,297 shares of common stock and 66,625 shares of Series A Convertible Preferred Stock were entitled to vote as of the November 8, 2016 record date.
Material Changes and Corporate Actions
Significant changes reported in this filing include:
- Delisting Notice: The Company received notice of non-compliance with NYSE MKT Section 1003(a)(iii) due to low equity and sustained net losses. A ".BC" indicator is already affixed to the trading symbol due to prior non-compliance with Section 1003(f)(v).
- Board Composition: Four directors were elected: Frank C. Ingriselli, Elizabeth P. Smith, David Z. Steinberg, and Adam McAfee. Mr. McAfee replaced departing director David C. Crikelair and was appointed Chairman of the Audit Committee and "audit committee financial expert."
- Equity Plan Amendment: Stockholders approved an amendment to the 2012 Equity Incentive Plan, increasing the reserved share pool by 5,000,000 shares to a total of 15,000,000.
- Reverse Stock Split Authorization: Stockholders authorized the Board to effect a reverse stock split in a ratio between 1-for-2 and 1-for-10 at its sole discretion.
- Compensation Awards:
- Directors received 545,455 restricted shares each (valued at $60,000 for Mr. McAfee) vesting in one year.
- CEO Michael L. Peterson received 1,650,000 restricted shares.
- EVP Clark R. Moore received 1,050,000 restricted shares.
- CFO Gregory Overholtzer received options to purchase 600,000 shares at $0.11 per share.
Outlook, Risks, and Contingencies
Compliance Plan: The Company must submit a plan of compliance to the NYSE MKT by January 27, 2017, to regain compliance by June 27, 2018. Failure to submit an acceptable plan or fail to make progress may result in delisting procedures.
Risks: There is no assurance the Company will achieve compliance within the required timeframe. Continued non-compliance will maintain the ".BC" trading indicator, which may negatively impact liquidity and investor perception.
Contingencies: The Company has received stockholder approval to issue more than 19.9% of outstanding shares upon conversion of the $4.925 million MIEJ Note, subject to the terms of the note.
Investor Verification Checklist
- Verify the status of the compliance plan submission to the NYSE MKT by the January 27, 2017 deadline.
- Monitor the ".BC" trading indicator and any subsequent delisting notices or appeals.
- Review the terms of the MIEJ Note conversion to understand potential dilution from the issuance of >19.9% of shares.
- Assess the impact of the authorized reverse stock split on share price and liquidity.
- Confirm the vesting schedules and conditions for the significant equity awards granted to directors and executive officers.