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PROSPECTUS
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Filed Pursuant
to Rule 424(b)(3)
Registration
File No. 333-214415
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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. 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 December 16, 2016, the last
reported sales price of our common stock was
$0.12.
Sales of our common stock,
if any, under this 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, or any
other existing trading market for our common stock, at market
prices prevailing at the time of sale or at prices related to such
prevailing market prices, and/or any other sales method that is
deemed to be an "at the market offering" as defined in Rule
415(a)(4) of the Securities Act. 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 $4.9 million, based on approximately 49.85
million shares of outstanding common stock, of which approximately
8.74 million shares are held by affiliates, and a price of $0.12
per share, which was the closing price of our common stock on the
NYSE MKT on December 16, 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. 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-9 of this prospectus,
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
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-8 and S-9
of this
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 is accurate or complete. Any
representation to the contrary is a criminal offense.
National
Securities Corporation
The date of this prospectus
is January 17, 2017
TABLE OF CONTENTS
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Page
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About This
Prospectus
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S-1
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Prospectus
Summary
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S- 3
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The
Offering
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S- 7
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Forward-Looking
Statements
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S- 8
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Risk
Factors
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S- 9
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Use of
Proceeds
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S- 13
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Price Range of
Common Stock
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S- 14
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Description of
Capital Stock
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S- 14
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Dividend
Policy
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S- 18
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Dilution
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S- 18
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Plan of
Distribution
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S- 19
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Legal
Matters
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S- 20
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Experts
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S- 20
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Where You Can Find
More Information
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S- 20
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Incorporation of
Certain Documents by Reference
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S- 21
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ABOUT THIS PROSPECTUS
This
prospectus relates to the offering of our common stock. Before
buying any of the common stock that we are offering, we urge you to
carefully read this prospectus, together with the information
incorporated by reference as described under the heading
“Incorporation of Certain Documents by Reference” in
this prospectus. These documents contain important information that
you should consider when making your investment
decision.
This
prospectus describes the specific terms of the common stock we are
offering and also adds to, and updates information contained in the
documents incorporated by reference into this prospectus. To the
extent there is a conflict between the information contained in
this prospectus, on the one hand, and the information contained in
any document incorporated by reference into this prospectus that
was filed with the Securities and Exchange Commission, or SEC,
before the date of this prospectus, on the other hand, you should
rely on the information in this prospectus. If any statement in one
of these documents is inconsistent with a statement in another
document having a later date—for example, a document
incorporated by reference into this prospectus— the statement
in the document having the later date modifies or supersedes the
earlier statement.
You
should rely only on the information contained or incorporated by
reference into this 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
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 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 does 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 this prospectus 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. It is important for you to read and consider all
the information contained in this prospectus, including the
documents incorporated by reference therein, in making your
investment decision.
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 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.
Our
logo and other trade names, trademarks, and service marks of
PEDEVCO Corp. appearing in this prospectus are the property of our
company. Other trade names, trademarks, and service marks appearing
in this prospectus are the property of their respective
holders.
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 is also based on our good faith estimates.
While we believe the market data included in this 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-9
of this prospectus,
and under similar headings in the other documents that are filed
after the date hereof and incorporated by reference into this
prospectus.
All
references to “we”, “our”,
“us”, the “Company”, and
“PEDEVCO” in this prospectus 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, 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-20 and S-21, respectively.
PROSPECTUS
SUMMARY
The following
summary highlights material information found in more detail
elsewhere in, or incorporated by reference in, this prospectus. 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 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.
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 September 30, 2016, we held approximately
11,556 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 September 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,
which the Company is working to close as soon as
possible, subject to satisfaction of closing conditions including
possible approval by applicable bankruptcy
courts
.
Below
is the total production volumes and total revenue net to the
Company for the three months ended September 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”).
September
30,
2016
September
30,
2015
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Three Months Ended
September
30,
2016
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Three Months Ended
September
30,
2015
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Oil volume (barrels
(Bbl))
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25,617
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25,256
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Gas volume
(thousand cubic feet (Mcf))
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51,896
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112,239
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Volume equivalent
(barrel of oil equivalent (Boe)) (1)
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34,266
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43,963
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Revenue
(000’s)
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$
1,218
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$
1,318
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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 December 16, 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 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 next twelve
months will be focused on the development of our D-J Basin Asset.
Our development plan calls for the development of approximately
$35.6 million in capital expenditures (of which $5.1 million has
been deployed to acquire interests in 2.1 net short lateral wells
already in 2016) in order to drill and complete, participate in the
drilling and completion of, and/or acquire approximately 8.5 net
wells in our D-J Basin Asset for the next twelve months. We plan to
fund our operations and business plan by utilizing projected cash
flow from operations, a $26 million debt facility we closed in
May 2016, our cash on hand and proceeds from future potential debt
and/or equity financings, which may include drilling partnerships.
In addition, we may seek additional funding through asset sales,
farm-out arrangements, lines of credit, or public or private debt
or equity financings to fund additional 2016-2017 capital
expenditures and/or repay or refinance a portion or all of our
outstanding debt. If market conditions are not conducive to
raising additional funds, the Company may choose to extend the
drilling program and associated capital expenditures further
into 2017.
Unless otherwise noted,
the following table presents summary data for our leasehold acreage
in our core D-J Basin Asset as of September 30, 2016 and our
drilling capital budget with respect to this acreage from December
1, 2016 to December 31, 2017,
of
which $5.1 million has been deployed to acquire interests in 2.1
net short lateral wells
. If commodity prices do
not increase significantly, we may delay drilling activities. The
ultimate amount of capital we will expend may fluctuate materially
based on, among other things, market conditions, commodity prices,
asset monetizations, the success of our drilling results as the
year progresses, availability of capital and whether we consummate
the GOM Merger. In the event the GOM Merger is consummated, the
Company plans to expand this development plan to incorporate
development of assets held by GOM, with the final schedule and
budget anticipated to be disclosed by the Company once they are
available.
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Drilling Capital
Budget December 2016 - December 2017
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Current Core Assets:
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Potential Gross
-Drilling
Locations
(1)
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Capital Cost
to
the Company
(2)(3)
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D-J Basin
Asset
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11,556
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80
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147
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Long
lateral
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6.4
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$
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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11,556
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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.
(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.
(3)
Costs
per well are gross costs while capital costs presented are net to
our working interests.
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-20.
Our
Contact Information
Our principal
office is located at 4125 Blackhawk Plaza Circle, Suite 201,
Danville, California 94506. Our phone number is (855) 733-3826. 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.
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 16,666,667
shares, assuming sales at a price of $0.12 per share, which was the
closing price of our common stock on the NYSE MKT on December 16,
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 19
of this prospectus.
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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-13 of this
prospectus.
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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-9
of this prospectus and in the documents incorporated by reference
in this 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
December 16, 2016 and
the number of shares of common stock outstanding after the
offering, assumes the sale of 16,666,667 shares of common stock at
an assumed offering price of $0.12 per share, the last reported
sale price of our common stock on the NYSE MKT on December 16,
2016
, and excludes as of such date:
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●
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4,308,890 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 $0.57 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 $0.80 per share;
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●
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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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●
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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 793,830 shares
remain available for future awards.
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Additionally,
unless otherwise stated, all information in this
prospectus:
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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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FORWARD-LOOKING STATEMENTS
Certain
information included in this 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, 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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●
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business
strategy;
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reserves;
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●
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technology;
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●
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cash flows and
liquidity;
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●
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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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●
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timing and amount
of future production of oil and natural gas;
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●
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availability of oil
field labor;
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●
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the amount, nature
and timing of capital expenditures, including future exploration
and development costs;
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●
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availability and
terms of capital;
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●
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drilling of
wells;
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●
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government
regulation and taxation of the oil and natural gas
industry;
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●
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marketing of oil
and natural gas;
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●
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exploitation
projects or property acquisitions;
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●
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costs of exploiting
and developing our properties and conducting other
operations;
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general economic
conditions;
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competition in the
oil and natural gas industry;
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effectiveness of
our risk management activities;
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environmental
liabilities;
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●
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counterparty credit
risk;
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●
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developments in
oil-producing and natural gas-producing countries;
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●
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future operating
results;
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●
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planned combination
transaction with GOM Holdings, LLC; and
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●
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estimated future
reserves and the present value of such reserves.
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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 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 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.
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 or the date
of any document incorporated by reference in this prospectus 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 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, and other sections of this prospectus, 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, 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 and incorporated by reference in this 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-21. 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
8
of this
prospectus, where we describe additional uncertainties associated
with our business and the forward-looking statements included or
incorporated by reference in this prospectus.
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 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 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 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:
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●
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our actual or
anticipated operating and financial performance and drilling
locations, including reserve 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;
|
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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 and the
filings incorporated by reference herein and therein;
|
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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.
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.
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 16,666,667 shares of our common stock
are sold at a price of $0.12 per share pursuant to this
prospectus, which was the last reported sale price of our common
stock on the NYSE MKT on December 16, 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 $0.03 per
share, representing the difference between our as adjusted net
tangible book value per share as of September 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-18 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, and which we have filed an amendment
to/replacement of. To date, an aggregate of $19,500,378 in
securities have been sold by us under the Form S-3, leaving
$80,499,622 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.
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.
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Quarter Ended
|
|
Low
|
|
March 31,
2016
|
$
0.32
|
$
0.15
|
|
June 30,
2016
|
0.41
|
0.16
|
|
September 30,
2016
|
0.32
|
0.16
|
|
December 31, 2016
(through December 16, 2016)
|
0.20
|
0.10
|
|
|
|
|
|
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 December 16, 2016, we had
910
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.
DESCRIPTION
OF CAPITAL STOCK
As of December 16,
2016, our authorized capital stock consists of 300 million shares,
consisting of 200 million shares of common stock, par value $0.001
per share, and 100 million shares of preferred stock, par value
$0.001 per share, of which 66,625 shares have been designated as
“Series A Convertible Preferred Stock” (the
“Series A preferred stock”). As of December 16, 2016,
we had 49,849,297 shares of common stock issued and outstanding and
66,625 shares of Series A preferred stock issued and outstanding.
The authorized and unissued shares of common stock and the
authorized and undesignated shares of preferred stock are available
for issuance without further action by our stockholders, unless
such action is required by applicable law or the rules of any stock
exchange on which our securities may be listed. Unless approval of
our stockholders is so required, our board of directors will not
seek stockholder approval for the issuance and sale of our common
stock or preferred stock.
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.
Preferred Stock
On February 23, 2015 (the
“
Original Issuance
Date
”), the Company
issued all 66,625 shares of Series A preferred stock to Golden
Globe Energy (US), LLC (“
GGE
”) in connection with an acquisition of
certain assets, all of which shares remain issued and outstanding
as of the date of this prospectus.
The 66,625 shares of Series A preferred stock
issued to GGE (i) had a liquidation preference senior to all of the
Company’s common stock equal to $400 per share (the
“
Liquidation
Preference
”) prior to the
date the Shareholder Approval (defined below) was received, (ii)
accrued an annual dividend equal to 10% of their Liquidation
Preference, payable annually from the date of issuance (the
“
Dividend
”)
prior to the date the Shareholder Approval (defined below) was
received, (iii) vote together with the common stock on all matters,
with each share having one (1) vote, and (iv) since the date of the
Shareholder Approval are convertible into common stock of the
Company on a 1,000:1 basis. On October 7, 2015, the Company
obtained shareholder approval of the issuance of the
Company’s common stock upon conversion of the Series A
preferred stock, and other related matters under applicable NYSE
MKT rules and regulations (the “
Shareholder
Approval
”). Upon our
receipt of Stockholder Approval, (x) the Series A preferred stock
automatically ceased accruing Dividends and all accrued and unpaid
Dividends were automatically forfeited and forgiven in their
entirety, (y) the liquidation preference of the Series A preferred
stock was reduced to $0.001 per share from $400 per share, and (z)
each share of Series A preferred stock became convertible into
common stock on a 1,000:1 basis.
Notwithstanding
the above, no conversion is allowed in the event the holder thereof
would beneficially own more than 9.9% of the Company’s common
stock or voting stock.
GGE,
the sole holder of our Series A preferred stock, has the right
pursuant to the certificate of designation designating the Series A
preferred stock, upon notice to us, voting separately as a single
class, to appoint designees to fill two (2) seats on our board of
directors, one of which must be an independent director as defined
by applicable rules and the exclusive right, voting the Series A
preferred stock as sole stockholder thereof, separately as a single
class, to elect such two (2) nominees to the board of directors.
The board of directors appointment rights continue until GGE no
longer holds any of the 15,000 shares of Series A preferred stock
designated as Tranche One Shares.
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 it more difficult for 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:
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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;
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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;
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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
|
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|
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:
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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.
|
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●
|
Amendment of Bylaws —
Our
bylaws may be amended by our board of directors alone.
|
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●
|
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.
|
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●
|
No cumulative voting
— Our
certificate of formation and
bylaws
do not include a provision for cumulative voting in
the election of directors.
|
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●
|
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.
|
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●
|
Preferred Stock
— Our
certificate of formation
allows
us to issue up to 100,000,000 shares of preferred stock, of which
66,625 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.
|
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:
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any breach of the
director’s duty of loyalty to us or
our shareholders;
|
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●
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acts or omissions
not in good faith that constitute a breach of the director’s
duty to us;
|
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●
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acts or omissions
that involve intentional misconduct or a knowing violation of
law;
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any transaction
from which the director receives an improper benefit;
or
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acts or omissions
for which the liability is expressly provided by an applicable
statute.
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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 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.
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 $0.12 per share, the last reported
sale price of our common stock on the NYSE MKT on December 16,
2016, and excluding the deduction of commissions and estimated
aggregate
offering expenses
payable by us, our net tangible book value as of September 30, 2016
would have been $6.0 million, or $0.09 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 $0.03 per share to
new investors.
The following
table illustrates this per share dilution:
|
Assumed offering
price per share:
|
$
0.12
|
|
Historical net
tangible book value per share at September 30, 2016
|
$
0.08
|
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Increase per share
attributable to investors purchasing shares in this
offering:
|
$
0.01
|
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As adjusted net
tangible book value per share as of September 30, 2016 after giving
effect to this offering:
|
$
0.09
|
|
Dilution per share
to new investors purchasing shares in this offering:
|
$
0.03
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The
foregoing table is based on 49,849,297 shares of our common stock
outstanding as of September 30, 2016.
The table above assumes for
illustrative purposes that an aggregate of 16,666,667 shares of our
common stock are sold pursuant to this prospectus at a price of
$0.12 per share, the last reported sale price of our common stock
on the NYSE MKT on December 16, 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 $0.17 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 $0.10 per share and would increase the dilution in
net tangible book value per share to new investors in this offering
to $0.07 per share, excluding the deduction of commissions and
estimated aggregate offering expenses payable by us.
Any sales of our
common stock pursuant to this prospectus at a price at or below
$0.08 per share, assuming all of our common stock in the aggregate
amount of $2.0 million is sold at that price and excluding the
deductions of commissions and estimated aggregate offering expenses
payable by us, would result in no dilution in net tangible book
value per share after the offering to new investors in this
offering because the Company’s net tangible book value per
share is $0.08 per share, calculated as of September 30,
2016.
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.
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 may be made in sales deemed to be “at
the market offerings” as defined in Rule 415 promulgated
under the Securities Act, including sales made directly on or
through the NYSE MKT, the existing trading market for our common
stock, or any other existing trading market for our common stock,
at market prices prevailing at the time of sale or at prices
related to such prevailing market prices, and/or any other sales
method that is deemed to be an "at the market offering" as defined
in Rule 415(a)(4) of the Securities Act.
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, of which
$20,000 has been paid as of the date hereof. 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,
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, 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 is a part. See “Where You Can Find More
Information” beginning on
S-
20
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.
NSC
may distribute this prospectus electronically.
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 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, 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 a 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. You
should rely only on the information contained or incorporated by
reference in this prospectus and any supplement or amendment
hereto. We have not authorized anyone to provide you with
information different from that contained in this prospectus. The
securities offered under this prospectus are offered only in
jurisdictions where offers and sales are permitted. The information
contained in this prospectus, and any free writing prospectus, is
accurate only as of the date of this prospectus and any such free
writing prospectus, regardless of the time of delivery of this
prospectus, or any free writing prospectus, or any sale of the
securities.
This
prospectus and any free writing prospectus, constitute a part of a
registration statement we filed with the SEC under the Securities
Act. This 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The
SEC 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, 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 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 2016 Annual
Meeting of Shareholders, filed with the SEC on November 8,
2016;
●
Our
Quarterly Reports on Form 10-Q for the quarters ended March 30,
2016, June 30, 2016 and September 30, 2016 filed with the SEC on
May 19, 2016, August 11, 2016 and November 9, 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, May 17, 2016, September 29, 2016, October 21, 2016, November
9, 2016, and December 30, 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) 733-3826
Fax: (925)
494-3502
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 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.
Up to $2,000,000 of Shares of
Common Stock
PEDEVCO Corp.
___________
PROSPECTUS
___________
National Securities
Corporation
January 17, 2017
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