Item 1.01. Entry into a Material Definitive Agreement.
On February 2, 2021, PEDEVCO Corp. (the
“Company”),
entered into an underwriting agreement (the
“Underwriting
Agreement”) with
Kingswood Capital Markets, division of Benchmark Investments, Inc.,
as representative of the underwriters name therein (the
“Kingswood”),
pursuant to which the Company agreed to sell to the underwriters in
a firm commitment underwritten public offering (the
“Offering”)
an aggregate of 5,190,000 shares of the Company’s common
stock, par value $0.001 per share (the “Common
Stock”), at a public
offering price of $1.50 per share. The
Company also granted the
underwriters a 45-day option to purchase up to an additional
778,500 shares of Common Stock to cover over-allotments, if
any. The Offering is
expected to close, subject to customary closing conditions, on or
about February 5, 2021.
Kingswood is acting as sole bookrunner for the
Offering. The shares of Common Stock are being offered by the
Company pursuant to a registration statement on Form S-3 (File
No. 333-250904), filed with the Securities and Exchange Commission
(the “Commission”)
on November 23, 2020, which was declared effective by the
Commission on December 2, 2020 (the “Registration
Statement”), and a
prospectus supplement forming a part of the effective Registration
Statement, dated February 2, 2021. The Company agreed to pay the
underwriters a cash fee equal to 6% of the aggregate gross proceeds
received by the Company in connection with the Offering and to
reimburse certain expenses not to exceed
$50,000.
The
net proceeds to the Company from the Offering, after deducting the
underwriting discounts and commissions and Offering expenses, are
expected to be approximately $7.2 million ($8.3 million if the
over-allotment is exercised in full). The Company currently intends
to use the net proceeds from the offering, if any, (i) to fund the
Company’s 2021 Permian Basin and D-J Basin asset development
programs, (ii) to fund potential acquisition and business
combination opportunities, and (iii) for general corporate purposes
and working capital.
The
Underwriting Agreement contains customary representations and
warranties that the parties made to, and solely for the benefit of,
the other party in the context of all of the terms and conditions
of that agreement and in the context of the specific relationship
between the parties. The provisions of the Underwriting Agreement,
including the representations and warranties contained therein, are
not for the benefit of any party other than the parties to such
agreement and are not intended as documents for investors and the
public to obtain factual information about the current state of
affairs of such parties to those documents and agreements. Rather,
investors and the public should look to other disclosures contained
in the Company’s filings with the Commission.
Pursuant
to the Underwriting Agreement, the Company agreed, subject to
certain exceptions, not to offer, issue or sell any shares of
Common Stock or securities convertible into or exercisable or
exchangeable for shares of Common Stock until the later of (i) 45
days following the closing of the Offering or (ii) 30 days
following the date of the Underwriting Agreement, without the prior
written consent of Kingswood.
In
connection with the Offering, each of our officers and directors
will also be required to agree, subject to certain exceptions, not
to offer, issue, sell, contract to sell, encumber, grant any option
for the sale of or otherwise dispose of any shares of our Common
Stock or other securities convertible into or exercisable or
exchangeable for shares of our Common Stock for a period of
forty-five (45) days after the Offering is completed, without the
prior written consent of Kingswood.
The
foregoing summary of the terms of the Underwriting Agreement is
subject to, and qualified in its entirety by reference to, a copy
of the Underwriting Agreement that is filed as Exhibit
1.1 to this Current Report on Form 8-K and is
incorporated herein and into the Registration Statement and
prospectus supplement filed in connection with the Offering by
reference.
This
Current Report on Form 8-K does not constitute an offer to sell any
securities or a solicitation of an offer to buy any securities, nor
shall there be any sale of any securities in any state or
jurisdiction in which such an offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.
A copy
of the opinion of The Loev Law Firm, PC, relating to the validity
of the issuance of the shares of Common Stock, is attached
as Exhibit 5.1 hereto is
incorporated herein and into the Registration Statement and
prospectus supplement filed in connection with the Offering by
reference.
A copy
of the form of lock-up agreement to be entered into between
officers and directors of the Company prior to the closing of the
Offering is attached as Exhibit 10.1 hereto is
incorporated herein and into the Registration Statement and
prospectus supplement filed in connection with the Offering by
reference.