PEDEVCO (PED) - 2025 Q2 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements This section warns readers about forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements subject to risks and uncertainties, many beyond the company's control. Readers are cautioned not to place undue reliance on these statements, which are based on various factors and assumptions that could cause actual results to differ materially[8][9][10] - Forward-looking statements cover areas such as business strategy, reserves, technology, cash flows, financial strategy, projected costs, oil and natural gas prices, timing of production, capital expenditures, government regulation, economic conditions, competition, and future acquisitions[12] PART I – FINANCIAL INFORMATION This part presents unaudited consolidated financial statements and management's discussion of financial condition and results Item 1. Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, cash flows, and shareholders' equity, along with detailed notes Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and shareholders' equity at specific dates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------- | :------------ | :---------------- | :----- | :------- | | Total Assets | $136,818 | $133,845 | $2,973 | 2.22% | | Total Liabilities | $16,166 | $12,745 | $3,421 | 26.84% | | Total Shareholders' Equity | $120,652 | $121,100 | $(448) | -0.37% | - Current assets increased by $4.376 million, primarily driven by a $4.457 million increase in cash and cash equivalents[14] - Current liabilities increased by $3.656 million, mainly due to a significant rise in accounts payable and revenue payable[14] Consolidated Statements of Operations This section details the company's revenues, expenses, and net income or loss over specific periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Oil and gas sales | $6,972 | $11,811 | $15,708 | $19,927 |\n| Total operating expenses | $8,859 | $9,173 | $17,445 | $16,684 |\n| Operating income (loss) | $(2,244) | $2,638 | $(2,094) | $3,243 |\n| Net (loss) income | $(1,676) | $2,681 | $(1,536) | $3,454 |\n| Basic EPS | $(0.02) | $0.03 | $(0.02) | $0.04 |\n| Diluted EPS | $(0.02) | $0.03 | $(0.02) | $0.04 | - The company reported a net loss of $1.7 million for the three months ended June 30, 2025, a decrease of $4.4 million compared to net income of $2.7 million in the prior year, primarily due to a $1.4 million note receivable credit loss and reduced operating income[99] - For the six months ended June 30, 2025, the net loss was $1.5 million, a $5.0 million decrease from the $3.5 million net income in the same period last year, driven by the note receivable write-off and lower operating income[111] Consolidated Statements of Cash Flows This section outlines the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating Activities | $5,508 | $295 |\n| Investing Activities | $(1,040) | $(12,333) |\n| Financing Activities | $139 | $- |\n| Net increase (decrease) in cash and restricted cash | $4,607 | $(12,038) | - Net cash provided by operating activities significantly increased by $5.2 million year-over-year, reaching $5.508 million, despite a decrease in net income, due to non-cash adjustments like impairment and credit loss[130] - Net cash used in investing activities decreased by $11.3 million, primarily due to lower cash outlays for drilling and completion costs and cash received from the sale of oil and gas properties[131] Consolidated Statements of Shareholders' Equity This section presents changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | | Common Stock Shares | 89,495,267 | 91,829,352 |\n| Common Stock Amount | $89 | $92 |\n| Additional Paid-in Capital | $227,013 | $228,098 |\n| Accumulated Deficit | $(106,002) | $(107,538) |\n| Total Shareholders' Equity | $121,100 | $120,652 | - Total shareholders' equity slightly decreased from $121.1 million at December 31, 2024, to $120.652 million at June 30, 2025, primarily due to a net loss of $1.676 million in Q2 2025, partially offset by share-based compensation and proceeds from common stock issuance[23] - The number of common shares outstanding increased from 89,495,267 at December 31, 2024, to 91,829,352 at June 30, 2025, due to the issuance of restricted common stock and common stock for cash proceeds[23] Notes to Unaudited Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements NOTE 1 – BASIS OF PRESENTATION This note describes the accounting principles and rules used in preparing the interim financial statements - The interim unaudited consolidated financial statements are prepared in accordance with GAAP and SEC rules, reflecting normal recurring adjustments. Results for interim periods are not necessarily indicative of full-year results[24] - The Company's future financial condition and liquidity are dependent on the success of its drilling program, commercially viable oil and natural gas discoveries, speed to production, exploration and development costs, and prevailing commodity prices[26] NOTE 2 – DESCRIPTION OF BUSINESS This note outlines the company's primary business activities and strategic focus in the oil and gas industry - PEDEVCO is an oil and gas company focused on developing, acquiring, and producing oil and natural gas assets, particularly legacy proven properties in the Permian Basin (West Texas and eastern New Mexico) and the Denver-Julesberg Basin (Colorado and Wyoming)[27] - The company believes horizontal development in the Permian Basin and Wattenberg/Wattenberg Extension in the D-J Basin are among the most economic plays in the U.S. and plans to optimize existing assets and seek accretive acquisitions[27] NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note summarizes the key accounting policies and recent accounting pronouncements relevant to the company's financial reporting - There have been no changes to the Company's significant accounting policies since December 31, 2024[28] - The FASB issued ASU 2023-09 (Income Taxes) effective December 31, 2025, and ASU 2024-03 (Income Statement Expenses) effective after December 15, 2026, which the Company is currently evaluating for impact[29][30][31] NOTE 4 – REVENUE FROM CONTRACTS WITH CUSTOMERS This note disaggregates revenue by product type and explains the company's revenue recognition policies | Product Type (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Oil sales | $6,180 | $10,952 | $13,254 | $18,406 |\n| Natural gas sales | $323 | $290 | $1,165 | $623 |\n| Natural gas liquids sales | $469 | $569 | $1,289 | $898 |\n| Total oil and gas sales | $6,972 | $11,811 | $15,708 | $19,927 | - Total oil and gas sales decreased by 41% for the three months ended June 30, 2025, and by 21% for the six months ended June 30, 2025, primarily due to unfavorable crude oil prices and lower production volumes[32][102][113] NOTE 5 – CASH This note provides details on the company's cash and restricted cash balances and their changes | Cash Type (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------- | :------------ | :---------------- | | Cash | $8,467 | $4,010 |\n| Restricted cash | $2,747 | $2,597 |\n| Total cash and restricted cash | $11,214 | $6,607 | - Total cash and restricted cash increased by $4.607 million from December 31, 2024, to June 30, 2025. The increase in restricted cash is related to additional collateral for a surety bond required by the Colorado Bureau of Land Management[33] NOTE 6 – OIL AND GAS PROPERTIES This note details the company's oil and gas property assets, including capital costs, impairment, and dispositions | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | | Oil and gas properties, subject to amortization | $210,039 | $217,944 |\n| Oil and gas properties, not subject to amortization | $14,738 | $13,260 |\n| Total oil and gas properties, net | $103,512 | $102,417 | - The Company incurred $8.455 million in capital costs for the six months ended June 30, 2025, primarily for completion operations on four recently drilled wells in the Permian Basin[35] - An impairment of $0.742 million was recorded for undeveloped D-J Basin leases (1,007 net acres) that expired or had no drilling plans[36] - In February 2025, the Company entered a joint development agreement in the D-J Basin, receiving $1.7 million and transferring operatorship of Roth and Amber DSUs. In April 2025, it sold operated production in Weld County, Colorado, for $0.606 million, recognizing a gain of $1.021 million[37][39] NOTE 7 – NOTE RECEIVABLE This note explains the write-off of a promissory note due to default and the recognition of a credit loss - Tilloo Exploration and Production LLC defaulted on its promissory note, failing to make payments since January 8, 2025. Due to sustained default and remote recovery prospects, the Company fully wrote off the outstanding balance, recognizing a $1.267 million bad debt expense and an additional $0.111 million for post-closing adjustments, totaling $1.378 million in credit loss[42][43] NOTE 8 – ASSET RETIREMENT OBLIGATIONS This note details the company's obligations related to asset retirement, including changes in estimates and settlements | Metric (in thousands) | Six Months Ended June 30, 2025 | | :-------------------- | :----------------------------- | | Balance at beginning of period | $6,371 |\n| Accretion expense | $369 |\n| Liabilities settled | $(297) |\n| Disposition of liabilities | $(505) |\n| Changes in estimates, net | $119 |\n| Balance at end of period | $6,057 | - The Company reimbursed the New Mexico Oil and Gas Conservation Division $0.297 million for plugging and abandoning costs related to 299 inactive legacy wells in the Permian Basin Asset, in full compliance with a Stipulated Final Order[47] NOTE 9 – COMMITMENTS AND CONTINGENCIES This note discloses the company's operating lease commitments, drilling commitments, and legal contingencies - The Company has an operating lease for office space in Houston, Texas, expiring February 28, 2027, with remaining monthly payments of approximately $0.0158 million-$0.016 million. The weighted-average remaining lease term is 1.7 years with a 7.90% discount rate[50][53][54] - Leasehold drilling commitments include 129 net acres expiring in the D-J Basin during the remainder of 2025 and 5,371 net acres expiring within the next two years. The Company plans to hold this acreage through drilling or lease extensions[55] - The Company is not currently a party to any material legal proceedings and believes any ultimate liability from future claims will not have a material adverse effect on its financial condition[56][58] - Tilloo Exploration & Production, LLC alleged misrepresentations related to the Milnesand Sale and defaulted on the Tilloo Note. The Company disputes the allegations and is pursuing remedies to collect outstanding amounts[59] NOTE 10 – SHAREHOLDERS' EQUITY This note details changes in shareholders' equity, including restricted stock awards and common stock issuances - During the six months ended June 30, 2025, the Company granted 2,105,000 restricted stock awards to employees[60] - In June 2025, the Company sold 489,967 shares of common stock through an 'at the market offering' (ATM Offering) for net proceeds of $0.354 million, with $7.6 million remaining available for future sales under the ATM Offering[60][61][125] NOTE 11 – SHARE-BASED COMPENSATION This note describes the company's share-based compensation plans, including restricted stock and stock options - On January 23, 2025, 1,844,118 restricted common stock shares were granted to officers and employees with a total fair value of $1.568 million, vesting over 34 months[64] - Stock-based compensation expense for restricted stock was $0.419 million (Q2 2025) and $0.838 million (YTD Q2 2025). The remaining unamortized expense was $1.537 million at June 30, 2025[65] - The Company granted options to purchase 464,000 common shares at $0.85 per share, with an aggregate fair value of $0.195 million, vesting fully by November 2027[66] - Stock option expense was $0.055 million (Q2 2025) and $0.111 million (YTD Q2 2025). The remaining unamortized expense was $0.210 million at June 30, 2025[67] NOTE 12 – EARNINGS (LOSS) PER COMMON SHARE This note presents the basic and diluted earnings per share calculations and related adjustments | EPS Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $(0.02) | $0.03 | $(0.02) | $0.04 |\n| Diluted EPS | $(0.02) | $0.03 | $(0.02) | $0.04 | - For periods with a net loss (Q2 2025 and YTD Q2 2025), potentially dilutive securities (options) were excluded from diluted EPS calculation as their inclusion would be anti-dilutive[70][71] NOTE 13 – INCOME TAXES This note discusses the company's effective tax rate, income tax benefits, and the impact of recent tax legislation - The Company's effective tax rate was 21.3% for the six months ended June 30, 2025, compared to 0.0% in the prior year, resulting in an income tax benefit of $0.414 million due to recognized tax benefits[72] - The 'One Big Beautiful Bill Act' (OBBBA), signed into law on July 4, 2025, includes a permanent extension of 100% bonus depreciation and modifications to interest expense limitations. Its effects are not reflected in the current financial statements, and the Company is evaluating its potential tax impacts[73] NOTE 14 – SEGMENT INFORMATION This note identifies the company's single reportable operating segment and how financial performance is managed - The Company operates in one reportable operating segment: oil and natural gas development, exploration, and production. Financial performance is assessed as a single enterprise, with resource allocation made on a project basis across the entire portfolio[74][75] - The President and CEO serves as the Chief Operating Decision Maker (CODM), reviewing consolidated forecasts and results, including return on capital, operating expenses, and cash flow[74][75] NOTE 15 – SUBSEQUENT EVENTS This note discloses significant events that occurred after the reporting period, such as board appointments - On July 7, 2025, John K. Howie was appointed to the Board of Directors and granted 150,000 shares of restricted common stock, vesting on July 7, 2026, contingent on his continued service[76] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial position, results of operations, and cash flows for the periods ended June 30, 2025 and 2024. It covers the business overview, strategic objectives, detailed analysis of financial performance, liquidity and capital resources, non-GAAP financial measures, and critical accounting estimates Introduction This section provides context for the financial discussion, referencing prior reports and fiscal year details - This discussion should be read in conjunction with the audited financial statements in the 2024 Annual Report on Form 10-K and the unaudited consolidated financial statements in this quarterly report[78] - The Company's fiscal year ends on December 31st, with interim results presented quarterly[80] General Overview This section provides an overview of PEDEVCO's business, asset holdings, and recent operational changes - PEDEVCO is an oil and gas company focused on acquiring and developing assets using modern drilling and completion techniques, particularly in legacy proven properties in the Permian Basin and D-J Basin[84] - As of June 30, 2025, the Company held approximately 14,105 net Permian Basin acres (39 gross, 35.5 net wells) and 17,830 net D-J Basin acres (71 gross, 6.9 net wells)[84] - In April 2025, the Company sold all 17 of its legacy operated wells in the D-J Basin to reduce plugging and abandonment liabilities and operational expenses, while retaining leasehold ownership[84] Strategy This section outlines the company's strategic objectives for increasing stockholder value and planned capital expenditures - The Company aims to increase stockholder value by[87][89] - Growing production, cash flow, and reserves through developing operated drilling inventory and participating in non-operated projects[89] - Applying modern drilling and completion techniques to historically underdeveloped properties[89] - Optimizing well density and configuration using extensive geological and production data[89] - Maintaining operational control or forming partnerships for major development projects[89] - Leveraging technical and operational experience for accretive acquisition opportunities[89] - Preserving financial flexibility for organic and external growth[89] - Net capital expenditures for 2025 are estimated at $27 million to $33 million, with 70-75% allocated to D-J Basin development under joint development agreements[88] Results of Operations and Financial Condition This section analyzes the company's financial performance, including market conditions, commodity prices, and operational results Market Conditions and Commodity Prices This section discusses the impact of volatile commodity prices and external factors on the company's financial results - Financial results are highly dependent on natural gas and crude oil prices, which are influenced by external factors like market supply and demand, weather, inventory levels, and basis differentials. Prices are expected to remain volatile[97] - Finding and developing sufficient reserves at economical costs is crucial for long-term success[97] Results of Operations This section provides a detailed comparison of the company's operational performance across different periods Three Months Ended June 30, 2025, vs. Three Months Ended June 30, 2024 This section compares the company's financial results for the second quarter of 2025 against the same period in 2024 - Net loss of $1.7 million (or $(0.02) per share) for Q2 2025, compared to net income of $2.7 million (or $0.03 per share) for Q2 2024, a $4.4 million decrease[99] - Total revenues decreased by $4.8 million (41%) to $7.0 million, driven by a $2.3 million unfavorable price variance (crude oil and NGL) and a $2.5 million unfavorable volume variance[101][102] | Production Volume | Q2 2025 | Q2 2024 | Change | % Change | | :---------------- | :------ | :------ | :----- | :------- | | Crude Oil (Bbls) | 100,249 | 139,472 | (39,223) | (28%) |\n| Natural Gas (Mcf) | 119,493 | 145,574 | (26,081) | (18%) |\n| NGL (Bbls) | 17,863 | 19,083 | (1,220) | (6%) |\n| Total (Boe) | 138,028 | 182,817 | (44,789) | (24%) | | Average Sale Price | Q2 2025 ($) | Q2 2024 ($) | Change ($) | % Change | | :----------------- | :---------- | :---------- | :--------- | :------- | | Crude Oil ($/Bbl) | 61.65 | 78.52 | (16.87) | (21%) |\n| Natural Gas ($/Mcf) | 2.70 | 1.99 | 0.71 | 36% |\n| NGL ($/Bbl) | 26.24 | 29.84 | (3.60) | (12%) | - Key expense changes include a $0.7 million decrease in Lease Operating Expenses, a $0.4 million decrease in Depreciation, Depletion, Amortization and Accretion, and a $0.5 million impairment of oil and gas properties[103][104][105] - A $1.021 million gain on sale of oil and gas properties was recognized from the sale of D-J Basin operated wells, offset by a $1.378 million note receivable credit loss[108][109] Six Months Ended June 30, 2025 vs. Six Months Ended June 30, 2024 This section compares the company's financial results for the first six months of 2025 against the same period in 2024 - Net loss of $1.5 million (or $(0.02) per share) for YTD Q2 2025, compared to net income of $3.5 million (or $0.04 per share) for YTD Q2 2024, a $5.0 million decrease[111] - Total revenues decreased by $4.2 million (21%) to $15.7 million, due to a $2.1 million unfavorable crude oil price variance and a $2.1 million unfavorable volume variance[112][113] | Production Volume | YTD Q2 2025 | YTD Q2 2024 | Change | % Change | | :---------------- | :---------- | :---------- | :----- | :------- | | Crude Oil (Bbls) | 202,931 | 240,375 | (37,444) | (16%) |\n| Natural Gas (Mcf) | 286,227 | 277,514 | 8,713 | 3% |\n| NGL (Bbls) | 41,006 | 30,640 | 10,366 | 34% |\n| Total (Boe) | 291,642 | 317,267 | (25,625) | (8%) | | Average Sale Price | YTD Q2 2025 ($) | YTD Q2 2024 ($) | Change ($) | % Change | | :----------------- | :-------------- | :-------------- | :--------- | :------- | | Crude Oil ($/Bbl) | 65.32 | 76.57 | (11.25) | (15%) |\n| Natural Gas ($/Mcf) | 4.07 | 2.24 | 1.83 | 82% |\n| NGL ($/Bbl) | 31.43 | 29.33 | 2.10 | 7% | - Operating expenses saw a $0.1 million increase in Lease Operating Expenses, a $0.5 million decrease in Depreciation, Depletion, Amortization and Accretion, and a $0.7 million impairment of oil and gas properties[114][115][116][117] - A $1.021 million gain on sale of oil and gas properties was recognized, alongside a $1.378 million note receivable credit loss[120][121] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and fund operations Working Capital This section details the changes in the company's working capital position and its contributing factors - Working capital surplus increased by $0.7 million to $7.0 million at June 30, 2025, from $6.3 million at December 31, 2024, due to a proportional increase in production and sales, offset by increased payables[124] Financing This section describes the company's financing activities, including equity offerings and available credit facilities - The Company sold 489,967 shares of common stock in June 2025 through an 'at the market offering' (ATM Offering) for net proceeds of $0.354 million, with $7.6 million still available for future sales[125] - The Company expects to have sufficient cash for the next 12 months from projected cash flow, existing cash, potential equity infusions/loans from Dr. Simon G. Kukes, public/private debt/equity financings (including the ATM Offering), and its $250 million reserve-based lending facility (RBL) with Citibank (initial borrowing base of $20 million, undrawn to date)[127][128] Cash Flows This section analyzes the company's cash flows from operating, investing, and financing activities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating Activities | $5,508 | $295 |\n| Investing Activities | $(1,040) | $(12,333) |\n| Financing Activities | $139 | $- |\n| Net increase (decrease) in cash and restricted cash | $4,607 | $(12,038) | - Net cash provided by operating activities significantly increased by $5.2 million year-over-year, primarily due to non-cash adjustments like impairment and credit loss, despite a decrease in net income[130] - Net cash used in investing activities decreased by $11.3 million, driven by lower cash outlays for drilling and completion and cash received from asset sales[131] - Cash flows from financing activities were $0.139 million, solely from common stock sales via the ATM Offering, with no financing activities in the prior period[132] Non-GAAP Financial Measures This section presents and reconciles non-GAAP financial measures like EBITDA and Adjusted EBITDA for analytical purposes - The Company presents EBITDA and Adjusted EBITDA as non-GAAP measures to provide additional financial analytical framework for investors and management decisions[133] - Adjusted EBITDA excludes non-cash items like share-based compensation, impairment, and gains/losses on asset sales or credit losses to enhance comparability[133] | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) income | $(1,676) | $2,681 | $(1,536) | $3,454 |\n| EBITDA | $1,691 | $6,923 | $5,253 | $11,181 |\n| Adjusted EBITDA | $3,032 | $7,385 | $7,301 | $12,106 | Critical Accounting Estimates This section discusses the significant accounting estimates and judgments that impact the company's financial statements Oil and Gas Properties, Successful Efforts Method This section explains the accounting method used for oil and gas properties, including capitalization and amortization policies - The Company uses the successful efforts method for oil and gas accounting, capitalizing costs for development wells, support equipment, facilities, and proved mineral interests. Geological and geophysical costs are expensed[136] - Exploratory well costs are capitalized pending determination of proved reserves; if not economically viable within one year or if major capital expenditures are not firmly planned, they are expensed as dry holes[137] - Depreciation, depletion, and amortization of capitalized oil and gas properties are calculated using the unit of production method on a field-by-field basis[139] Revenue Recognition This section details the company's policies for recognizing revenue from oil, natural gas, and NGL sales - Revenue is derived from exploration and production activities, primarily selling oil to marketers/refiners, natural gas to pipelines/end-users, and NGLs to end-users/refiners[140][141] - Sales revenues are recognized when control of the product transfers to the customer, typically at delivery, based on contract price which may include market differentials and downstream cost adjustments[142] - Revenues are recognized only for the Company's net share of production volumes, excluding sales on behalf of other working interest or royalty owners[143] Stock-Based Compensation This section describes the accounting for stock-based compensation, including valuation models and assumptions - The Company measures the cost of employee services for equity awards based on grant-date fair value over the vesting period, using the Black-Scholes option pricing model[144] - Highly subjective assumptions, including expected volatility and expected life, are used in the Black-Scholes model, with volatility estimated from historical stock volatility and expected term using a simplified method[144] Recently Adopted and Recently Issued Accounting Pronouncements This section outlines new accounting standards and their potential impact on the company's financial reporting - The FASB issued ASU 2023-09 (Income Taxes) effective December 31, 2025, requiring disaggregated tax rate reconciliation and income taxes paid information[145] - The FASB issued ASU 2024-03 (Income Statement Expenses) effective after December 15, 2026, requiring additional disclosure about specified expense categories. The Company does not expect a material effect but is evaluating presentation alternatives[146] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' PEDEVCO Corp. is not required to provide the quantitative and qualitative disclosures about market risk - The Company is exempt from providing market risk disclosures as it qualifies as a 'smaller reporting company' under SEC regulations[148] Item 4. Controls and Procedures This section details the Company's disclosure controls and procedures, their evaluation, and any changes in internal control over financial reporting. Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to un-remediated material weaknesses identified in the prior annual report Disclosure Controls and Procedures This section defines the company's disclosure controls and procedures for financial reporting - Disclosure controls and procedures are designed to ensure timely recording, processing, summarizing, and reporting of information required under the Exchange Act[149] Evaluation of Disclosure Controls and Procedures This section reports management's assessment of the effectiveness of disclosure controls and procedures - As of June 30, 2025, management concluded that the Company's disclosure controls and procedures were not designed at a reasonable assurance level and were not effective[150][151] - This conclusion is due to material weaknesses identified in the 2024 Annual Report on Form 10-K that have not yet been remediated[151] Changes in Internal Control over Financial Reporting This section discloses any material changes in the company's internal control over financial reporting - There were no changes in internal control over financial reporting during the three months ended June 30, 2025, that materially affected or are reasonably likely to materially affect, the Company's internal control over financial reporting[152] Limitations on Effectiveness of Controls and Procedures This section acknowledges the inherent limitations of any control system in providing absolute assurance - Management acknowledges that any controls and procedures, regardless of design, can only provide reasonable assurance of achieving objectives due to inherent limitations and resource constraints[153] PART II – OTHER INFORMATION This part covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings This section addresses the Company's involvement in legal and regulatory proceedings, stating that it is not currently a party to any material legal proceedings and has implemented policies to mitigate environmental risks - The Company is not currently a party to any material legal or governmental proceedings, nor is it aware of any contemplated against it[155] - The oil and gas business carries environmental risks, and the Company has implemented policies and programs to reduce and mitigate these risks[156] Item 1A. Risk Factors This section refers to the risk factors previously disclosed in the Company's Annual Report on Form 10-K, indicating no material changes since that filing - There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[157] - Investors are encouraged to review the risk factors in the Annual Report, as any of these factors could materially and adversely affect the Company's business, financial condition, operating results, and stock price[157] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms that the Company did not issue or sell any unregistered equity securities during the quarter ended June 30, 2025, and had no proceeds from the sale of registered securities to report - The Company did not issue or sell any unregistered equity securities during the quarter ended June 30, 2025[158] - There were no proceeds from the sale of registered securities to report[159] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities during the reporting period[161] Item 4. Mine Safety Disclosures This item is typically for companies with mining operations. The document does not contain any specific disclosures under this item, implying it is not applicable or there are no reportable events Item 5. Other Information This section discloses Rule 10b5-1 trading plans adopted by certain directors and executive officers for the sale of common stock in connection with equity award vesting - On May 20, 2025, several executive officers (Paul A. Pinkston, J. Douglas Schick, Jody Crook, and Clark R. Moore) entered into Rule 10b5-1(c) trading plans[163] - These plans provide for the sale of an aggregate of 829,629 shares of common stock in connection with the vesting of their equity awards through May 19, 2027[163] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various agreements, certifications, and XBRL documents, indicating which are filed or furnished herewith and which are incorporated by reference - The exhibits include the PEDEVCO Corp. 2021 Equity Incentive Plan and its first amendment, form of Restricted Shares Grant Agreement, form of Indemnification Agreement, and a letter from Marcum LLP[164] - Certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 (Sections 302 and 906) are filed or furnished[164] - Inline XBRL documents for the instance, taxonomy extension schema, calculation, definition, label, and presentation linkbase, and the cover page are included[164] SIGNATURES This section provides the official signatures and authorization for the report - The report was signed on August 14, 2025, by J. Douglas Schick, President and Chief Executive Officer, and Paul A. Pinkston, Chief Accounting Officer, duly authorized on behalf of PEDEVCO Corp.[167][169][170]