8-K: PEDEVCO Appoints Seasoned Energy Executive to Board Amidst Auditor Change and Internal Control Concerns

PEDEVCO Corp. announced a change in its independent registered public accounting firm, dismissing Marcum LLP and engaging Weaver and Tidwell, L.L.P., while also appointing John K. Howie, an experienced oil and gas executive, to its Board of Directors.

Summary

• PEDEVCO Corp. dismissed Marcum LLP as its independent registered public accounting firm, effective July 1, 2025.
• Marcum LLP's audit reports for the years ended December 31, 2024 and 2023 did not contain adverse opinions or disclaimers, nor were they qualified or modified.
• The dismissal followed identified material weaknesses in the company's internal controls over financial reporting related to the review of inputs for depreciation, depletion, and amortization calculations (2023 and 2024) and tax provision preparation (2024).
• The company engaged Weaver and Tidwell, L.L.P. as its new independent registered public accounting firm for the fiscal year ending December 31, 2025, effective July 7, 2025.
• The Board of Directors increased its size to five members and appointed Mr. John K. Howie as a new independent director, effective July 7, 2025.
• Mr. Howie was appointed to the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee.
• Mr. Howie was granted 150,000 shares of restricted common stock, vesting on July 7, 2026, subject to his continued service.
• The company entered into a standard Indemnification Agreement with Mr. Howie.

Sentiment

Score: 4

Explanation: The sentiment is mixed, leaning slightly negative due to the recurring material weaknesses in internal controls over financial reporting, which are significant. However, the appointment of a highly experienced and independent director is a positive development for corporate governance and strategic oversight.

Positives

• Appointment of John K. Howie, an independent director with over 40 years of extensive experience in oil and gas engineering, management, and finance, including executive roles at Tellurian Production Company, Impact Natural Resources, and leadership positions at Goldman, Sachs and EnCap Investments.
• Mr. Howie's expertise is expected to provide valuable guidance to management and support the company's growth plans.
• The previous auditor, Marcum LLP, did not issue adverse opinions or disclaimers on the financial statements for the audit periods.

Negatives

• Identification of material weaknesses in internal controls over financial reporting for two consecutive years (2023 and 2024).
• Specifically, weaknesses related to the review of inputs for depreciation, depletion, and amortization calculations were identified in both 2023 and 2024.
• An additional material weakness related to the preparation of the tax provision was identified in 2024.

Risks

• Material weaknesses in internal controls over financial reporting, specifically concerning depreciation, depletion, and amortization calculations and tax provision preparation, which could impact the reliability of financial reporting.

Future Outlook

Management anticipates continuing to execute on the company's growth plans, leveraging the deep financial and industry experience of the newly appointed director, John K. Howie.

Management Comments

• Mr. J. Douglas Schick, President and Chief Executive Officer, stated: 'Mr. Howie brings over 40 years of experience in oil and gas engineering, management, and finance. In his distinguished multifaceted career, he has held numerous executive roles, served as a principal investor, and founded several companies. We believe Johns deep financial and industry experience, as well as his knowledge as a Registered Professional Engineer in Texas, will provide a sounding board for Company management and serve as an invaluable resource as we continue to execute on our strategy.'
• Mr. John K. Howie commented: 'I am honored to join the Companys Board and look forward to working with Doug and his team as they continue to execute upon the Companys growth plans. PEDEVCO affords investors a pristine balance sheet, an excellent management team and a track record of value creation.'

Industry Context

This announcement reflects standard corporate governance practices within the energy sector, including the appointment of experienced professionals to the board and changes in auditing firms. The new director's background in oil and gas engineering, management, and finance aligns with the company's focus on strategic, high-growth energy projects in the U.S.

Management Changes

Corporate Governance

Related Party Transactions

• Grant of 150,000 shares of restricted common stock to Mr. John K. Howie, a non-employee director, under the company's Amended and Restated 2021 Equity Incentive Plan.
• Entry into a standard Indemnification Agreement with Mr. John K. Howie in connection with his appointment to the Board of Directors.

Stakeholder Impact

• Shareholders: Impacted by changes in corporate governance, including the appointment of a new independent director and the identified material weaknesses in internal controls, which could affect financial reporting reliability and investor confidence.
• Management: Will benefit from the strategic insights and 'sounding board' provided by the experienced new director.
• Auditors: Marcum LLP was dismissed, and Weaver and Tidwell, L.L.P. was engaged, affecting their respective client portfolios and responsibilities.

Next Steps

• Mr. John K. Howie's restricted stock award is scheduled to vest on July 7, 2026, contingent on his continued service as a director.

Key Dates

Keywords

PEDEVCO Corp., SEC filing, 8-K, auditor change, independent registered public accounting firm, Marcum LLP, Weaver and Tidwell L.L.P., Board of Directors, director appointment, John K. Howie, corporate governance, internal controls over financial reporting, material weaknesses, restricted stock, energy company, oil and gas