Pedevco Corp

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in the Companys Annual Report on Form 10-K/A for the year ended December 31, 20245, filed with the Commission on OctoberMarch 31, 20256 (the Form 10-K), under the heading Item 1A. Risk Factors, except as discussed below, and investors are encouraged to review such risk factors in the Annual Report, and below, prior to making an investment in the Company. Any of these factors, in whole or in part, could materially and adversely affect the Companys business, financial condition, operating results and stock price.

CurrGent PEDEVCO stockholders will have a reduced ownershipopolitical conflicts and voting interest in PEDEVCO after the Automatic Conversion Date compared to their current ownership and will exercise less influence overdisruptions to global energy management.

Based on the number of issued and outstanrkets, including shares of PEDEVCO common stock as of the date of this Report, it is expected that, on a fully-dilutrisks associated basis, current PEDEVCO stockholders are collectively expected to own approximately 47%, and certain affiliates of Juniper are collectively expected to own approximately 53%, of the outstanding shares of PEDEVCO common stock following the Automatic Conversion Date. As a result, current PEDEVCO stockholders will own a smaller percentage of the combined company than they currently own of PEDEVCOwith the Strait of Hormuz, may adversely affect our business, financial condition, and as a result will have less influence on the management and policies of PEDEVCO post-automatics of operations

Ongoing geopolitical conversion than they now have on the managementflicts involving Iran and policies of PEDEVCO, as othe case may be.

Securitir countries class action and derivative lawsuits may be filed againin the Middle East us, or against our directors, challenging the Mergers.

Securities class action lawsuits and derivhave created significant volative lawsuits are often brought against public companies that have enteredlity and uncertainty into and/or closed acquisition, merger or other similar agreemen global energy markets. Mergers like tThe Mergers are frequently subject to litigation or other legal proceedings, including actions alleging that our Board breached their fiduciary duties to our stockholders by entering into and/or closing the Merger Agreement. We cannot provide assurance that such litigation or oStrait of Hormuz, a critical transit chokepoint through which approximately 20% of ther legal proceedings will not be brought. If litigation or other legal proceedings are in fact brought against us, or against our Board, we will defend against it, but might not be successful in doing so. An adverse outcome in such matters, as well  worlds oil supply and a significant portion of liquefied natural gas the costs and efforts of a defense even if successful, could have a flows, has experienced material adverse effect on the business, results of operadisruption or financial position of us or the combined company, including through the possible diversion of company resources or distraction of key personnel.

Combining the businesses of PEDEVCO, the Acquired Companies may be more direduced vessel trafficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated synergies, military activity, and other benefits of the Mergers, which may adversely affect the combiheightened companys business results and negatively affect the value of our common stock.

PEDEVCO and each of the Acquired Companies have opesecurity risks.

Although our operated prior to the closing of the Mergers, independently. The success of the Mergers will depend on, among other things, the ability of PEDEVCO and the Acquired Companies to combine their bions are domestic, our businesses in a manner that facilitates growth opportunities and realizes is indirectly expected cost savings. We entered inosed to the Merger Agreement because we believe that the transactions contemplated by the Merger Agreement are fair to and in the best interests of our stockholders and that combining the businesses of PEDEVCO and the Acquired Companies will produce benefits as well as cost savings and other cost and capital expenditure synergies.

PEDEVCO anglobal energy market conditions. Disruptions to supply, transportation constraints, or perceived the Acquired Companies must successfully combine their respective businessesrisks of interruption in a manner that permits these benefits to be realized. Fthe Strait of Hormuz or example, the followsurrounding issues, among others, must be addregions may ressedult in integrating the operations of thesignificant companies in order to realize the anticipated benefits of the Mergers:

It is possibmodity price volatility, incle that the integration process could result in the loss of key employees of PEDEVCO or the Acquired Companies, the disruption of either PEDEVCOs or the Acquired Companies ongoing businesses,uding rapid increases or decreases inconsistencies in st oil andards, controls, procedures and polici natural gas prices, unexpected integration issues, higher than expected integras well as dislocation costs and an overall post-completion integration process that takes longer than originally anticipated. s in supply chains and end markets.

In addition, the actual integration may result in addimilitary escalational and unforeseen expenses. If the combined company is not able to adequately address integration challenges, we may be unable to successfull or collateral damage affecting energy integrate operations and the anticipated benefits of the integration plan may not be realized.

In addition, the combined company must achieve the anticipated growth and cost savings without adversely affecting current revenues and investmentsfrastructure, shipping routes, or regional production facilities in future growth. If the combined company is not able to successfully achieve the Middle East may furthese objectives, the anticipated synergies and other benefits of the Mergers may not be realized fully, or at all, or may take longer to realize than expected. Additionally, we may inherit from the Acquired Companies legal, regulatoryr exacerbate global supply shortages, increase input and operating costs, and other risks that occurred prior to the Mergers, whether known or unknown to us, which may becontribute to broader material to the combined company. Actual growth, cost and capital expenditure synergies and other cost savcroeconomic instability, includings, if achieved, may be lower than what we expect and may take longer to achieve than anticipated. Moreover, at times the attent inflationary pressures or recession of the combined companys management and resources may be focused on the integratary conditions. These condition of the businesses of the compans may and didverted from day-to-day business operations sely impact demand for otheur opportunities that may have been beneficial to such company, which may il and natural gas, disrupt the combined cocapital markets, and impanys ongoing businesses.

Anir our inability to realize the full extent of the anticipated benefits of the Mergers, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, laccess financing on acceptable terms.

Our ongoing devel of expenses and operating results of the combined company, which may opment activities may also be adversely affect the value of the PEDEVCO common stock following the consummation of the Mergers. Moreover, if the combined company is unable to realize the full strategic and financial benefits curred by such geopolitical events. Supply chain disruptions, equipmently anticipated from the Merger procurement delays, PEDEVCO stockholders will have experienced substantial dilutiocost inflation, or volatility in of their ownership interests without receiviil and gas pricing any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Mergers.

The combined company may not be able to could delay project timelines, increase capital expenditures, or reduce expected retain suppliers or distributors, or suppliers or distributors may seek to modify contractual relationships with the combined company, which could have an adverse effect on the combined companys business and operations. Third parties may terminate or alter existing contracts or relaurns.

Furthermore, geopolitical instability may result in heightened regulatory scrutiny, trade restrictions, sanctionships with the combined company.

As a result of the Mergers, the combined company may experience impacts on relationships with suppliers and distributors that may harm the combined companys business and results of o, or changes in U.S. energy policy, any of which could adversely affect our operations. Certain suppliers, counterparties, or distributors may seek to terminate or modify contractual obligategic initiations following tves. The Mergers whether or not contractual rights are triggered as a result of the Mergers. There can be no guarantee that customers, suppliers and distributors will extent and duration of these risks remain with or continue to have a relationship with the combineuncertain and company or do so on the same or similar contractual terms following the Mergers. If any customers, suppliers or distributors seek to terminate or modify contractuuld have a material adverse effect on our business, financial obligations or discontinue the relationship with the combined company, then the combined companys business ancondition, and results of operations may be harmed. If the combined companys suppliers were to seek to terminate or modify an arrangement with the combined company, then the combined company may be unable to procure necessary supplies from other suppliers in a timely.

Our hedging activities have in the past and efficient manner and on acceptable terms, or at all.

Our hedging activities may may in the future prevent us from fully benefiting from increases in crude oil, natural gas and NGLs prices and may expose us to other risks, including counterparty risk, and our future production may not be sufficiently protected from any declines in commodity prices by our existing or future hedging arrangements.

We use financial derivative instruments (primarily financial fixed price swaps and collar contracts) to hedge the impact of fluctuations in commodity prices on our results of operations and cash flows. As of the date of this Report we have hedged 2,512,600 Bbls of oil and 2,312,905 MMBTUs of natural gas. Such hedges may prevent us from fully realizingIn connection with the entry into the benefits of increases in commoAR Credity prices above Agreement, the prices establishCompany was required by ourto hedging contracts. In addition, our hedging activities may expose us to the risk of financial loss in certain circumstances, including instances in which the counterpartie at least 75% of its projected proved developed producing reserves to our hedging contracts fail to perform under the contracts.

After the Automatic Conversion Date, affiliates of Juniper will hav(PDP) oil and gas production at the the ability to coime of entrol or significantly influence all matters submitted to the combined companys stockholdersy into the AR Credit Agreement, for approval.

After tthe Automatic Conversion Date, affiliatefirst 24 months of Juniper, will, in the aggregate, beneficially own approximately 53reement, and 50% of the combined companys outstanding sharesits projected PDP of capital stock, on a fully diluted basis. As a result, if these stockholders were to choose to act together, they would be able to control or significantly influence all matters submitted to toil and gas production for months 2536. Afterward, within 60 days after each fiscal quarter, the combined comCompanys stockholders for approval, as well as the combined companys management an must show it has hedged affairs. As such, affiliates t least 50% of Juniper will be able to control the outcome of all matters requiring a stockholder vote, including the eleexpected oil and gas production of directors,for the adoption of amendments to our certificate of formation or bylaws and the approval of mergers and other significant corporate transactions, subject to requirements under Texnext 18 months. The Company may hedge crude oil, natural gas, or natural gas law which reiquire the approvads (on a barrel of two-thirds of the outstanding voting stock.

Addoil equivalent basitionally, froms) to meet the Closing Date until the Automatic Conversion Date the holders of PEDEVCO Series A Preferred Stock, voting as a separate class, are entitlse requirements, but may not hedge more than 75% of anticipated to elect one member of PEDEVCOs Board. If a Preferred Director position becomes vacant, a majority in interest inproduction (on a barrel of oil equivalent basis) for any month. As of the holdersdate of the PEDEVCO Series A Preferred Stock may fill is report, the vacancy. Any preferred director so elected or Company currently has appointed serves for the remainder of the original term, subject to prior death, resignation, retirement, disqualificaroximately 75% of its crude oil production, or removal. A preferred director may be removed, with or without cause, only by the affirmative vote or written consent of the majority in interest of holders of such Series A Preferred Stock. The initial preferred director is Josh Schmidt.

Finally, under the Shareholder Agreement, hedged through November 2027 and approximately 51% hedged from and after the Automatic Conversion Date,December 2027 the Board of Directors of the Company will consist of six directors, or a greater number rough November 2028, and ~75% of its natural gas approved in accordance with the Companys organizational documents. On that date, the Juniper Shareholder will have the right to nominate up to three directors (the Junipproduction hedged through November Directors), including at least one independent director. The Juniper Shareholders nomination rights will depend on its, together with its affiliates, ownership of the shares of common stock issuable upon conversion of2027 and approximately 50% hedged from December 2027 the Series A Preferred Stock on the Automatic Conversion Date, as determined onrough November 2028, at various prices.

For the applicable date of determination as measurthree months ended relative to the total number of shares of PEDEVCO common stock issued and outstanding on the Automatic Conversion Date (Juniper Beneficial Ownership), as follows: if Juniper Beneficial Ownership is 50% or more, it may nominate three Juniper Directors includMarch 31, 2026, the Company had a net loss on derivative contracts of $31.3 million. Our hedging one which must be an independent director; if Juniper Beneficial Ownership is between 30% and 49.9%, it may nominate two Juniper Directors; if Juniper Beneficial Ownership is between 10% and 29.9%, it activities have in the past expose, and may nominate one Juniper Director; and if Juniper Beneficial Ownership is less than 10%, it losesin the future expose, us to the right to nomsk of finate any Juniper Directors. Finally, onencial loss independent director will be mutually agreed  certain writing by the Juniper Shareholder and the Governcircumstance Committee, exs, including current Juniper Directors on the committee.

Tinstances in which the nomination of such Juniper appointed directors is subject to such persons not becounterparties to our hedging prohibited from serving as a member of the Board. Incontracts fail to perform under the event any Juniper director ceases serving as a member of contracts. Our hedges have in the Board of PEDEVCO for any reason,past and may in the Juniper Shareholder has the right to designate afuture result in losses and replacement, and subject to certain customary exceptions, the Board is required to take all reasonable actions within its control to appoint such replacement person as a memberduce the amount of revenue we would otherwise obtain upon the sale of the Board of the Company to fill such vacancy. The Juniper Shareholder also hour oil and natural gas the right to remove any Juniper appointed director at any time for any reason.

In some instances Junipeproduction and may also decrease our may have interests different than the rest of our stockholders. The influence orgins and net revenues.

Our control of our company by such personsactual future production may have the effect of delaying or preventing a change of control of our company and may adversely affect the voting and otbe significantly higher rights of other stockholders. Additionally, the interests of such persons may differ from the interests of or lower than we estimate at the other stockholders and thus resulttime we enter in corporate decisions that are adverse to other stockholders.

The PEDEVCO Series A Preferred Stock provides the holders thereof certain rights which may havto derivative contracts for the relevant period. If the a materictual adverse effect on our stock price and operamount of productions.

As long as any PEDEVCO Series A Preferred Stock is outstanding, PEDEVCO and its subsidiaries may not is higher than we estimated, without approval of holders of a majore will have greater commodity in interest of the outstanding shares of the PEDEVCO Series A Preferred Stock (a Majority In Interest), voting as a single class: (a) amend the governing documentsprice exposure than we intended. If the actual amount of such entity (including as to PEDEVCO, the designation of production is lower than the PEDEVCO Series A Preferred Stock), or other governing documents in a way notional amount that adversely affis subjects rights of the holders of PEDEVCO S to our deries A Preferred Stock; (b) change the size or composition of the board or the committees of the board of such entity; (c) alter the linevative instruments, we might be forced to satisfy all or nature of the businessa portion of such entity; (d) issue securities (including securities convertible, exchangeable or exercisable for equity) ranking pari passuour derivative transactions with or senior toout the Series A Preferred Stock, or convertible into PEDEVCO common stock (except under approved equity plans); (e) issue securities benefit of the subsidiaries of PEDEVCO; (f) repurchase or redeem equity, except between wholly-owned subsidiaries or under permitted employee plans; (g) declare or pay dividends or similar distributions, except within wholly-owned subsidiaries; (h) effect any merger, consolidationcash flow from our sale of the underlying physical commodity, recapitalization, reclassification, sale of sulting in a substantially all assets, or other change diminution of control of such entity; (i) adopt any plan of liquidation or dissolutionour liquidity. As a result of such entity; (j) complete acquisitionthese factors, dispositions, or divestitures exceedour hedging $500,000 in any fiscal year; (k) make or commit to capital expenditures exceeding $250,000, other thanactivities may not be as effective as we intend in accordance with a budgetreducing then in effect, (l) incur indebtedness or issue debt over $500,000, other than volatility of our cash flows, and in the ordinary course; (m) enter any joint venture or similar alliance; (n) hire, terminate, or designate executivecertain circumstances may actually increase the volatility officers, or appoint or remove our cash flows.

To the board chair; (o) enter into or amend any transaction with shareholders, affiliatesextent that we have engaged, or related parties; (p) adopt or materially modify incentive or equity plans (except existing ones); (q) change auditors or such entitys fiscal year; (r) commence or settle litigation involving more than $500,000; (s) adopt any shareholder rights plan or poison pill; (t) exchange, rin the future engage, in hedging activities to protect ourselves against commodity price declassify, or cancel any PEDEVCO Series A Preferrines, we may be prevented Stock shares; (u) cfrom fully reate exchange righlizing the benefits into PEDEVCO Series A Preferred Stock shares; (v) alter the rights or preferenof increases in commodity prices ofabove the PEDEVCO Seriprices A Preferred Stock to adversely affect the rights thereof; (w) amend or modify any Support Agreement; or (x) announce or commitestablished by our hedging contracts, similar to any of the foregoing.

Awhat occurredditionally, until the Automatic Conversion Date, during the the holders of PEDEVCO Series A Preferred Stock, voting as a separate class, are entitlree months ended to elect one member of PEDEVCOs BoardMarch 31, 2026. If a Preferred Director position becomes vacant, a Majority in Interestn addition, our hedging activities may fill the vacancy. Any Preferred Director so elected or appointed serves forexpose us to the remainderisk of the original term, subject to prior death, resignation, retirement, disqualification, or removal. A Preferred Director may be removed, with or without cause, only by the affirmative vote or writtenfinancial loss in certain circumstances, including instances in which the counterparties to our hedging consent of the Majority in Interest. The initial Preferred Director is [Josh Schmidt].

The rights and preferences of the PEDEVCO Series A Preferred Stock holders could adversely affect ttracts fail to perform under the value and contrading price of the PEDEVCO common stock. As discussed above the PEDEVCO Scts.

Deries A Preferred Stock includes certain approval and protectvative provisions, including the right to appoint one member of our board of directors. These rights give the holders of instruments also expose us to the PEDEVCO Series A Preferred Stock significant influence over matters that may be important to PEDEVCO common stock holderrisk of financial loss in some circumstances, including corporatewhen:

In acdditions and fundamental business decisions. T, depending on the intereststype of the holders of the PEDEVCO Series A Preferred Stock may differ from or conflict with those of holders ofivative arrangements we enter into, the PEDEVCO common stock, which cagreements could result in decisionslimit that are not aligned with the interests of the PEDEVCO common stock holders. As a result, the markete benefit we would receive from increases in oil and gas price of the PEDEVCO common stock may s. It cannot be lowerassumed than it would be if we did not t the hedging transactions we have PEDEVCO Series A Preferred Stock outstanding or if PEDEVCO Series A Preferred Stock did not include such rights and entered into, or will enter into, will adequately protect us from fluctuations. In addition, the presence of PEDEVCO Series A Preferred Stock with such rights could make the PEDEVCO common stock less attractive to investors  in commodity prices.

Increases in the differential between the ceiling value for limit the potentioil and natural appreciation of the PEDEVCO gas prices set forth in our common stock reldity derivative to companies that do not hacontracts and commodity derivative preferred stock with similar rights.

The combincollar contracts is anticipated company may be exposed to increased litigation, including stockholder lto affect our business, financial conditigation, which could have an adverse effect on the combined companys business andon and results of operations.

The combined company may be exposed to increased litigatiFor more information from stockholders, suppliers and other third parties due to the combination of PEDEVCOs business and the Acquired Companies business following the Mergers. Such litigregarding our current derivative instruments see Part I. Item 1. Financial Statements Note 9 Derivation may ves.

We have an adverserecorded impact oirments in the combined companys business past and results of operations or may cause disruptionsbe required to the combined companys operations. In arecord addition, in the past, stockholders have initiated class action lawsuits against al write-downs of our oil and gas companies following natural gas properiods of volatility ities in the market prices of these companies stock. Such litigation, if instituted against the combinedfuture, including as a result of declining company, could cause the combined company to incur substantial costsmodity prices and divert managements attentlease expiration and resourcess, which could have a material aadverse ely affect on the combined companys business,ur financial condition and results of operations.

A futurWe reverse stock split may decrease the liquidity of the shares of our common stock.

On October 30, 2025, (a) Dr. Simon Kukes, the tiew our long-lived tangible and intangible assets for impairment when Executive Chairman of PEDEVCO; (b) The SGK 2018 Revocable Trust, a family trust of which Dr. Kukes, serves as trustee and beneficiary; (c) J. Douglas Schick, the Chief Executive Officer, President and memberever events or changes in circumstances indicate that the carrying value of the Board; (d) Clark R. Moore, the Executive Vice President, General Counsel and Secretary of PEDEVCO; (e) Paul A. Pinkston, the Chief Accounting Officer of PEDEVCO; (f) Jody D. Crook, the Chief Commercial Officer of PEDEVCO; (g) John J. Scelfo, a then member of the Board; (h) H. Douglas Evans, a then member of the Board; and (i) John K. Howie, a member of the Board (collectively, tan asset may not be recoverable. Historically, impairments have resulted primarily from declines in oil and natural gas prices. For example, for the Majority Shareholders), who collectively held more than two-thirds of the combinyear ended December 31, 2020, we recorded voting power of the total issued and outstanding PEDEVCO common stock, execua $19.3 million impairment related a written consent in lieu of a special meeting of shareholders of PEDEVCO (the Written Consent)to our D-J Basin properties, approvnd during the Merger Agreement and the Mergers, years ended December 31, 2024 and 2023, the shares of PEDEVCO common stock upon conversion of the Series A Preferred Stock shares issued pursuaAcquired Companies recorded impairment to the Mecharger Agreement and Subscripts of $3.9 million Agreement, and among other things, the grant of discretionary authority to the Companys Board of Directors to (A) app$21.1 million, respectively, with respect to their proved an amendment to the Companys Certificate of Formation, d unproved oil and natural gas amended, to effect a reverse stock split of our issuedproperties in the PRB for 2024 and outstanding shares of PEDEVCO common stock, by a ratio of between one-both the PRB and D-J Basin for-ten to one-for-twenty, inclusive, with the exact  2023. Aside from certain lease expiratio to be set at a whole number to be determined by our Board ns, no significant impairment was recorded for a duly authorized committee thereof in its discrethe year ended December 31, 2025.

In addition, at any time after approval of the amendment and prior to October 30, 2026 ( to commodity price volatility, our asset base is subject to the Reverse Stock Split), and (B) determinerisk of lease expirations, whether to arrange forich may result in the dispositionloss of fractional interests by sharleaseholder entitled thereto, to pay in cash the fair value of fractions of a share of PEDEVCO common stock as of the time when those entitled interests and associated capitalized costs if we are unable to receive such fractions are determined, or to meet drilling commitmentitle shareholder to receive from the Corporations transfer agent, in lieu of any fractional share, the number of shas or obtain extensions. In our D-J Basin asset, 16,138 net acres of PEDEVCO common stock roundare scheduled up to the next whole number (the Reverse Split Authority). Pursuant to rules adopted by the SEC under the Exchange Act, an information statement will be filed with the SEC expire during 2026, with an additional 2,133 and 638 net acres expiring in 2027 and 2028, respectively, and mailed or provided to the shareholders of the Company 8,081 net acres thereafter, in accordance with the Exchange Act and the terms set fortheach case net to our direct ownership in the Merger Agreementerest, and the corporate actions discussed above, wif we do not satisfy applicable drill become effective no earlier than the 21st day following the mailing date of such information stating or extension requirement.

s. In the event the Board of Directors movPRB, 4,822 net acres forward with a Reverse Stock Splitare set to expire in the future, the liquidity of the shares of the PEDEVCO common stock may be affected adversely by the Reverse Stock Split given the reduced number of sha2026, with 34,999 and 15,828 net acres expiring in 2027 and 2028, res that will be outstanding following the Reverse Stock Splitpectively. In addition, tthe Reverse Stock Split may increase the number of stockholders who own odd lots (less than 1Permian Basin asset, approximately 200 shares) of the PEDEVCO common stock, creating the potential for such stockholdersnet acres are scheduled to experience an increaseire in the cost of selling their shares and greater difficulty affecting such sales.

Our Reverse Stock Split may not 2026(net to our direct ownership interesult in a proportional increase in t only). If the per share price of the PEDEVCO common stock.

The Majority Shareholders authorized the Board to affect a Reverse Stock Split in a ratio of between 1-for-10 and 1-for-20. The effect of se leases expire without being developed or extended, we may be required to write off the Reverse Stock Split on the marketassociated unproved price for the PEDEVCO common stock cannot be accurately predicted. In particular, we cannot assure you that theoperty costs, which could result in material non-cash charges.

If proportiooil, nate increase in theural gas and NGL prices of the PEDEVCO common stock immediately after the Reverse Stock Split from the prices for shares of the PEDEVCO common stock immediremain depressed for extended periods, decline mately before the Rrially from current leverse Stock Split will be maintained for a substantial ls, or if we experiod of time. It is not uncommon for the market price of a companys common stock to decline in the period following a Reverse Stock Split. If the market price of the PEDEVCO common stockence significant lease expirations without replacement or declines following the Reverse Stock Split, the percentage declinevelopment, we may be greater than would occur in the absence of a Reverse Stock Split. The market price of the PEDEVCO common stock may also be affected by other factors which may be unrelated to the Reverse Stock Split or the number of shares outstrequired to record additional material write-downs of both proved anding.

More unprover, because some investors may view the Reverse Stock Split negatively, we cannot assure you that the Reverse Stock Split will not d properties. Any such impairments or write-offs would adversely impaaffect the market priour balance of the PEDEVCO common stock. Accordingly, our total market capitalization after the Reverse Stock Split may be sheet, results of operations and cash flower than the market capitalization before the Reverse Stock Split. s, and could cause the value of our securities to decline.