Company: PED
Filing Date: 2025-10-31
Form Type: 10-K/A
Source: 0001654954-25-012381
Chunk: 174

Company: PEDEVCO CORP
Filing Date: 2025-10-31
Form: 10-K/A
Chunk 174
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122 |

There was also a material weakness in the preparation of the 2024 and 2023 tax provisions.

For the year ended December 31, 2024, the material weakness was due to the improper inclusion of additional prior period net operating losses (“NOL”) in calculation of the tax provision. This misstatement resulted in an overstatement of our tax benefit and deferred income tax account of approximately $5.5 million.

For the year ended December 31, 2023, the material weakness was due to a lack of a reconciliation between the provision tax basis to the tax return, primarily related to the tax basis of the Company’s oil and gas properties, which created an unidentified historical return to provision adjustment in the previous year. However, in the previous year, the impact was a footnote-only disclosure because there was a full valuation allowance compared to the release of the valuation allowance in the current year. This identified disclosure misstatement in the tax footnote for 2023 in the amount of $8.7 million affecting gross deferred tax assets ($1.9 million), gross deferred tax liabilities ($6.8 million), and valuation allowance ($8.7 million) was corrected with the restatement of 2023 footnote. There was no impact on net deferred tax balances.

We plan to implement new controls and procedures designed to address the identified material weaknesses in the preparation of the tax provision. In particular, the Company’s Chief Accounting Officer will ensure that appropriate NOL amounts are included in the preparation of the tax provision and a reconciliation of the provision tax basis to the tax return is adequately performed prior to submission to our audit firm. The Company believes that this new control and procedure will remediate the material weaknesses in a future period. However, there is the potential that the Company’s already implemented efforts to remedy the material weakness will be ineffective and/or that additional material weaknesses could occur regardless of the remediation or additional controls implemented by the Company.

Based on our assessment, management has concluded that the Company’s internal control over financial reporting were not effective as of December 31, 2024.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting during the quarter ended December 31, 2024 that have materially affected or are reasonably likely to materially affect, our internal controls over financial reporting, including any corrective actions with regard to significant deficiencies and material weaknesses, outside of the changes discussed above.

Limitations on the Effectiveness of Controls

The Company’s disclosure controls and procedures are designed to provide the Company’s