DEF 14C: Clean Energy Tech Secures $175K Funding via Convertible Note

Clean Energy Technologies, Inc. secured $175,000 in funding through a securities purchase agreement involving a convertible promissory note and common stock issuance, approved by majority stockholders.

Summary

• Clean Energy Technologies, Inc. (the Company) entered into a Securities Purchase Agreement (SPA) with Firstfire Global Opportunities Fund, LLC on July 18, 2025.
• The Company sold a convertible promissory note with a principal amount of $201,250 and 125,000 shares of common stock for an aggregate purchase price of $175,000.
• The transaction closed on July 21, 2025, with the Company receiving net funding of $169,500 after $5,500 in legal expenses were paid from the gross purchase price.
• The convertible note matures in 12 months, accrues guaranteed interest of 10% per annum (first 12 months guaranteed), and requires monthly payments of $22,137.50 starting September 18, 2025.
• The note is convertible into common stock at the holder's election at a conversion price equal to 85% of the lowest traded price during the 10 trading days prior to conversion, subject to a 4.99% beneficial ownership cap for the holder.
• The issuance of shares and potential shares upon conversion implicates NASDAQ Listing Rules 5635(b) (potential change of control) and 5635(d) (issuance of 20% or more of common stock at a discount).
• Majority stockholders, holding approximately 56.4% of the outstanding common stock as of July 30, 2025, approved the transaction and related share issuances by written consent to ensure compliance with NASDAQ listing requirements.
• The proceeds from the transaction are designated for business development and working capital, explicitly excluding repayment of indebtedness to officers, directors, or employees, or certain other loans/investments.

Sentiment

Score: 6

Explanation: The company successfully secured $175,000 in funding for business development and working capital, which is positive for operations. However, the financing involves a convertible note with a variable conversion price at a discount to market, leading to potential significant dilution for existing shareholders. The transaction also incurred $5,500 in legal expenses, reducing net proceeds.

Positives

• Secured $175,000 in funding, providing $169,500 in net proceeds for business development and working capital.
• Maintained compliance with NASDAQ listing rules by obtaining majority stockholder approval for the transaction and potential share issuances.
• The funding is earmarked for operational growth and working capital, supporting ongoing business activities.

Negatives

• The convertible note's principal amount ($201,250) is higher than the aggregate purchase price ($175,000), indicating a discount or premium structure.
• The variable conversion price (85% of the lowest traded price) could lead to significant dilution for existing shareholders if the stock price declines.
• Incurred $5,500 in legal expenses, reducing the net capital received by the company.
• The transaction involves the issuance of common stock and a convertible note that could potentially exceed 20% of outstanding common stock, triggering NASDAQ rules related to dilution and potential change of control.

Risks

• Significant potential dilution for existing shareholders due to the conversion of the promissory note at a variable discount to market price.
• The variable conversion price, potentially as low as $0.01 per share, could result in a substantial increase in outstanding common stock.
• The beneficial ownership cap of 4.99% for the note holder may limit the immediate impact but does not eliminate the long-term dilution risk.
• Failure to comply with NASDAQ listing rules, despite current approval, could lead to delisting if future actions or interpretations change.

Future Outlook

The proceeds from the capital raise are intended for business development and working capital, supporting the company's ongoing operations and strategic initiatives.

Management Comments

• Management, through the CEO's signature, confirmed the actions taken by majority stockholders and the company's adherence to regulatory requirements for the securities issuance.

Industry Context

NA

Corporate Governance

Stakeholder Impact

• Shareholders face potential dilution from the conversion of the promissory note into common stock, especially given the variable discount conversion price.
• The company's ability to maintain its NASDAQ listing is supported by the majority stockholder approval of the transaction, benefiting all shareholders.
• The funding provides capital for business development and working capital, which could positively impact employees, suppliers, and customers through continued operations and growth.

Next Steps

• The actions approved by written consent will become effective 20 calendar days after the Information Statement was first mailed (August 18, 2025).
• The Company is required to make monthly payments of $22,137.50 on the convertible note, with the first payment due on September 18, 2025.

Key Dates

Recommendation

While the capital raise provides necessary funding for business development and working capital, the terms of the convertible note, particularly the variable conversion price at a discount, introduce significant potential for shareholder dilution. This creates a balanced outlook where the benefit of new capital is offset by the cost of potential dilution, warranting a 'hold' recommendation to observe the impact on share price and the effective use of funds.

Keywords

Clean Energy Technologies, Convertible Note, Securities Purchase Agreement, NASDAQ Listing Rules, Stockholder Approval, Dilution, Firstfire Global Opportunities Fund, DEF 14C, Capital Raise, Common Stock Issuance, Working Capital