DEF 14C: Clean Energy Tech Secures $651.5K via Convertible Notes, Shares

Clean Energy Technologies, Inc. informs shareholders of recent financing transactions totaling $651,500 through convertible notes and common stock, approved by majority stockholders to maintain NASDAQ listing.

Summary

• The company entered into two securities purchase agreements with Mast Hill Fund, L.P. to raise capital.
• The first transaction on June 4, 2025, involved a $335,000 junior secured convertible promissory note and 50,000 shares of common stock for an aggregate purchase price of $301,500, resulting in net funding of $296,500.
• The second transaction on August 18, 2025, involved a $388,888 unsecured convertible promissory note and 150,000 shares of common stock for an aggregate purchase price of $350,000, resulting in net funding of $341,500.
• In total, the company issued convertible notes with a principal amount of $723,888 and 200,000 shares of common stock, securing $638,000 in net funding after $13,500 in legal expenses.
• The notes accrue guaranteed interest of 10% per annum and mature in 12 months.
• Conversion of the notes is at the election of the holder, at a price equal to the lesser of $37.50 per share (post-reverse stock split) or 90% of the lowest dollar volume-weighted average price over the five trading days prior to conversion, subject to a 4.99% beneficial ownership cap.
• Majority stockholders, holding approximately 52.8% of the outstanding voting stock, approved these transactions via written consent on October 6, 2025.
• This stockholder approval was necessary to comply with NASDAQ Listing Rules 5635(b) and 5635(d), which require approval for transactions that could result in a change of control or the issuance of 20% or more of common stock at a discount.
• A reverse stock split was effected on October 6, 2025, impacting share prices and conversion terms.
• The actions taken by written consent will become effective 20 calendar days after the Information Statement was first mailed or delivered to stockholders (on or about October 27, 2025).

Sentiment

Score: 4

Explanation: The filing details a necessary capital raise to fund operations, which is positive for liquidity. However, the terms of the convertible notes, particularly the variable conversion price and potential for significant dilution, introduce notable risks for existing shareholders. The need for majority shareholder approval to maintain NASDAQ listing also highlights compliance challenges.

Positives

• Secured $638,000 in net funding, providing capital for working capital and business development.
• Obtained majority stockholder approval for the financing transactions, ensuring compliance with NASDAQ listing requirements and avoiding potential delisting issues.

Negatives

• The issuance of convertible notes and common stock, particularly with a variable conversion price at a discount to market value, introduces significant potential for dilution for existing shareholders.
• The company incurred $13,500 in legal expenses related to these financing transactions, reducing the net proceeds.
• The Second Mast Hill Note is unsecured, which places it at a higher risk position compared to secured debt.
• A special shareholder meeting is required if the common stock trades below $7.50 (post-reverse split) to approve further share issuances to Mast Hill exceeding the 12,370,000 share exchange cap, indicating potential future dilution.

Risks

• Dilution Risk: The issuance of common stock upon conversion of the notes, especially at a discount to market value, could significantly dilute the ownership percentage of existing shareholders.
• NASDAQ Listing Compliance Risk: Failure to obtain additional shareholder approval for future share issuances exceeding the exchange cap (12,370,000 shares) could jeopardize the company's NASDAQ listing.
• Change of Control Risk: The transactions may be deemed to result in a change of control under NASDAQ Listing Rule 5635(b) if Mast Hill acquires 20% or more of the common stock.
• Variable Conversion Price Risk: The conversion price being 90% of the lowest 5-day VWAP could lead to a very low conversion price if the stock price declines, resulting in substantial dilution.
• Debt Repayment Risk: The notes mature in 12 months, requiring repayment or conversion, which could put pressure on the company's liquidity or lead to further dilution.
• Subordination Risk: The First Mast Hill Note is junior secured, and the Second Mast Hill Note is unsecured, placing them lower in priority for repayment compared to senior lenders like Nations Interbanc.

Future Outlook

The company anticipates continued operations and business development, funded in part by the recent capital raise. Future share issuances to Mast Hill exceeding 12,370,000 shares will require additional shareholder approval, particularly if the stock price trades below $7.50 (post-reverse split).

Management Comments

• Our Board of Directors is not soliciting your consent or your proxy in connection with this action, and neither consents nor proxies are being requested from stockholders.
• The actions taken by written consent of the Majority Stockholders will not become effective until the date that is twenty (20) calendar days after this Information Statement is first mailed or otherwise delivered to holders of our Common Stock as of the Record Date.

Industry Context

This financing activity reflects a common strategy for smaller public companies in the clean energy technology sector to raise capital through convertible debt and equity, often to fund working capital and business development. The reliance on private placements and the need to navigate NASDAQ listing rules for such transactions are typical for companies seeking growth capital while maintaining public market access. The terms, including discounted conversion prices and potential for significant dilution, are not uncommon in such financing arrangements for companies with fluctuating stock prices or perceived higher risk profiles.

Comparison to Industry Standards

• The 10% guaranteed interest rate on convertible notes is within the typical range for growth-stage companies, though potentially on the higher side, reflecting the junior secured/unsecured nature of the debt.
• The conversion price mechanism, allowing for a discount to the volume-weighted average price, is a common feature in certain types of financing, often seen in companies facing liquidity challenges or seeking capital when traditional financing is unavailable. This structure can lead to significant dilution compared to standard equity raises.
• The requirement for shareholder approval under NASDAQ Listing Rules 5635(b) and 5635(d) for issuances exceeding 20% of outstanding shares or potentially leading to a change of control is a standard regulatory compliance measure for all NASDAQ-listed companies.
• The beneficial ownership cap of 4.99% is a common provision to prevent triggering certain reporting requirements or hostile takeover concerns, though it does not prevent overall dilution.

Corporate Governance

Related Party Transactions

• Calvin Pang, CFO and director, controls MGW Investment I Limited, which holds 1,602,941 shares (34.2%) of common stock and is part of the Majority Stockholders group.
• Kambiz Mahdi, CEO and director, and his spouse control the Kambiz and Bahareh Mahdi Living Trust, which holds 154,503 shares (3.3%) of common stock and is part of the Majority Stockholders group.

Stakeholder Impact

• Shareholders: Potential for significant dilution due to the conversion terms of the notes, especially if the stock price declines. The majority stockholder approval ensures NASDAQ listing compliance for these transactions.
• Creditors: The First Mast Hill Note is junior secured, and the Second Mast Hill Note is unsecured, placing them subordinate to senior lenders like Nations Interbanc.
• Company Operations: The capital raised provides working capital and funds business development, supporting ongoing operations and growth initiatives.

Next Steps

• The actions approved by majority stockholders will become effective 20 calendar days after the mailing of this Information Statement (on or about November 16, 2025).
• The company is required to hold a special meeting of shareholders if its common stock trades below $0.50 ($7.50 after reverse stock split) to obtain approval for issuing shares to Mast Hill in excess of the 12,370,000 share exchange cap.

Key Dates

Keywords

Clean Energy Technologies, Convertible Notes, Securities Purchase Agreement, NASDAQ Listing Rules, Stockholder Approval, Dilution, Capital Raise, Junior Secured Note, Unsecured Note, Common Stock, Mast Hill Fund, DEF 14C, Reverse Stock Split