8-K: Clean Energy Technologies Secures $150K Via Convertible Note

Clean Energy Technologies, Inc. has entered into a securities purchase agreement to issue a $166,500 convertible promissory note to Walnut Capital, LLC, receiving $150,000 in net proceeds for working capital.

Summary

• Clean Energy Technologies, Inc. (the Company) entered into a securities purchase agreement (SPA) with Walnut Capital, LLC (Walnut) on September 9, 2026.
• The agreement involved the sale of a convertible promissory note (the Note) with a principal amount of $166,500 for a purchase price of $150,000.
• The Company received net funding of $150,000, which will be used for general working capital purposes.
• The Note matures on September 8, 2027, and accrues a one-time 12% interest charge on the issuance date.
• Repayment is scheduled in 10 monthly installments starting December 8, 2026.
• The Note is convertible into the Company's common stock at 85% of the lowest closing bid price during the ten trading days prior to conversion, subject to beneficial ownership limits (4.99%) and Nasdaq shareholder approval requirements (19.99% aggregation limit).
• The holder can deduct $1,500 from each conversion amount for associated fees.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative development due to the dilutive nature of the convertible note and the unfavorable conversion terms, indicating potential financial strain.

Positives

• Secured $150,000 in immediate funding for working capital needs.
• The agreement provides a clear repayment schedule and maturity date for the note.

Negatives

• The convertible note has a significant discount to its face value ($166,500 principal for $150,000 purchase price), indicating a high cost of capital.
• The conversion price is set at a discount (85% of the lowest closing bid price), which is dilutive to existing shareholders.
• The conversion is subject to beneficial ownership limits (4.99%) and Nasdaq shareholder approval, which could complicate or delay conversion.
• The holder is entitled to deduct fees from conversion amounts, further reducing the effective proceeds to the company upon conversion.

Risks

• Potential for significant dilution of existing shareholders' equity if the note is converted at a low stock price.
• The need for working capital suggests potential short-term financial pressures.
• The conversion terms, particularly the discount and potential for large issuances, could negatively impact the stock price.
• The requirement for shareholder approval for certain conversion levels introduces regulatory and timing risks.

Future Outlook

The company has secured immediate working capital through a convertible note. The future outlook is dependent on the company's ability to manage its working capital effectively and the potential impact of the note's conversion terms on its stock price and shareholder structure.

Management Comments

• Proceeds from the Transaction are to be used for general working capital purposes.

Industry Context

StockSavvy.ai notes that the issuance of convertible debt, especially at a discount and with conversion price adjustments, is a common, albeit often dilutive, financing strategy for companies in the clean energy sector that may require significant capital for development and operations but face challenges accessing traditional debt or equity markets.

Comparison to Industry Standards

• Convertible notes are a frequent financing tool in the clean energy sector, often used by early-stage or growth-stage companies.
• The conversion discount of 15% is within the typical range for such instruments, though higher discounts can be seen for companies with greater perceived risk.
• The beneficial ownership and Nasdaq approval thresholds are standard protective measures for both the issuer and the holder, aligning with common market practices.

Stakeholder Impact

• Shareholders: Potential for dilution of ownership and voting power if the convertible note is converted, especially at a discounted price.
• Creditors: The issuance of debt may impact the company's leverage ratios and debt servicing capacity.
• Management: Faces the challenge of managing working capital effectively and navigating potential share price volatility related to conversion terms.

Next Steps

• The Company will use the $150,000 in net proceeds for general working capital.
• Monthly payments on the note will commence on December 8, 2026.
• The note is convertible into common stock under specific conditions, which may lead to future share issuances.

Key Dates

Recommendation

The issuance of a convertible note at a discount, with a conversion price set below market value and subject to beneficial ownership limits, signals potential financial distress and a high likelihood of future dilution. This structure is often indicative of a company struggling to access more favorable financing, making it a negative signal for investors.

Keywords

Convertible Note, Securities Purchase Agreement, Working Capital, Financing, Dilution, Walnut Capital