8-K: Clean Energy Technologies Secures $406K Convertible Note

Clean Energy Technologies, Inc. has entered into a securities purchase agreement to issue a $406,000 convertible promissory note to Pacific Pier Capital II, LP, with proceeds designated for business development.

Summary

• Clean Energy Technologies, Inc. (the Company) entered into a securities purchase agreement (SPA) with Pacific Pier Capital II, LP (Pacific Pier) on April 22, 2026.
• The agreement involves the sale of a convertible promissory note (the Note) with a principal amount of $406,000.
• Pacific Pier purchased the Note for $357,280, with $7,000 paid for legal expenses, resulting in net funding of $350,280 for the Company.
• Proceeds are to be used for business development and payment of service providers, excluding certain debt repayments and investments.
• The Company must obtain shareholder approval by May 1, 2026, to issue shares exceeding an Exchange Cap of 2,000,000 shares to Pacific Pier.
• The Note matures in 12 months, accrues 12% annual interest, and is convertible into common stock at 85% of the lowest daily VWAP during the 10 trading days prior to conversion.
• Conversion is limited to prevent the holder from exceeding 4.99% beneficial ownership of the Company's common stock.
• The Note was sold under an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this as a neutral event; while it provides necessary funding, the terms indicate a cost of capital and potential for significant dilution, requiring careful monitoring of shareholder approval and conversion events.

Positives

• Secured $350,280 in net funding to support business development and operational needs.
• The convertible note structure allows for future equity conversion, potentially strengthening the balance sheet upon shareholder approval.
• The interest rate of 12% is a clear cost of capital for the funding received.

Negatives

• The effective purchase price of $357,280 for a $406,000 principal note represents a discount, indicating a cost of capital.
• The Company is required to obtain shareholder approval for issuing shares above an Exchange Cap, which introduces a potential hurdle and timeline pressure.
• The conversion price is set at a discount to market price (85% of VWAP), which could lead to significant dilution for existing shareholders upon conversion.

Risks

• Failure to obtain shareholder approval by May 1, 2026, could impact the Company's ability to fully utilize the convertible note's potential for equity conversion.
• The conversion of the note into common stock could lead to substantial dilution for existing shareholders, particularly if the share price is low at the time of conversion.
• The requirement to file a preliminary information statement on Schedule 14C by June 1, 2026, and a definitive one thereafter, indicates a regulatory process that needs to be managed.
• The restriction on using proceeds for certain debt repayments or investments might limit financial flexibility in specific scenarios.

Future Outlook

The Company plans to use the net proceeds for business development and payment of service providers. The future outlook is contingent on obtaining shareholder approval to issue shares beyond the Exchange Cap, which is required by May 1, 2026, and subsequent SEC filings.

Industry Context

StockSavvy.ai notes that securing convertible debt is a common financing strategy for companies in the clean energy sector, especially those requiring capital for growth and development. However, the terms, including the discount and ownership cap, are critical for assessing potential dilution and the cost of capital compared to industry peers.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for dilution if the note is converted into common stock at a price below current market value, especially if the Exchange Cap is exceeded.
• Service Providers: The proceeds are designated, in part, for payment to service providers, indicating a positive impact on these parties.
• Creditors: The use of proceeds for business development and service providers, rather than debt repayment, may not immediately benefit existing creditors.

Next Steps

• Obtain shareholder approval by May 1, 2026, to issue shares in excess of the Exchange Cap.
• File a preliminary information statement on Schedule 14C with the SEC on or before June 1, 2026.
• File a definitive information statement as soon as permissible.
• Manage the conversion of the note into common stock, subject to the 4.99% beneficial ownership limitation.

Key Dates

Recommendation

The company has secured necessary funding, but the terms of the convertible note, including the discount and potential for significant dilution, coupled with the upcoming need for shareholder approval, warrant a 'hold' recommendation. Investors should await the outcome of the shareholder vote and further clarity on the conversion impact before considering a stronger position.

Keywords

Convertible Note, Securities Purchase Agreement, Financing, Clean Energy Technologies, Pacific Pier Capital, Business Development, Shareholder Approval, Dilution