8-K: Clean Energy Technologies Secures Convertible Note Financing

Clean Energy Technologies, Inc. has entered into a securities purchase agreement to issue a convertible promissory note, raising $150,000.80 in gross proceeds.

Summary

• Clean Energy Technologies, Inc. (the Company) entered into a securities purchase agreement (SPA) with Pacific Pier Capital II, LP (Pacific Pier) on August 10, 2026.
• The agreement involved the sale of a convertible promissory note (the Note) for a purchase price of $150,000.80, with the Company receiving net funding of $143,000.80 after legal expenses.
• The proceeds are designated for business development and payment of service providers, excluding certain debt repayments and investments.
• The Note has a principal amount of $178,410, matures 12 months after August 7, 2026, and accrues 12% annual interest.
• The Note is convertible into common stock at 85% of the lowest daily VWAP during the 10 trading days prior to conversion, subject to a 4.99% beneficial ownership cap.
• The Company must obtain shareholder approval by November 7, 2026, to issue shares exceeding an Exchange Cap of 2,000,000 shares to Pacific Pier.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative development due to the dilutive nature of the convertible note and the company's reliance on such financing, indicating potential financial strain.

Positives

• Secured funding of $143,000.80 to support business development and operational needs.
• The convertible note structure allows for flexibility in repayment and potential equity conversion.

Negatives

• The convertible note is dilutive, with a conversion price set at a discount (85% of VWAP) to the market price.
• The company is issuing debt that can convert into equity, which can significantly dilute existing shareholders.
• The need for shareholder approval for share issuance beyond the Exchange Cap indicates potential future dilution concerns.
• The company paid $7,000 in legal expenses from the gross purchase price, reducing the net proceeds.

Risks

• Potential for significant dilution of common stock if the Note is converted, especially if the share price is low.
• The requirement for shareholder approval by November 7, 2026, poses a risk if approval is not obtained, potentially impacting future financing or operations.
• The conversion price being a discount to market price suggests the company may be facing financial challenges that necessitate such terms.
• The 4.99% beneficial ownership cap on conversion could lead to multiple conversions and complex share management.

Future Outlook

The company must secure shareholder approval by November 7, 2026, to issue shares beyond the initial Exchange Cap. The Note is convertible into common stock, with conversion possible starting six months after issuance, subject to ownership limitations.

Industry Context

StockSavvy.ai notes that the reliance on convertible note financing, especially with a discount to market price and a 4.99% ownership cap, is common for companies facing capital constraints or seeking to bridge financing gaps. This often signals a need for further equity raises or operational improvements to achieve sustainable growth.

Stakeholder Impact

• Shareholders: Potential for dilution of ownership and voting power due to the conversion of the Note into common stock, especially if the conversion price is significantly below current market value.
• Creditors: The use of proceeds for business development and service providers, rather than debt repayment, may impact existing creditors' recovery prospects.
• Employees/Service Providers: The funding is intended to cover payments to service providers, which could improve their financial standing with the company.

Next Steps

• Obtain shareholder approval by November 7, 2026, for the issuance of shares exceeding the Exchange Cap.
• Manage the conversion of the Note into common stock, adhering to the 4.99% beneficial ownership limit.
• Utilize the net proceeds for business development and payment of service providers.

Key Dates

Recommendation

The company has secured necessary funding, but the terms of the convertible note (discounted conversion price, interest, potential dilution) suggest ongoing financial challenges. While the funding is positive for operations, the dilutive nature warrants a cautious 'hold' until clearer signs of sustainable growth and improved financial health emerge.

Keywords

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