Business Context and Reporting Period
This Form 8-K Current Report was filed by Probe Manufacturing, Inc. (not Clean Energy Technologies, Inc.) on June 13, 2006, covering events occurring on June 7, 2006, and May 25, 2006. The registrant is incorporated in Nevada and maintains its principal executive offices in Costa Mesa, CA.
Key Financial Metrics
The filing does not provide standard financial statements, revenue, profit, cash flow, or liquidity metrics. The only financial data disclosed relates to specific contractual obligations:
- CEO Compensation: A new two-year employment contract establishes an annualized salary of $250,000 ($20,833 monthly), an increase from the previous $167,000.
- Stock Grant Option: The $83,000 difference between the new and old salary may be paid in stock at the Board's discretion, priced at the closing market price on the grant date.
- Preferred Stock Redemption: Series C Convertible Preferred Stock carries a redemption price of $120.00 per share for the first year, increasing by 12% annually thereafter.
Material Changes
The report details two material changes:
- Executive Compensation: Effective June 7, 2006, the CEO's compensation structure was modified to increase annualized pay by approximately 49.7%.
- Capital Structure Modification: On May 25, 2006, the Board approved exchanging Series B Convertible Preferred Stock for Series C Convertible Preferred Stock. Series B will be cancelled. Series C retains the rights of Series B but adds a redemption feature allowing the Company to redeem shares at its sole discretion.
Guidance, Outlook, and Risks
The filing contains no forward-looking guidance, revenue outlook, or management commentary regarding future performance. The primary risks and contingencies identified are:
- Redemption Obligation: The Company has the discretion to redeem Series C stock, creating a potential future cash outflow obligation starting at $120.00 per share.
- Dilution Risk: The CEO's salary increase may be satisfied via stock grants, which could dilute existing shareholders depending on the Board's election and the stock price at the time of grant.
Investor Verification Checklist
- Verify the exact number of Series C shares issued to determine the total potential redemption liability.
- Confirm whether the Board has elected to pay the CEO's salary increase in cash or stock.
- Review the full text of the Series C Certificate of Designation (Exhibit 4.1) for additional conversion or dividend terms not summarized here.
- Check subsequent filings to see if the Series B to Series C exchange has been completed and if Series B has been officially cancelled.