Clean Energy Technologies, Inc. - Form 8-K Summary
Business Context and Reporting Period
Clean Energy Technologies, Inc. (CETY), a Nevada corporation trading on the OTCQB, filed this Current Report on Form 8-K on November 14, 2022. The filing discloses the closing of a financing transaction with Mast Hill, L.P. on the same date.
Key Financial Metrics and Transaction Details
The Company secured financing through a Convertible Promissory Note and associated warrants. Key terms include:
- Principal Amount: $95,000
- Purchase Price: $85,500 (reflecting a $9,500 original issue discount)
- Interest Rate: 15% per annum
- Maturity Date: November 10, 2023
- Warrant Issuance: 1,187,500 shares exercisable at $0.04 per share (subject to adjustment)
- Warrant Term: Five years
The filing does not provide specific revenue, profit, cash flow, or existing debt levels for the Company.
Material Changes and Conversion Terms
The Note includes significant conversion features tied to corporate events:
- Conversion Trigger: Conversion may occur upon an event of default or the consummation of an IPO/Up List Offering.
- Conversion Price: Fixed at $0.025 per share, or 75% of the offering price if an Up List Offering occurs on or before May 9, 2023.
- Anti-Dilution: The conversion price adjusts downward if the Company issues equity at a lower price, subject to certain exclusions.
- Prepayment: The Company may prepay the Note prior to default at a 115% premium.
- Default: Triggers immediate payment and a 15% default interest rate.
Outlook, Risks, and Contingencies
Management's commentary is limited to the terms of the agreement. The transaction includes registration rights for Mast Hill. A material contingency exists regarding the "Up List Offering"; if consummated before May 9, 2023, both the Note conversion price and Warrant exercise price will adjust based on the offering price. The Warrant allows for cashless exercise under specific conditions if a non-stale registration statement is not effective.
Investor Verification Checklist
- Verify the Company's current liquidity position and ability to service the 15% interest or prepay the note at a 115% premium.
- Assess the likelihood of an IPO or Up List Offering occurring before May 9, 2023, which would alter the dilution impact.
- Review the full text of the Convertible Promissory Note (Exhibit 10.158) and Warrant (Exhibit 10.159) for specific anti-dilution exclusions.
- Confirm the Company's existing capital structure to understand the potential dilution from the 1,187,500 warrant shares and note conversion.