Clean Energy Technologies, Inc. - Form 8-K Summary
Business Context and Reporting Period
Clean Energy Technologies, Inc. (CETY), a Nevada corporation, filed this Current Report on Form 8-K on September 2, 2022. The filing details a material definitive agreement entered into on the same date to secure funding for the company.
Key Financial Metrics and Transaction Details
The company consummated a funding transaction with Pacific Pier Capital, LLC. The filing does not provide broader financial metrics such as revenue, profit, cash flow, or existing debt levels; it focuses solely on the terms of this specific financing event.
- Convertible Promissory Note: Face value of $138,888.88 issued for a purchase price of $125,000.00 plus a $13,888.88 original issue discount.
- Interest Rate: 15% per annum (increases to 15% default rate upon event of default).
- Maturity Date: September 1, 2023.
- Warrant Issuance: A five-year warrant to purchase 1,736,111 shares of Common Stock.
- Warrant Exercise Price: $0.04 per share (subject to adjustment based on future offering prices).
Material Changes and Terms
The primary material change is the addition of new debt and potential equity dilution through the issuance of the Note and Warrant. Key terms include:
- Conversion Rights: The Note may be converted into Common Stock at $0.025 per share, or 75% of the offering price if an IPO ("Up List Offering") occurs on or before March 1, 2023.
- Prepayment: The Company may prepay the Note prior to default at a 115% premium.
- Anti-Dilution: The conversion price is subject to downward adjustment if the Company issues equity securities at a lower price, subject to a 4.99% beneficial ownership limitation for the investor.
- Warrant Exercise: The Warrant may be exercised on or after March 1, 2023, or upon an Up List Offering. It allows for cashless exercise under specific conditions.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, management commentary on future operations, or a discussion of general risks. The transaction implies an intent to pursue an "Up List Offering" (IPO) to a national exchange, as conversion and warrant terms are tied to such an event. The primary contingency is the potential dilution of existing shareholders upon conversion of the Note or exercise of the Warrant.
Investor Verification Checklist
- Verify the current outstanding debt load and liquidity position of the company outside of this new $138,888.88 obligation.
- Confirm the status of any pending "Up List Offering" or IPO plans referenced in the conversion terms.
- Review the full text of the Securities Purchase Agreement (Exhibit 10.148) and Convertible Promissory Note (Exhibit 10.149) for additional covenants or restrictions.
- Assess the potential dilution impact of 1,736,111 warrant shares and the convertible note principal on the current share count.