Hillcrest Energy Technologies to Settle $110,000 Debt by Issuing 611,111 Units

Details of Debt Settlement and Unit Structure

Hillcrest Energy Technologies has proposed debt settlement agreements with certain arm's length creditors to satisfy $110,000 in outstanding debt. The company will issue 611,111 units priced at $0.18 each as full and final settlement.

Each unit comprises one common share and one share purchase warrant, offering creditors immediate equity ownership plus future upside potential. Warrants allow holders to purchase additional shares at $0.20 per share within 24 months from issuance.

Warrant Features and Investor Incentives

The warrants form a crucial part of the settlement, with an exercise price set at $0.20—slightly above the $0.18 unit price—providing an incentive for warrant holders to exercise if the share price rises.

The 24-month exercise window enables warrant holders to assess the company’s progress and market conditions before deciding on conversion, aligning with standard Canadian equity financing practices.

Regulatory Hold Period and Securities Compliance

All shares and warrants issued are subject to a four-month-and-one-day hold period mandated by Canadian securities regulations, restricting immediate resale on secondary markets.

Furthermore, these securities have not been registered under the U.S. Securities Act of 1933 or any state laws, prohibiting their offer or sale in the U.S. unless an exemption applies. This measure ensures compliance with cross-border securities regulations.

Consultant Stock Option Grant

Alongside the debt settlement, Hillcrest granted a consultant 1,000,000 stock options at an exercise price of $0.18 per share, matching the unit price. These options vest immediately and are exercisable until July 20, 2030, providing a four-year exercise period.

Conditions for Finalizing the Debt Settlement

The debt settlement is contingent upon executing formal agreements with each creditor. While terms have been announced, final documentation is pending.

Additionally, regulatory non-objection from the Canadian Securities Exchange (CSE), where Hillcrest trades as HEAT, is required. This approval ensures compliance with exchange and securities laws.

Company Overview and Market Listings

Hillcrest Energy Technologies specializes in advanced power conversion and digital control systems for next-generation powertrains and renewable energy grids. The company aims to deliver sustainable energy solutions from development through commercialization.

Hillcrest is listed on multiple exchanges: the Canadian Securities Exchange (CSE: HEAT), OTCQB Venture Market (HLRTF), and Frankfurt Exchange (7HI), reflecting its strategy to engage diverse investor bases.

Forward-Looking Statements and Risk Factors

The company cautions that forward-looking statements, including those about completing the debt settlement, are subject to risks and uncertainties that could cause actual results to differ materially.

Completion depends on executing agreements with creditors and obtaining regulatory approval from the CSE. Investors are advised to review the company’s Management Discussion and Analysis (MD&A) for the year ended December 31, 2025, available on SEDAR+, for detailed risk disclosures. Hillcrest does not commit to updating forward-looking statements except as required by law.

Capital Management Strategy and Market Implications

The debt-for-equity settlement reflects Hillcrest’s strategy to manage liabilities and liquidity by converting debt into equity, thereby preserving cash flow. This approach is common among growth-stage technology firms addressing financial obligations while maintaining working capital.

Creditors gain potential equity appreciation through common shares and warrants, with pricing at $0.18 per unit and $0.20 per warrant share establishing a valuation benchmark for investors evaluating the company’s capital structure.

Upcoming Developments and Investor Considerations

Investors should watch for announcements on finalized debt settlement agreements and regulatory approvals from the CSE, which are prerequisites for closing the transaction. The timeline for these milestones was not specified.

Following settlement completion and expiration of the hold period, the new securities will be freely tradable, subject to applicable restrictions. The 24-month warrant exercise period offers a window for potential capital activity as warrant holders decide on exercising their rights.