HNO International, Inc. 8-K/A

What Happened

• HNO International, Inc. announced it entered into two separate financing transactions on May 5, 2026 with Monroe Street Capital Partners, LP and Lambda Ventures, LLC. Each investor received a Convertible Promissory Note with a principal amount of $67,500 (which includes a $5,000 original issue discount) and a Common Stock Purchase Warrant to buy up to 385,000 shares.
• Each note carries a one‑time 8% interest charge ($5,400) earned at issuance, matures on May 5, 2027, and is convertible at the investor’s option into common stock at a conversion price equal to 60% of the lowest traded price during the 20 trading days before conversion (subject to adjustments). Each investor’s conversion and warrant exercise rights are subject to a 4.99% beneficial ownership cap.

Key Details

• Gross proceeds: $62,500 from each investor (total $125,000); net proceeds to the company were approximately $57,625 from each after legal and placement agent fees.
• Note economics: $67,500 principal per note (includes $5,000 OID), 8% one‑time interest ($5,400), maturity in 12 months (May 5, 2027); default remedy accelerates payment to 150% of outstanding principal and interest.
• Warrants: each warrant allows purchase of up to 385,000 shares at $0.25 per share, exercisable May 5, 2026–May 5, 2031; cashless exercise permitted in certain circumstances.
• Share reservation: the company irrevocably reserved 20,000,000 shares (per transaction) with its transfer agent to cover conversions/exercises; investors have certain participation rights and the agreements limit the company’s ability to enter variable rate financings or issue shares for specified periods.

Why It Matters

• These financings create short‑term debt obligations that may convert into common stock, so investors should be aware of potential dilution if the notes are converted or warrants exercised. Conversion mechanics (conversion at 60% of recent low prices and a large reserved share pool) could lead to substantial issuance of shares.
• The notes impose contractual restrictions (e.g., limitations on other financings, 30‑day issuance restriction, participation rights for 18 months) that may affect the company’s flexibility to raise capital or complete certain transactions while these notes are outstanding. The notes also include strong default remedies that increase what the company would owe if it fails to meet obligations.