HNO International, Inc. (HNOI) adds second May 2026 convertible note and warrant deal
Rhea-AI Filing Summary
HNO International, Inc. entered into two separate financing transactions with Monroe Street Capital Partners, LP and Lambda Ventures, LLC, each involving a $67,500 Convertible Promissory Note and a warrant to purchase up to 385,000 common shares. Each investor provided gross proceeds of $62,500, with approximately $57,625 received by the company after legal and placement agent fees in each case.
The notes include a $5,000 original issue discount and a one-time 8% interest charge (about $5,400), mature on May 5, 2027, and are convertible at the holders’ option at 60% of the lowest traded price over the prior 20 trading days, subject to a 4.99% beneficial ownership cap. On default, they become due at 150% of outstanding principal and interest, with up to 18% default interest. The five-year warrants have a $0.25 exercise price and may be exercised on a cashless basis, also subject to a 4.99% cap. For each transaction, 20,000,000 shares are reserved with the transfer agent for potential conversions and exercises, and the purchase agreements restrict variable rate transactions, limit new equity issuances for 30 days, and grant participation rights in future offerings for at least 18 months or until each note is extinguished. This amendment adds the Lambda Ventures transaction that was inadvertently omitted from an earlier report, without changing the Monroe Street Capital terms.
Positive
- None.
Negative
- The notes carry a 150% default repayment premium plus up to 18% default interest, increasing the company’s obligations if default events occur.
- Each financing reserves 20,000,000 common shares for note conversion and warrant exercise, which could dilute existing shareholders if fully utilized.
8-K Event Classification
4 items: 1.01, 2.03, 3.02, 9.01
4 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 3.02
Unregistered Sales of Equity Securities
Securities
The company sold equity securities in a private placement or other unregistered transaction.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
MSC Note principal: $67,500
LV Note principal: $67,500
Gross proceeds per investor: $62,500
+5 more
8 metrics
MSC Note principal
$67,500
Principal amount of Monroe Street Capital Partners convertible promissory note
LV Note principal
$67,500
Principal amount of Lambda Ventures convertible promissory note
Gross proceeds per investor
$62,500
Cash consideration received from each investor under the purchase agreements
Net proceeds per investor
$57,625
Approximate net cash to the company after legal and placement agent fees in each deal
Warrant shares per investor
385,000 shares
Maximum common shares purchasable under each common stock purchase warrant
Warrant exercise price
$0.25 per share
Exercise price for common stock under both the MSC and LV warrants
Conversion price discount
60% of lowest traded price
Note conversion price formula based on lowest traded price over prior 20 trading days
Share reservation per transaction
20,000,000 shares
Common shares reserved with the transfer agent for each note and warrant package
Key Terms
Convertible Promissory Note, original issue discount, Variable Rate Transaction, beneficial ownership limitation, +1 more
5 terms
Convertible Promissory Note financial
"the Company issued to the MSC Buyer a Convertible Promissory Note in the principal amount"
A convertible promissory note is a loan a company takes now that can later be turned into shares instead of being repaid in cash. Think of it as lending money with the option to accept ownership in the business down the road; that matters to investors because it affects who gets paid first, how much ownership existing shareholders keep, and the company’s future valuation and cash needs. Terms such as conversion price, interest and maturity determine the financial impact.
original issue discount financial
"The MSC Note has a principal amount of $67,500, which includes an original issue discount of $5,000."
Original issue discount (OID) is the difference between a debt security’s face value and the lower price at which it is first sold, treated as additional interest that accrues over the life of the instrument. For investors it matters because OID raises the effective yield and changes taxable income and the holding’s cost basis over time — think of buying a $100 voucher for $90 and recognizing the $10 gain as earned interest as the voucher approaches maturity.
Variable Rate Transaction financial
"consummation of a Variable Rate Transaction, failure to maintain a minimum market capitalization"
beneficial ownership limitation financial
"The MSC Buyer’s right to convert the MSC Note is subject to a 4.99% beneficial ownership limitation."
A beneficial ownership limitation is a rule that caps the percentage of a company’s shares an investor can be treated as owning or controlling for voting, regulatory or tax purposes. It matters to investors because it can restrict how many shares a person or group can buy or vote, affect takeover chances, and influence share liquidity and value — like a speed limit that prevents any single driver from taking over the whole road.
Rule 506(b) of Regulation D regulatory
"issued in reliance upon the exemption from registration provided by Section 4(a)(2) ... and Rule 506(b) of Regulation D"
Rule 506(b) of Regulation D is a set of rules that allows companies to raise money from investors without having to register with the government, as long as they follow certain guidelines. It lets companies offer securities to a limited number of investors, often trusted or experienced ones, making it easier and quicker to raise funds compared to traditional methods. This rule matters to investors because it provides access to private investment opportunities that are generally less regulated but still require careful consideration.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What financing transactions did HNOI complete with Monroe Street Capital Partners and Lambda Ventures?
HNO International, Inc. completed two similar financings, each issuing a $67,500 Convertible Promissory Note and a warrant for up to 385,000 common shares. Each investor paid $62,500 gross, with the company receiving about $57,625 net after legal and placement agent fees.
What are the key terms of HNOI’s convertible notes with Monroe Street Capital and Lambda Ventures?
Each note has $67,500 principal, a $5,000 original issue discount, a one-time 8% interest charge and matures May 5, 2027. Holders may convert at 60% of the lowest traded price over the prior 20 trading days, subject to a 4.99% beneficial ownership limitation.
How do the HNOI common stock purchase warrants issued in these deals work?
Each investor received a warrant to buy up to 385,000 common shares at $0.25 per share, exercisable from May 5, 2026 to May 5, 2031. The warrants allow cashless exercise when conditions are met and are subject to a 4.99% beneficial ownership cap.
Under what securities law exemptions were HNOI’s notes and warrants issued?
The securities were issued to accredited investors under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D. Both Monroe Street Capital Partners and Lambda Ventures represented accredited status, supporting an unregistered private placement structure.
What restrictions do the HNOI purchase agreements place on future financings?
Each purchase agreement prohibits HNO International, Inc. from entering any Variable Rate Transaction while the related note is outstanding, restricts issuing common stock or equivalents for 30 days, and grants the investor participation rights in future offerings for at least 18 months or until the note is fully extinguished.