HNO International, Inc. 8-K

What Happened
HNO International, Inc. announced on March 17, 2026 (Form 8-K) that it entered into a Securities Purchase Agreement with CFI Capital LLC and issued a Convertible Redeemable Promissory Note dated March 12, 2026. The note has $150,000 principal, a $12,000 original-issue discount (purchase price $138,000) and the buyer may deduct $5,000 for legal fees at funding, leaving the company with roughly $133,000 in net proceeds. The note matures March 12, 2027 and carries an 8% annual interest rate.

Key Details

• Principal and proceeds: $150,000 principal; $12,000 original issue discount; purchase price $138,000; approx. $133,000 net after a possible $5,000 legal fee deduction.
• Maturity and interest: Matures March 12, 2027; 8% per year interest.
• Conversion mechanics: Beginning six months after issue, outstanding principal and accrued interest may convert into common stock at a conversion price equal to 60% of the lowest trading price over the prior 20 trading days (50% if a DTC "chill" is in effect; 45% upon an Event of Default).
• Ownership limits and reserves: Conversions are limited by a 4.99% beneficial ownership cap (can be increased to 9.9% with 61 days’ prior notice). The company irrevocably reserved 7,861,635 shares for conversions and agreed to maintain a share reservation equal to five times the amount needed for full conversion.
• Protective term for the investor: The note includes a most-favored-nation clause allowing the holder to adopt better terms if the company later issues securities with more favorable conversion discounts, lookback periods, interest rates, original issue discounts, or prepayment rates.

Why It Matters
This is a short-term financing transaction that provides HNOI with roughly $133K cash now but creates a convertible obligation that could dilute existing shareholders if converted. The conversion terms are highly discounted to market (a 40% discount baseline, deeper discounts in certain events), and the company has set aside a large share reserve to satisfy conversions, which further highlights dilution risk. The note also contains investor-friendly protections (MFN) that could allow the holder to benefit if the company gives better terms to future investors. Investors should watch for future conversions, any changes to the ownership cap, and additional financings that could affect share count and dilution.