Key Highlights

  • Conversion price set at 60 % of the lowest traded price over a recent 20‑day window, with a 4.99 % beneficial‑ownership ceiling.
  • The company has irrevocably earmarked 20,000,000 shares to satisfy potential conversions and warrant exercises.
  • The transaction reflects the company’s ongoing reliance on high‑discount financing tools while its equity trades at modest levels.

The transaction reflects the company’s ongoing reliance on high‑discount financing tools while its equity trades at modest levels.

Structure of the Dual Notes

Both notes share the same terms. The notes mature in twelve months and may be converted at the holder’s discretion. The conversion price is recalculated daily, anchored at 60 % of the lowest traded price observed over the preceding twenty trading sessions.

Holders may deduct a modest amount from each conversion notice to offset conversion‑related expenditures, and a 4.99 % beneficial‑ownership limit is enforced to prevent any single investor from exceeding the threshold that would trigger additional regulatory constraints. The warrants contain a cashless‑exercise feature designed to allow holders to convert the warrant value into shares without requiring additional cash outlay, should the market price exceed the exercise price and no registration statement be in effect.

Context Within the Micro‑Cap Sector

Micro‑cap issuers such as HNO International often turn to convertible promissory notes to raise capital when traditional equity offerings are impractical. The combination of an original issue discount, a conversion discount tied to recent market performance, and a modest interest charge represents a common structure aimed at compensating investors for the heightened risk associated with low‑liquidity securities. While the dilution impact of such instruments can be significant, especially when warrants are also involved, the reserved share pool provides the company with flexibility to meet conversion demands without immediate dilution beyond the agreed caps.

Forward‑Looking Considerations

The maturity dates for both notes are set for a future point in the calendar, at which time the company must either repay the principal with accrued interest or effect conversion in accordance with the stipulated terms. Stakeholders will be attentive to the company’s ability to uphold the $3,000,000 market‑capitalization covenant, as any deviation could trigger the accelerated repayment provision. Any subsequent financing activities within the forthcoming period may be subject to participation rights granted to the existing note holders, potentially influencing the company’s capital‑raising strategy.

This summary is based on the Form 8‑K/A filed in early May 2026.

This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial adviser before making investment decisions.