Hydrogen Corporation’s Statement on Acquired Loans Amounting to $1.5 Million and Current Business Developments
Next Hydrogen Solutions Inc. has secured a loan package worth $1.5 million to bolster its working capital and support ongoing operations. The loan consists of an unsecured insider loan of $530,000 from certain directors and officers, bearing 5% interest per annum, and a potential $1 million commercial loan currently being negotiated.
The insider loan, already advanced on July 23, 2025, is subject to regulatory approvals, including those from the TSXV. A set-up fee of $20,000 will be paid to the lenders. The loan maturity date is one year from the advance of the loan.
The insider loan will increase the company’s debt level by $530,000, adding short-term liabilities with interest obligations. However, the new capital injection should improve liquidity and enhance the company's ability to finance operational and strategic initiatives in the short term.
The impact on Next Hydrogen’s future financial position is not without uncertainty, as there is no guarantee the full $1 million commercial loan will materialize. The loans might moderately increase the company’s leverage and interest expense, but if well-utilized for growth or operational stability, they could strengthen Next Hydrogen’s financial health long-term.
The insider loan being unsecured indicates potentially higher risk carried by the lenders but also flexible lending terms. The company is relying on exemptions from the formal valuation requirements of MI 61-101 and the minority shareholder approval requirements of MI 61-101.
In addition to the insider loan, the company will issue an aggregate of 214,140 common shares to the lenders as bonus shares, representing approximately 20% of the principal amount of the loan. The loan may be converted into common shares at the option of the company, in whole or in part, on the earlier of the maturity date or the closing of an offering of equity securities.
The Lenders for the loan consist of several directors and officers of the company, and the participation of Insiders in the Loan would constitute a "related party transaction" within the meaning of MI 61-101. The company did not file a material change report 21 days prior to the expected closing date of the Loan as closing occurred on an expedited basis.
The TSXV has not approved or disapproved the contents of this press release. The last day of trading of the Common Shares on the OTCQX is Thursday, July 24, 2025. The advance of the loan is expected to take place on July 23, 2025, prior to a $1 million loan from an arm's length commercial lender. There is no definitive timetable for the completion of the review of financial and strategic solutions, and the company does not intend to comment further unless a specific transaction is approved or disclosure is necessary or appropriate.
- The insider loan, a portion of the company's overall financial strategy, is already advanced and subject to regulatory approvals, involving a set-up fee of $20,000 and bearing 5% interest per annum.
- The company's business strategy includes issuing common shares to the lenders as bonus shares, which equate to approximately 20% of the loan principal, and the loan may be convertible into common shares under certain conditions, potentially affecting the equity structure of the company.
