8-K: IIOT-OXYS Restructures Debt, Shifts Control to GHS Investments

IIOT-OXYS, Inc. converted significant debt into equity and appointed new directors, with GHS Investments gaining voting control through super-voting preferred stock.

Summary

• IIOT-OXYS, Inc. entered into a Stock Purchase Agreement with GHS Investments, LLC, issuing 100 shares of Series A Super-voting Preferred Stock to GHS on November 5, 2025, granting GHS voting control.
• Clifford L. Emmons, CEO and Director, exchanged $387,242 of accrued fees for 268.529 shares of Series E Convertible Preferred Stock and canceled 7,800 shares of Series A Preferred Stock.
• Vidhyadhar Mitta, former Director, exchanged $216,156 of principal and interest for 180 shares of Series E Preferred Stock and canceled 12,000 shares of Series A Preferred Stock.
• Karen McNemar, former CFO, exchanged $323,269 of accrued fees for 269 shares of Series E Preferred Stock and canceled 6,045 shares of Series A Preferred Stock.
• Sergey Gogin and YVSGRAMORAH, LLC exchanged an aggregate of $522,195 of principal and interest for 489 shares of Series E Preferred Stock.
• The company entered an Asset Transfer Agreement with Aingura IIoT, S.L. to transfer certain assets in exchange for $30,843 in fees owed, with $30,843 of Series E Preferred Stock held in escrow.
• Clifford L. Emmons entered a Consulting Agreement for a monthly fee of $4,166.66, payable in Series E Preferred Stock, for a three-month term.
• Debt exchange agreements with two consultants converted $9,985 of unpaid consulting fees into 19,969,770 shares of Common Stock.
• Karen McNemar resigned from all positions within the company, and Vidhyadhar Mitta resigned as a director, effective November 5, 2025.
• The Board of Directors was expanded to four members, and Sarfraz Hajee, Mark Grober, and Matthew Schissler were appointed as directors, all of whom are equity owners of GHS.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the significant transfer of voting control to GHS Investments, substantial debt-to-equity conversions indicating financial distress, and the resignations of key personnel. While debt reduction is positive, the terms suggest a company in a challenging position.

Positives

• Conversion of approximately $1.45 million in debt into equity reduces immediate cash obligations and cleans up the balance sheet.
• The company secured new directors, potentially bringing fresh perspectives and expertise to the board.

Negatives

• GHS Investments, LLC obtained voting control of the company through the issuance of 100 shares of Series A Super-voting Preferred Stock, significantly diluting the influence of common shareholders.
• Significant debt was converted into preferred stock, which can lead to substantial dilution for existing common equity holders upon conversion.
• The resignations of the Chief Financial Officer and a Director, even if stated as not due to disagreements, can signal instability or a challenging operational environment.
• The company continues to incur consulting fees payable in Series E Preferred Stock to its CEO, indicating ongoing reliance on equity for compensation.

Risks

• Concentration of voting control with GHS Investments through Series A Super-voting Preferred Stock poses a risk to the autonomy and influence of other shareholders.
• Potential for further dilution of common stock from the conversion of Series E Preferred Stock issued to various parties.
• Uncertainty surrounding the Asset Transfer Agreement with Aingura IIoT, S.L., including the contingency of the company acquiring assets or an operating entity and the three-month deadline for the transfer.
• The company's history of defaults under agreements with GHS, as mentioned in the SPA, indicates ongoing financial challenges.

Future Outlook

The company's future outlook includes the contingent transfer of certain assets to Aingura IIoT, S.L. upon the company acquiring assets or an operating entity, with a three-month deadline for this transfer before escrowed shares are issued. The consulting agreement with Mr. Emmons is for three months and is automatically renewable.

Management Comments

• "Ms. McNemar did not resign as a result of a disagreement with the Company, known to an executive officer of the Company, on any matter relating to the Companys operations, policies or practices."
• "Mr. Mitta did not resign as a result of a disagreement with the Company, known to an executive officer of the Company, on any matter relating to the Companys operations, policies or practices."

Industry Context

This announcement reflects a common strategy for companies facing financial challenges or seeking to restructure their balance sheets by converting debt into equity. The issuance of super-voting preferred stock to a strategic investor like GHS Investments is a mechanism often used to secure financing or consolidate control in exchange for addressing financial distress, aligning with trends where distressed companies seek capital and operational stability, often at the cost of existing common shareholder dilution and control.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Related Party Transactions

• Debt Exchange Agreement with Clifford L. Emmons (CEO and Director) for $387,242 of accrued fees in exchange for Series E Preferred Stock.
• Consulting Agreement with Clifford L. Emmons (CEO and Director) for a monthly fee of $4,166.66 payable in Series E Preferred Stock.
• Debt Exchange Agreement with Vidhyadhar Mitta (former Director) for $216,156 of principal and interest in exchange for Series E Preferred Stock.
• Debt Exchange Agreement with Karen McNemar (former Chief Financial Officer) for $323,269 of accrued fees in exchange for Series E Preferred Stock.
• Debt Exchange Agreement with Sergey Gogin and YVSGRAMORAH, LLC (an entity controlled by Mr. Gogin, who was a holder of a Senior Secured Note) for $522,195 of principal and interest in exchange for Series E Preferred Stock.
• Appointment of Sarfraz Hajee, Mark Grober, and Matthew Schissler as directors, all of whom are equity owners of GHS Investments, LLC, which now holds voting control of the company.

Stakeholder Impact

• **Shareholders (Common Stock)**: Experience significant dilution of their equity and a substantial loss of voting control due to the issuance of super-voting preferred stock to GHS Investments. Their influence on company decisions is severely diminished.
• **Creditors (former debt holders)**: Those who exchanged debt for Series E Preferred Stock or Common Stock have converted their creditor position into an equity stake, potentially reducing their immediate risk of default but exposing them to equity market volatility.
• **GHS Investments, LLC**: Gains significant control over the company's operations and strategic direction through its super-voting Series A Preferred Stock, becoming the dominant stakeholder.
• **Management (Clifford L. Emmons)**: Converted a substantial personal debt into equity and secured a new consulting agreement, indicating continued involvement and compensation tied to the company's equity performance.

Next Steps

• The company is required to have $30,843 of Series E Preferred Stock held in escrow for Aingura IIoT, S.L. until an asset transfer occurs.
• The asset transfer to Aingura IIoT, S.L. is contingent upon the company acquiring assets or an operating entity and must occur within three months of October 29, 2025, or the escrowed shares will be issued to Aingura.
• Mr. Emmons will receive a monthly fee of $4,166.66 payable in Series E Preferred Stock for a three-month term, with automatic renewal upon consent.

Key Dates

Recommendation

The filing reveals a company in significant financial distress, evidenced by the extensive debt-to-equity conversions and the issuance of super-voting preferred stock that transfers control to GHS Investments. This effectively dilutes existing common shareholders and signals a highly precarious financial position. The resignations of key officers and directors, coupled with the company's history of defaults, further exacerbate the negative outlook. For a seasoned investor, these events indicate a substantial increase in risk and a likely erosion of common shareholder value, warranting a strong sell recommendation.

Keywords

Debt-to-equity conversion, Preferred stock, Corporate governance, Voting control, Board changes, SEC filing, IIOT-OXYS, GHS Investments, Series A Preferred Stock, Series E Preferred Stock