UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarterly period ended
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Securities registered pursuant to Section 12(b) of the Act: None
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Smaller reporting company |
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Emerging Growth Company |
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Table of Contents
PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited interim condensed consolidated financial statements of Helio Corporation (referred to herein as the “Company,”) are included in this Quarterly Report on Form 10-Q (the “Quarterly Report”).
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (the “SEC”), In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
1
Helio Corporation
Financial Statements for the Three and Nine Months Ended July 31, 2025
Index to the Condensed Consolidated Financial Statements (Unaudited)
F- 1
HELIO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| July 31, | October 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | (audited) | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ |
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$ |
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| Accounts receivable, net |
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| Work in progress |
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| Prepaid expenses and other current assets |
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| Total Current Assets |
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| Property and equipment, net |
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| Security deposits |
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| Right-of-use assets, net |
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| Total Non-current Assets |
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| TOTAL ASSETS | $ |
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$ |
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| Liabilities and Shareholders' Deficit | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ |
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$ |
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| Accrued compensation |
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| Notes Payable - Related Parties |
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| Notes payable |
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| Operating lease obligations, current |
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| Total Current Liabilities |
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| Notes payable - Related Parties, less current portion |
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| Notes payable, less current portion |
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| Operating lease obligations |
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| Total Non-current Liabilities |
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| Total Liabilities |
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| Commitments and contingencies (Note 8) | ||||||||
| Shareholders' Deficit | ||||||||
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Common stock,
par value,
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Accumulated deficit |
(
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(
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| Total Shareholders’ Deficit |
(
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(
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| Total Liabilities and Shareholders' Deficit | $ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F- 2
HELIO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| July 31, | July 31, | July 31, | July 31, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue: | ||||||||||||||||
| Service fees | $ |
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$ |
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$ |
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$ |
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| Engineering fees |
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| Materials |
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| Total Revenue |
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| Costs of revenue |
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| Gross profit |
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| Operating expenses | ||||||||||||||||
| General and administrative expenses |
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| Personnel expenses |
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| Facilities expense |
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| Professional fees |
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| Depreciation expense |
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| Right of use amortization |
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| Total Operating Expenses |
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| Operating loss |
(
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(
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(
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(
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| Other expense: | ||||||||||||||||
| Interest expense, net |
(
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(
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(
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(
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| Total other expense |
(
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(
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(
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| Provision for income taxes | ||||||||||||||||
| Net loss | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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| Basic and diluted net loss per share | $ |
(
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) | $ |
(
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) | $ |
(
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) | $ |
(
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| Weighted average shares outstanding – basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F- 3
HELIO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2025 AND 2024
|
No par-value
Common Stock |
Accumulated | |||||||||||||||
| Shares | Amount | Deficit | Totals | |||||||||||||
| Balances as of October 31, 2023 (as previously reported) |
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$ |
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$ |
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$ |
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| Conversion of shares due to recapitalization* |
(
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| Balances at October 31, 2023, effect of recapitalization |
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| Stock-based compensation | - |
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| Net loss | - |
(
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(
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| Balances at January 31, 2024 |
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| Stock-based compensation | - |
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| Net loss | - |
(
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(
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| Balances at April 30, 2024 |
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(
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| Stock-based compensation | - |
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| Net loss | - |
(
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(
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| Balances at July 31, 2024 |
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$ |
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$ |
(
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) | $ |
(
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| Balances at October 31, 2024 |
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$ |
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$ |
(
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(
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| Stock-based compensation | - |
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| Net loss | - |
(
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| Balances at January 31, 2025 |
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(
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| Stock-based compensation | - |
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| Net loss | - |
(
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| Balances at April 30, 2025 |
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(
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(
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| Stock-based compensation | - |
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| Net loss | - |
(
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(
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| Balances at July 31, 2025 |
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$ |
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$ |
(
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(
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F- 4
HELIO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
For the Nine Months Ended
July 31, |
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| 2025 | 2024 | |||||||
| CASH FLOWS USED IN OPERATING ACTIVITIES | ||||||||
| Net loss | $ |
(
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) | $ |
(
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| Adjustments to reconcile net loss to net cash (used in) operating activities | ||||||||
| Depreciation and amortization |
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| Stock-based compensation |
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| Right of use asset amortization |
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| Changes in assets and liabilities | ||||||||
| Accounts receivable |
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| Prepaid expenses and other current assets |
(
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| Work in progress |
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(
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| Accounts payable and accrued expenses |
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(
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| Accrued compensation |
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| Operating lease obligations |
(
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(
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| Net cash (used in) operating activities |
(
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(
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| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from notes payable |
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| Proceeds from notes payable - related parties |
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| Repayment of notes payable - related parties |
(
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(
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| Recapitalization |
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| Net cash provided by financing activities |
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| NET DECREASE IN CASH |
(
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(
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| CASH - BEGINNING OF PERIOD |
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| CASH - END OF PERIOD | $ |
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$ |
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| CASH PAID DURING THE PERIOD FOR: | ||||||||
| Interest expense | $ |
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$ |
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| Income taxes | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F- 5
HELIO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2025
(UNAUDITED)
NOTE 1: BUSINESS
Helio Corporation (the “Company” or “Helio”) is an aerospace technology, engineering, and research and development (R&D) holding company serving commercial, government, and non-profit organizations. Heliospace Corporation (“Heliospace”), the Company’s wholly-owned subsidiary, is an aerospace company specializing in the design, engineering, assembly and test of space flight qualified hardware, providing systems engineering, modeling, analysis, integration and test services for space missions. Heliospace was incorporated on March 6, 2018 in Delaware. The Company’s products include aerospace related hardware, systems, and services for customers such as NASA, universities, and private space companies. The customer base ranges from NASA and foreign space agencies to private companies, foundations, universities, and non-profits.
Heliospace designs, fabricates, assembles and tests space qualified hardware, including radar antennas for the NASA Europa Clipper mission, antennas for the SunRISE CubeSat constellation, and deployable systems and sensors for numerous lunar landers and the Mars Sample Return program. Heliospace also provides systems engineering, integration and test, and mission formulation services, including support for the design, testing, and launch of the James Webb Space Telescope, formulation and design of the Roman Space Telescope, Habworlds Observatory, Mars Sample Return, and the Atmospheric Observing System.
Change-in-control Transaction
On
Liquidity
The Company has historically funded its working capital, research and development and capital expenditure requirements and other commitments (including debt service and repayment) from its operating cash flows, debt financing, and issuances of equity. The Company has historically experienced negative cash flows from operations and recurring net losses.
In May and June 2025, the Company entered into an additional note payable agreement and a Receivables Sale Agreement to obtain additional funding (see Note 5). Additional financing or capital investment will be necessary to sustain operations for one year from the issuance of these condensed consolidated financial statements.
The Company is currently engaged in negotiations with prospective lenders regarding potential bridge financing arrangements, and potential investors for the purchase of convertible notes or equity investments. These discussions are ongoing, and there can be no assurance that the Company will enter into definitive agreements or that any such financing will be completed on favorable terms or at all.
If completed, the Company expects to use the net proceeds from investments and bridge financing to repay certain outstanding promissory notes and to support key operational initiatives. These include investments in research and development, expansion of sales, marketing, and business development activities, facility and infrastructure enhancements, manufacturing improvements, and other general corporate purposes, including working capital and upgrades to the Company’s financial and contract management systems.
The Company will need to raise substantial additional
capital to accomplish its business plan for the foreseeable future. There can be no assurance as to the availability, if any, or terms
upon which such financing and capital might be available in the future. As of July 31, 2025, the Company had cash and cash equivalents
of $
The Company has outstanding unsecured notes to
certain related parties with an aggregate outstanding principal balance of $
F- 6
As of July 31, 2025, the Company has outstanding
debt from unrelated parties pursuant to notes payable in the aggregate principal amount of $
Because of historical and expected operating losses and net operating cash flow deficits, there is substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the unaudited condensed consolidated financial statements. The unaudited condensed consolidated financial statements have been prepared under the going concern basis of accounting. These unaudited condensed consolidated financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to U.S. generally accepted accounting principles (“U.S. GAAP) and reflect all adjustments which are, in the opinion of management, necessary to a fair presentation of the results of the interim periods presented, under the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). These unaudited condensed consolidated financial statements include all adjustments consisting of only normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. The unaudited condensed consolidated financial statements include the accounts of Helio Corporation and its wholly-owned subsidiary Heliospace. The Company’s unaudited condensed consolidated financial statements reflect the elimination of all significant inter-company accounts and transactions. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending October 31, 2025. Certain information and note disclosures normally included in the Company’s annual audited consolidated financial statements and accompanying notes prepared in accordance with U.S. GAAP have been condensed in, or omitted from, these interim financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes to the consolidated financial statements for the fiscal year ended October 31, 2024 included in the Company’s financial statements included in Form S-1/A filed with the SEC on March 7, 2025.
Reclassification
In the preparation of the unaudited condensed consolidated financial
statements, the Company identified a $
Cash and Cash Equivalents
For the purposes of the unaudited condensed consolidated statements of cash flows, the Company considers all highly liquid investments purchased with a maturity of three (3) months or less to be cash equivalents. The Company has cash equivalents as of July 31, 2025 and October 31, 2024.
Cash accounts are insured at the Federal Deposit
Insurance Corporation limits of $
Work In Progress
Work In Progress (WIP) tracks the costs incurred of a specific job that has not reached a certain milestone achievement. This is the computed value of work performed to advance milestone(s) that have not yet been billed and is used to track total job cost (billed and unbilled). Revenue of WIP is only recognized for specific milestones that are distinct contractual performance obligations that provide identifiable benefits to the customer independently of other project phases.
F- 7
Accounts Receivable, net
Accounts receivables are recorded at the amount the Company expects to collect on the balance outstanding at period-end. Management closely monitors outstanding balances during the year and allocates an allowance account if appropriate. The Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables and contract assets. The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. Forward-looking information is also considered in the evaluation of current expected credit losses. However, because of the short time to the expected receipt of accounts receivable, the Company believes that the carrying value, net of expected losses, approximates fair value and therefore, relies more on historical and current analysis of such financial instruments. Based on this analysis, the Company has determined that no allowance for credit losses is necessary for the current or prior reporting periods.
As of July 31, 2025 and October 31, 2024, there
was
amount recorded relating to the allowance for credit losses. The Company writes off bad debts as they occur during the year, if
applicable. Accounts receivable as of July 31, 2025 and October 31, 2024 was $
Property and Equipment, net
Property and equipment is stated at cost. Depreciation
is computed primarily using the straight-line method over the estimated useful lives of the assets. Expenditures for repairs and
maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation
are removed from the accounts, and any related gain or loss is reflected in the unaudited condensed consolidated statements of operations
during the period in which the disposal occurred.
| Property and Equipment, net Categories |
Estimated
Useful Life |
|
| Furniture and equipment |
|
Management regularly reviews property and equipment for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based on management’s assessment, there were no indicators of impairment of the Company’s property and equipment as of July 31, 2025 or October 31, 2024, respectively.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
Fair Value Measurements
Accounting Standards Codification (“ASC”) 820 Fair Value Measurements defines fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosure about fair value measurements.
The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which fair value is observable:
| Level 1 — | fair value measurements are those derived from quoted prices (unadjusted in active markets for identical assets or liabilities); | |
| Level 2 — | fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and | |
| Level 3 — | fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management for the respective periods. The respective carrying value of certain financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, short-term notes payable, accounts payable and accrued expenses. The carrying value of long-term debt approximates fair value, as the variable interest rates approximate current market rates.
F- 8
Revenue Recognition
The Company records revenue based on a five-step model in accordance with the Financial Accounting Standards Board (“FASB”) ASC 606, Revenue from Contracts with Customers , which requires the following:
| 1. | Identify the contract with a customer. |
| 2. | Identify the performance obligations in the contract. |
| 3. | Determine the transaction price of the contract. |
| 4. | Allocate the transaction price to the performance obligations in the contract. |
| 5. | Recognize revenue when the performance obligations are met or delivered. |
The Company’s operating revenues are primarily generated from service fees, engineering fees, and materials fees. The Company uses two different types of contracts which are deliverable based or time based. The Company recognizes revenue related to services when performance obligations are fulfilled.
Design service contracts deliver system engineering inputs including designs, analyses, test and verification plans, and mission formulation architectures on a continual basis over the course of a contract. Customer work is based on distinct identifiable contracts with clear performance obligations, objectives, and pricing. Service revenue contract types are either Time & Materials (T&M) or Purchase Order (PO) contracts. Time & Materials contracts meet performance obligations continuously and are billed with revenue recognized at each invoice. PO contracts are billed at fulfillment of a performance obligation based on the customer agreements, and thus revenue is recognized when earned.
Engineering services deliver both space qualified hardware and accompanying analyses, and are conducted under Cost-type, Fixed price, PO, and T&M contracts. Cost-type and T&M Engineering contracts are billed monthly as work is completed and revenue is recognized. Revenue for fixed price contracts including purchase orders that specify priced milestones for delivery of hardware, reports, or analyses is recognized upon completion of a specific milestone. Revenue on fixed price contracts that are still in progress at month end are otherwise recognized on the percentage-of-completion method, measured by the percentage of total costs incurred to date to the estimated total costs for each contract.
Income Taxes
The Company accounts for income taxes under the provisions of ASC 740 Accounting for Income Taxes, which requires a company to first determine whether it is more likely than not (which is defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.
Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Deferred income taxes are also recognized for carry-forward losses which can be utilized to offset future taxable income. A valuation allowance is recognized when, based on the weight of all available evidence, it is considered more likely than not that all, or some portion, of the net deferred tax assets will not be realized. The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and cause a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation is reflected in current income. Income tax expense is comprised of the sum of current income tax plus the change in deferred tax assets and liabilities.
F- 9
Earnings (loss) Per Share
Basic net (loss) income per common share is computed
by dividing net (loss) income by the weighted average number of vested common shares outstanding during the period. Diluted net (loss)
income per common share is computed by dividing net (loss) income by the weighted average number of outstanding common shares, plus the
net impact of common shares (computed using the treasury stock method), if dilutive, resulting from the exercise of dilutive securities.
In periods when losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents because
their inclusion would be anti-dilutive.
| July 31, | ||||||||
| 2025 | 2024 | |||||||
| Stock options |
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| Total common stock equivalents |
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Leases
The Company accounts for leases based on ASC Topic 842, Leases. Based on this standard, the Company determines if an agreement is a lease at inception. Operating leases are included in right-of-use asset, current operating lease obligations, and operating lease obligations, in the Company’s unaudited condensed consolidated balance sheets. Finance leases are included in property and equipment, net, current portion of long-term debt, net and long-term debt, less current portion, and debt issuance costs in the Company’s unaudited condensed consolidated balance sheets.
As permitted under ASU 2016-02
Leases
(Topic 842) the Company has made an accounting policy election not to apply the recognition provisions of ASU 2016-02 to short
term leases (leases with a lease term
Research and Development
Research and development costs are expensed as incurred. These costs include, but are not limited to, employee related expenses, including salaries, benefits and stock-based compensation of research and development personnel, supplies; facilities, depreciation and other expenses, which include direct and allocated expenses for rent, utilities and insurance.
Stock based-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718, Stock Compensation . The computation of the expense associated with stock-based compensation requires the use of a valuation model. The Company currently obtains valuation reports according to FASB ASC Topic 718 — Stock Compensation (“ASC 718”). Equity-based compensation consists solely of stock option awards, including Incentivized Stock Options (ISOs) and Non-Qualified Stock Options (NSOs), whose exercise prices are determined by the 409A valuation reports. Compensation expense is recognized ratably over the vesting period as the employee provides services. See Note 6 – Stock Options for additional information.
Benefit Plan
The Company offers a 401(k) plan. Employees
are eligible to participate in the plan on the first day of the month following the date of hire. Employees may defer up to $
F- 10
Subsequent Events
The Company evaluates events and transactions that occur after the condensed consolidated balance sheet date through the date the unaudited condensed consolidated financial statements are issued or available for issuance, to determine whether they should be recognized or disclosed in the unaudited condensed consolidated financial statements.
Recently Issued Accounting Pronouncements
Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . This standard requires a public entity to disclose significant segment expenses and other segment items on an interim and annual basis. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements. The Company adopted this ASU in November 1, 2024. The adoption of this ASU had no effect on the Company’s results of operations. See Note 11 for the required disclosures associated with this update.
The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3: PROPERTY AND EQUIPMENT
The major classifications of property and equipment are summarized as follows:
|
July 31,
2025 |
October 31,
2024 |
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| Property and equipment | $ |
|
$ |
|
||||
| Less accumulated depreciation |
(
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) |
(
|
) | ||||
| Property and equipment, net | $ |
|
$ |
|
||||
Depreciation expense for each of the three months
ended July 31, 2025 and 2024 was $
NOTE 4: NOTES PAYABLE – RELATED PARTIES
Between April 2022 and February 2025, certain
related parties, including the Company’s Chief Executive Officer and Director and its Chief Engineer and Director, made various
loans to the Company. The balance at July 31, 2025 and October 31, 2024 was $
Included within the notes payable – related
parties balance is a convertible note agreement entered on March 18, 2024 for $
On April 25, 2025, the Company executed an extension of the maturity date until the earlier of the date the Company is able to achieve a listing on a national stock exchange or June 30, 2025. The terms of the amended note were not substantially different than the original and therefore did not result in an extinguishment of the original note. On September 22, 2025 the Company executed an extension of the maturity date until the earlier of the date the Company is able to achieve a listing on a national stock exchange or October 31st, 2025, with repayment of the note to occur in monthly installments from October 31 st through December 31 st 2025. Under the terms of the extension the note was not considered in default. The terms of the amended note were not substantially different than the original and therefore did not result in an extinguishment of the original note.
F- 11
On April 16, 2025, the Company issued an unsecured promissory
note in the principal amount of $
|
July
31,
2025 |
October 31,
2024 |
|||||||
| Notes payable – related parties, current portion | $ |
|
$ |
|
||||
| Notes payable – related parties, non-current portion |
|
|
||||||
| Total notes payable – related parties | $ |
|
$ |
|
||||
The aggregate maturity on the notes payable – related parties as of July 31, 2025, are as follows:
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| 2028 |
|
|||
|
|
||||
| Less current portion |
(
|
) | ||
| Notes payable – related parties, non-current portion | $ |
|
NOTE 5: NOTES PAYABLE
On March 12, 2024, the Company executed a note payable agreement
for $
On June 20, 2024, the Company executed a convertible note
payable agreement for $
F- 12
On July 31, 2024, the Company issued a convertible
note payable agreement for $
On July 31, 2024, the Company executed
a convertible note payable agreement for $
On January 9, 2025, the Company executed a note
payable agreement for $
F- 13
On February 3, 2025, the Company executed a note
payable agreement for $
In May 19, 2025, the Company obtained a short-term
loan, which totaled $
On June 8, 2025, the Company entered into a Receivables
Sale Agreement pursuant to which the Company sold receivables totaling $
|
July 31,
2025 |
October 31,
2024 |
|||||||
| Notes payable, current | $ |
|
$ |
|
||||
| Notes payable, less current portion |
|
|
||||||
| Total notes payable | $ |
|
$ |
|
||||
The aggregate maturity on the notes payable as of July 31, 2025, are as follows:
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
|
|
||||
| Less current portion |
(
|
) | ||
| Notes payable, non-current portion | $ |
|
NOTE 6: STOCK OPTIONS
The 2018 Equity Incentive Plan was approved by
the Board of Directors on July 1, 2018 and the Company amended the equity plan on December 17, 2023. In conjunction with the
recapitalization and effective January 3, 2024, the Company adopted the Heliospace 2018 Equity Plan as the Company’s Plan (“Equity
Plan”). The Equity Plan limits the shares of common stock authorized to be awarded as stock awards to
Due to the change-in-control transaction described
in Note 1, there was a recapitalization for which the Company’s stock options were adjusted for the new capital structure. The Company
adjusted each of the granted options a
During the three months ended July 31, 2025 and
2024, there were
stock options granted. During the nine months ended July 31, 2025 and 2024, there were
The grant date fair value was calculated using the Black-Scholes option pricing model using the following weighted average inputs:
| Risk free interest rate |
|
% |
|
% | |||||
| Expected term (years) |
|
|
|||||||
| Expected volatility |
|
% |
|
% | |||||
| Expected dividends |
|
% |
|
% |
F- 14
|
Number of
Shares |
Weighted
Average Shares ($) |
Weighted
Average (Years) |
Intrinsic
Value |
|||||||||||||
| Balance as of October 31, 2023 |
|
$ |
|
|
$ |
|
||||||||||
| Recapitalization of options |
(
|
) | - | |||||||||||||
| Issued |
|
|
|
|
||||||||||||
| Canceled | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Balance as of January 31, 2024 |
|
$ |
|
|
$ |
|
||||||||||
| Issued | - | |||||||||||||||
| Canceled |
(
|
) | - |
(
|
) | |||||||||||
| Exercised | - | |||||||||||||||
| Balance as of April 30, 2024 |
|
$ |
|
|
$ |
|
||||||||||
| Issued | - | |||||||||||||||
| Canceled | - | |||||||||||||||
| Exercised | ||||||||||||||||
| Balance as of July 31, 2024 |
|
$ |
|
|
$ |
|
||||||||||
| Balance as of October 31, 2024 |
|
|
|
|
||||||||||||
| Issued | - | |||||||||||||||
| Canceled | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Balance as of January 31, 2025 |
|
$ |
|
|
$ |
|
||||||||||
| Issued | - | |||||||||||||||
| Canceled | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Balance as of April 30, 2025 |
|
$ |
|
|
$ |
|
||||||||||
| Issued | - | |||||||||||||||
| Canceled | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Balance as of July 31, 2025 |
|
$ |
|
|
$ |
|
||||||||||
Stock-based compensation from stock awards
for the three months ended July 31, 2025 and 2024 was $
The fair value of the stock was determined using observable inputs (level 2 fair value measurement) with a market approach technique. The main input for the common stock fair value was the price of the Company’s common stock as of the date of the grant.
F- 15
NOTE 7: LEASES
The Company leases its office and manufacturing
facility both classified as operating leases. The Company recognized right of use assets and lease liabilities pursuant to these leases.
Leases with an initial term of
In addition, the Company is a lessee under four
leases with an initial term of
The lease for the manufacturing facility commenced
on June 1, 2022 and has a term of five years. For the first year the monthly lease payments were $
The office lease commenced on September 1,
2023 and has a term of
years. The rent is fixed at $
Future minimum lease payments required under operating leases on an undiscounted cash flow basis as of July 31, 2025 were as follows:
| 2025 | $ |
|
||
| 2026 |
|
|||
| 2027 |
|
|||
| Total future minimum lease payments | $ |
|
||
| Less imputed interest |
(
|
) | ||
| Total operating lease liability | $ |
|
The Company recognized rent expense pursuant to
these leases on the straight-line basis in accordance with the guidance in ASC 842. The Company recognized rent expense of $
NOTE 8: COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is not presently a party to any legal proceedings, the resolution of which the Company believes would have a material adverse effect on its business, financial condition, operating results, or cash flows. However, legal proceedings are subject to inherent uncertainties, and an unfavorable outcome could include monetary damages, and excessive verdicts can result from litigation, and as such, could result in a material adverse impact on its business, financial position, results of operations, and/or cash flows.
NOTE 9: INCOME TAXES
There was income tax expense reflected in the results of operations for the quarters ended July 31, 2025 and 2024, because the Company carried forward net losses for tax purposes.
The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the quarters ended July 31, 2025 and 2024:
|
July 31,
2025 |
July 31,
2024 |
|||||||
| Federal income taxes at statutory rate |
|
% |
|
% | ||||
| State income taxes at statutory rate |
|
% |
|
% | ||||
| Change in valuation allowance |
(
|
)% |
(
|
)% | ||||
| Other |
|
% |
(
|
)% | ||||
| Totals | % | |||||||
F- 16
Deferred tax assets as of July 31, 2025 and October 31, 2024 consist of the following components:
|
July 31,
2025 |
October 31, 2024 | |||||||
| Deferred tax assets | $ | - | $ | - | ||||
| Net operating loss carryforwards |
|
|
||||||
| Capitalized research and development costs |
|
|
||||||
| Stock based compensation |
|
|
||||||
| ROU Liabilities |
|
|||||||
| Other |
|
|
||||||
| Total deferred tax asset | $ |
|
$ |
|
||||
| Valuation allowance |
(
|
) |
(
|
) | ||||
| Deferred tax assets, net | $ |
|
$ |
|
||||
| Deferred tax liabilities | ||||||||
| ROU Assets |
(
|
) | ||||||
| Depreciation |
(
|
) |
(
|
) | ||||
| Net deferred tax assets | $ | $ | ||||||
The Company has net operating loss carry forwards
available to offset future taxable income. Current tax laws limit the Company’s ability to utilize these carryforwards. Because
the Company’s realization of the deferred tax assets is not certain, the Company fully offset the deferred tax assets resulting
from these carryforwards with a valuation allowance. The Company has approximately $
The Company recognizes uncertain tax positions taken when filing its tax returns if it is more likely than not that the tax authorities will not uphold the position based on current tax law. As of July 31, 2025, the company has not identified any uncertain tax positions.
NOTE 10: CLIENT CONCENTRATIONS
Three customers accounted for
| Accounts Receivable Concentration | ||||||||
| July 31, | October 31 | |||||||
| Company | 2025 | 2024 | ||||||
| A |
|
% |
|
% | ||||
| B |
|
% |
|
% | ||||
| C |
|
% |
|
% | ||||
| D |
|
% |
|
% | ||||
|
|
% |
|
% | |||||
For the three months ended July 31, 2025 and 2024,
the Company’s revenue was concentrated amongst
For the nine months ended July 31, 2025 and 2024,
the Company revenue was concentrated amongst
F- 17
NOTE 11: SEGMENT INFORMATION
The Company conducts its business activities and
reports financial results as
NOTE 12: SUBSEQUENT EVENTS
In preparing these unaudited condensed consolidated financial statements, management has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. Such events or transactions are described below as of the date these unaudited condensed consolidated financial statements were issued.
The following subsequent events occurred after July 31, 2025, and prior to the filing of this Quarterly Report on Form 10-Q.
On August 26, 2025, the Company entered into a
Securities Purchase Agreement with an accredited investor. Pursuant to the Purchase Agreement, the Company issued a promissory note in
the aggregate principal amount of $
In addition, the Company issued
The Note is convertible, upon certain events of
default or missed payments, into shares of the Company’s common stock at a price equal to
The Note provides for monthly amortization payments beginning on February 26, 2026, with all remaining amounts due at maturity on August 26, 2026.
On September 21, 2025, Erick Frim, who had been serving as the Company’s interim Chief Financial Officer and as its principal financial and accounting officer, ceased serving in such roles. Gregory Delory, the Company’s Chief Executive Officer, assumed the responsibilities of principal financial and accounting officer.
On September 16, 2025 the Company issued
September 21, 2025 the Company executed an extension of the maturity
date of the Note payable agreement dated March 12, 2024 for $
On September 22, 2025 the Company executed an extension of the
maturity of the related party note payable agreement dated March 18, 2024 for $
On September 22, 2025 the Company executed an extension of the
maturity date of the unsecured promissory note to Indicia Capital, LLC for $
On September 22, 2025, the Company executed an extension of the
maturity date of the $
F- 18
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Quarterly Report, including (without limitation) statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain forward-looking statements. Although we believe that, in making any such statements, our expectations are based on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected.
These forward-looking statements include statements relating to our anticipated financial performance and business prospects, including debt reduction, currency values and financial impact, foreign exchange counterparty exposures, the impact of pending legal proceedings, adequate liquidity levels, dividends, share repurchases or other capital deployment initiatives and/or statements preceded by, followed by or that include the words “believe,” “will,” “will be,” “will continue,” “will likely result,” “may,” “predicts,” “so we can,” “when,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “aim,” “could,” “plans,” “seeks” and similar expressions. These forward-looking statements speak only as of the date stated, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control. These risks and uncertainties, including those disclosed in the “Risk Factors” section in our registration statement on Form S-1, as amended (File No. 333-284062) (the “S-1 Registration Statement”) could cause actual results to differ materially from those suggested by the forward-looking statements and include, without limitation:
| ● | Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter. |
| ● | Our success depends heavily on our executive officers, senior management team and highly trained employees; difficulty hiring officers and employees of equal competency or ineffective succession planning, could adversely affect our business. |
| ● | Competition could cause downward pressure on prices, fewer customer orders, reduced margins, inability to take advantage of new business opportunities, and the loss of market share. |
| ● | Our competitors may be better capitalized, have greater revenues, and have more industry or management experience. |
| ● | Our competitors may develop technologies and products that are more effective than those we develop or that render our technology and products obsolete or noncompetitive. |
2
| ● | Our projections of future financial results are based on a number of assumptions by our management, some or all of which may prove to be incorrect, and actual results may differ materially and adversely from such projections. |
| ● | Our estimated and projected market for our products and services may be inaccurate and may not reach our expected potential. |
| ● | We will incur significant expenses and capital expenditures to execute our business plan; there are no assurances that we will obtain adequate financing to meet these expenditures. |
| ● | We may invest significant resources in developing new products, services and technologies in pursuit of applications and revenue opportunities that may never materialize. |
| ● | Our ability to grow our business depends on our ability to develop new products, and services to satisfy changing customer demands and respond to changing industry cycles in a timely and cost-effective manner. |
| ● | Our business may be adversely affected by changes in budgetary priorities of the U.S. Government. |
| ● | Technology failures or cyber security breaches or other unauthorized access to our information technology systems or sensitive or proprietary information could have an adverse effect on the Company’s business and operations. |
| ● | Federal contracting is subject to significant regulation, including rules related to bidding, billing and accounting kickbacks and false claims, and non-compliance could subject us to fines and penalties. |
| ● | Our inability to secure additional U.S. government contracts and funding may adversely affect our business, financial condition and results of operations. |
| ● | The U.S. government’s budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year and consequently having to shut down or operate on funding levels equivalent to its prior fiscal year pursuant to a “continuing resolution,” could have an adverse impact on our business, financial condition, results of operations and cash flows. |
| ● | Our common stock has historically experienced limited trading and you may have difficulty liquidating your shares. |
| ● | Our stock price may be volatile and purchasers of our common stock could incur substantial losses. |
| ● | We do not expect to pay dividends in the foreseeable future, and you must rely on price appreciation of your shares of common stock for return on your investment. |
3
| ● | Our Company’s founders, directors and executive officers own or control a majority of the Company and you will have little or no management control over our business or corporate mattes. |
| ● | Our operating results may continue to be adversely affected as a result of unfavorable market, economic, social and political conditions. |
We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report or to conform such statements to actual results or revised expectations, except as required by law.
Overview of Operations
Heliospace, our wholly owned subsidiary, is an aerospace company specializing in the design, engineering, assembly and test of space flight qualified hardware, providing systems engineering, modeling, analysis, integration and test services to customers in government, commercial, private and non-profit markets. Heliospace designs, fabricates, assembles and tests space qualified hardware, including radar antennas for the NASA Europa Clipper mission, the antennas for the SunRISE CubeSat constellation, and deployable systems and sensors for numerous lunar landers and the Mars Sample Return program. Heliospace also provides systems engineering, integration and test, and mission formulation services, including support for the design, testing, and launch of the James Webb Space Telescope, formulation and design of the Roman Space Telescope, Habworlds Observatory, Mars Sample Return, and the Atmospheric Observing System.
In January 2024, via a share exchange accounted for as a reverse acquisition, Web3 Corporation, a Florida corporation that was originally incorporated under the name Stirling Bridge Group, Inc. and was a specialized small business venture lender, acquired 100% of the stock of Heliospace, and changed its name from Web3 Corporation to Helio Corporation (the “Business Combination”). Heliospace was the accounting acquirer in the Business Combination and was determined to be the sole predecessor of Helio Corporation. Accordingly, this discussion and analysis, and the financial statements included elsewhere in this quarterly report, reflect the financial condition and results of operations of Helio Corporation and its sole consolidated subsidiary, Heliospace, after the Business Combination and of Heliospace prior to the Business Combination.
Trends, Events, and Uncertainties
Government Budget Uncertainty and Proposed NASA Cuts
A significant portion of our revenue is derived from contracts with the U.S. federal government, including through NASA, where our subsidiary, Heliospace, provides mission-critical components and engineering services for science and exploration missions. Accordingly, our financial condition and results of operations are influenced by trends in federal discretionary spending, particularly in space science and technology programs.
4
One key emerging trend is the proposed shift in federal budget priorities under the Trump administration. In April 2025, the administration released its draft budget proposal for fiscal year 2026, which recommends a significant reduction in overall discretionary spending, including an approximately 50% cut to NASA’s Science Mission Directorate. If enacted, this proposal would reduce funding for core science programs such as astrophysics, heliophysics, Earth science, and planetary science—areas directly aligned with Heliospace’s technical capabilities and historical contract activity.
Although this proposal remains subject to Congressional negotiation and approval, the magnitude of the proposed cuts and the administration’s stated intent to reprioritize government resources away from space science programs present a material uncertainty for our future growth. Any resulting reduction, delay, or cancellation of NASA programs could reduce the number of available contracts, increase competition for limited awards, and adversely impact our future revenue and profitability.
In addition, broader fiscal challenges at the federal level—such as the rising national debt, persistent budget deficits, and the risk of government shutdowns or extended continuing resolutions—could result in delays to contract funding or payments, reduced availability of new program opportunities, and increased uncertainty in long-term planning. These macroeconomic pressures may also negatively affect private sector customers that rely on or benefit from government-funded space and research initiatives.
As we execute our expansion plans, we have continued to increase the percentage of revenue from private and commercial sources, and are actively working to expand our offerings to defense agencies whose budgets remain a priority for the current administration and Congress. However, these plans are subject to risks and uncertainties, and there can be no assurance that they will succeed or fully offset the effects of any reduction in government spending.
Cybersecurity Risk and Ongoing Threat Landscape
As a government contractor and developer of advanced aerospace technology, we operate in a highly sensitive and data-driven environment. Cybersecurity risks—including ransomware attacks, data breaches, intellectual property theft, and attempted intrusions by nation-state actors—continue to increase in frequency and sophistication across our industry. Like many companies operating in the defense and aerospace sectors, we remain a potential target for both criminal and geopolitical cyber threats.
We have implemented security protocols, systems monitoring, and access controls to protect our infrastructure and proprietary information, including information related to our work with NASA and other government agencies. However, cybersecurity is an evolving threat landscape, and there can be no assurance that our efforts will prevent all attacks or unauthorized access. A successful breach could disrupt our operations, compromise confidential data, harm our reputation, result in regulatory investigations, or expose us to legal claims and financial losses.
We will continue to invest in cybersecurity tools, training, and third-party audits to strengthen our defenses, and we are evaluating compliance with emerging federal cybersecurity requirements. Nonetheless, future cybersecurity incidents could materially affect our business, financial condition, or results of operations.
5
Results of Operations
Comparison of the Three Months Ended July 31, 2025 to the Three Months Ended July 31, 2024
The following table provides certain selected financial information of Helio Corporation for the periods presented:
| Three Months Ended | ||||||||||||||||
| July 31, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Revenues | $ | 784,587 | $ | 1,664,193 | (879,606 | ) | (53 | )% | ||||||||
| Costs of revenue | 686,197 | 1,103,485 | (417,288 | ) | (38 | )% | ||||||||||
| Operating expenses | 1,000,284 | 910,964 | 89,320 | 10 | % | |||||||||||
| Operating income (loss) | (901,894 | ) | (350,256 | ) | (551,638 | ) | 157 | % | ||||||||
| Interest expense, net | (48,860 | ) | (24,430 | ) | (24,430 | ) | 100 | % | ||||||||
| Net income (loss) | $ | (950,754 | ) | $ | (374,686 | ) | (576,068 | ) | 154 | % | ||||||
| Loss per share basic and diluted | $ | (0.084 | ) | $ | (0.03 | ) | ||||||||||
Revenue
Revenue for the three months ended July 31, 2025 decreased by 53% to $ 784,587 from $ 1,664,193 for the three months ended July 31, 2024, reflecting a lower overall volume of work compared to the prior three months due to the ongoing reformulation of the NASA Mars Sample Return program, coupled with an overall downturn in NASA hardware contract awards and a delay in at least one commercial contract. For the three months ended July 31, 2025, we serviced nine customers, two of which were direct government customers, four were commercial customers and two were non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer. One commercial customer was serviced whose sources of funds were private investment. For the three months ended July 31, 2024, we serviced thirteen customers, of which two were direct government customers and seven were private foundations, and four were non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer.
6
Cost of Revenue
The 38% decrease in cost of revenue for the three months ended July 31, 2025 to $686,197 from $1,103,485 for the three months ended July 31, 2024 mainly reflected the decreased business volume described above. As a percentage of revenue, cost of sales amounted to 87% and 66% in the three months ended July 31, 2025 and 2024, respectively. Cost of sales as a percentage of revenue increased by approximately 21% due to a lower overall revenue against certain fixed costs, and billing one services contract beyond the hours originally allocated to that contract.
Operating Expenses
| Three Months Ended | ||||||||||||||||
| July 31, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Operating expenses | ||||||||||||||||
| Professional fees | $ | 120,676 | $ | 60,000 | $ | 60,676 | 101 | % | ||||||||
| Personnel expenses | 116,664 | 127,336 | (10,672 | ) | (8 | )% | ||||||||||
| Facilities expense | 49,722 | 115,728 | (66,006 | ) | (57 | )% | ||||||||||
| Depreciation | 5,666 | 5,666 | - | 0 | % | |||||||||||
| Other general and administrative (1) | 707,556 | 602,234 | 105,322 | 17 | % | |||||||||||
| Total | $ | 1,000,284 | $ | 910,964 | $ | 89,320 | 10 | % | ||||||||
(1) Including right of use asset amortization.
Overall operating expenses increased by $89,320, or 10%, to $1,000,284 for the three months ended July 31, 2025, as compared to $910,964 for the three months ended July 31, 2024, driven by professional fees incurred in connection with a public offering attempt and higher G&A expenses associated with this and R&D activities.
Other Expense
We have not recorded income tax expense or benefit in the three months ended July 31, 2025 and 2024 (because of our tax loss carryforwards). We had approximately $3,179,000 of net operating loss carry forwards to offset future federal taxable income as of July 31, 2025.
The NOL carry forward is subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Under the Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company’s net operating loss carryforwards and research credit carryforwards to offset taxable income and tax, respectively, may be limited based on cumulative changes in ownership. The Company has not completed an analysis to determine whether any such limitations have been triggered as of July 31, 2025. The annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.
7
We recorded $48,860 in interest expense in the three months ended July 31, 2025 compared to $24,430 in the three months ended July 31, 2024, reflecting our increased amount of average outstanding debt and increased rates of interest thereunder.
Net Loss
Our net loss for the three months ended July 31, 2025 was $950,754, compared to a net loss of $374,686 for the three months ended July 31, 2024. The change was due to the reasons discussed above.
Comparison of the Nine Months Ended July 31, 2025 to the Nine Months Ended July 31, 2024
The following table provides certain selected financial information of Helio Corporation for the periods presented:
| Nine Months Ended | ||||||||||||||||
| July 31, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Revenues | $ | 3,384,423 | $ | 5,336,376 | (1,951,953 | ) | 37 | % | ||||||||
| Costs of revenue | 2,680,940 | 3,389,439 | (708,499 | ) | 21 | % | ||||||||||
| Operating expenses | 3,391,392 | 3,261,177 | 130,215 | 4 | % | |||||||||||
| Operating income (loss) | (2,687,909 | ) | (1,314,240 | ) | (1,373,669 | ) | 105 | % | ||||||||
| Interest expense, net | (197,020 | ) | (55,559 | ) | (141,461 | ) | 255 | % | ||||||||
| Net income (loss) | $ | (2,884,929 | ) | $ | (1,369,799 | ) | (1,515,130 | ) | 111 | % | ||||||
| Loss per share basic and diluted | $ | 0.26 | $ | 0.12 | ||||||||||||
Revenue
Revenue for the nine months ended July 31, 2025 decreased by 37% to $3,384,423 from $5,336,376 for the nine months ended July 31, 2024, reflecting a lower overall volume of work compared to the prior nine months due to the ongoing reformulation of the NASA Mars Sample Return program, coupled with an overall downturn in NASA hardware contract awards and a delay in at least one commercial contract. For the nine months ended July 31, 2025, we serviced eleven customers, of which two were direct government customers, one was a commercial customer with private funding, five were commercial customers and three were non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer. For the nine months ended July 31, 2024, we serviced eleven customers, of which one was a direct government customer, one was a private foundation, six were commercial customers and three were non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer.
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Cost of Revenue
The 21% decrease in cost of revenue for the nine months ended July 31, 2025 to $2,680,940 from $3,389,439 for the nine months ended July 31, 2024 mainly reflected the decreased business volume described above. As a percentage of revenue, cost of sales amounted to 79% and 64% in the nine months ended July 31, 2025 and 2024, respectively. Cost of sales as a percentage of revenue increased by approximately 16%.
Operating Expenses
| Nine Months Ended | ||||||||||||||||
| July 31, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Operating expenses | ||||||||||||||||
| Professional fees | $ | 343,495 | $ | 206,903 | $ | 136,592 | 66 | % | ||||||||
| Personnel expenses | 408,908 | 336,727 | 72,181 | 21 | % | |||||||||||
| Facilities expense | 249,800 | 332,798 | (83,318 | ) | (25 | )% | ||||||||||
| Depreciation | 16,996 | 16,996 | - | 0 | % | |||||||||||
| Other general and administrative (1) | 2,372,513 | 2,367,753 | 4,760 | 0.20 | % | |||||||||||
| Total | $ | 3,391,392 | $ | 3,261,177 | $ | 130,215 | 4 | % | ||||||||
| (1) | Including right of use asset amortization. |
Overall operating expenses increased by $130,215, or 4%, to $3,391,392 for the nine months ended July 31, 2025, as compared to $3,261,177 for the nine months ended July 31, 2024, mainly driven by higher professional fees, reflecting higher labor costs, mainly in connection with the preparation for the Company’s underwritten public offering attempt during May of 2025.
Other Expense
We have not recorded income tax expense or benefit in the nine months ended July 31, 2025 and 2024, because of our tax loss carry forwards. We had approximately $3,179,000 of net operating loss carry forwards to offset future federal taxable income as of July 31, 2025.
We recorded $197,020 in interest expense in the nine months ended July 31, 2025 compared to $55,559 in the nine months ended July 31, 2024, reflecting our increased amount of average outstanding debt and increased rates of interest thereunder.
Net Loss
Our net loss for the nine months ended July 31, 2025 was $2,884,929, compared to a net loss of $1,369,799 for the nine months ended July 31, 2024. The change was due to the reasons discussed above.
Liquidity and Capital Resources
As of July 31, 2025, we had cash and cash equivalents of $43,933, representing a decrease of $507,619 from $551,552 as of October 31, 2024. The decrease primarily reflects our operating losses during the period, partially offset by proceeds from the issuance of promissory notes.
Capital Resources Outlook
In May and June 2025, the Company entered into an additional note payable agreement and a Receivables Sale Agreement to obtain additional funding (see Note 5). Additional financing or capital investment will be necessary to sustain operations for one year from the issuance of these unaudited condensed consolidated financial statements.
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As part of management’s ongoing efforts to strengthen the Company’s financial position, the Company is currently engaged in negotiations with prospective lenders regarding potential bridge financing arrangements, and potential investors for the purchase of convertible notes or equity investments. These discussions are ongoing, and there can be no assurance that the Company will enter into definitive agreements or that any such financing will be completed on favorable terms or at all.
If completed, the Company expects to use the net proceeds from investments and bridge financing to repay certain outstanding promissory notes and to support key operational initiatives. These include investments in research and development, expansion of sales, marketing, and business development activities, facility and infrastructure enhancements, manufacturing improvements, and other general corporate purposes, including working capital and upgrades to the Company’s financial and contract management systems.
Over the longer term, the Company expects that it will need to raise substantial additional capital to accomplish its business plan over the next several years. There can be no assurance as to the availability, if any, or terms upon which such financing and capital might be available in the future. Failure to obtain adequate capital could require us to delay, reduce, or curtail operations, limit strategic initiatives, or impact our ability to service existing obligations.
The Company has outstanding unsecured notes to certain related parties with an aggregate outstanding principal balance of $1,163,280 as of July 31, 2025. The proceeds from these notes were used to meet working capital and cash flow management needs. The notes bear interest at between 6.5% and 11.25% per annum. $668,280 of these notes mature in the current 2025 fiscal year, and the remaining $495,000 mature in the 2026, 2027, or 2028 fiscal year.
As of July 31, 2025, the Company has outstanding debt from unrelated parties under notes payable in the aggregate principal amount of $1,831,731. These notes bear interest at 9.75% and 12.00% and mature within the next two fiscal years. Certain of these notes were initially convertible but all such convertible notes were amended to eliminate the conversion features in consideration of the issuance by the Company and/or the transfer by certain shareholders of shares of the Company’s common stock. See Note 5. Interest on these notes either accrues or is paid quarterly or at maturity along with principal, as specifically described in the note. Upon the occurrence and during the continuance of any default by the Company under any of the above notes, which default is not cured within fifteen (15) days following written notice of such default from the payee, the payee may declare the entire unpaid principal and unpaid interest immediately due and payable. Certain of these notes are secured by the Company’s accounts receivable, and by shares of common stock pledged by one of the Company’s shareholders. In addition, certain of these notes become due, and the payees under certain of these notes have the right to accelerate their notes, upon the completion of an offering.
Because of historical and expected operating losses and net operating cash flow deficits, there is substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the unaudited condensed consolidated financial statements, which is not alleviated by management’s plans. The unaudited condensed consolidated financial statements have been prepared under the going concern basis of accounting. These unaudited condensed consolidated financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.
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Cash Flows
Comparison of the Nine Months Ended July 31, 2025 to the Nine Months Ended July 31, 2024.
| Nine months Ended | ||||||||
| July 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash provided by (used in) operating activities | $ | (1,549,753 | ) | $ | (1,285,077 | ) | ||
| Cash provided by (used in) investing activities | $ | - | $ | - | ||||
| Cash provided by (used in) financing activities | $ | 1,042,134 | $ | 1,114,272 | ||||
| Cash on hand (end of period) | $ | 43,933 | $ | 333,531 | ||||
Cash Flows from/used in Operating Activities
For the nine months ended July 31, 2025, net cash used in operating activities was $(1,549,753), compared to cash used in operating activities of $(1,285,077) for the nine months ended July 31, 2024.
Our operating cash flow results were affected by the aging and timing of certain working capital items. During the nine months ended July 31, 2025 and 2024, our negative operating cash flow was attributed mainly to our net loss, as described above.
During the nine months ended July 31, 2025, the Company reported $(1,549,753) of cash used in operating activities. The Company’s negative operating cash flow was attributed mainly to a net loss of $(2,884,929) and is partially offset by a decrease in accounts receivable of $788,869, and a decrease in work in process of $174,537.
During the nine months ended July 31, 2024, the Company reported $(1,285,077) of cash used in operating activities. The Company’s negative operating cash flow was attributed mainly to a net loss of $(1,369,799), a decrease in work in process of $958,445, a decrease in accounts payable and accrued expense of $305,565, a decrease in operating lease liability of $243,655 and partially offset by a decrease in accounts receivable of $992,014 and increase in accrued compensation of $172,810.
Cash Flows used in Investing Activities
During the nine months ended July 31, 2025 and 2024, net cash used in investing activities was $0.
Cash Flows from/used in Financing Activities
During the nine months ended July 31, 2025, net cash from financing activities was $1,042,154, which included the incurrence of new debt discussed above.
During the nine months ended July 31, 2024, net cash provided by financing activities was $1,114,272, which mainly included $1,046,306 in net proceeds from incurrence of debt discussed above.
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Material Cash Commitments
The Company’s material future cash commitments, to be paid from cash flows from operations, are to repay its current debt obligations and payments under leases for its facilities. The Company does not have any material commitments for capital expenditures. The following table shows the material future commitments for the years ending October 31st:
| Leases | Debt | Total | ||||||||||
| Remainder of 2025 | $ | 121,922 | $ | 785,404 | $ | 907,326 | ||||||
| 2026 | 477,956 | 1,564,607 | 2,042,563 | |||||||||
| 2027 | 283,626 | 260,000 | 543,626 | |||||||||
| 2028 | — | 385,000 | 385,000 | |||||||||
| 2029 | — | — | — | |||||||||
| Total | $ | 883,504 | $ | 2,995,011 | $ | 3,878,515 | ||||||
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this quarterly report, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
We believe our most critical accounting policies and estimates relate to the following:
| ● | Revenue Recognition |
| ● | Work in Progress |
| ● | Lease Accounting |
Revenue Recognition
Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.
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Revenues from cost-plus and time and materials contracts are recognized with each invoice. For fixed price contracts including purchase orders with specific priced milestone deliveries, revenue is recognized upon invoicing for each milestone completed. Revenue on fixed price contracts that are still in progress at month end are otherwise recognized on the percentage-of-completion method, measured by the percentage of total costs incurred to date to the estimated total costs for each contract. This method is used because management considers total costs to be the best available measure of progress on these contracts.
Work in Progress
Inventory consists of work in progress and consists of estimated revenue calculated on a percentage of completion based on direct labor and materials in relation to the total contract value. The Company does not maintain raw materials nor finished goods.
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities — current, and operating lease liabilities — noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Leases with a lease term of 12 months or less at inception are not recorded on our balance sheet and are expensed on a straight-line basis over the lease term in our statement of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As of July 31, 2025, the end of the period covered by this Quarterly Report on Form 10-Q, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended).
Based on this evaluation, management concluded that our disclosure controls and procedures were not effective as of July 31, 2025, due to the presence of material weaknesses in our internal control over financial reporting, as described below.
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Identified Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
Although management has not yet completed a formal evaluation of the Company’s internal control over financial reporting, certain control deficiencies were identified that are significant enough to suggest the existence of material weaknesses, including:
| ● | Lack of Segregation of Duties. The Company did not maintain adequate segregation of duties within its finance and accounting function. This deficiency increases the risk that errors or fraudulent activity could occur and remain undetected in a timely manner. |
| ● | Insufficient Accounting and Financial Reporting Expertise. The Company did not have a sufficient number of qualified personnel with the requisite knowledge of U.S. generally accepted accounting principles (GAAP) and SEC reporting requirements to ensure the timely and accurate preparation, review, and disclosure of financial statements. |
Remediation Plan
We are actively working to remediate these material weaknesses. Planned remediation steps include hiring additional qualified accounting personnel and implementing more robust internal review and approval procedures. We will continue to monitor and assess the effectiveness of our remediation efforts in future periods.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended July 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are not currently party to any legal proceedings, and we are not aware of any pending or threatened litigation against us that we believe could have a material adverse effect on our business, operating results, or financial condition.
ITEM 1A. RISK FACTORS.
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5.
Subsequent Events
The following subsequent events occurred after July 31, 2025, and prior to the filing of this Quarterly Report on Form 10-Q.
On August 26, 2025, the Company entered into a Securities Purchase Agreement with an accredited investor. Pursuant to the Purchase Agreement, the Company issued a promissory note in the aggregate principal amount of $275,000, for a purchase price of $250,000, reflecting an original issue discount of $25,000. The Note bears interest at 10% per annum and matures 12 months from the issue date.
In addition, the Company issued 25,000 unregistered shares of its common stock, nil par value (the “Commitment Shares”), to the Buyer as additional consideration. The net proceeds from the sale of the Note were approximately $200,000, after deducting legal and placement agent fees. The Company intends to use the net proceeds for general corporate and working capital purposes.
The Note is convertible, upon certain events of default or missed payments, into shares of the Company’s common stock at a price equal to 90% of the lowest closing price during the 10 trading days prior to conversion, subject to adjustment. Conversions are further limited by a beneficial ownership cap of 4.99% (which the Buyer may adjust up to 9.99% with 61 days’ notice).
The Note provides for monthly amortization payments beginning on February 26, 2026, with all remaining amounts due at maturity on August 26, 2026.
On September 21, 2025, Erick Frim, who had been serving as the Company’s interim Chief Financial Officer and as its principal financial and accounting officer, ceased serving in such roles. Gregory Delory, the Company’s Chief Executive Officer, assumed the responsibilities of principal financial and accounting officer.
On September 16, 2025 the Company issued 83,333 shares as part of a consulting agreement.
On September 21, 2025 the Company executed an extension of the maturity date for the Note payable agreement dated March 12, 2024 for $150,000 until the earlier of the date the Company is able to achieve a listing on a national stock exchange or Nov 1, 2025. Under the terms of the extension the Note was not considered in default. The terms of the amended note were not substantially different than the original and therefore did not result in an extinguishment of the original note.
On September 22, 2025 the Company executed an extension of the maturity of the related party note payable agreement dated March 18, 2024 for $50,000 until the earlier of the date the Company is able to achieve a listing on a national stock exchange or October 31 st , 2025. Repayment of the note will occur in monthly installments from October 31 st through December 31 st 2025. Under the terms of the extension the note was not considered in default. The terms of the amended note were not substantially different than the original and therefore did not result in an extinguishment of the original note.
On September 22, 2025 the Company executed an extension of the maturity date of the unsecured promissory note to Indicia Capital, LLC for $150,000 to October 31 st , 2025. Repayment of the note to occur in monthly installments from October 31st through December 31st 2025 or upon investment of $1,000,000 or more. Under the terms of the extension the note was not considered in default. The terms of the amended note were not substantially different than the original and therefore did not result in an extinguishment of the original note.
On September 22, 2025, the Company executed an extension of the maturity date of the $50,000 portion of the note payable agreement dated June 20, 2024 to October 31 st , 2025, with repayment of the note to occur in monthly installments from October 31st through December 31st 2025. Under the terms of the extension the note was not considered in default. The terms of the amended note were not substantially different than the original and therefore did not result in an extinguishment of the original note.
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ITEM 6. EXHIBITS.
| * | Filed herein |
The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| HELIO CORPORATION | ||
| Date: September 22, 2025 | By: | /s/ Gregory T. Delory |
| Gregory T. Delory | ||
|
Chief Executive Officer and
Chairman of the Board of Directors |
||
| (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
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