HLEO 10-Q
Helio Corp /FL/ (HLEO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
For the quarterly period ended
OR
For the transition period from ______ to ______
Commission file number:
(Name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
(Address of principal executive offices including zip code)
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Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant
(1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
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of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act
| ☐ | Large accelerated Filer | ☐ | Accelerated Filer |
| ☒ | Smaller reporting company | ||
| Emerging Growth Company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as
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As of September 14, 2026, there were shares of the registrant’s common stock, no par value per share, outstanding.
Table of Contents
| i |
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, 2026
Index to the Condensed Consolidated Financial Statements (Unaudited)
| 2 |
HELIO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| July 31, | October 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Security deposits | ||||||||
| Right-of-use lease assets, net | ||||||||
| Total Non-current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Liabilities | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued compensation | ||||||||
| Notes Payable - Related Parties | ||||||||
| Notes payable | ||||||||
| Convertible notes payable | ||||||||
| Derivative liability | ||||||||
| Operating lease obligations, current | ||||||||
| Total Current Liabilities | ||||||||
| Notes payable - Related Parties, less current portion | ||||||||
| Notes payable, less current portion | ||||||||
| Operating lease obligations, less current portion | ||||||||
| Total Non-current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 8) | ||||||||
| Mezzanine Equity | ||||||||
| Preferred Stock, par value $, authorized, designated as follows: | ||||||||
| Series A Convertible Preferred Stock, par value $, designated; and shares issued and outstanding as of July 31, 2026 and October 31,2025 respectively | ||||||||
| Series B Convertible Preferred Stock, par value $, designated; and shares issued and outstanding as of July 31, 2026 and October 31,2025 respectively | ||||||||
| Series C Convertible Preferred Stock, par value $, designated; and shares issued and outstanding as of July 31, 2026 and October 31,2025 respectively | ||||||||
| Total Mezzanine Equity | ||||||||
| Shareholders’ Deficit | ||||||||
| Series D Convertible Preferred Stock, par value $, designated; and shares issued and outstanding as of July 31, 2026 and October 31, 2025, respectively | ||||||||
| Common stock, par value, shares authorized; and shares issued and outstanding as of July 31, 2026 and October 31, 2025, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Deficit | ( | ) | ( | ) | ||||
| Total Mezzanine Equity and Shareholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities, Mezzanine Equity, and Shareholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
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, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue: | ||||||||||||||||
| Service fees | $ | $ | $ | $ | ||||||||||||
| Engineering fees | ||||||||||||||||
| Materials | ||||||||||||||||
| Total Revenue | ||||||||||||||||
| Costs of revenue | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Personnel expenses | ||||||||||||||||
| Facilities expense | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Depreciation expense | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Gain on extinguishment of derivative liability | ||||||||||||||||
| Loss on issuance of derivative | ( | ) | ( | ) | ||||||||||||
| Loss on modification of debt | ( | ) | ||||||||||||||
| Loss on debt extinguishment | ( | ) | ( | ) | ||||||||||||
| Total other (expense) income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net loss per share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average shares outstanding – basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
HELIO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2026 AND 2025
(UNAUDITED)
| Mezzanine Equity - Preferred Stock |
$0.00010 par-value Permanent Equity - Preferred Stock | No par-value Common Stock | Common Stock to be Issued | Additional Paid-in capital | Accumulated | |||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Amount | Deficit | Totals | ||||||||||||||||||||||||||||||
| Balances at October 31, 2025 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | |||||||||||||||||||||||||||||||||||||
| Conversion of notes payable and accrued interest | – | – | – | |||||||||||||||||||||||||||||||||||||
| Common stock issued with notes payable | – | – | – | |||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balances at January 31, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Extinguishment of debt by shareholder | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Sale of common stock | – | – | – | |||||||||||||||||||||||||||||||||||||
| Common stock subscribed | – | – | – | |||||||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | |||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes payable and accrued interest | – | – | – | |||||||||||||||||||||||||||||||||||||
| Conversion of notes payable and accrued interest | – | – | – | |||||||||||||||||||||||||||||||||||||
| Cashless exercise of warrants | – | – | – | |||||||||||||||||||||||||||||||||||||
| Exercise of stock options | – | – | – | |||||||||||||||||||||||||||||||||||||
| Common stock issued with debt amendment | – | – | – | |||||||||||||||||||||||||||||||||||||
| Conversion of notes payable into Series D Convertible Preferred Stock | – | – | – | |||||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balances at April 30, 2026 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | – | – | – | – | ||||||||||||||||||||||||||||||||||||
| Sale of common stock | – | – | – | |||||||||||||||||||||||||||||||||||||
| Common stock issued previously subscribed | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | – | |||||||||||||||||||||||||||||||||||||
| Conversion of convertible notes payable and accrued interest | – | – | – | |||||||||||||||||||||||||||||||||||||
| Common stock repurchased | – | – | ( | ) | ( | ) | – | ( | ) | |||||||||||||||||||||||||||||||
| Sale of Series A Preferred Stock, net of issuance costs | – | – | – | |||||||||||||||||||||||||||||||||||||
| Sale of Series B Preferred Stock, net of issuance costs | – | – | – | |||||||||||||||||||||||||||||||||||||
| Sale of Series C Preferred Stock, net of issuance costs | – | – | – | |||||||||||||||||||||||||||||||||||||
| Accrual of dividends for Series A Preferred Stock | – | – | – | – | ( | ) | ||||||||||||||||||||||||||||||||||
| Accrual of dividends for Series B Preferred Stock | – | – | – | – | ( | ) | ||||||||||||||||||||||||||||||||||
| Accrual of dividends for Series C Preferred Stock | – | – | – | – | ( | ) | ||||||||||||||||||||||||||||||||||
| Net loss | – | – | – | – | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balances at July 31, 2026 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
HELIO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2026 AND 2025
(UNAUDITED)
(CONTINUED)
| No par-value Common Stock | Accumulated | |||||||||||||||
| Shares | Amount | Deficit | Totals | |||||||||||||
| Balances at October 31, 2024 | $ | $ | ( | ) | $ | ( | ) | |||||||||
| Stock-based compensation | – | |||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||
| Balances at January 31, 2025 | ( | ) | ( | ) | ||||||||||||
| Stock-based compensation | – | |||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||
| Balances at April 30, 2025 | ( | ) | ( | ) | ||||||||||||
| Stock-based compensation | – | |||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||
| Balances at July 31, 2025 | $ | $ | ( | ) | $ | ( | ) | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
HELIO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Nine Months Ended July 31, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS USED IN OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Common stock issued for services | ||||||||
| Loss on debt extinguishment | ||||||||
| Loss on modification of debt | ||||||||
| Loss on issuance of derivative | ||||||||
| Gain on extinguishment of derivative liability | ( | ) | ||||||
| Amortization of debt discount | ||||||||
| Right of use asset amortization | ||||||||
| Change in fair value of derivative liability | ||||||||
| Changes in assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Work in progress | ||||||||
| Security deposits | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued compensation | ( | ) | ||||||
| Operating lease obligations | ( | ) | ( | ) | ||||
| Net cash (used in) operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Sale of common stock | ||||||||
| Common stock repurchased | ( | ) | ||||||
| Sale of Series A Convertible Preferred Stock, net of issuance costs | ||||||||
| Sale of Series B Convertible Preferred Stock, net of issuance costs | ||||||||
| Sale of Series C Convertible Preferred Stock, net of issuance costs | ||||||||
| Proceeds from notes payable | ||||||||
| Proceeds from notes payable - related parties | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Repayment of notes payable | ( | ) | ||||||
| Repayment of convertible notes payable | ( | ) | ||||||
| Repayment of notes payable - related parties | ( | ) | ( | ) | ||||
| Exercise of stock options | ||||||||
| Net cash provided by financing activities | ||||||||
| NET INCREASE (DECREASE) IN CASH | ( | ) | ||||||
| CASH - BEGINNING OF PERIOD | ||||||||
| CASH - END OF PERIOD | $ | $ | ||||||
| CASH PAID DURING THE PERIOD FOR: | ||||||||
| Interest expense | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Conversion of notes payable and accrued interest | $ | $ | ||||||
| Accrual of dividends for preferred stock | $ | $ | ||||||
| Common stock issued with notes payable | $ | $ | ||||||
| To record derivative liability | $ | $ | ||||||
| To record debt discounts | $ | ( | ) | $ | ||||
| Notes payable, related party transfer to notes payable | $ | $ | ||||||
| Conversion of notes payable into Series D Convertible Preferred Stock | $ | $ | ||||||
| Cashless exercise of warrants | $ | $ | ||||||
| Extinguishment of debt and accrued interest by shareholder | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
HELIO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2026
(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. Our support of science and technology missions is currently well established with our hardware and service lines; we are now expanding these offerings into larger integrated solutions in the form of Space Based Solar Power, pursuing large addressable markets which we believe have significant revenue growth potential.
Liquidity
During the year ended October 31, 2025 and the nine months ended July 31, 2026, the Company entered into additional debt and equity financings to obtain additional funding (see Note 4, 5, 6 and 13). 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 potential investors for the purchase of convertible notes or equity investments and prospective lenders regarding potential bridge financing arrangements. 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, 2026, the Company has outstanding debt from unrelated parties pursuant to notes payable in the aggregate principal amount of $ and convertible notes payable in the amount of $. The remaining notes mature within the next two fiscal years. The remaining interest-bearing notes bear interest ranging from % and %. Certain of these notes were initially convertible but 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.
| 8 |
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 condensed consolidated financial statements. The condensed consolidated financial statements have been prepared under the going concern basis of accounting. These 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 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 condensed consolidated financial statements include the accounts of Helio Corporation and its wholly-owned subsidiary Heliospace. The Company’s 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 year ending October 31, 2026. 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, 2025 included in the Company’s financial statements as part of the Company’s 10K filed on February 17, 2026.
Cash and Cash Equivalents
For the purposes of the 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 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.
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 an allowance for credit losses related to its financial instruments, including its accounts receivables. 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, 2026 and October 31, 2025, there
was
| 9 |
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 condensed consolidated statements of operations during the period in which the disposal occurred. The Company computes depreciation utilizing estimated useful lives, as stated below:
| 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, 2026 or October 31, 2025, respectively.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, if any at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. 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 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 fixed interest rates approximate current market rates.
The derivative liabilities are classified as Level 3 liabilities because significant inputs utilized in determining fair value are unobservable and require management judgment. Significant assumptions include the Company’s common stock price, expected volatility, expected term, and risk-adjusted discount rates. Increases in the Company’s stock price, expected volatility, or contractual term generally result in a higher fair value measurement, while decreases in those inputs generally reduce the fair value measurement. Because the valuation relies on significant unobservable inputs, actual results may differ materially from estimated fair values.
| 10 |
The following table represents the Company’s assets and liabilities by level measured at fair value on a recurring basis at July 31, 2026 and October 31, 2025.
| July 31, 2026 | October 31, 2025 | |||||||||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Derivative liability | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
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 the performance obligations are satisfied.
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.
| 11 |
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.
Basic net (loss) income per common share is computed by dividing net (loss) income by the weighted average number of 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. As of July 31, 2026 and 2025, the Company excluded the common stock equivalents summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of loss per share as their effect would have been anti-dilutive.
| July 31, | ||||||||
| 2026 | 2025 | |||||||
| Stock options | ||||||||
| Convertible notes payable | ||||||||
| Preferred stock | ||||||||
| Total common stock equivalents | ||||||||
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 lease asset, current operating lease obligations, and operating lease obligations, in the Company’s condensed consolidated balance sheets.
As permitted under Accounting Standards Updated (“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 12 months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a straight-line basis over the 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. During the nine months ended July 31, 2026 and 2025, the company recorded $
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 valuations 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). Compensation expense is recognized ratably over the vesting period as the employee provides services. See Note 8 – Stock Options for additional information.
| 12 |
Recently Issued Accounting Pronouncements
The Company does not believe that there are any 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, 2026 | October
31, 2025 | |||||||
| Furniture and equipment | $ | $ | ||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense for each of the nine
months ended July 31, 2026 and 2025 was $
NOTE 4: NOTES PAYABLE – RELATED PARTIES
Between April 2022 and September 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, 2026 and October 31, 2025 was $
These notes were collateralized with the Company’s accounts receivables and other assets.
On December 2, 2025, the Company entered into
exchange agreements with the Company’s then Chief Executive Officer and Chairman of the Board, and the Company’s Chief Engineer
and a member of the Board of Directors. Pursuant to the Exchange Agreement, the officers exchanged principal in the amount of $
On April 22, 2026, the Company entered into exchange
agreements with the Company’s then Chief Executive Officer and Chairman of the Board. Pursuant to the Exchange Agreement, the officer
exchanged principal in the amount of $
Included within the notes payable –
related parties balance is a convertible note agreement entered on March 18, 2024 for $
| 13 |
On April 16, 2025, the Company issued an unsecured
promissory note in the principal amount of $
| July 31, 2026 | October 31, 2025 | |||||||
| Notes payable – related parties, current portion | $ | $ | ||||||
| Notes payable – related parties, non-current portion | ||||||||
| Total notes payable – related parties | $ | $ | ||||||
NOTE 5: NOTES PAYABLE
The following table details the Company’s notes payable as of July 31, 2026 and October 31, 2025, respectively:
| Original | Principal Balance as of | |||||||||||||
| Date of Note | Principal | July 31, | October 31, | |||||||||||
| Ref No. | Issuance | Balance | 2026 | 2025 | ||||||||||
| 1* | $ | $ | $ | |||||||||||
| 2 | ||||||||||||||
| 3* | ||||||||||||||
| 4 | ||||||||||||||
| 5 | ||||||||||||||
| 6 | ||||||||||||||
| 7 | ||||||||||||||
| 8 | ||||||||||||||
| 9 | ||||||||||||||
| 10* | ||||||||||||||
| 11* | ||||||||||||||
| 12 | ||||||||||||||
| 13 | ||||||||||||||
| 14 | ||||||||||||||
| 15 | ||||||||||||||
| 16 | ||||||||||||||
| 17 | ||||||||||||||
| 18** | ||||||||||||||
| 19 | ||||||||||||||
| Total | $ | $ | ||||||||||||
| * | |
| ** |
| 14 |
Note 1
On July 25, 2018, the Company executed a note
payable agreement for $
Note 2
On March 12, 2024, the Company executed a
note payable agreement for $
Note 3
A convertible note agreement was entered on March 18,
2024 for $
Note 4
On June 20, 2024, the Company executed a
convertible note payable agreement for $
Note 5
On October 7, 2024, $
Note 6
On July 31, 2024, the Company issued a convertible
note payable agreement for $
| 15 |
Note 7
On July 31, 2024, the Company executed a convertible
note payable agreement for $
Note 8
On January 9, 2025, the Company executed a note
payable agreement for $
Note 9
On February 3, 2025, the Company executed a note
payable agreement for $
Note 10
On April 16, 2025, the Company issued an unsecured
promissory note in the principal amount of $
Note 11
On April 23, 2025, the Company executed a note
payable agreement for $
As of July 31, 2026, the remaining balance for
Notes 12, 13, 14, 15, 16, and 17 are all $
| 16 |
Note 18
On September 30, 2026, the Company executed a
note payable agreement for $
Note 19
On January 23, 2026, the Company issued a $
July 31, 2026 | October 31, 2025 | |||||||
| Notes payable, current | $ | $ | ||||||
| Notes payable, less current portion | ||||||||
| Total notes payable | $ | $ | ||||||
The aggregate maturity on the notes payable as of July 31, 2026, are as follows:
| Due in less than one year | $ | |||
| Due after one year | ||||
| Less: current portion | ( | ) | ||
| Notes payable, non-current portion | $ | |||
NOTE 6: CONVERTIBLE NOTES PAYABLE
On December 19, 2025, the Company executed a note
payable agreement for $
On February 13, 2026, the Company executed a note
payable agreement for $
On February 17, 2026, the Company executed a note
payable agreement for $
On July 30, 2026, the Company executed a note
payable agreement for $
| 17 |
During the nine months ended July 31, 2026, the
Company repaid $
The aggregate maturity on the convertible notes payable as of July 31, 2026, are as follows:
| Due in less than one year | $ | |||
| Due after one year | ||||
| Less unamortized discount | ( | ) | ||
| Carrying value | ||||
| Less: current portion | ( | ) | ||
| Convertible notes payable, non-current portion | $ | |||
NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS
Embedded derivatives
The Company’s convertible promissory notes and convertible preferred stock gave rise to derivative financial instruments. The notes and preferred stock embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.
The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of July 31, 2026 and October 31, 2025 and the amounts that were reflected in operations related to derivatives for the period ended:
| July 31, 2026 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Embedded derivative liabilities – convertible notes payable | $ | |||||||
| Embedded derivative liabilities – convertible preferred stock | ||||||||
| Total | $ | |||||||
| October 31, 2025 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Embedded derivative liabilities | $ | |||||||
| Total | $ | |||||||
The following table summarizes the effects on the Company’s loss associated with changes in the fair values of the derivative financial instruments by type of financing for the three and nine months ended July 31, 2026 and 2025:
| For the Three months Ended | ||||||||
| July 31, 2026 | July 31, 2025 | |||||||
| Embedded derivative liability | $ | ( | ) | $ | ||||
| Total gain (loss) | $ | ( | ) | $ | ||||
| For the Nine months Ended | ||||||||
| July 31, 2026 | July 31, 2025 | |||||||
| Embedded derivative liability | $ | ( | ) | $ | ||||
| Warrant derivative liability | ( | ) | ||||||
| Total gain (loss) | $ | ( | ) | $ | ||||
| 18 |
Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in operations. The Company has selected the Lattice Model valuation technique to fair value the embedded derivatives because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatility and risk-free rates. The Lattice Model technique is a level three valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators. For instruments in which the time to expiration has passed, the Company has utilized the intrinsic value as the fair value. The intrinsic value is the difference between the quoted market price on the valuation date and the applicable conversion price. Significant range of inputs and results arising from the Lattice Model process are as follows for the embedded derivatives that have been bifurcated from the convertible notes and classified in liabilities:
|
Inception Dates Note & Preferred Stock |
Period Ended July 31, |
|||||||
| Underlying price on valuation date | $ | - | $ | - | ||||
| Effective contractual conversion rates | $ | - | $ | - | ||||
| Contractual term to maturity | ||||||||
| Market volatility: | ||||||||
| Volatility | ||||||||
| Risk-adjusted interest rate | ||||||||
The detachable warrants issued with the convertible notes require derivative liability classification due to agreements containing a fundamental transaction clause which could require net cash settlement in certain situations. The warrant fair value was calculated using the Black-Scholes option pricing model using the following inputs:
| Inception | ||||
| Dates Note | ||||
| Underlying price on valuation date | $ | |||
| Effective contractual conversion rates | $ | |||
| Contractual term to maturity | ||||
| Market volatility: | ||||
| Volatility | ||||
| Risk-adjusted interest rate | ||||
The following table reflects the issuances of derivatives and changes in fair value inputs and assumptions related to the embedded derivatives for the three and nine months ended July 31, 2026 and 2025, respectively.
| Nine Months Ended | ||||||||
| July 31, 2026 | July 31, 2025 | |||||||
| Balances at beginning of period | $ | $ | ||||||
| Issuances: | ||||||||
| Embedded derivatives – convertible notes payable | ||||||||
| Embedded derivatives – convertible preferred stock | ||||||||
| Warrant derivatives | ||||||||
| Extinguishments: | ||||||||
| Embedded derivatives | ( | ) | ||||||
| Warrant derivatives | ( | ) | ||||||
| Changes in fair value inputs and assumptions reflected in operations | ||||||||
| Balances at end of period | $ | $ | ||||||
| Three Months Ended | ||||||||
| July 31, 2026 | July 31, 2025 | |||||||
| Balances at beginning of period | $ | $ | ||||||
| Issuances: | ||||||||
| Embedded derivatives – convertible notes payable | ||||||||
| Embedded derivatives – convertible preferred stock | ||||||||
| Warrant derivatives | ||||||||
| Extinguishments: | ||||||||
| Embedded derivatives | ( | ) | ||||||
| Warrant derivatives | ||||||||
| Changes in fair value inputs and assumptions reflected in operations | ||||||||
| Balances at end of period | $ | $ | ||||||
| 20 |
On August 19, 2025, the Company adopted the Helio Corporation 2025 Equity Incentive Plan (the “2025 Plan”), which was also approved by the Company’s stockholders on August 19, 2025. The 2025 Plan is intended to assist the Company in recruiting and retaining employees, officers, directors, and consultants, and to provide incentives tied to increases in the value of the Company’s equity. Unless terminated earlier by the Board, the 2025 Plan will terminate on August 19, 2035, and no awards may be granted after that date.
The 2025 Equity Plan limits the shares of common stock authorized to be awarded as stock awards to shares as of July 31, 2026 and October 31, 2025, respectively. As of July 31, 2026, stock awards are available for grant under the 2025 Plan. Employees are provided stock options vesting over a period of four years with a one year cliff. After one year, % of the award size vests followed by 1/48th of the award size for each month thereafter. On a case-by-case basis, options have been granted outright with no vest period.
During the three and nine months ended July 31, 2026 and 2025, there were no stock options granted.
| Number of Shares | Weighted Average Exercise Price ($) | Weighted Average Remaining Term | Aggregate Intrinsic Value | |||||||||||||
| Three and nine months ended July 31, 2025 | ||||||||||||||||
| 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 | $ | $ | ||||||||||||||
| Three and nine months ended July 31, 2026 | ||||||||||||||||
| Balance as of October 31, 2025 | $ | $ | ||||||||||||||
| Issued | – | |||||||||||||||
| Canceled | – | |||||||||||||||
| Exercised | – | |||||||||||||||
| Balance as of January 31, 2026 | $ | $ | ||||||||||||||
| Issued | – | |||||||||||||||
| Canceled | – | |||||||||||||||
| Exercised | $ | – | ||||||||||||||
| Balance as of April 30, 2026 | $ | $ | ||||||||||||||
| Issued | – | |||||||||||||||
| Canceled | – | |||||||||||||||
| Exercised | – | |||||||||||||||
| Balance as of July 31, 2026 | $ | $ | ||||||||||||||
| Exercisable as of July 31, 2026 | $ | $ | ||||||||||||||
| 21 |
Stock-based compensation from stock awards for the nine months ended July 31, 2026 and 2025 was $ and $, respectively. Stock-based compensation from stock awards for the three months ended July 31, 2026 and 2025 was $ and $, respectively. As of July 31, 2026 and 2025, there remained $ and $ of unrecognized stock-based compensation from stock option awards, respectively.
NOTE 9: LEASES
The Company leases its manufacturing facility
and it is classified as an operating lease. The Company recognized a right of use asset and lease liability pursuant to this lease. The
lease liability was calculated at the commencement date of the lease by discounting the future payments using the Company’s incremental
borrowing rate of
The lease for the manufacturing facility
commenced on June 1, 2022, and has a term of years. For the first twelve months the monthly lease payments were
$
Right-of-use lease asset is summarized below:
July 31, 2026 | October 31, 2025 | |||||||
| Manufacturing lease | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Right-of-use lease asset, net | $ | $ | ||||||
Operating lease liability is summarized below:
| July 31, 2026 | October 31, 2025 | |||||||
| Manufacturing lease | $ | $ | ||||||
| Less: current portion | ( | ) | ( | ) | ||||
| Long term portion | $ | $ | ||||||
Future minimum lease payments required under this operating lease on an undiscounted cash flow basis as of July 31, 2026 were as follows:
| Remainder of 2026 | $ | |||
| 2027 | ||||
| Total future minimum lease payments | $ | |||
| Less imputed interest | ( | ) | ||
| Total operating lease liability | $ | |||
The Company recognized rent expense pursuant to
this lease on the straight-line basis in accordance with the guidance in ASC 842. The Company recognized rent expense of $
| 22 |
NOTE 10: 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 11: CLIENT CONCENTRATIONS
Four customers accounted for
| Receivables Concentration | ||||||||
| July 31, | October 31 | |||||||
| Company | 2026 | 2025 | ||||||
| A | ||||||||
| B | ||||||||
| C | ||||||||
| D | ||||||||
For the three months ended July 31, 2026 and 2025,
the Company’s revenue was concentrated amongst
For the nine months ended July 31, 2026 and 2025,
the Company’s revenue was concentrated amongst
NOTE 12: SEGMENT INFORMATION
The Company conducts its business activities and reports financial results as business segment. The presentation of financial results as reportable segment is consistent with the way the Company operates its business and is consistent with the manner in which the Chief Operating Decision Maker (“CODM”) evaluates performance and makes resource and operating decisions for the business. The Company’s CODM is the Chief Executive Officer. Furthermore, the Company notes that monitoring financial results as one reportable segment helps the CODM manage costs on a consolidated basis, consistent with the integrated nature of the operations. The CODM uses net loss, as reported on the Condensed Consolidated Statements of Operations, in evaluating the performance of the Company and determining how to allocate resources of the Company as a whole. As the CODM evaluates performance on a consolidated basis, all required financial segment information is included in the condensed consolidated financial statements.
| 23 |
NOTE 13: EQUITY
Common Stock
On July 20, 2026, the Company completed a
Preferred Stock
The Company’s Articles of Incorporation, as amended, authorize the issuance of up to shares of preferred stock, par value $ per share, issuable in one or more series with such designations, preferences, rights, and limitations as may be determined by the Company’s Board of Directors from time to time without further shareholder approval. As of July 31, 2026, the Board had designated four series of preferred stock — Series A, Series B, and Series C Convertible Mezzanine Preferred Stock (each designated April 17, 2026) and Series D Convertible Preferred Stock — as described below.
Series A Preferred Stock
On April 17, 2026, the Company designated shares of Series A Convertible Preferred Stock (“Series A Preferred Stock”), par value $ per share, pursuant to a Certificate of Designation filed with the State of Florida. Each share of Series A Preferred Stock has a stated value of $ per share.
The Series A Preferred Stock ranks senior to the
Company’s common stock with respect to dividend rights and distributions upon liquidation, dissolution, or winding up of the Company.
Holders are entitled to cumulative dividends at an annual rate of 10% of the stated value, payable upon redemption, liquidation, or conversion.
Upon the occurrence of certain events of default such as failure to make required payments, breaches of key covenants, insolvency events
or delisting of the Company’s common stock, the dividend rate increases to
In the event of liquidation, dissolution, winding up, or a deemed liquidation event, holders of Series A Preferred Stock are entitled to receive, prior to any distribution to holders of common stock, an amount equal to the stated value of the shares plus accrued and unpaid dividends and any applicable adjustment amounts as defined in the Certificate of Designation.
The Company may redeem the Series A Preferred
Stock during specified redemption periods at amounts ranging from
Beginning 180 days after issuance, holders may convert the Series A Preferred Stock into shares of the Company’s common stock. The conversion price is variable and is generally equal to 65% of the lowest trading price of the Company’s common stock during the ten trading days preceding the conversion date, subject to adjustment provisions contained in the Certificate of Designation.
On February 6, 2026, the Company sold shares
of Series A Convertible Preferred Stock for $
On May 8, 2026, the Company sold shares
of Series A Convertible Preferred Stock for $
On June 16, 2026, the Company sold shares
of Series A Convertible Preferred Stock for $
| 24 |
On July 16, 2026, the Company sold shares
of Series A Convertible Preferred Stock for $
As of July 31, 2026, there were shares of Series A Convertible Preferred Stock outstanding.
As of July 31, 2026, the aggregate redemption
value of the Series A Convertible Preferred Stock was $
Series B Preferred Stock
On April 17, 2026, the Company designated shares of Series B Convertible Preferred Stock ("Series B Preferred Stock"), par value $ per share, pursuant to a Certificate of Designation filed with the State of Florida. Each share of Series B Preferred Stock has a stated value of $ per share.
The Series B Preferred Stock ranks senior to the
Company’s common stock with respect to dividend rights and distributions upon liquidation, dissolution, or winding up of the Company.
Holders are entitled to cumulative dividends at an annual rate of
In the event of liquidation, dissolution, winding up, or a deemed liquidation event, holders of Series B Preferred Stock are entitled to receive, prior to any distribution to holders of common stock, an amount equal to the stated value of the shares plus accrued and unpaid dividends and any applicable adjustment amounts as defined in the Certificate of Designation.
The Company may redeem the Series B Preferred
Stock during specified redemption periods at amounts ranging from
Beginning 180 days after issuance, holders may convert the Series B Preferred Stock into shares of the Company’s common stock. The conversion price is variable and is generally equal to 65% of the lowest trading price of the Company’s common stock during the ten trading days preceding the conversion date, subject to adjustment provisions contained in the Certificate of Designation.
On May 29, 2026, the Company sold shares of Series B Convertible
Preferred Stock for $
On July 27, 2026, the Company sold shares
of Series B Convertible Preferred Stock for $
As of July 31, 2026, the aggregate redemption
value of the Series B Convertible Preferred Stock was $
Series C Preferred Stock
On April 17, 2026, the Company designated shares of Series C Convertible Preferred Stock ("Series C Preferred Stock"), par value $ per share, pursuant to a Certificate of Designation filed with the State of Florida. Each share of Series C Preferred Stock has a stated value of $ per share.
The Series C Preferred Stock ranks senior to the
Company’s common stock with respect to dividend rights and distributions upon liquidation, dissolution, or winding up of the Company.
Holders are entitled to cumulative dividends at an annual rate of
In the event of liquidation, dissolution, winding up, or a deemed liquidation event, holders of Series C Preferred Stock are entitled to receive, prior to any distribution to holders of common stock, an amount equal to the stated value of the shares plus accrued and unpaid dividends and any applicable adjustment amounts as defined in the Certificate of Designation.
| 25 |
The Company may redeem the Series C Preferred
Stock during specified redemption periods at amounts ranging from
Beginning 180 days after issuance, holders may convert the Series C Preferred Stock into shares of the Company’s common stock. The conversion price is variable and is generally equal to 65% of the lowest trading price of the Company’s common stock during the ten trading days preceding the conversion date, subject to adjustment provisions contained in the Certificate of Designation.
On June 16, 2026, the Company sold shares
of Series C Convertible Preferred Stock for $
As of July 31, 2026, the aggregate redemption
value of the Series C Convertible Preferred Stock was $
Accounting treatment for Series A, Series B and Series C Preferred Stock
The variable-price conversion features are not considered indexed to the Company’s own stock and therefore do not qualify for the equity classification exception under ASC 815-40. Accordingly, the conversion features were bifurcated from the preferred-stock host contracts and accounted for as derivative liabilities. The derivative liabilities were initially and subsequently measured at fair value, with changes in fair value recognized in earnings.
The remaining preferred-stock host contracts are classified as mezzanine equity because certain cash-redemption provisions are contingent upon events that are not solely within the Company’s control. As of July 31, 2026, no event had occurred that permitted the holders to require cash redemption. Based on its assessment of contractual compliance, anticipated ability to satisfy the applicable obligations, and the absence of pending or expected transactions that would trigger holder redemption rights, management concluded that the occurrence of a contingency permitting redemption outside the Company’s control was not probable. Accordingly, the Company did not accrete their carrying amounts to stated or redemption value.
Incremental issuance costs were allocated between the derivative liabilities and the preferred-stock hosts based on their relative initial fair values. Costs allocated to the derivative liabilities were expensed, and costs allocated to the preferred-stock hosts were recorded as reductions of mezzanine equity.
| Mezzanine-equity carrying amounts | |||||||||||||||||
| Series A | Series B | Series C | Total | ||||||||||||||
| Cash purchase price | $ | $ | $ | $ | |||||||||||||
| Initial derivative liability | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Residual preferred-stock host | |||||||||||||||||
| Issuance costs allocated to host | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Preferred stock (mezzanine equity) carrying amount | |||||||||||||||||
| Residual preferred-stock host | |||||||||||||||||
| Mezzanine-equity carrying amount | $ | $ | $ | $ | |||||||||||||
Series D Preferred Stock
On April 30, 2026, the Company issued
shares of Series D Convertible Preferred Stock pursuant to a conversion of $
The Series D Convertible Preferred Stock carries
a cumulative annual dividend equal to
| 26 |
The Company evaluated the terms of the Series D Convertible Preferred Stock under ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. Based on management’s analysis, the Series D Convertible Preferred Stock was classified as permanent equity as of July 31, 2026.
As of July 31, 2026, shares of Series
D Convertible Preferred Stock were issued and outstanding with an aggregate carrying value of $
NOTE 14: SUBSEQUENT EVENTS
In preparing these 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, 2026, and prior to the filing of this Quarterly Report on Form 10-Q.
On September 1, 2026, the Company executed a note payable agreement for $165,000 from which $38,050 in fees were deducted for net proceeds of $126,950. The note matures on December 15, 2026 and carries an interest rate of 12% per annum. Interest on the note accrues and is paid at maturity along with principal. The Note is convertible, following the last to occur, (i) 180 days following the inception date or (ii) an event of default, into shares of the Company’s common stock at a price equal to 65% 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).
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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 described in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from those suggested by the forward-looking statements and include, without limitation:
| · | 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. | |
| · | 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. | |
| · | 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. | |
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| · | 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. | |
| · | 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.
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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 condensed consolidated 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.
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 pursue and acquire additional revenue from private, commercial, and defense department sources., 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.
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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.
Results of Operations
Comparison of the Nine months Ended July 31, 2026 to the Nine months Ended July 31, 2025
The following table provides certain selected financial information of Helio Corporation for the periods presented:
| Nine Months Ended | ||||||||||||||||
| July 31, | ||||||||||||||||
| 2026 | 2025 | Change | % | |||||||||||||
| Revenues | $ | 1,543,492 | $ | 3,384,423 | (1,840,931 | ) | (54% | ) | ||||||||
| Costs of revenue | (905,106 | ) | (2,680,940 | ) | 1,775,834 | 66% | ||||||||||
| Operating expenses | (4,715,947 | ) | (3,391,392 | ) | (1,324,555 | ) | (39% | ) | ||||||||
| Operating income (loss) | (4,077,561 | ) | (2,687,909 | ) | (1,389,652 | ) | 52% | |||||||||
| Interest expense, net | (293,123 | ) | (197,020 | ) | (96,103 | ) | 49% | |||||||||
| Amortization of debt discount | (864,738 | ) | – | (864,738 | ) | Increase from zero | ||||||||||
| Change in fair value of derivative liability | (731,919 | ) | – | (731,919 | ) | Increase from zero | ||||||||||
| Gain on extinguishment of derivative liability | 509,476 | – | 509,476 | Increase from zero | ||||||||||||
| Loss on issuance of derivative | (105,527 | ) | – | (105,527 | ) | Increase from zero | ||||||||||
| Loss on modification of debt | (51,480 | ) | – | (51,480 | ) | Increase from zero | ||||||||||
| Loss on debt extinguishment | (1,236,303 | ) | – | (1,236,303 | ) | Increase to zero | ||||||||||
| Net income (loss) | $ | (6,851,175 | ) | $ | (2,884,929 | ) | (3,966,246 | ) | 137% | |||||||
| Loss per share basic and diluted | $ | (1.52 | ) | $ | (1.28 | ) | ||||||||||
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Revenue for the nine months ended July 31, 2026 decreased by 54% to $1,543,492 from $3,384,423 for the nine months ended July 31, 2025, reflecting a lower overall volume of work compared to the prior nine months. Contributing factors include continuing budget cuts to NASA programs enacted by the current administration, combined with the extended government shutdown. During the nine months ended July 31, 2026, we serviced six customers, one of which was a government customer, one public company and three non/not-for-profit customers who were under government contracts, and one private customer. 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
Cost of Revenue
The 66% decrease in cost of revenue for the nine months ended July 31, 2026 to $905,106 from $2,680,940 for the nine months ended July 31, 2025 mainly reflected the decreased business volume described above. As a percentage of revenue, cost of revenue amounted to 59% and 79% in the nine months ended July 31, 2026 and 2025, respectively. Cost of revenue as a percentage of revenue decreased by approximately 20% due to increased operational efficiency on several new contracts that commenced in Q3 2026.
Operating Expenses
| Nine Months Ended | ||||||||||||||||
| July 31, | ||||||||||||||||
| 2026 | 2025 | Change | % | |||||||||||||
| Operating expenses | ||||||||||||||||
| Other general and administrative | $ | 3,359,080 | $ | 2,072,456 | $ | 1,286,624 | 62% | |||||||||
| Personnel expenses | 97,680 | 408,908 | (311,228 | ) | (76% | ) | ||||||||||
| Facilities expense | 609,430 | 549,537 | 59,893 | 11% | ||||||||||||
| Professional fees | 632,760 | 343,495 | 289,265 | 84% | ||||||||||||
| Depreciation expense | 16,997 | 16,996 | 1 | 0% | ||||||||||||
| Total | $ | 4,715,947 | $ | 3,391,392 | $ | 1,324,555 | 39% | |||||||||
Overall operating expenses increased by $1,324,555, or 39%, to $4,715,947 for the nine months ended July 31, 2026, as compared to $3,391,392 for the nine months ended July 31, 2025, driven by professional fees and higher G&A expenses and R&D activities. Additionally, the Company issued stock for services to the CEO, CFO and consultants for an aggregate value of $2,481,918.
Other Expense
Our other expenses are comprised of interest expense, amortization of debt discount, change in fair value of derivative liabilities, gain on extinguishment of derivative liabilities, loss on issuance of derivative, loss on modification of debt and loss on debt extinguishment. Overall other expenses increased by $2,576,594, or 1308%, to $2,773,614 for the nine months ended July 31, 2026, as compared to $197,020 for the nine months ended July 31, 2025. We recorded $293,123 in interest expense in the nine months ended July 31, 2026 compared to $197,020 in the nine months ended July 31, 2025, reflecting our increased amount of average outstanding debt and increased rates of interest thereunder. In the nine months ended July 31, 2026 we recorded amortization of debt discount of $864,738, the change in fair value of derivative liabilities of $731,919, which was due to the issuance of convertible debt and preferred stock, loss on issuance of derivative in the amount of $105,527, a gain on extinguishment of derivative liabilities in the amount of $509,476, a loss on modification of debt in the amount of $51,480 and a loss on debt extinguishment in the amount of $1,236,303.
We have not recorded income tax expense or benefit in the nine months ended July 31, 2026 and 2025 (because of our tax loss carryforwards). We had approximately $11,836,000 of net operating loss carry forwards to offset future federal taxable income as of July 31, 2026.
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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, 2026. 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 nine months.
Net Loss
Our net loss for the nine months ended July 31, 2026 was $6,851,175, compared to a net loss of $2,884,929 for the nine months ended July 31, 2025. The change was due to the reasons discussed above.
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 twelve months from the issuance of the condensed consolidated financial statements, which is not alleviated by management’s plans. The condensed consolidated financial statements have been prepared under the going concern basis of accounting. These condensed consolidated financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.
Comparison of the Three Months Ended July 31, 2026 to the Three Months Ended July 31, 2025
The following table provides certain selected financial information of Helio Corporation for the periods presented:
| Three Months Ended | |||||||||||||||||
| July 31, | |||||||||||||||||
| 2026 | 2025 | Change | % | ||||||||||||||
| Revenues | $ | 590,626 | $ | 784,587 | (193,961 | ) | (25% | ) | |||||||||
| Costs of revenue | (325,534 | ) | (686,197 | ) | 360,663 | 53% | |||||||||||
| Operating expenses | (811,324 | ) | (1,000,284 | ) | 188,960 | 19% | |||||||||||
| Operating income (loss) | (546,232 | ) | (901,894 | ) | 355,662 | (39% | ) | ||||||||||
| Interest expense, net | (54,070 | ) | (48,860 | ) | (5,210 | ) | 11% | ||||||||||
| Amortization of debt discount | (420,163 | ) | – | (420,163 | ) | Increase from zero | |||||||||||
| Change in fair value of derivative liability | (412,977 | ) | – | (412,977 | ) | Increase from zero | |||||||||||
| Gain on extinguishment of derivative liability | 420,239 | – | 420,239 | Increase from zero | |||||||||||||
| Loss on issuance of derivative | (105,527 | ) | – | (105,527 | ) | Increase from zero | |||||||||||
| Loss on debt extinguishment | (352,760 | ) | – | (352,760 | ) | Increase from zero | |||||||||||
| Net income (loss) | $ | (1,471,490 | ) | $ | (950,754 | ) | (520,736 | ) | 55% | ||||||||
| Loss per share basic and diluted | $ | (0.29 | ) | $ | (0.42 | ) | |||||||||||
Revenue for the three months ended July 31, 2026 decreased by 25% to $590,626 from $784,587 for the three months ended July 31, 2025, reflecting a lower overall volume of work compared to the prior three months. Contributing factors include continuing budget cuts to NASA programs enacted by the current administration. During the three months ended July 31, 2026 we serviced six customers, of which one was a direct government customer, one was a public company, three were non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer, and one private customer. 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, and one private customer.
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Cost of Revenue
The 53% decrease in cost of revenue for the three months ended July 31, 2026 to $325,534 from $686,197 for the three months ended July 31, 2025 mainly reflected the decreased business volume described above. As a percentage of revenue, cost of revenue amounted to 55% and 87% in the three months ended July 31, 2026 and 2025, respectively. Cost of revenue as a percentage of revenue decreased by approximately 32% due to increased operational efficiency on several new contracts that commenced in Q3 2026.
Operating Expenses
| Three Months Ended | ||||||||||||||||
| July 31, | ||||||||||||||||
| 2026 | 2025 | Change | % | |||||||||||||
| Operating expenses | ||||||||||||||||
| Other general and administrative | $ | 347,872 | $ | 607,537 | $ | (259,665 | ) | (43% | ) | |||||||
| Personnel expenses | 25,162 | 116,664 | (91,502 | ) | (78% | ) | ||||||||||
| Facilities expense | 175,156 | 149,741 | 25,415 | 17% | ||||||||||||
| Professional fees | 257,469 | 120,676 | 136,793 | 113% | ||||||||||||
| Depreciation expense | 5,665 | 5,666 | (1 | ) | 0% | |||||||||||
| Total | $ | 811,324 | $ | 1,000,284 | $ | (188,960 | ) | (19% | ) | |||||||
Overall operating expenses decreased by $188,960, or 19%, to $811,324 for the three months ended July 31, 2026, as compared to $1,000,284 for the three months ended July 31, 2025, in both cases driven by lower personnel expenses and G&A expenses.
Other Expense
Our other expenses are comprised of interest expense, amortization of debt discount, change in fair value of derivative liability, gain on extinguishment of derivative liabilities, loss on issuance of derivative, loss on modification of debt and loss on debt extinguishment. Overall other expenses increased by $876,398, or 1794%, to $925,258 for the three months ended July 31, 2026, as compared to $48,860 for the three months ended July 31, 2025. We recorded $54,070 in interest expense in the three months ended July 31, 2026 compared to $48,860 in the three months ended July 31, 2025, reflecting our increased amount of average outstanding debt and increased rates of interest thereunder. In the three months ended July 31, 2026 we recorded amortization of debt discount of $420,163, the change in fair value of derivative liabilities of $412,977, which was due to the issuance of convertible debt and preferred stock, loss on issuance of derivative in the amount of $105,527, a gain on extinguishment of derivative liabilities in the amount of $420,239, a loss on debt extinguishment in the amount of $352,760.
Net Loss
Our net loss for the three months ended July 31, 2026 was $1,471,490, compared to a net loss of $950,754 for the three months ended July 31, 2025. The change was due to the reasons discussed above.
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 twelve months from the issuance of the condensed consolidated financial statements, which is not alleviated by management’s plans. The condensed consolidated financial statements have been prepared under the going concern basis of accounting. These condensed consolidated financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.
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Liquidity and Capital Resources
As of July 31, 2026, the Company had cash and cash equivalents of $520,504 and has historically incurred operating losses and negative cash flows from operations. The Company has funded its working capital, research and development activities, capital expenditures, and other commitments primarily through loans from the Company’s executive officers and directors and other debt financings. The Company has also issued equity securities in non-cash transactions, including in connection with services rendered and debt-related arrangements. The Company expects to continue to incur operating losses and negative operating cash flows as it advances its business and executes its strategic initiatives.
The Company’s primary liquidity requirements include funding operating expenses, research and development activities, engineering and technical personnel costs, general and administrative expenses, professional fees, and costs associated with maintaining its public company reporting obligations. As of July 31, 2026, the Company’s ability to meet its obligations as they become due depend, and is expected to continue to depend, on its ability to obtain additional financing through debt or equity issuances, strategic transactions, or other capital-raising activities.
Default Under Promissory Notes
As of July 31, 2026, the Company was not in default under any of its outstanding promissory notes.
During fiscal year 2026 and subsequent to July 31, 2026, the Company completed multiple financing transactions to support its liquidity needs (see Notes 6, 13, and 14).
These notes bear interest at rates generally ranging from approximately 6% to 12% per annum (subject to higher default rates) and have maturities ranging from October 2026 through July 2027. The proceeds from these financings were used for working capital and general corporate purposes.
Debt Obligations and Contractual Commitments
As of July 31, 2026, the Company had outstanding debt from unrelated parties under notes payable with an aggregate principal balance of $750,500. These notes bear interest at rates of 6.00% and 12.00% per annum and mature within the next two fiscal years. Certain of these notes are secured by the Company’s accounts receivable and by shares of common stock pledged by a shareholder, and certain notes permit acceleration upon the occurrence of specified events.
The Company’s ability to service its debt obligations will depend on its future operating performance and its ability to obtain additional financing.
Subsequent Financing Activities
Subsequent to July 31, 2026, the Company executed a note payable agreement for $165,000 from which $38,050 in fees were deducted for net proceeds of $126,950.
Capital Requirements and Going-Concern Considerations
Because of historical and expected operating losses and negative operating cash flows, there is substantial doubt about the Company’s ability to continue as a going concern for twelve months from the issuance of the condensed consolidated financial statements. Management’s plans to address this uncertainty include pursuing additional debt and equity financings, strategic partnerships, and other capital-raising initiatives. However, there can be no assurance that such financing or other arrangements will be available on acceptable terms, or at all.
If the Company is unable to obtain additional capital when needed, it may be required to reduce or delay expenditures, curtail operations, delay or limit strategic initiatives, or pursue other strategic alternatives.
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Cash Flows
| Nine months Ended July 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash used in operating activities | $ | (1,937,196 | ) | $ | (1,549,753 | ) | ||
| Cash provided by financing activities | $ | 2,450,395 | $ | 1,042,134 | ||||
| Cash on hand (end of period) | $ | 520,504 | $ | 43,933 | ||||
Cash Flows Used in Operating Activities
Our operating cash flow results were affected by the aging and timing of certain working capital items. During the nine months ended July 31, 2026 and 2025, our negative operating cash flow was attributed mainly to our net loss, as described above.
During the nine months ended July 31, 2026, the Company reported $1,937,196 of cash used in operating activities. The Company’s negative operating cash flow was attributed mainly to a net loss of $6,851,175, decrease in lease obligations of $314,060, a decrease in accrued compensation in the amount of $229,575 and a gain on extinguishment of derivative liability in the amount of $509,476. This was offset by a loss on debt extinguishment in the amount of $1,236,303, amortization of debt discount in the amount of $864,738, common stock issued for services in the amount of $2,481,918, and change in fair value of derivative liabilities in the amount of $731,919.
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.
Cash Flows Provided by Financing Activities
During the nine months ended July 31, 2026, net cash provided by financing activities was $2,450,395, which included the incurrence of new debt proceeds amounting to $1,737,045, proceeds from the sale of common stock in the amount of $1,522,747, proceeds from the sale of preferred stock in the amount of $1,053,500, proceeds from the exercise of stock options in the amount of $8,066, offset by repayments of debt totaling $1,821,135 and common stock repurchased for $49,828.
During the nine months ended July 31, 2025, net cash from financing activities was $1,042,134, which included $1,110,403 of the incurrence of new debt offset by $68,269 in repayments of notes payable.
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 nine months ending July 31, 2026:
| Leases | Debt | Total | ||||||||||
| Remainder of 2026 | $ | 121,555 | $ | 1,202,722 | $ | 1,324,277 | ||||||
| 2027 | 283,628 | 70,000 | 353,628 | |||||||||
| Total | $ | 405,183 | $ | 1,272,722 | $ | 1,677,905 | ||||||
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.
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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, 2026, 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, 2026, due to the presence of material weaknesses in our internal control over financial reporting, as described below.
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 consolidated 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 consolidated 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, 2026, 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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following sets forth information regarding all equity securities of the Company sold during the three months ended July 31, 2026 that were not registered under the Securities Act of 1933, as amended (the “Securities Act”), and that were not otherwise previously reported. Unless otherwise noted, no underwriters were involved and no underwriting discounts or commissions were paid. The applicable exemption from registration and the facts relied upon to make the exemption available for each issuance remain to be confirmed by the Company, as described below.
Convertible Notes
On July 30, 2026, the Company issued a convertible promissory note in the aggregate principal amount of $200,000 (reflecting an original issue discount of $20,000, for a purchase price of $180,000), maturing on July 30, 2027 and bearing interest at 6% per annum. Accrued interest is payable in shares of common stock in accordance with the terms of the note. Beginning after the sixth monthly anniversary of the note, the holder may convert all or any portion of the outstanding principal into shares of the Company’s common stock at a conversion price equal to 60% of the lowest trading price of the Company’s common stock during the 20 trading days preceding conversion, subject to adjustment. Conversions are subject to a 4.99% beneficial ownership limitation, which may be increased to up to 9.9% upon 60 days’ prior written notice.
Common Stock
During the three months ended July 31, 2026, the Company issued 7,412 shares of common stock to consultants in lieu of cash compensation for services rendered, with an aggregate value of $137,053.
During the three months ended July 31, 2026, the Company sold an aggregate of 123,152 shares of common stock for aggregate proceeds of $348,097.
Preferred Stock
During the three months ended July 31, 2026, the Company sold an aggregate of 400,000 shares of its Series A Convertible Preferred Stock for aggregate proceeds of $400,000, consisting of 200,000 shares pursuant to a Series A Preferred Stock Purchase Agreement dated June 16, 2026 and 200,000 shares pursuant to a Series A Preferred Stock Purchase Agreement dated July 16, 2026.
During the three months ended July 31, 2026, the Company issued an aggregate of 355,000 shares of Series B Convertible Preferred Stock, consisting of 177,500 shares issued to Efrat Investments and 177,500 shares sold to SilverCrest Hybrid Capital LLC on July 27, 2026. The SilverCrest shares were sold for aggregate proceeds of $159,750, or $0.90 per share.
On June 16, 2026, the Company sold 200,000 shares of its Series C Convertible Preferred Stock at a purchase price of $1.00 per share, for aggregate proceeds of $200,000 to Auctus Fund, LLC.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table sets forth information regarding purchases of the Company’s common stock made by or on behalf of the Company during the three months ended July 31, 2026.
| Period | (a) Total Number of Shares Purchased | (b) Average Price Paid per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs |
| May 1 – May 31, 2026 | – | – | – | – |
| June 1 – June 30, 2026 | 1,835.4 | $5.61 | – | – |
| July 1 – July 31, 2026 | 7,395.4 | $5.35 | – | – |
| Total | 9,230.8 | – | – |
The Company purchased an aggregate of 9,230.8 shares of common stock, as adjusted for the Company’s 1-for-5 reverse stock split effected on July 22, 2026, in open-market transactions during the three months ended July 31, 2026. These purchases were not made pursuant to a publicly announced repurchase plan or program. On July 2, 2026, the Board of Directors authorized the Company to repurchase up to 250,000 shares of its common stock from time to time through September 30, 2026 and ratified 9,477 shares repurchased prior to adoption of the program. The Company did not publicly announce the repurchase program.
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ITEM 5. OTHER INFORMATION
During the
quarter ended July 31, 2026, no director or officer of the Company
ITEM 6. EXHIBITS
| Exhibit No. | Description | |
| 31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * | Filed herewith |
| ** | Furnished herewith. This exhibit will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. |
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 14, 2026 | By: | /s/ Edward Cabrera |
| Edward Cabrera | ||
| Chief Executive Officer and Chairman of the Board of Directors | ||
| (Principal Executive Officer) | ||
| Date: September 14, 2026 | By: | /s/ Mark Knauf |
| Mark Knauf | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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