Deepening losses and heavy debt pressure Helio Corp (HLEO) as revenue falls
Helio Corporation reported a sharp deterioration in results for the three months ended January 31, 2026. Revenue fell to $495,550 from $1,427,576 a year earlier, while net loss widened to $3,733,728 compared with $919,142, reflecting lower contract volume and higher operating costs.
Cash was $282,061 against total liabilities of $5,028,519, leaving a shareholders’ deficit of $3,886,719. The company carries substantial notes payable of $1,727,432 and convertible notes payable of $481,517, and discloses substantial doubt about its ability to continue as a going concern.
Positive
- None.
Negative
- Sharp operating deterioration: Revenue fell to $495,550 (down 65%), while net loss grew to $3,733,728, indicating a much weaker operating profile.
- Strained balance sheet and leverage: Cash of $282,061 versus total liabilities of $5,028,519 and a shareholders’ deficit of $3,886,719 highlight significant financial stress.
- Going-concern uncertainty: Management discloses substantial doubt about the company’s ability to continue as a going concern, given recurring losses and funding needs.
- Reliance on expensive, dilutive financing: The company uses high-interest notes and deeply discounted convertible debt, with derivative liabilities of $498,690 and additional post-quarter converts of about $760,272.
Insights
Helio shows steep revenue decline, rising losses, heavy debt and going-concern pressure.
Helio Corporation saw quarterly revenue drop to $495,550, down 65% year over year, while net loss expanded to $3.73M. Operating expenses more than doubled, driving an operating loss of $2.68M despite a smaller cost base on projects.
The balance sheet is highly leveraged: total liabilities of $5.03M sit against only $282k of cash and a shareholders’ deficit of $3.89M. The company relies on multiple high-interest notes and convertible notes, some in default, and records a derivative liability of $498,690 tied to structured financing features.
Management explicitly states there is substantial doubt about continuing as a going concern for one year from issuance, and subsequent events include roughly $760k of additional discounted convertible notes. Future performance will depend heavily on securing sustainable financing and stabilizing revenue from government and commercial space contracts.
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:
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
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Securities registered pursuant to Section 12(b) of the Act:
Indicate by check mark whether the registrant
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| ☒ | Smaller reporting company | ||
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As of March 27, 2026 there were
Table of Contents
| PART I—FINANCIAL INFORMATION | 1 |
| Item 1. Financial Statements | 1 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 2 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 11 |
| Item 4. Controls and Procedures | 11 |
| PART II—OTHER INFORMATION | 13 |
| Item 1. Legal Proceedings | 13 |
| Item 1A. Risk Factors | 13 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 13 |
| Item 4. Mine Safety Disclosures | 13 |
| Item 5. Other Information | 13 |
| Item 6. Exhibits | 16 |
| SIGNATURES | 17 |
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 Months Ended January 31, 2026
Index to the Condensed Consolidated Financial Statements (Unaudited)
| Page No. | ||
| Condensed Consolidated Balance Sheets at January 31, 2026 (Unaudited) and October 31, 2025 | F-2 | |
| Condensed Consolidated Statements of Operations for the three months ended January 31, 2026 and 2025 (Unaudited) | F-3 | |
| Condensed Consolidated Statements of Changes in Shareholders’ Deficit for the three months ended January 31, 2026 and 2025 (Unaudited) | F-4 | |
| Condensed Consolidated Statements of Cash Flows for the three months ended January 31, 2026 and 2025 (Unaudited) | F-5 | |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | F-6 |
F-1
HELIO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| January 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 asset, net | ||||||||
| Total Non-current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| Liabilities and Shareholders’ (Deficit) Equity | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued compensation | ||||||||
| Notes Payable - Related Parties | ||||||||
| Notes payable | ||||||||
| Convertible notes payable, net | ||||||||
| 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 10) | ||||||||
| Shareholders’ (Deficit) Equity | ||||||||
| Common stock, no par value, | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Shareholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-2
HELIO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| For the Three Months Ended | ||||||||
| January 31, | January 31, | |||||||
| 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: | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Amortization of debt discount | ( | ) | - | |||||
| Change in fair value of derivative liability | ( | ) | - | |||||
| Loss on debt extinguishment | ( | ) | - | |||||
| Total expense | ( | ) | ( | ) | ||||
| 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.
F-3
HELIO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY
(UNAUDITED)
FOR THE THREE MONTHS ENDED JANUARY 31, 2026 AND 2025
| No par-value | ||||||||||||||||
| Common Stock | Accumulated | |||||||||||||||
| Shares | 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 | $ | $ | ( | ) | $ | ( | ) | |||||||||
| 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 | $ | $ | ( | ) | $ | ( | ) | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-4
HELIO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Three Months Ended January 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 | ||||||||
| Credit loss expense | - | |||||||
| Stock-based compensation | ||||||||
| Common stock issued for services | - | |||||||
| Loss on extinguishment of debt | ||||||||
| 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 | - | |||||||
| Accounts payable and accrued expenses | ||||||||
| Accrued compensation | ( | ) | ( | ) | ||||
| Operating lease obligations | ( | ) | ( | ) | ||||
| Net cash (used in) operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from notes payable | ||||||||
| Proceeds from convertible notes payable | - | |||||||
| Proceeds from notes payable - Related party | - | |||||||
| Repayment of notes payable | ( | ) | - | |||||
| Repayment of notes payable - related parties | ( | ) | - | |||||
| 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 (related party) and accrued interest into common stock | $ | $ | - | |||||
| Common stock issued with notes payable | $ | $ | - | |||||
| Derivative liabilities, assumed | $ | $ | - | |||||
| Debt discounts obtained | $ | ( | ) | $ | - | |||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
F-5
HELIO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 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.
Change-in-control Transaction
On
Liquidity
The Company has historically funded its working capital, research and development and capital expenditure requirements and other commitments (including debt service and repayment) from its operating cash flows, debt financing, and issuances of equity. The Company has historically experienced negative cash flows from operations and recurring net losses.
During the year ended October 31, 2025 and the three months ended January 31, 2026, the Company entered into additional note payable agreements and convertible note agreements to obtain additional funding (see Note 5). Additional financing or capital investment will be necessary to sustain operations for one year from the issuance of these condensed consolidated financial statements.
The Company is currently engaged in negotiations with prospective lenders regarding potential bridge financing arrangements, and potential investors for the purchase of convertible notes or equity investments. These discussions are ongoing, and there can be no assurance that the Company will enter into definitive agreements or that any such financing will be completed on favorable terms or at all.
F-6
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.
The Company has outstanding unsecured notes to certain related parties
with an aggregate outstanding principal balance of $
As of January 31, 2026, the Company has outstanding
debt from unrelated parties pursuant to notes payable in the aggregate principal amount of $
Because of historical and expected operating losses and net operating cash flow deficits, there is substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the 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 any subsequent quarter or for the entire 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 condensed 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
F-7
Reclassification
Certain reclassifications have been made to prior periods for comparative presentation purposes only.
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 no cash equivalents as of January 31, 2026 and October 31, 2025.
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 a credit loss expense 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 January 31, 2026 and October 31, 2025, there was no amount recorded
relating to the allowance for credit losses. The Company writes off bad debts as they occur during the year, if applicable. During the
three months ended January 31, 2026 and 2025, the Company recorded bad debt expense in the amount of $
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.
| 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 January 31, 2026 or October 31, 2025, respectively.
F-8
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 following table represents the Company’s assets and liabilities by level measured at fair value on a recurring basis at January 31, 2026 and October 31, 2025.
| January 31, 2026 | October 31, 2025 | |||||||||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Embedded derivative liability | $ | — | — | $ | $ | — | — | $ | ||||||||||||||||
| Warrant derivative liability | $ | — | — | $ | $ | — | — | $ | — | |||||||||||||||
Convertible Debentures
The Company adheres to the guidance in Accounting Standards Updated (“ASU”) 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 simplifies an issuer’s accounting for convertible instruments and its application of the derivatives scope exception for contracts in its own equity. Additionally, ASU 2020-06 removes the requirements for accounting for beneficial conversion features.
F-9
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 satisified.
Engineering services deliver both space qualified hardware and accompanying analyses, and are conducted under Cost-type, Fixed price, PO, and T&M contracts. Cost-type and T&M Engineering contracts are billed monthly as work is completed and revenue is recognized. Revenue for fixed price contracts including purchase orders that specify priced milestones for delivery of hardware, reports, or analyses is recognized upon completion of a specific milestone. Revenue on fixed price contracts that are still in progress at month end are otherwise recognized on the percentage-of-completion method, measured by the percentage of total costs incurred to date to the estimated total costs for each contract.
Income Taxes
The Company accounts for income taxes under the provisions of ASC 740 Accounting for Income Taxes, which requires a company to first determine whether it is more likely than not (which is defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.
Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Deferred income taxes are also recognized for carry-forward losses which can be utilized to offset future taxable income. A valuation allowance is recognized when, based on the weight of all available evidence, it is considered more likely than not that all, or some portion, of the net deferred tax assets will not be realized. The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and cause a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation is reflected in current income. Income tax expense is comprised of the sum of current income tax plus the change in deferred tax assets and liabilities.
F-10
Earnings (loss) Per Share
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.
| January 31, | ||||||||
| 2026 | 2025 | |||||||
| Stock options | ||||||||
| Warrants | - | |||||||
| Convertible notes payable | - | |||||||
| 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
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 three months ended January 31, 2026 and 2025, the company recorded $
Stock based-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718, Stock Compensation. The computation of the expense associated with stock-based compensation requires the use of a 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.
F-11
Benefit Plan
From November 1, 2024 through July 31, 2025 the Company offered a 401(k) plan,
in which employees were eligible to participate in the plan on the first day of the month following the date of hire. Under the plan
employees may defer up to $
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:
| January 31, 2026 | October 31, 2025 | |||||||
| Furniture and equipment | $ | $ | ||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense for each of the three months
ended January 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 January 31, 2026 and October 31, 2025 was $
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 $
F-12
Included within the notes payable – related parties balance is
a convertible note agreement entered on March 18, 2024 for $
On April 16, 2025, the Company issued an unsecured promissory note
in the principal amount of $
| January 31, 2026 | October 31, 2025 | |||||||
| Notes payable – related parties, current portion | $ | $ | ||||||
| Notes payable – related parties, non-current portion | - | |||||||
| Total notes payable – related parties | $ | $ | ||||||
The aggregate maturity on the notes payable – related parties as of January 31, 2026, are as follows:
| On Demand | $ |
NOTE 5: NOTES PAYABLE
On March 12, 2024, the Company executed a note payable agreement
for $
F-13
On June 20, 2024, the Company executed a convertible note payable
agreement for $
On July 31, 2024, the Company issued a convertible note payable agreement
for $
F-14
On July 31, 2024, the Company executed a convertible note payable agreement
for $
On January 9, 2025, the Company executed a note payable agreement for
$
On February 3, 2025, the Company executed a note payable agreement
for $
On May 19, 2025, the Company obtained a short-term
loan, which totaled $
On June 8, 2025, the Company entered into a Receivables Sale Agreement
pursuant to which the Company sold receivables totaling $
On September 18, 2025, the Company obtained a
short-term loan, which totaled $
On September 30, 2025, the Company obtained a
short-term loan, which totaled $
F-15
On September 30, 2025, the Company obtained a
short-term loan, which totaled $
On September 30, 2025, the Company obtained a short-term loan, which
totaled $
On January 23, 2026, the Company issued a $
| January 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 January 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 August 26, 2025, the Company executed a note payable agreement for
$
F-16
On December 19, 2025, the Company executed a note payable agreement
for $
On December 19, 2025, the Company executed a note payable agreement
for $
On December 19, 2025, the Company executed a note payable agreement
for $
On January 12, 2026, the Company executed a note payable agreement
for $
F-17
On January 14, 2026, the Company executed a note payable agreement
for $
The aggregate maturity on the convertible notes payable as of January 31, 2026, are as follows:
| Due in less than one year | $ | |||
| Due after one year | - | |||
| Less current portion | ( | ) | ||
| Convertible notes payable, non-current portion | $ | - |
NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS
Embedded derivatives
The Company’s convertible promissory notes gave rise to derivative financial instruments. The notes 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 January 31, 2026 and October 31, 2025 and the amounts that were reflected in operations related to derivatives for the period ended:
| January 31, 2026 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Embedded derivative liability | $ | |||||||
| Warrant derivative liability | ||||||||
| Total | $ | |||||||
| October 31, 2025 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Embedded derivative liability | $ | |||||||
| 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 months ended January 31, 2026 and 2025:
| For the Three months Ended | ||||||||
| January 31, 2026 | January 31, 2025 | |||||||
| Embedded derivative liability | $ | $ | - | |||||
| Warrant derivative liability | ( | ) | - | |||||
| Total gain (loss) | $ | ( | ) | $ | - | |||
F-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 income. The Company has selected the Lattice Model valuation technique to fair value the embedded derivative 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 expired, 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 | Period Ended | |||||||
| Dates Note |
January 31, 2026 |
|||||||
| 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.
| Inception | Period Ended | |||||||
| Dates Note | January 31, 2026 | |||||||
| 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 derivatives for the three months ended January 31, 2026.
| January 31, 2026 | ||||
| Balances at beginning of period | $ | |||
| Issuances: | ||||
| Embedded derivatives | ||||
| Warrant derivatives | ||||
| Changes in fair value inputs and assumptions reflected in income | ||||
| Balances at end of period | $ | |||
NOTE 8: STOCK OPTIONS
The 2018 Equity Incentive Plan was approved by the Board of Directors on July 1, 2018 and the Company amended the equity plan on December 17, 2023. In conjunction with the recapitalization and effective January 3, 2024, the Company adopted the Heliospace 2018 Equity Plan as the Company’s Plan (“Equity Plan”). 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.
F-19
The
Due to the change-in-control transaction described
in Note 1, there was a recapitalization for which the Company’s stock options were adjusted for the new capital structure. The Company
adjusted each of the granted options a
During the three months ended January 31, 2026 and 2025, there were no stock options granted.
| Number of Shares | Weighted Average Exercise Price ($) | Weighted Average Remaining Term (Three months) | Aggregate Intrinsic Value | |||||||||||||
| Three months ended January 31, 2025 | ||||||||||||||||
| Balance as of October 31, 2024 | $ | $ | ||||||||||||||
| Issued | - | - | - | - | ||||||||||||
| Canceled | - | - | - | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Balance as of January 31, 2025 | $ | $ | ||||||||||||||
| Exercisable as of January 31, 2025 | $ | $ | ||||||||||||||
| Three months ended January 31, 2026 | ||||||||||||||||
| Balance as of October 31, 2025 | $ | $ | ||||||||||||||
| Issued | - | - | - | - | ||||||||||||
| Canceled | - | - | - | - | ||||||||||||
| Exercised | - | - | - | - | ||||||||||||
| Balance as of January 31, 2026 | $ | $ | ||||||||||||||
| Exercisable as of January 31, 2026 | $ | $ | ||||||||||||||
Stock-based compensation from stock awards
for the three months ended January 31, 2026 and 2025 was $
F-20
NOTE 9: LEASES
The Company leases its manufacturing facility and it is classified
as an operating lease. The Company recognized right of use assets and lease liabilities pursuant to these leases. Leases with an initial
term of
The lease for the manufacturing facility commenced on June 1,
2022, and has a term of five years. For the first twelve months the monthly lease payments were $
Right-of-use lease asset is summarized below:
January 31, 2026 | October 31, 2025 | |||||||
| Manufacturing lease | $ | $ | ||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Right-of-use lease asset, net | $ | $ | ||||||
Operating lease liability is summarized below:
| January 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 January 31, 2026 were as follows:
| 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 $
F-21
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
| Accounts Receivable Concentration |
||||||||
| January 31, | October 31 | |||||||
| Company | 2026 | 2025 | ||||||
| A | % | % | ||||||
| B | % | % | ||||||
| C | % | % | ||||||
| D | % | % | ||||||
| % | 99 |
% | ||||||
For the three months ended January 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
F-22
NOTE 13: 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 January 31, 2026, and prior to the filing of this Quarterly Report on Form 10-Q.
Convertible Note Financings
On February 9, 2026 and February 17, 2026, the
Company entered into separate Securities Purchase Agreements pursuant to which it issued an aggregate principal amount of approximately
$
On February 9, 2026, the Company entered into a Securities Purchase
Agreement (the “CFI SPA”) with CFI Capital LLC (“CFI”), pursuant to which the Company agreed to issue and sell,
and CFI agreed to purchase, a
Following the six-month anniversary of issuance,
CFI may, subject to certain beneficial ownership limitations, convert all or any portion of the outstanding principal and accrued interest
into shares of the Company’s common stock at a conversion price equal to sixty percent (
The CFI Note further provides that if the Company issues securities to another party with more favorable conversion terms (including conversion price, discount or lookback period), such conversion terms will be adjusted in favor of CFI.
The CFI Note may be prepaid subject to premiums
ranging from
Upon an event of default, unless cured within five days or waived by
the Holder, and during the continuation of an event of default, including, among other things, payment defaults, covenant breaches, reporting
delinquency, delisting, insolvency events or cross-default, unless cured by the Company within five days or otherwise waived in writing
by CFI, CFI may declare the CFI Note immediately due and payable. Upon default, interest accrues at the highest rate permitted by Florida
law and the conversion price is adjusted to forty-five percent (
F-23
On February 17, 2026, the Company entered into
a Securities Purchase Agreement (the “GS SPA”) with GS Capital Partners, LLC (“GS”), pursuant to which the Company
issued a
The GS Note bears interest at twelve percent (
The GS Note matures on
Upon the occurrence of an Event of Default (as
defined in the GS Note), GS may, at its option and subject to certain beneficial ownership limitations, convert all or any portion of
the outstanding principal and accrued interest, including default interest and other amounts due, into shares of the Company’s common
stock at a conversion price equal to seventy percent (
If, while the GS Note is outstanding, the Company
consummates a financing transaction resulting in net proceeds of $
The GS Note further provides that if the Company issues securities to another party with more favorable conversion terms (including conversion price, discount or lookback period), such conversion terms will be adjusted in favor of GS.
Upon an Event of Default, if not cured by the
Company within five (5) days or waived by GS, GS may declare the GS Note immediately due and payable and the outstanding principal increases
to
The foregoing description of the GS SPA and GS Note does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements, which are filed as exhibits to this Quarterly Report on Form 10-Q and are incorporated herein by reference.
F-24
On February 17, 2026, the Company entered into a Securities Purchase
Agreement (the “Quick SPA”) with Quick Capital, LLC (“Quick”), pursuant to which the Company agreed to issue and
sell, and Quick agreed to purchase, a Convertible Promissory Note in the aggregate principal amount of $
The Quick Note bears interest at six percent (
Beginning on the 180th day following issuance,
and subject to a
The Quick Note may be prepaid by
Upon an Event of Default, including, among other
things, payment defaults, breaches of representations or covenants, failure to maintain SEC reporting compliance, delisting or loss of
quotation, insolvency events, failure to maintain required share reserves, or cross-default under other indebtedness owed to Quick or
its affiliates, the Quick Note becomes immediately due and payable and the outstanding principal balance increases to one hundred fifty
percent (
While the Quick Note is outstanding, the Holder is entitled to participate in any pro rata issuance of rights to purchase common stock or other securities as if it were a holder of the number of shares of common stock issuable upon full conversion of the Quick Note (without regard to any conversion limitations) immediately prior to the applicable record date.
Board Resignations
On March 17, 2026, Paul Turin resigned as a member of the Board of Directors of Helio Corporation (the “Company”), effective March 17, 2026. Mr. Turin’s resignation from the Board was voluntary and not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Turin remains the Chief Engineer of the Company. The Company is furnishing as Exhibit 99.1 hereto a copy of Mr. Turin’s letter of resignation.
On March 17, 2026, Stuart Bale resigned as a member of the Board of Directors of the Company, effective March 17, 2026. Mr. Bale’s resignation from the Board was voluntary and not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Bale remains the Chief Scientist of the Company. The Company is furnishing as Exhibit 99.2 hereto a copy of Mr. Bale’s letter of resignation.
F-25
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Special Note Regarding Forward-Looking Statements
Certain matters discussed in this Quarterly Report, including (without limitation) statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain forward-looking statements. Although we believe that, in making any such statements, our expectations are based on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected.
These forward-looking statements include statements relating to our anticipated financial performance and business prospects, including debt reduction, currency values and financial impact, foreign exchange counterparty exposures, the impact of pending legal proceedings, adequate liquidity levels, dividends, share repurchases or other capital deployment initiatives and/or statements preceded by, followed by or that include the words “believe,” “will,” “will be,” “will continue,” “will likely result,” “may,” “predicts,” “so we can,” “when,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “aim,” “could,” “plans,” “seeks” and similar expressions. These forward-looking statements speak only as of the date stated, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control. These risks and uncertainties, including those disclosed in the “Risk Factors” section in our registration statement on Form S-1, as amended (File No. 333-284062) (the “S-1 Registration Statement”) could cause actual results to differ materially from those suggested by the forward-looking statements and include, without limitation:
| ● |
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. |
2
| ● | Our projections of future financial results are based on a number of assumptions by our management, some or all of which may prove to be incorrect, and actual results may differ materially and adversely from such projections. |
| ● | Our estimated and projected market for our products and services may be inaccurate and may not reach our expected potential. |
| ● | We will incur significant expenses and capital expenditures to execute our business plan; there are no assurances that we will obtain adequate financing to meet these expenditures. |
| ● | We may invest significant resources in developing new products, services and technologies in pursuit of applications and revenue opportunities that may never materialize. |
| ● | Our ability to grow our business depends on our ability to develop new products, and services to satisfy changing customer demands and respond to changing industry cycles in a timely and cost-effective manner. |
| ● | Our business may be adversely affected by changes in budgetary priorities of the U.S. Government. |
| ● | Technology failures or cyber security breaches or other unauthorized access to our information technology systems or sensitive or proprietary information could have an adverse effect on the Company’s business and operations. |
| ● | Federal contracting is subject to significant regulation, including rules related to bidding, billing and accounting kickbacks and false claims, and non-compliance could subject us to fines and penalties. |
| ● | Our inability to secure additional U.S. government contracts and funding may adversely affect our business, financial condition and results of operations. |
| ● | The U.S. government’s budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year and consequently having to shut down or operate on funding levels equivalent to its prior fiscal year pursuant to a “continuing resolution,” could have an adverse impact on our business, financial condition, results of operations and cash flows. |
| ● | Our common stock has historically experienced limited trading and you may have difficulty liquidating your shares. |
| ● | Our stock price may be volatile and purchasers of our common stock could incur substantial losses. |
| ● | We do not expect to pay dividends in the foreseeable future, and you must rely on price appreciation of your shares of common stock for return on your investment. |
3
| ● | Our Company’s founders, directors and executive officers own or control a majority of the Company and you will have little or no management control over our business or corporate mattes. |
| ● | Our operating results may continue to be adversely affected as a result of unfavorable market, economic, social and political conditions. |
We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report or to conform such statements to actual results or revised expectations, except as required by law.
Overview of Operations
Heliospace, our wholly owned subsidiary, is an aerospace company specializing in the design, engineering, assembly and test of space flight qualified hardware, providing systems engineering, modeling, analysis, integration and test services to customers in government, commercial, private and non-profit markets. Heliospace designs, fabricates, assembles and tests space qualified hardware, including radar antennas for the NASA Europa Clipper mission, the antennas for the SunRISE CubeSat constellation, and deployable systems and sensors for numerous lunar landers and the Mars Sample Return program. Heliospace also provides systems engineering, integration and test, and mission formulation services, including support for the design, testing, and launch of the James Webb Space Telescope, formulation and design of the Roman Space Telescope, Habworlds Observatory, Mars Sample Return, and the Atmospheric Observing System.
In January 2024, via a share exchange accounted for as a reverse acquisition, Web3 Corporation, a Florida corporation that was originally incorporated under the name Stirling Bridge Group, Inc. and was a specialized small business venture lender, acquired 100% of the stock of Heliospace, and changed its name from Web3 Corporation to Helio Corporation (the “Business Combination”). Heliospace was the accounting acquirer in the Business Combination and was determined to be the sole predecessor of Helio Corporation. Accordingly, this discussion and analysis, and the 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.
4
One key emerging trend is the proposed shift in federal budget priorities under the Trump administration. In April 2025, the administration released its draft budget proposal for fiscal year 2026, which recommends a significant reduction in overall discretionary spending, including an approximately 50% cut to NASA’s Science Mission Directorate. If enacted, this proposal would reduce funding for core science programs such as astrophysics, heliophysics, Earth science, and planetary science—areas directly aligned with Heliospace’s technical capabilities and historical contract activity.
Although this proposal remains subject to Congressional negotiation and approval, the magnitude of the proposed cuts and the administration’s stated intent to reprioritize government resources away from space science programs present a material uncertainty for our future growth. Any resulting reduction, delay, or cancellation of NASA programs could reduce the number of available contracts, increase competition for limited awards, and adversely impact our future revenue and profitability.
In addition, broader fiscal challenges at the federal level—such as the rising national debt, persistent budget deficits, and the risk of government shutdowns or extended continuing resolutions—could result in delays to contract funding or payments, reduced availability of new program opportunities, and increased uncertainty in long-term planning. These macroeconomic pressures may also negatively affect private sector customers that rely on or benefit from government-funded space and research initiatives.
As we execute our expansion plans, we have continued to increase the percentage of revenue from private and commercial sources, and are actively working to expand our offerings to defense agencies whose budgets remain a priority for the current administration and Congress. However, these plans are subject to risks and uncertainties, and there can be no assurance that they will succeed or fully offset the effects of any reduction in government spending.
Cybersecurity Risk and Ongoing Threat Landscape
As a government contractor and developer of advanced aerospace technology, we operate in a highly sensitive and data-driven environment. Cybersecurity risks—including ransomware attacks, data breaches, intellectual property theft, and attempted intrusions by nation-state actors—continue to increase in frequency and sophistication across our industry. Like many companies operating in the defense and aerospace sectors, we remain a potential target for both criminal and geopolitical cyber threats.
We have implemented security protocols, systems monitoring, and access controls to protect our infrastructure and proprietary information, including information related to our work with NASA and other government agencies. However, cybersecurity is an evolving threat landscape, and there can be no assurance that our efforts will prevent all attacks or unauthorized access. A successful breach could disrupt our operations, compromise confidential data, harm our reputation, result in regulatory investigations, or expose us to legal claims and financial losses.
We will continue to invest in cybersecurity tools, training, and third-party audits to strengthen our defenses, and we are evaluating compliance with emerging federal cybersecurity requirements. Nonetheless, future cybersecurity incidents could materially affect our business, financial condition, or results of operations.
5
Results of Operations
Comparison of the Three Months Ended January 31, 2026 to the Three Months Ended January 31, 2025
The following table provides certain selected financial information of Helio Corporation for the periods presented:
| Three Months Ended | ||||||||||||||||
| January 31, | ||||||||||||||||
| 2026 | 2025 | Change | % | |||||||||||||
| Revenues | $ | 495,550 | $ | 1,427,576 | (932,026 | ) | (65 | )% | ||||||||
| Costs of revenue | 244,863 | 1,016,848 | (771,985 | ) | (76 | )% | ||||||||||
| Operating expenses | 2,926,201 | 1,276,134 | 1,650,067 | 129 | % | |||||||||||
| Operating loss | (2,675,514 | ) | (865,406 | ) | (1,810,108 | ) | (209 | )% | ||||||||
| Interest expense, net | (164,309 | ) | (53,736 | ) | (110,573 | ) | (206 | )% | ||||||||
| Amortization of debt discount | (61,233 | ) | - | (61,233 | ) | Increase from zero | ||||||||||
| Change in fair value of derivative liability | (188,792 | ) | - | (188,792 | ) | Increase from zero | ||||||||||
| Loss on debt extinguishment | (643,880 | ) | - | (643,880 | ) | Increase from zero | ||||||||||
| Net loss | $ | (3,733,728 | ) | $ | (919,142 | ) | (2,814,586 | ) | 306 | % | ||||||
| Loss per share basic and diluted | $ | (0.21 | ) | $ | (0.08 | ) | ||||||||||
Revenue for the three months ended January 31, 2026 decreased by 65% to $495,550 from $1,427,576 for the three months ended January 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, combined with the extended government shutdown. During the three months ended January 31, 2026, we serviced three customers, one of which was a government customer, and two non/not-for-profit customers who were under government contracts. For the three months ended January 31, 2025, we serviced eight customers, of which one was a direct government customer and one was a private foundation. There were four commercial and two non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer.
Cost of Revenue
The 76% decrease in cost of revenue for the three months ended January 31, 2026 to $244,863 from $1,016,848 for the three months ended January 31, 2025 mainly reflected the decreased business volume described above. As a percentage of revenue, cost of revenue amounted to 49% and 71% in the three months ended January 31, 2026 and 2025, respectively. Cost of revenue as a percentage of revenue decreased by approximately 22% due to increased operational efficiency on several new contracts that commenced in Q3 2025.
6
Operating Expenses
| Three months Ended January 31, | ||||||||||||||||
| 2026 | 2025 | Change | % | |||||||||||||
| Operating expenses | ||||||||||||||||
| Personnel expenses | $ | 41,892 | $ | 158,566 | $ | (116,674 | ) | (74 | )% | |||||||
| Facilities expense | 171,110 | 210,511 | (39,401 | ) | (19 | )% | ||||||||||
| Professional fees | 115,277 | 178,738 | (63,461 | ) | (36 | )% | ||||||||||
| Depreciation expense | 5,666 | 5,666 | - | 0 | % | |||||||||||
| Other general and administrative | 2,592,256 | 722,653 | 1,869,603 | 259 | % | |||||||||||
| Total | $ | 2,926,201 | $ | 1,276,134 | $ | 1,650,067 | 129 | % | ||||||||
Overall operating expenses increased by $1,650,067, or 129%, to $2,926,201 for the three months ended January 31, 2026, as compared to $1,276,134 for the three months ended January 31, 2025, driven by professional fees incurred in connection with a public offering attempt and higher G&A expenses associated with this and R&D activities.
Other Expense
Our other expenses are comprised of interest expense, amortization of debt discount, change in fair value of derivative liability and loss on debt extinguishment. Overall other expenses increased by $1,004,478, or 1869%, to $1,058,214 for the three months ended January 31, 2026, as compared to $53,736 for the three months ended January 31, 2025. We recorded $164,309 in interest expense in the three months ended January 31, 2026 compared to $53,736 in the three months ended January 31, 2025, reflecting our increased amount of average outstanding debt and increased rates of interest thereunder. In the three months ended January 31, 2026 we recorded amortization of debt discount of $61,233, the change in fair value of derivative liability of $188,792, which was due to the issuance of convertible debt and a loss on debt extinguishment in the amount of $643,880.
We have not recorded income tax expense or benefit in the three months ended January 31, 2026 and 2025 (because of our tax loss carryforwards). We had approximately $3,179,000 of net operating loss carry forwards to offset future federal taxable income as of January 31, 2026.
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 January 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 three months.
Net Loss
Our net loss for the three months ended January 31, 2026 was $3,733,728, compared to a net loss of $919,142 for the three months ended January 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 January 31, 2026, the Company had cash and cash equivalents of $282,061 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 January 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
The Company is currently in default under certain of its outstanding promissory notes with an aggregate principal amount of approximately $1,185,000. The Company is engaged in discussions with the holders of such notes regarding potential waivers, amendments or other accommodations. While no assurance can be given as to the outcome of these discussions, the Company is seeking to resolve the matter without acceleration or enforcement actions. If the holders of such notes were to accelerate the amounts due, the Company may not have sufficient liquidity to satisfy such obligations.
During fiscal year 2026 and subsequent to January 31, 2026, the Company completed multiple financing transactions to support its liquidity needs (see Notes 6, 13).
These notes bear interest at rates generally ranging from approximately 10% to 12% per annum (subject to higher default rates) and have maturities ranging from October 2026 through January 2027. The proceeds from these financings were used for working capital and general corporate purposes.
Debt Obligations and Contractual Commitments
As of January 31, 2026, the Company had outstanding unsecured notes to related parties with an aggregate principal balance of $558,178. Of the aggregate outstanding principal balance, $358,178 are non-interest bearing and $200,000 are interest bearing at 9.75% per annum. $200,000 of the principal is in default as of January 31, 2026, the remaining $358,178 is due on demand.
As of January 31, 2026, the Company also had outstanding debt from unrelated parties under notes payable with an aggregate principal balance of $1,727,432. These notes bear interest at rates of 9.75% and 12.00% per annum and mature within the next two fiscal. 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 January 31, 2026, the Company issued additional promissory notes to investors in the aggregate principal amount of approximately $760,272, resulting in net proceeds of approximately $667,000 after giving effect to original issue discounts and transaction-related expenses. These notes contain customary interest, conversion and default provisions. The proceeds from these financings have been used to support the Company’s ongoing operations and liquidity needs. The Company has used, and expects to continue to use, proceeds from financing activities to fund its operations and address its liquidity needs while it continues discussions with holders of notes currently in default.
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
| Three Months Ended January 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash used in operating activities | $ | (290,619 | ) | $ | (501,760 | ) | ||
| Cash provided by financing activities | $ | 565,375 | $ | 50,000 | ||||
| Cash on hand (end of period) | $ | 282,061 | $ | 99,792 | ||||
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 three months ended January 31, 2026 and 2025, our negative operating cash flow was attributed mainly to our net loss, as described above.
During the three months ended January 31, 2026, the Company reported $290,619 of cash used in operating activities. The Company’s negative operating cash flow was attributed mainly to a net loss of $3,733,728, decrease in lease obligations of $101,322, and a decrease in accrued compensation in the amount of $52,380. This was offset by increases in right of use asset amortization of $82,249, decrease in accounts receivable of $301,058, an increase in accounts payable and accrued expenses of $99,350 and a decrease in prepaid expenses in current assets in the amount of $44,609.
During the three months ended January 31, 2025, the Company reported $501,760 of cash used by operating activities. The Company’s negative operating cash flow was attributed mainly to a net loss of $919,142, decreased work in progress of $191,683, and an increase in accounts payable of $32,502. This was offset by decreases in right of use asset amortization of $100,019, decrease in accrued compensation of $81,590, and decrease in accounts receivable of $236,569.
Cash Flows Provided by Financing Activities
During the three months ended January 31, 2026, net cash provided by financing activities was $565,375, which included the incurrence of new debt proceeds amounting to $847,477, offset by repayments of debt totaling $282,101.
During the three months ended January 31, 2025, net cash provided by financing activities was $50,000, which included the incurrence of new debt proceeds amounting to $50,000.
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Material Cash Commitments
The Company’s material future cash commitments, to be paid from cash flows from operations, are to repay its current debt obligations and payments under leases for its facilities. The Company does not have any material commitments for capital expenditures. The following table shows the material future commitments for the three months ending January 31st:
| Leases | Debt | Total | ||||||||||
| Remainder of 2026 | 359,942 | 2,668,031 | 3,127,973 | |||||||||
| 2027 | 283,626 | 480,000 | 763,626 | |||||||||
| — | ||||||||||||
| Total | $ | 643,568 | $ | 3,148,031 | $ | 3,891,599 | ||||||
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in the notes to our condensed consolidated financial statements included elsewhere in this quarterly report, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
We believe our most critical accounting policies and estimates relate to the following:
| ● | Revenue Recognition |
| ● | Work in Progress |
| ● | Lease Accounting |
Revenue Recognition
Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.
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Revenues from cost-plus and time and materials contracts are recognized with each invoice. For fixed price contracts including purchase orders with specific priced milestone deliveries, revenue is recognized upon invoicing for each milestone completed. Revenue on fixed price contracts that are still in progress at month end are otherwise recognized on the percentage-of-completion method, measured by the percentage of total costs incurred to date to the estimated total costs for each contract. This method is used because management considers total costs to be the best available measure of progress on these contracts.
Work in Progress
Inventory consists of work in progress and consists of estimated revenue calculated on a percentage of completion based on direct labor and materials in relation to the total contract value. The Company does not maintain raw materials nor finished goods.
Leases
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities — current, and operating lease liabilities — noncurrent on the condensed consolidated balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Leases with a lease term of 12 months or less at inception are not recorded on our balance sheet and are expensed on a straight-line basis over the lease term in our statement of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As of January 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 January 31, 2026, due to the presence of material weaknesses in our internal control over financial reporting, as described below.
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Identified Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim 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 January 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 1. LEGAL PROCEEDINGS.
We are not currently party to any legal proceedings, and we are not aware of any pending or threatened litigation against us that we believe could have a material adverse effect on our business, operating results, or financial condition.
ITEM 1A. RISK FACTORS.
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5.
Subsequent Events
The following subsequent events occurred after January 31, 2026, and prior to the filing of this Quarterly Report on Form 10-Q.
On February 9, 2026 and February 17, 2026, the Company entered into separate Securities Purchase Agreements pursuant to which it issued an aggregate principal amount of approximately $760,272 of promissory notes to four unaffiliated accredited investors. After giving effect to original issue discounts and legal fee deductions, the Company received aggregate net cash proceeds of approximately $667,000. The notes contain various interest, conversion, prepayment and default provisions as described below.
On February 9, 2026, the Company entered into a Securities Purchase Agreement (the “CFI SPA”) with CFI Capital LLC (“CFI”), pursuant to which the Company agreed to issue and sell, and CFI agreed to purchase, a 6% Convertible Redeemable Note in the aggregate principal amount of $200,000 (the “CFI Note”). The CFI Note contains an original issue discount of $20,000, resulting in a purchase price of $180,000, less a $5,000 legal fee deduction, resulting in net proceeds of $175,000 before expenses. The CFI Note bears interest at six percent (6%) per annum from February 9, 2026 and matures on February 9, 2027.
Following the six-month anniversary of issuance, CFI may, subject to certain beneficial ownership limitations, convert all or any portion of the outstanding principal and accrued interest into shares of the Company’s common stock at a conversion price equal to sixty percent (60%) of the lowest trading price of the Company’s common stock during the twenty (20) trading days preceding the conversion date. In the event of a DTC “Chill,” the conversion price is reduced to fifty percent (50%) of the lowest trading price during the applicable lookback period. The CFI Note contains a 4.99% beneficial ownership limitation, which may be increased to 9.99% upon 60 days’ prior written notice.
The CFI Note further provides that if the Company issues securities to another party with more favorable conversion terms (including conversion price, discount or lookback period), such conversion terms will be adjusted in favor of CFI.
The CFI Note may be prepaid subject to premiums ranging from 105% to 140% of the principal amount, plus accrued interest, depending on the timing of redemption. In the case of a “Sale Event” (as defined in the CFI Note), the Company must, at CFI’s election, either redeem the CFI Note in cash subject to the applicable premium or permit conversion at the applicable conversion price.
13
Upon an event of default, unless cured within five days or waived by the Holder, and during the continuation of an event of default, including, among other things, payment defaults, covenant breaches, reporting delinquency, delisting, insolvency events or cross-default, unless cured by the Company within five days or otherwise waived in writing by CFI, CFI may declare the CFI Note immediately due and payable. . Upon default, interest accrues at the highest rate permitted by Florida law and the conversion price is adjusted to forty-five percent (45%) of the lowest trading price during the applicable lookback period. Further, if the Company is delinquent or continues to be delinquent after six months of the Note in its SEC reports, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period as a base price for conversion. The foregoing description of the CFI SPA and CFI Note does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements, which are filed as exhibits to this Quarterly Report on Form 10-Q and are incorporated herein by reference.
On February 17, 2026, the Company entered into a Securities Purchase Agreement (the “GS SPA”) with GS Capital Partners, LLC (“GS”), pursuant to which the Company issued a 12% Promissory Note in the principal amount of $150,000 (the “GS Note”). The GS Note contains an original issue discount of $11,000, resulting in a purchase price of $139,000, less a $4,000 legal fee deduction, resulting in net proceeds of $135,000 before expenses. The Company issued 12,000 restricted shares of common stock to GS as commitment shares (the “GS Commitment Shares”).
The GS Note bears interest at twelve percent (12%) per annum. Interest is payable in shares of the Company’s common stock (“Interest Shares”), and GS may convert accrued interest into Interest Shares in accordance with the conversion formula set forth in the GS Note.
The GS Note matures on February 17, 2027. Beginning August 17, 2026, the Company is required to make six (6) equal monthly payments of $25,000 each, with any remaining outstanding amounts due at maturity.
Upon the occurrence of an Event of Default (as defined in the GS Note), GS may, at its option and subject to certain beneficial ownership limitations, convert all or any portion of the outstanding principal and accrued interest, including default interest and other amounts due, into shares of the Company’s common stock at a conversion price equal to seventy percent (70%) of the lowest trading price of the common stock during the fifteen (15) trading days preceding the date of conversion. In the event of a DTC “Chill,” the conversion price is reduced to fifty percent (50%) of the lowest trading price during the applicable lookback period. The GS Note contains a 4.99% beneficial ownership limitation, which may be increased to 9.99% upon 60 days’ prior written notice.
If, while the GS Note is outstanding, the Company consummates a financing transaction resulting in net proceeds of $700,000 or more in one or more closings, any proceeds in excess of $700,000 must be used to retire outstanding balances under the GS Note.
The GS Note further provides that if the Company issues securities to another party with more favorable conversion terms (including conversion price, discount or lookback period), such conversion terms will be adjusted in favor of GS.
Upon an Event of Default, if not cured by the Company within five (5) days or waived by GS, GS may declare the GS Note immediately due and payable and the outstanding principal increases to 150% of the outstanding principal balance, together with accrued interest and other amounts due. Events of Default include, among other things, payment defaults, covenant breaches, reporting delinquency, delisting or loss of quotation, insolvency events, failure to maintain required share reserves, termination of the Company’s transfer agent without consent, and certain cross-defaults.
The foregoing description of the GS SPA and GS Note does not purport to be complete and is qualified in its entirety by reference to the full text of such agreements, which are filed as exhibits to this Quarterly Report on Form 10-Q and are incorporated herein by reference.
14
On February 17, 2026, the Company entered into a Securities Purchase Agreement (the “Quick SPA”) with Quick Capital, LLC (“Quick”), pursuant to which the Company agreed to issue and sell, and Quick agreed to purchase, a Convertible Promissory Note in the aggregate principal amount of $172,222 (the “Quick Note”). The Quick Note contains an original issue discount of $17,222 and $5,000 withheld for legal expenses, resulting in net proceeds to the Company of $150,000 before other expenses. The Quick Note matures twelve (12) months from the date of issuance.
The Quick Note bears interest at six percent (6%) per annum on the outstanding principal amount. Upon the occurrence and continuation of an Event of Default, the interest rate increases to the lesser of twenty-four percent (24%) per annum or the maximum rate permitted by applicable law.
Beginning on the 180th day following issuance, and subject to a 4.99% beneficial ownership limitation, Quick may convert all or any portion of the outstanding principal, accrued interest and other amounts due into shares of the Company’s common stock at a conversion price equal to sixty percent (60%) of the lowest trading price of the Company’s common stock during the twenty (20) trading days preceding the date of conversion. Upon the occurrence of an Event of Default, the conversion discount increases such that the conversion price equals forty-five percent (45%) of the lowest trading price during the applicable lookback period. The Company is required to maintain a share reserve equal to at least four (4) times the number of shares issuable upon full conversion of the Quick Note, and failure to maintain such reserve constitutes an Event of Default.
The Quick Note may be prepaid by the Company, subject to the prior written consent of the Holder, upon not less than three (3) trading days’ prior written notice. If prepaid within the first 180 days following issuance, the Company must pay a premium equal to (i) 105% of the outstanding principal and accrued interest if prepaid within 0–30 days of issuance, (ii) 110% if prepaid during days 31–60, (iii) 120% if prepaid during days 61–90, (iv) 130% if prepaid during days 91–120, (v) 135% if prepaid during days 121–150, and (vi) 140% if prepaid during days 151–180. The Note may not be prepaid after the 180th day anniversary of the issuance date.
Upon an Event of Default, including, among other things, payment defaults, breaches of representations or covenants, failure to maintain SEC reporting compliance, delisting or loss of quotation, insolvency events, failure to maintain required share reserves, or cross-default under other indebtedness owed to Quick or its affiliates, the Quick Note becomes immediately due and payable and the outstanding principal balance increases to one hundred fifty percent (150%) of the outstanding principal amount, together with accrued and unpaid interest and other amounts due; in certain circumstances, the default amount increases to two hundred percent (200%) of the outstanding principal.
While the Quick Note is outstanding, the Holder is entitled to participate in any pro rata issuance of rights to purchase common stock or other securities as if it were a holder of the number of shares of common stock issuable upon full conversion of the Quick Note (without regard to any conversion limitations) immediately prior to the applicable record date.
On March 17, 2026, Paul Turin resigned as a member of the Board of Directors of Helio Corporation (the “Company”), effective March 17, 2026. Mr. Turin’s resignation from the Board was voluntary and not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Turin remains the Chief Engineer of the Company. The Company is furnishing as Exhibit 99.1 hereto a copy of Mr. Turin’s letter of resignation.
On March 17, 2026, Stuart Bale resigned as a member of the Board of Directors of the Company, effective March 17, 2026. Mr. Bale’s resignation from the Board was voluntary and not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Bale remains the Chief Scientist of the Company. The Company is furnishing as Exhibit 99.2 hereto a copy of Mr. Bale’s letter of resignation.
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ITEM 6. EXHIBITS.
| Exhibit No. | Description | |
| 10.1* | $200k Convertible Promissory Note dated February 9 2026 | |
| 10.2* | $200k Securities Purchase Agreement dated February 9 2026 | |
| 10.3* | $150k Convertible Promissory Note dated February 17 2026 | |
| 10.4* | $150k Securities Purchase Agreement dated February 17 2026 | |
| 10.5* | $172k Convertible Promissory Note dated February 17 2026 | |
| 10.6* | $172k Securities Purchase Agreement dated February 17 2026 | |
| 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 | |
| 99.1* | Helio Board Resignation letter Turin | |
| 99.2* | Helio Board Resignation letter Bale | |
| 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: March 30, 2026 | By: | /s/ Edward Cabrera |
| Edward Cabrera | ||
| Chief Executive Officer and Chairman of the Board of Directors | ||
| (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
| By: | /s/ Mark Knauf | |
| Mark Knauf | ||
| Chief Financial Officer |
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FAQ
How did Helio Corporation (HLEO) perform in the quarter ended January 31, 2026?
What is Helio Corporation’s (HLEO) liquidity and debt position as of January 31, 2026?
Did Helio Corporation (HLEO) disclose going-concern risks in this 10-Q?
How much did Helio Corporation’s (HLEO) revenue decline year over year?
What financing steps has Helio Corporation (HLEO) taken to fund operations?
What is Helio Corporation’s (HLEO) shareholders’ equity situation?
