Going concern risk and related-party debt weigh on HNO International (HNOI) results
HNO International, Inc. reported another early-stage quarter with no revenue for the three months ended January 31, 2026, and a net loss of $182,069, a sharp improvement from a $5,461,393 loss a year earlier when stock-based compensation was much higher.
Total assets were $1,389,564, including specialized hydrogen equipment of $1,257,972 net, against total liabilities of $3,086,637, resulting in a stockholders’ deficit of $1,697,073. Cash increased to $81,494, but the company still burned $125,531 in operating cash during the quarter.
Management highlights substantial doubt about the company’s ability to continue as a going concern due to recurring losses, a working capital deficit and lack of revenue. Operations remain heavily supported by related-party financing, including $1,375,000 in notes to HNO Green Fuels, Inc. and $1,218,385 of demand advances. Internal controls over financial reporting are described as not effective. The company continues to pursue equity offerings, convertible debt and cost reductions while developing green hydrogen production and refueling systems.
Positive
- None.
Negative
- None.
Insights
No revenue, heavy related-party debt, and going concern risk dominate this quarter.
HNO International remains a pre-revenue hydrogen technology company, posting a quarterly net loss of $182,069 with zero revenue. The loss narrowed significantly from the prior year mainly because there was no repeat of large stock-based compensation, not because the core business turned profitable.
The balance sheet shows total liabilities of $3,086,637 versus assets of $1,389,564, leaving a stockholders’ deficit of $1,697,073. Funding is concentrated in related-party obligations: notes to HNO Green Fuels, Inc. total $1,375,000, plus $1,218,385 of unsecured, on-demand advances. A new $150,000 convertible redeemable note issued in March 2026 adds future dilution and repayment risk.
Management explicitly states substantial doubt about continuing as a going concern within one year, and disclosure controls are deemed not effective due to material weaknesses. The company is relying on Regulation A and Regulation D equity sales, as well as related-party financing, to bridge operating cash burn of $125,531 this quarter. Future filings will clarify whether capital-raising efforts and hydrogen project commercialization ease liquidity pressure or deepen dependence on dilutive and insider funding.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
OR
For the transition period from _________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
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(Address of principal executive offices) |
(Zip Code) | |
(
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate
by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
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Indicate by check mark whether the registrant
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of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ¨ | Accelerated filer | ¨ |
| x | Smaller reporting company | ||
| Emerging growth company |
| 1 |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
¨ No
Indicate
the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of March
23, 2026 the registrant had
| 2 |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains "forward-looking statements" that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Form 10-K filed on February 6, 2026 and other filings we make with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.
The following discussion and analysis of financial condition and results of operations is based upon and should be read in conjunction with our audited financial statements and related notes thereto included elsewhere in this report, and in our Annual Report on Form 10-K filed on February 6, 2026.
| 3 |
HNO INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JANUARY 31, 2026
TABLE OF CONTENTS
| PAGE | ||
| PART I | FINANCIAL INFORMATION | |
| Item 1. | Financial Statements (Unaudited) | 5 |
| Unaudited Condensed Balance Sheets as of January 31, 2026 and October 31, 2025 | 6 | |
| Unaudited Condensed Statements of Operations for the Three months Ended January 31, 2026 and January 31, 2025 | 7 | |
| Unaudited Condensed Statement of Stockholders’ Deficit for the Three months Ended January 31, 2026 and January 31, 2025 | 8 | |
| Unaudited Condensed Statements of Cash Flows for the Three months Ended January 31, 2026 and January 31, 2025 | 9 | |
| Notes to Unaudited Condensed Financial Statements | 10 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 20 |
| Item 4. | Controls and Procedures | 20 |
| PART II | OTHER INFORMATION | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 21 |
| Item 5. | Other Information | 21 |
| Item 6. | Exhibits | 21 |
| Signatures | 22 |
| 4 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
| HNO INTERNATIONAL, INC. CONDENSED BALANCE SHEETS | ||||||||
| January 31, | October 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | Unaudited | Audited | ||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Other receivable | ||||||||
| Prepaid payroll | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use asset | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | ||||||||
| Accrued interest payable | ||||||||
| Lease liability | ||||||||
| Advances, related party | ||||||||
| Convertible note payable, at fair value | ||||||||
| Notes payable, related party | ||||||||
| Total Current Liabilities | ||||||||
| Non-Current Liability | ||||||||
| Lease liability | ||||||||
| Long term notes payable, related party | ||||||||
| Total Non-Current Liability | ||||||||
| Total Liabilities | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, par value $ | — | — | ||||||
| Series A, par value $ | ||||||||
| Series B, par value $ | ||||||||
| Common stock, par value $ | ||||||||
| Common stock payable | ||||||||
| Common stock subscription receivable | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
| The accompanying notes are an integral part of these condensed unaudited financial statements. | ||||||||
| 5 |
| HNO INTERNATIONAL, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||
| For the Three Months Ended January 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross Profit | ||||||||
| Operating expenses | ||||||||
| Advertising and marketing | ||||||||
| General and administrative expenses | ||||||||
| Depreciation and amortization | ||||||||
| Total Operating Expenses | ||||||||
| Other Income (Expenses) | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Gain on fair value of convertible note | ||||||||
| Total Other (Expenses) | ( | ) | ||||||
| Loss from Operations | $ | ( | ) | $ | ( | ) | ||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| PER SHARE AMOUNTS | ||||||||
| Basic and diluted net loss per share | ( | ) | ( | ) | ||||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||
| The accompanying notes are an integral part of these condensed unaudited financial statements. | ||||||||
| 6 |
| HNO INTERNATIONAL, INC. CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT For the three months ended January 31, 2025 and 2026 (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Series B Preferred Stock | Common Stock | Stock | Share Subscription | Additional Paid-in | Accumulated | Total Stockholders' | |||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Payable | Receivable | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||||||||
| For the three months ended January 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at October 31, 2024 | — | $ | — | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||
| Regulation D stock issuances | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Shares cancelled as per exchange agreement | — | — | — | — | ( | ) | ( | ) | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||
| Series B preferred stock issuances | — | — | $ | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended January 31, 2025 | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at January 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||
For the three months ended January 31, 2026 | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at October 31, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||
| Regulation A stock issued for conversion of convertible note | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Regulation A stock issued for cash | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
| Regulation D stock issued for cash | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended January 31, 2026 | — | — | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
| Balance at January 31, 2026 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed unaudited financial statements.
| 7 |
| HNO INTERNATIONAL, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
| For the Three Months Ended January 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash Flow from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right-to-use asset | ||||||||
| Gain on fair value of convertible note | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase)/Decrease in accounts receivable | ||||||||
| (Increase)/Decrease in other receivable | ||||||||
| Increase/(Decrease) in accounts payable | ( | ) | ||||||
| (Increase)/Decrease in prepaid payroll | ( | ) | ||||||
| Increase in accrued interest payable | ||||||||
| Increase in lease vendor payable | ||||||||
| Increase (Decrease) in lease liabilities | ( | ) | ||||||
| Operating lease ROU assets and lease liabilities, net | ( | ) | ||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from related party advances | ||||||||
| Proceeds from sale of common stock subscription payable | ||||||||
| Proceeds from sale of common stock | ||||||||
| Net Cash Provided by Financing Activities | ||||||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net Cash Used in Investing Activities | ( | ) | ||||||
| Net increase (decrease) in cash | ||||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental Disclosure for Cash Paid: | ||||||||
| Lease liability paid during the period | $ | $ | ||||||
| Interest paid during the period | $ | $ | ||||||
| Income taxes paid during the period | $ | $ | ||||||
| Supplemental Disclosure for Non-Cash Investing and Financing Activities: | ||||||||
| Common stock cancellation per share exchange agreement | $ | $ | ||||||
| Series B preferred stock issuance per exchange agreement | $ | $ | ||||||
| Shares issued for redemption of convertible notes payable | $ | $ | ||||||
| The accompanying notes are an integral part of these condensed unaudited financial statements. | ||||||||
| 8 |
HNO INTERNATIONAL, INC.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
JANUARY 31, 2026
NOTE 1 – ORGANIZATION AND BASIS OF ACCOUNTING
Organization
HNO International, Inc. (the “Company”) specializes in the design, integration, and development of green hydrogen-based clean energy technologies. With the Company’s management having over 14 years of experience in the field of green hydrogen production, the Company is committed to providing scalable products that help businesses and communities decarbonize, reduce emissions, and cut operational costs. HNO stands for Hydrogen and Oxygen. The Company is at the forefront of developing innovative solutions, such as the Compact Hydrogen Refueling System (“CHRS”) and the Compact Hydrogen Production System (“CHPS”), which can be used to produce green hydrogen for various applications including fuel cell electric vehicles, hydrogen internal combustion engines, heating, and cooking. The CHPS is highly scalable, capable of producing 100-2,000 (or more) kilograms of hydrogen per day for commercial use in various applications. In addition, the Company develops energy systems that complement the zero-emissions EV infrastructure, reduce harmful emissions, and cut maintenance costs of commercial diesel fleets. By integrating components from leading industry partners, the Company aims to transition fossil fuels to cleaner alternatives and promote lower emissions.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company for the three months ended January 31, 2026.
Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. The management makes its best estimate of the outcome for these items based on information available when the financial statements are prepared.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of January 31, 2026, and October 31, 2025, the Company did not hold any investments that qualify as cash equivalents. Therefore, the cash and cash equivalents line item in the balance sheet solely comprises cash.
The Company maintains its cash balances at financial institutions, which at times may exceed federally insured limits. While the Company monitors the credit quality of its banking institutions, cash balances in excess of Federal Deposit Insurance Corporation (FDIC) insurance limits expose the Company to a certain degree of credit risk in the event of the financial institutions' failure.
| 9 |
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 requires that the cost of equity awards, issued in exchange for services, including those issued to employees and predominantly to consultants, be measured at the grant-date fair value. The Company does not adhere to a formal stock-based compensation plan; rather, it issues stock awards on a discretionary basis as part of compensation agreements with selected employees and consultants. Compensation for stock-based awards is recognized as a non-cash expense on the statement of operations. The fair value of restricted stock grants is determined using the closing market price on the grant date, adjusted for an appropriate discount to reflect the restrictions on transferability and marketability of the shares. The discount is calculated using a weighted average of comparable restricted stock transactions, which better reflects the economic impact of larger issuances and provides a more accurate representation of fair value under ASC 718. The expense associated with these awards is recorded based on the fair value on the date of grant, as determined using a pricing model commensurate with the terms of the award. This cost is recognized over the period during which the award recipient is required to perform services, typically known as the vesting period. The total compensation cost related to vested stock-based awards is recognized after adjusting for estimated forfeitures at the time of vesting. The expense related to stock-based compensation is included within the same statement of operations lines as cash compensation for the consultants and employees who receive the awards, currently included in general and administrative expenses on the statement of operations as the Company does not allocate compensation costs to Costs of Goods Sold. As of the report date, the Company has not established any plans to issue dividends on stock-based awards. Any tax benefits arising from deductions for these awards are recorded in additional paid-in capital, provided they exceed the cumulative compensation cost recognized.
Employee Benefits
During the three months ended January 31, 2026, the
Company paid $
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
The Company follows the provisions of
ASC 740, Income Taxes (“ASC 740”), related to accounting for uncertainty in income taxes. ASC 740 prescribes a recognition
threshold and measurement process for uncertain tax positions taken or expected to be taken in a tax return. The Company recognizes the
financial statement effects of a tax position when it is more likely than not that, based on technical merits, the position will be sustained
upon examination by the relevant taxing authorities. The Company had
Revenue Recognition
We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.
In certain arrangements where the Company facilitates the provision of goods or services provided by a third party, and does not take control of those goods or services, revenue is recognized on a net basis, limited to the margin or fee earned, consistent with the Company’s role as an agent under ASC 606-10-55-36 through 55-40.
Basic and Diluted Net Loss per Common Share
Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding for each period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding plus the dilutive effect of shares issuable as common stock equivalents. As the Company is currently presenting net losses the weighted-average number of common shares outstanding excludes potential common stock equivalents because their inclusion would be anti-dilutive.
| 10 |
Property and Equipment
Property and equipment are carried at cost and, less accumulated depreciation. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the statement of operations in the year of disposal. The Company examines the possibility of decreases in the value of property and equipment when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.
The Company’s property and equipment consists of specialized hydrogen equipment, related processing systems, and vehicles. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Small equipment is depreciated over 3 years, vehicles are depreciated over 4 years, and large equipment is depreciated over 7 years.
| Schedule of estimated useful lives | ||
| Useful life | ||
| Small equipment | ||
| Large equipment | ||
| Vehicles |
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of a long-lived asset, management evaluates whether the estimated future undiscounted net cash flows from the asset are less than its carrying amount. If impairment is indicated, the long-lived asset would be written down to fair value. Fair value is determined by an evaluation of available price information at which assets could be bought or sold, including quoted market prices, if available, or the present value of the estimated future cash flows based on reasonable and supportable assumptions.
Leases
The Company accounts for leases in accordance with ASC 842, Leases (“ASC 842”). At contract inception, the Company determines if an arrangement is or contains a lease. Where the Company is the lessee, for each lease with a term greater than twelve months, the Company records a right-of-use asset and lease liability. A right-of-use asset represents the economic benefit conveyed to the Company by the right to use the underlying asset over the lease term. A lease liability represents the obligation to make lease payments arising from the use of the asset over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease. Leases with an initial expected term of 12 months or less are not recorded in the Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term.
Fair value of financial instruments
The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are carried at cost, which approximates their fair value, due to the relatively short maturity of these instruments.
The Company’s convertible promissory note issued on April 7, 2025, was classified as a liability and measured at fair value on a recurring basis in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), as the instrument requires settlement in a variable number of shares for a fixed monetary amount. The fair value of the convertible note was determined based on the conversion terms and observable market price of the Company’s common stock.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820, Fair Value Measurement (“ASC 820”), establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| 11 |
| · | Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; |
| · | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| · | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
During the three months ended January 31, 2026,
the convertible promissory note was fully converted into shares of the Company’s common stock in accordance with its terms, and
the liability was derecognized. As a result, the Company had
NOTE 3 – GOING CONCERN
On
January 31, 2026, we had an accumulated deficit of $
Based on the above factors, substantial doubt exists about our ability to continue as a going concern within one year after the date that the financial statements are issued.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
| Schedule of property and equipment | ||||||||
| January 31, 2026 | October 31, 2025 | |||||||
| Vehicles | $ | $ | ||||||
| Small equipment | $ | |||||||
| Large equipment | ||||||||
| Property and Equipment, Gross | $ | $ | ||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and Equipment, Net | $ | $ | ||||||
Depreciation
expense for the three months ended January 31, 2026 and 2025 were $
NOTE 5 – LEASES
Operating leases
The Company has an operating lease agreement for office space in Murrieta, California, expiring on November 30, 2026.
| 12 |
The Company determined the above office space leases and related extensions are classified as operating leases under ASC 842. Therefore, the Company recognized operating lease liabilities with corresponding Right-Of-Use ("ROU") assets based on the present value of the minimum rental payments of such leases.
As the Company’s leases do
not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments
using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the
Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined
using a portfolio approach based on information available at the commencement date of the lease. As of January 31, 2026, the ROU asset
was $
Remaining lease term as of January 31, 2026:
| Schedule of remaining lease term | ||||
| Year | Operating Lease Payment | |||
| 2026 and above | ||||
| Total Payments | $ | |||
Lease Not Yet Commenced
In April 2024, the Company entered into a lease agreement for an industrial facility located in Katy, Texas. The lease is subject to completion of landlord construction and build-out prior to commencement. Under the terms of the lease, the commencement date occurs when the leased premises are made available for the Company’s use.
As of January 31, 2026, the landlord’s construction had not been completed, the lease had not commenced, and the Company had not taken possession of the facility. Accordingly, no right-of-use asset or lease liability has been recorded on the Company’s balance sheet as of January 31, 2026.
NOTE 6 – COMMON STOCK
Stock Issued
During the quarter ended January 31, 2025,
the Company entered into a Stock Subscription Agreement with accredited investors (under Rule 506 (b) of Regulation D under the Securities
Act of 1933, as amended (the “Securities Act”)) whereby the Company privately sold a total of
During
the quarter ended January 31, 2025, the Company's Board of Directors granted approval for the issuance of
| 13 |
During the quarter
ended January 31, 2026, the Company entered into a Stock Subscription Agreement with an accredited
investor (under Rule 506(b) of Regulation D under the Securities Act of 1933, as amended). Whereby the Company privately sold a total
of
Pursuant to
the Company’s Regulation A offering, which was qualified by the Securities and Exchange Commission on December 11, 2025, the Company
entered into stock subscription agreement for its common stock at a purchase price of $
Convertible Note Conversion
On December
12, 2025, following the qualification of the Company’s Regulation A Offering Statement on Form 1-A (“Form 1-A”) by the
SEC on December 11, 2025, the Company converted $
Stock Receivable
As of January 31, 2026 and October 31,
2025, the Company issued
Stock Payable
As of January 31, 2026, the Company sold
As of January 31, 2026, the Company sold
As of January 31, 2026 and October 31, 2025, the Company
had
NOTE 7 – PREFERRED STOCK
Series B Preferred Stock
On January 2, 2025, the Company entered
into a Share Exchange Agreement with the CEO. Pursuant to the agreement, the CEO exchanged
On January 2, 2025, the Company entered
into a Share Exchange Agreement with HNO Green Fuels, Inc. (“HNO Green Fuels), a related party. Pursuant to the agreement, HNO Green
Fuels exchanged
| 14 |
NOTE 8 – RELATED PARTY TRANSACTIONS
Notes Payable, Related Party
On November 19, 2021, the Company issued a note payable
in the amount of $
As of January 31, 2026, the Company had multiple outstanding
promissory notes payable to HNO Green Fuels, Inc. The notes bear interest at
| Schedule of multiple outstanding promissory notes payable | ||||||||||||||
| Issue Date |
Original Principal |
Maturity Date |
Principal Outstanding | Accrued Interest | ||||||||||
| $ | $ | $ | ||||||||||||
| $ | $ | $ | ||||||||||||
| $ | $ | $ | ||||||||||||
| $ | $ | $ | ||||||||||||
| $ | $ | $ | ||||||||||||
| $ | $ | $ | ||||||||||||
| $ | $ | $ | ||||||||||||
| $ | $ | $ | ||||||||||||
| $ | $ | $ | ||||||||||||
| $ | $ | $ | ||||||||||||
| Total | $ | $ | ||||||||||||
Extension of Promissory Notes:
Advances from Related Party
During the year ended October 31, 2024, Donald Owens,
the Company’s Chairman of the Board of Directors, advanced $
During the year ended October 31, 2025, Mr. Owens
advanced an additional $
During the three months ended January 31, 2026, HNO
Green Fuels, Inc. advanced an additional $
These advances are unsecured, non-interest bearing
and due on demand. As of January 31, 2026, and October 31, 2025, related party advances had outstanding balances of $
NOTE 9 – SUBSEQUENT EVENTS
Subsequent events have been evaluated through March 23, 2026, which represents the date the financial statements were issued, and no events, other than discussed below have occurred through that date that would impact the financial statements.
On March 12, 2026, the
Company entered into a Securities Purchase Agreement with an investor and issued a convertible redeemable promissory note in the
principal amount of $
| 15 |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
HNO International, Inc., a Nevada corporation (herein referred to as “we,” “us,” “our,” “HNO” and the “Company”), focuses on systems engineering design, integration, and product development to generate green hydrogen-based clean energy solutions to help businesses and communities decarbonize in the near term.
HNO stands for “Hydrogen” and “Oxygen” and our experienced management team has over 14 years of expertise in the green hydrogen production industry.
HNO provides green hydrogen systems engineering design, integration, and products to multiple markets, which include: (i) the zero-emission vehicle and mobile equipment market consisting of hydrogen fuel cell electric passenger vehicles, material handling equipment such as forklifts and airport ground support equipment, as well as the medium and heavy-duty truck market; (ii) the current and emerging hydrogen gas markets encompassing ammonia, fertilizer, steel, mining, electronics, semiconductors, and fuel cell electric vehicles; (iii) and the gasoline and diesel engine emissions and maintenance reduction product and services market.
HNO is at the forefront of developing innovative integrated products that cater to various uses of green hydrogen, both current and future. These include:
| · | Hydrogen refueling and generation systems for Fuel Cell Electric vehicles, such as forklifts, drones, cars, and trucks, as well as for zero-emission heating and cooking applications. | |
| · | Small to mid-scale green hydrogen production facilities with a capacity of 100kg/day to 5,000kg/day. These facilities can help decarbonize industrial processes and increase the use of hydrogen and hydrogen-based fuels for transportation and material handling. | |
| · | Hydrogen technologies that decrease emissions and maintenance for existing gasoline and diesel internal combustion engines. This can aid companies in decarbonizing their operations in the short term. |
Results of Operations
For the three months ended January 31, 2026 and 2025
Revenue
For the three months ended January 31, 2026 and January 31, 2025, we generated no revenue.
Operating Expenses
General and Administrative, and Contract Labor expenses were $121,489 for the three months ended January 31, 2026, compared to $5,394,662 during the same period in 2025, a decrease of $5,273,173. The 2025 period included $5,092,557 of stock-based compensation expense. No stock-based compensation was recorded during the same period in 2026. Excluding stock-based compensation, general and administrative expenses decreased by $180,616, primarily due to reduced professional fees, lower consultant costs, and a general reduction in administrative overhead.
Depreciation and amortization expense increased by $10,768 to $65,217 for the three months ended January 31, 2026, compared to $54,449 for the same period in 2025, reflecting depreciation on additions to property and equipment.
Advertising and marketing expenses were $853 for the three months ended January 31, 2026, compared to $5,350 for the same period in 2025. The decrease was due to reduced outreach activities compared to the prior year, which had higher spending to support the Company’s hydrogen engineering and combustion solutions.
Net Loss
Net loss for the three months ended January 31, 2026, was $182,069 compared to a net loss of $5,461,393 during the same period in 2025.
| 16 |
Forward-Looking Considerations
The Company recognizes the possibility of future increases in labor or material costs. Factors such as evolving market conditions, potential inflation, and global economic dynamics are considered. We are actively monitoring these aspects to anticipate and navigate any forthcoming rises in labor or material expenses.
Cost-to-Revenue - The Company is assessing alterations in the relationship between cost of sales and revenue. We are examining the factors influencing these changes, including shifts in prices and fluctuations in the volume of services sold. Understanding the impact of these elements is crucial for maintaining a balanced and effective cost-to-revenue structure.
Liquidity and Capital Resources
We incurred a net loss for the three months ended January 31, 2026 of $182,069 and had an accumulated deficit of $52,232,259 at January 31, 2026. At January 31, 2026, we had a cash balance of $81,494, compared to a cash balance of $9,525 at October 31, 2025. At January 31, 2026, the working capital deficit was $2,415,029, compared to a working capital deficit of $2,422,574 at October 31, 2025. Our existing and available capital resources are not expected to be sufficient to satisfy our funding requirements through one year from the date of this filing in the absence of share issuances or other sources of financing.
We have not been able to generate sufficient cash from operating activities to fund our ongoing operations. We have raised capital through sales of common stock and debt securities.
The effect of existing or probable government regulations on our business is not known at this time. Due to the nature of our business, it is anticipated that there may be increasing government regulation that may cause us to have to take serious corrective actions or make changes to the business plan.
There are no external sources of liquidity available to the Company at this time. The Company will need to raise additional capital through equity financings or other means in order to continue operations and meet its obligations. Failure to obtain additional funding could have a material adverse effect on our financial condition and the results of operations.
Cash Flow
For the Three months Ended January 31, 2026 and 2025
The following table summarizes our cash flows for the periods indicated below:
|
For the Three months Ended January 31, 2026 |
For the Three months Ended January 31, 2025 | |||||||
| Cash Used in Operating Activities | $ | (125,531 | ) | $ | (168,412 | ) | ||
| Cash Provided by Financing Activities | 197,500 | 374,000 | ||||||
| Cash used in investing activities | $ | — | $ | (177,943 | ) | |||
Cash Used in Operating Activities
During the three months ended January 31, 2026, cash used in operating activities amounted to $(125,531), primarily reflecting our net loss of $(182,069). This was offset by depreciation and amortization of $65,217. Additionally, there was a decrease in accounts receivable of $332,669, a decrease in other receivable of $1,000, a decrease in accounts payable of $336,507, a decrease in accrued payroll of $96, and an increase in accrued interest payable of $6,932.
During the three months ended January 31, 2025, cash used in operating activities amounted to $(168,412), primarily reflecting our net loss of $(5,461,393). This impact was largely offset by non-cash items, primarily $5,092,557 stock-based compensation, along with depreciation and amortization of $54,449. Additionally, there was an increase in accounts payable of $121,146, an increase in accrued payroll of $17,476, and an increase in accrued interest payable of $6,931.
Cash Used in Financing Activities
During the three months ended January 31, 2026, cash provided by financing activities was $197,500, which consisted of proceeds from related party advances of $130,000 and proceeds from the sale of common stock of $67,500.
| 17 |
During the three months ended January 31, 2025, cash provided by financing activities was $374,000, which consisted of proceeds from related party advances of $359,000 and proceeds from the sale of common stock of $15,000.
Cash Provided by Investing Activities
During the three months ended January 31, 2026, there was no cash used in investing activities.
During the three months ended January 31, 2025, cash used in investing activities was $(177,943), which consisted of the purchase of property and equipment and long-term assets.
Going Concern
The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the three months ended January 31, 2026, the Company incurred a net loss of $182,069 and used cash in operating activities of $125,531, and on January 31, 2026, had stockholders’ deficit of $1,697,073. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and the classification of liabilities that might result from this uncertainty.
Management is actively seeking additional sources of capital through the sale of equity, advances from related parties, and exploring strategic partnerships. The Company is also focused on attracting suitable investors to support its business plan without relying heavily on existing cash reserves. Additionally, management is implementing cost-saving measures and exploring opportunities to diversify through acquisitions or entering into new markets. However, there can be no assurance that these efforts will result in sufficient funding, and the Company may continue to face substantial uncertainty regarding its ability to achieve profitable operations and sustain its business.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements with any party.
Critical Accounting Policies
Our discussion and analysis of results of operations and financial condition are based upon our condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Stock Based-Compensation
The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 requires that the cost of equity instrument awards, issued in exchange for services, including those issued to employees and predominantly to consultants, be measured at the grant-date fair value. The Company does not adhere to a formal stock-based compensation plan; rather, it issues stock awards on a discretionary basis as part of compensation agreements with selected consultants and employees. Compensation for stock-based awards is recognized as a non-cash expense on the income statement. The fair value of restricted stock grants is determined using the closing market price on the grant date, adjusted for an appropriate discount to reflect the restrictions on transferability and marketability of the shares. The discount is calculated using a weighted average of comparable restricted stock transactions, which better reflects the economic impact of larger issuances and provides a more accurate representation of fair value under ASC 718. The cost is recognized over the period during which the award recipient is required to perform services, typically known as the vesting period. The total compensation cost related to vested stock-based awards is recognized after adjusting for estimated forfeitures at the time of vesting. The expense related to stock-based compensation is included within the same income statement lines as cash compensation for the consultants and employees who receive the awards. As of the report date, the Company has not established any plans to issue dividends on stock-based awards. Any tax benefits arising from deductions for these awards are recorded in additional paid-in capital, provided they exceed the cumulative compensation cost recognized.
| 18 |
Employee Benefits
During the quarter ended January 31, 2026, the Company paid $743 in employer retirement contributions, representing 3% of semi-monthly payroll for one employee over three pay periods. These contributions are made in accordance with the terms of the Company’s state-mandated retirement plan for eligible employees and are recorded as employee benefits expense in the period incurred.
Fair Value Measurement of Convertible Instruments
The Company evaluates convertible financial instruments in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), to determine whether an instrument should be classified as a liability or as equity. Instruments that are required to be settled in a variable number of shares for a fixed monetary amount are classified as liabilities and measured at fair value on a recurring basis, with changes in fair value recognized in earnings.
Revenue Recognition
We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.
In certain arrangements where the Company facilitates the provision of goods or services provided by a third party, and does not take control of those goods or services, revenue is recognized on a net basis, limited to the margin or fee earned, consistent with the Company’s role as an agent under ASC 606-10-55-36 through 55-40.
Proposed Transactions
The Company is not anticipating any transactions.
Changes in Accounting Policies Including Initial Adoption
There were no recent accounting pronouncements that have or will have a material effect on the Company’s financial position or results of operations.
Financial Instruments
The main risks associated with the Company’s financial instruments include credit risk, market risk, and liquidity risk. The Company does not have significant exposure to foreign exchange risk, as all of it operations and transactions are denominated in U.S dollars.
Outstanding Share Data
As of January 31, 2026, the following securities were outstanding:
Common Stock: 101,821,989 shares
Series A Preferred Stock: 5,000,000 shares
Series B Preferred Stock: 360,000 shares
| 19 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending October 31, 2026, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during the quarter ended January 31, 2026, that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
| 20 |
PART II - OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
The following table includes all unregistered sales of securities made by the Company during the quarter ended January 31, 2026:
| Date | Name | Consideration | Securities | Exemption from Registration |
| 11/13/2025 | Raymond Renfrow | Cash | 500,000 | Rule 506 (b) of Regulation D |
| 12/13/2025 | Kevin Bens | Cash | 33,334 | Regulation A |
| 1/23/2026 | Tri-Bridge Ventures, LLC | Cash | 333,334 | Regulation A |
No commissions were paid in connection with the sales of securities above. Proceeds from the sale of common stock were applied toward operating capital to support the Company's operations.
ITEM 5. OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
None of our directors or executive
officers
ITEM 6. EXHIBITS
| Incorporated by reference | ||||||
| Exhibit | Exhibit Description | Filed herewith | Form | Period ending | Exhibit | Filing date |
| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 32.1* | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 32.2* | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 101.INS | Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document XBRL Instance Document | X | ||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Definition | X | ||||
| 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 | |||||
* Furnished, not filed.
| 21 |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
HNO INTERNATIONAL INC.
| |
| March 24, 2026 |
By: /s/ Donald Owens Donald Owens, Chief Executive Officer (Principal Executive Officer) |
| March 24, 2026 |
By: /s/ Hossein Haririnia Hossein Haririnia, Treasurer (Principal Financial and Accounting Officer) |
******
| 22 |
FAQ
How did HNOI perform financially in the quarter ended January 31, 2026?
What is HNOI’s liquidity position and cash burn as of January 31, 2026?
Why does HNOI’s filing highlight a going concern risk?
How much related-party debt does HNOI owe, and to whom?
What recent equity and convertible note transactions has HNOI completed?
What are HNOI’s main business activities in green hydrogen technology?
What internal control issues did HNOI disclose in this 10-Q?
