Quarterly Report for Quarter Ending April 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Quarterly Report, including (without limitation) statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" contain forward-looking statements. Although we believe that, in making any such statements, our expectations are based on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected.

These forward-looking statements include statements relating to our anticipated financial performance and business prospects, including debt reduction, currency values and financial impact, foreign exchange counterparty exposures, the impact of pending legal proceedings, adequate liquidity levels, dividends, share repurchases or other capital deployment initiatives and/or statements preceded by, followed by or that include the words "believe," "will," "will be," "will continue," "will likely result," "may," "predicts," "so we can," "when," "anticipate," "intend," "estimate," "expect," "project," "aim," "could," "plans," "seeks" and similar expressions. These forward-looking statements speak only as of the date stated, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control. These risks and uncertainties, including those described in our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from those suggested by the forward-looking statements and include, without limitation:

	·	Because of historical and expected operating losses and net operating cash flow deficits, there is substantial doubt about the Company's ability to continue as a going concern.
	·	Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.
	·	Our success depends heavily on our executive officers, senior management team and highly trained employees; difficulty hiring officers and employees of equal competency or ineffective succession planning, could adversely affect our business.
	·	Competition could cause downward pressure on prices, fewer customer orders, reduced margins, inability to take advantage of new business opportunities, and the loss of market share.
	·	Our competitors may be better capitalized, have greater revenues, and have more industry or management experience.
	·	Our competitors may develop technologies and products that are more effective than those we develop or that render our technology and products obsolete or noncompetitive.
	·	Our projections of future financial results are based on a number of assumptions by our management, some or all of which may prove to be incorrect, and actual results may differ materially and adversely from such projections.
	·	Our estimated and projected market for our products and services may be inaccurate and may not reach our expected potential.

	·	We will incur significant expenses and capital expenditures to execute our business plan; there are no assurances that we will obtain adequate financing to meet these expenditures.
	·	We may invest significant resources in developing new products, services and technologies in pursuit of applications and revenue opportunities that may never materialize.
	·	Our ability to grow our business depends on our ability to develop new products, and services to satisfy changing customer demands and respond to changing industry cycles in a timely and cost-effective manner.
	·	Our business may be adversely affected by changes in budgetary priorities of the U.S. Government.
	·	Technology failures or cyber security breaches or other unauthorized access to our information technology systems or sensitive or proprietary information could have an adverse effect on the Company's business and operations.
	·	Federal contracting is subject to significant regulation, including rules related to bidding, billing and accounting kickbacks and false claims, and non-compliance could subject us to fines and penalties.
	·	Our inability to secure additional U.S. government contracts and funding may adversely affect our business, financial condition and results of operations.
	·	The U.S. government's budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year and consequently having to shut down or operate on funding levels equivalent to its prior fiscal year pursuant to a "continuing resolution," could have an adverse impact on our business, financial condition, results of operations and cash flows.
	·	Our common stock has historically experienced limited trading and you may have difficulty liquidating your shares.
	·	Our stock price may be volatile and purchasers of our common stock could incur substantial losses.
	·	We do not expect to pay dividends in the foreseeable future, and you must rely on price appreciation of your shares of common stock for return on your investment.
	·	Our Company's founders, directors and executive officers own or control a majority of the Company and you will have little or no management control over our business or corporate mattes.
	·	Our operating results may continue to be adversely affected as a result of unfavorable market, economic, social and political conditions.

We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report or to conform such statements to actual results or revised expectations, except as required by law.

Overview of Operations

Heliospace, our wholly owned subsidiary, is an aerospace company specializing in the design, engineering, assembly and test of space flight qualified hardware, providing systems engineering, modeling, analysis, integration and test services to customers in government, commercial, private and non-profit markets. Heliospace designs, fabricates, assembles and tests space qualified hardware, including radar antennas for the NASA Europa Clipper mission, the antennas for the SunRISE CubeSat constellation, and deployable systems and sensors for numerous lunar landers and the Mars Sample Return program. Heliospace also provides systems engineering, integration and test, and mission formulation services, including support for the design, testing, and launch of the James Webb Space Telescope, formulation and design of the Roman Space Telescope, Habworlds Observatory, Mars Sample Return, and the Atmospheric Observing System.

In January 2024, via a share exchange accounted for as a reverse acquisition, Web3 Corporation, a Florida corporation that was originally incorporated under the name Stirling Bridge Group, Inc. and was a specialized small business venture lender, acquired 100% of the stock of Heliospace, and changed its name from Web3 Corporation to Helio Corporation (the "Business Combination"). Heliospace was the accounting acquirer in the Business Combination and was determined to be the sole predecessor of Helio Corporation. Accordingly, this discussion and analysis, and the condensed consolidated financial statements included elsewhere in this Quarterly Report, reflect the financial condition and results of operations of Helio Corporation and its sole consolidated subsidiary, Heliospace, after the Business Combination and of Heliospace prior to the Business Combination.

Trends, Events, and Uncertainties

Government Budget Uncertainty and Proposed NASA Cuts

A significant portion of our revenue is derived from contracts with the U.S. federal government, including through NASA, where our subsidiary, Heliospace, provides mission-critical components and engineering services for science and exploration missions. Accordingly, our financial condition and results of operations are influenced by trends in federal discretionary spending, particularly in space science and technology programs.

One key emerging trend is the proposed shift in federal budget priorities under the Trump administration. In April 2025, the administration released its draft budget proposal for fiscal year 2026, which recommends a significant reduction in overall discretionary spending, including an approximately 50% cut to NASA's Science Mission Directorate. If enacted, this proposal would reduce funding for core science programs such as astrophysics, heliophysics, Earth science, and planetary science-areas directly aligned with Heliospace's technical capabilities and historical contract activity.

Although this proposal remains subject to Congressional negotiation and approval, the magnitude of the proposed cuts and the administration's stated intent to reprioritize government resources away from space science programs present a material uncertainty for our future growth. Any resulting reduction, delay, or cancellation of NASA programs could reduce the number of available contracts, increase competition for limited awards, and adversely impact our future revenue and profitability.

In addition, broader fiscal challenges at the federal level-such as the rising national debt, persistent budget deficits, and the risk of government shutdowns or extended continuing resolutions-could result in delays to contract funding or payments, reduced availability of new program opportunities, and increased uncertainty in long-term planning. These macroeconomic pressures may also negatively affect private sector customers that rely on or benefit from government-funded space and research initiatives.

As we execute our expansion plans, we have continued to pursue and acquire additional revenue from private, commercial, and defense department sources., However, these plans are subject to risks and uncertainties, and there can be no assurance that they will succeed or fully offset the effects of any reduction in government spending.

Cybersecurity Risk and Ongoing Threat Landscape

As a government contractor and developer of advanced aerospace technology, we operate in a highly sensitive and data-driven environment. Cybersecurity risks-including ransomware attacks, data breaches, intellectual property theft, and attempted intrusions by nation-state actors-continue to increase in frequency and sophistication across our industry. Like many companies operating in the defense and aerospace sectors, we remain a potential target for both criminal and geopolitical cyber threats.

We have implemented security protocols, systems monitoring, and access controls to protect our infrastructure and proprietary information, including information related to our work with NASA and other government agencies. However, cybersecurity is an evolving threat landscape, and there can be no assurance that our efforts will prevent all attacks or unauthorized access. A successful breach could disrupt our operations, compromise confidential data, harm our reputation, result in regulatory investigations, or expose us to legal claims and financial losses.

We will continue to invest in cybersecurity tools, training, and third-party audits to strengthen our defenses, and we are evaluating compliance with emerging federal cybersecurity requirements. Nonetheless, future cybersecurity incidents could materially affect our business, financial condition, or results of operations.

Results of Operations

Comparison of the Six Months Ended April 30, 2026 to the Six Months Ended April 30, 2025

The following table provides certain selected financial information of Helio Corporation for the periods presented:

		Six Months Ended April 30,
		2026				2025				Change				%
Revenues		$	952,866			$	2,599,836				(1,646,970	)			(63%	)
Costs of revenue			579,572				1,994,743				(1,415,171	)			(71%	)
Operating expenses			3,904,623				2,391,108				1,513,515				63%
Operating income (loss)			(3,531,329	)			(1,786,015	)			(1,745,314	)			98%
Interest expense, net			(239,053	)			(148,160	)			(90,893	)			61%
Amortization of debt discount			(444,575	)			-				(444,575	)			Increase from zero
Change in fair value of derivative liability			(318,942	)			-				(318,942	)			Increase from zero
Gain on extinguishment of derivative liability			89,237				-				89,237				Increase from zero
Loss on modification of debt			(51,480	)			-				(51,480	)			Increase from zero
Loss on debt extinguishment			(883,543	)			-				(883,543	)			Increase from zero
Net loss		$	(5,379,685	)		$	(1,934,175	)			(3,445,510	)			178%
Loss per share basic and diluted		$	(0.26	)		$	(0.17	)

Revenue for the six months ended April 30, 2026 decreased by 63% to $952,866 from $2,599,836 for the six months ended April 30, 2025, reflecting a lower overall volume of work compared to the prior six months. Contributing factors include continuing budget cuts to NASA programs enacted by the current administration, combined with the extended government shutdown. During the six months ended April 30, 2026, we serviced five customers, one of which was a government customer, one commercial and two non/not-for-profit customers who were under government contracts, and one private customer. For the six months ended April 30, 2025, we serviced eleven customers, of which two were direct government customers, one was a private foundation, five were commercial customers and three were non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer.

Cost of Revenue

The 71% decrease in cost of revenue for the six months ended April 30, 2026 to $579,572 from $1,994,743 for the six months ended April 30, 2025 mainly reflected the decreased business volume described above. As a percentage of revenue, cost of revenue amounted to 61% and 77% in the six months ended April 30, 2026 and 2025, respectively. Cost of revenue as a percentage of revenue decreased by approximately 16% due to increased operational efficiency on several new contracts that commenced in Q3 2025.

Operating Expenses

		Six Months Ended April 30,
		2026				2025				Change				%
Operating expenses
Personnel expenses		$	72,518			$	292,244			$	(219,726	)			(75%	)
Facilities expense			434,274				399,796				34,478				9%
Professional fees			375,291				222,819				152,472				68%
Depreciation expense			11,332				11,332				-				0%
General and administrative expenses			3,011,208				1,464,917				1,546,291				106%
Total		$	3,904,623			$	2,391,108			$	1,513,515				63%

Overall operating expenses increased by $1,513,515, or 63%, to $3,904,623 for the six months ended April 30, 2026, as compared to $2,391,108 for the six months ended April 30, 2025, driven by professional fees and higher G&A expenses associated with this and R&D activities. Additionally, the Company issued stock for services to the CEO, CFO and consultants for an aggregate value of $2,406,532.

Other Expense

Our other expenses are comprised of interest expense, amortization of debt discount, change in fair value of derivative liabilities, gain on extinguishment of derivative liabilities, loss on modification of debt and loss on debt extinguishment. Overall other expenses increased by $1,700,196, or 1148%, to $1,848,356 for the six months ended April 30, 2026, as compared to $148,160 for the six months ended April 30, 2025. We recorded $239,053 in interest expense in the six months ended April 30, 2026 compared to $148,160 in the six months ended April 30, 2025, reflecting our increased amount of average outstanding debt and increased rates of interest thereunder. In the six months ended April 30, 2026 we recorded amortization of debt discount of $444,575, the change in fair value of derivative liabilities of $318,942, which was due to the issuance of convertible debt, a gain on extinguishment of derivative liabilities in the amount of $89,237, a loss on modification of debt in the amount of $51,480 and a loss on debt extinguishment in the amount of $883,543.

We have not recorded income tax expense or benefit in the six months ended April 30, 2026 and 2025 (because of our tax loss carryforwards). We had approximately $9,344,900 of net operating loss carry forwards to offset future federal taxable income as of April 30, 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 April 30, 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 six months.

Net Loss

Our net loss for the six months ended April 30, 2026 was $5,379,685, compared to a net loss of $1,934,175 for the six months ended April 30, 2025. The change was due to the reasons discussed above.

Because of historical and expected operating losses and net operating cash flow deficits, there is substantial doubt about the Company's ability to continue as a going concern for twelve months from the issuance of the condensed consolidated financial statements, which is not alleviated by management's plans. The condensed consolidated financial statements have been prepared under the going concern basis of accounting. These condensed consolidated financial statements do not include any adjustments that might be necessary from the outcome of this uncertainty.

Comparison of the Three Months Ended April 30, 2026 to the Three Months Ended April 30, 2025

The following table provides certain selected financial information of Helio Corporation for the periods presented:

		Three Months Ended April 30,
		2026				2025				Change				%
Revenues		$	457,316			$	1,172,260				(714,944	)			(61%	)
Costs of revenue			334,709				977,895				(643,186	)			(66%	)
Operating expenses			978,422				1,114,974				(136,552	)			(12%	)
Operating loss			(855,815	)			(920,609	)			64,794				(7%	)
Interest expense, net			(74,744	)			(94,424	)			19,680				(21%	)
Amortization of debt discount			(383,342	)			-				(383,342	)			Increase from zero
Change in fair value of derivative liabilities			(130,150	)			-				(130,150	)			Increase from zero
Gain on extinguishment of derivative liabilities			89,237				-				89,237				Increase from zero
Loss on modification of debt			(51,480	)			-				(51,480	)			Increase from zero
Loss on debt extinguishment			(239,663	)			-				(239,663	)			Increase from zero
Net loss		$	(1,645,957	)		$	(1,015,033	)			(630,924	)			62%
Loss per share basic and diluted		$	(0.07	)		$	(0.09	)

Revenue for the three months ended April 30, 2026 decreased by 61% to $457,316 from $1,172,260 for the three months ended April 30, 2025, reflecting a lower overall volume of work compared to the prior three months. Contributing factors include continuing budget cuts to NASA programs enacted by the current administration. During the three months ended April 30, 2026, we serviced five customers, one of which was a government customer, one commercial and two non/not-for-profit customers who were under government contracts, and one private customer. For the three months ended April 30, 2025, we serviced nine customers, one of which was a direct government customer, one was a private foundation, four were commercial customers and three were non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer.

Cost of Revenue

The 66% decrease in cost of revenue for the three months ended April 30, 2026 to $334,709 from $977,895 for the three months ended April 30, 2025 mainly reflected the decreased business volume described above. As a percentage of revenue, cost of revenue amounted to 73% and 83% in the three months ended April 30, 2026 and 2025, respectively. Cost of revenue as a percentage of revenue decreased by approximately 10% due to increased operational efficiency on several new contracts that commenced in Q3 2025.

Operating Expenses

		Three Months Ended April 30,
		2026				2025				Change				%
Operating expenses
Personnel expenses		$	30,626			$	133,678			$	(103,052	)			(77%	)
Facilities expense			263,164				189,285				73,879				39%
Professional fees			260,014				44,081				215,933				490%
Depreciation expense			5,666				5,666				-				0%
General and administrative			418,952				742,264				(323,312	)			(44%	)
Total		$	978,422			$	1,114,974			$	(136,552	)			(12%	)

Overall operating expenses decreased by $136,552, or 12%, to $978,422 for the three months ended April 30, 2026, as compared to $1,114,974 for the three months ended April 30, 2025, in both cases driven by lower G&A expenses. Additionally, the Company issued stock for services to the CFO and consultants for an aggregate value of $274,932.

Other Expense

Our other expenses are comprised of interest expense, amortization of debt discount, change in fair value of derivative liability, gain on extinguishment of derivative liabilities, loss on modification of debt and loss on debt extinguishment. Overall other expenses increased by $695,718, or 737%, to $790,142 for the three months ended April 30, 2026, as compared to $94,424 for the three months ended April 30, 2025. We recorded $74,744 in interest expense in the three months ended April 30, 2026 compared to $94,424 in the three months ended April 30, 2025, reflecting our increased amount of average outstanding debt and increased rates of interest thereunder. In the three months ended April 30, 2026 we recorded amortization of debt discount of $383,342, the change in fair value of derivative liabilities of $130,150, which was due to the issuance of convertible debt, a gain on extinguishment of derivative liabilities in the amount of $89,237, a loss on

Net Loss

Our net loss for the three months ended April 30, 2026 was $1,645,957, compared to a net loss of $1,015,033 for the three months ended April 30, 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.

Liquidity and Capital Resources

As of April 30, 2026, the Company had cash and cash equivalents of $464,720 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 April 30, 2026, the Company's ability to meet its obligations as they become due depend, and is expected to continue to depend, on its ability to obtain additional financing through debt or equity issuances, strategic transactions, or other capital-raising activities.

Default Under Promissory Notes

As of April 30, 2026, the Company was in default under certain of its outstanding promissory notes with an aggregate principal amount of approximately $1,185,000. Subsequent to April 30, 2026, the Company has resolved all of these defaults. Specifically, pursuant to a settlement agreement dated April 27, 2026, the aggregate outstanding obligation of $879,163 in principal and accrued interest owed under two secured promissory notes (original principal amounts of $400,000 and $500,000, respectively) was resolved. In addition, four other notes (original principal amounts of $50,000, $150,000, $50,000, and $250,000, respectively) for which default notices were received in February 2026 have been resolved and are now current.

During fiscal year 2026 and subsequent to April 30, 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 April 30, 2026, the Company had outstanding debt from unrelated parties under notes payable with an aggregate principal balance of $1,848,192. 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 April 30, 2026, the Company raised an additional $284,800 in proceeds in exchange for 149,409 shares of common stock in connection with the April 2026 Private Placement Memorandum. On May 29, 2026, an accredited investor purchased a Convertible Preferred share, netting Helio Corporation $154,750.

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.

Cash Flows

		Six Months Ended April 30,
		2026				2025
Cash used in operating activities		$	(1,319,440	)		$	(1,226,332	)
Cash provided by financing activities		$	1,776,855			$	690,469
Cash on hand (end of period)		$	464,720			$	15,699

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 April 30, 2026 and 2025, our negative operating cash flow was attributed mainly to our net loss, as described above.

During the six months ended April 30, 2026, the Company reported $1,319,440 of cash used in operating activities. The Company's negative operating cash flow was attributed mainly to a net loss of $5,379,685, decrease in lease obligations of $205,198, and a decrease in accrued compensation in the amount of $240,100. This was offset by a loss on debt extinguishment in the amount of $883,592, amortization of debt discount in the amount of $444,575 and change in fair value of derivative liabilities in the amount of $318,942.

During the six months ended April 30, 2025, the Company reported $(1,226,322) of cash used in operating activities. The Company's negative operating cash flow was attributed mainly to a net loss of $(1,934,175) and is partially offset by a decrease in accounts receivable of $381,349, and a decrease in work in process of $174,537.

Cash Flows Provided by Financing Activities

During the six months ended April 30, 2026, net cash provided by financing activities was $1,776,855, which included the incurrence of new debt proceeds amounting to $1,503,985, proceeds from the sale of common stock in the amount of $1,174,650, proceeds from the exercise of stock options in the amount of $8,066, offset by repayments of debt totaling $909,846.

During the six months ended April 30, 2025, net cash from financing activities was $690,469, which mainly included $695,000 the incurrence of new debt discussed above.

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 six months ending April 30, 2026:

		Leases				Debt				Total
Remainder of 2026		$	241,928			$	1,763,192			$	2,005,120
2027			283,626				85,000				368,626
Total		$	525,554			$	1,848,192			$	2,373,746

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.