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.) | |
|
(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
requirements for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
| 1 |
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 |
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 September 19, 2025, the registrant had outstanding shares of Common Stock.
| 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 March 20, 2025, as amended by our Form 10-K/A filed on June 26, 2025, 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 March 20, 2025, as amended by our Form 10-K/A filed on June 26, 2025.
| 3 |
HNO INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JULY 31, 2025
TABLE OF CONTENTS
| PAGE | ||
| PART I | FINANCIAL INFORMATION | |
| Item 1. | Financial Statements (Unaudited) | 5 |
| Unaudited Condensed Balance Sheets as of July 31, 2025 and October 31, 2024 | 6 | |
| Unaudited Condensed Statements of Operations for the Three and Nine months Ended July 31, 2025 and July 31, 2024 | 7 | |
| Unaudited Condensed Statement of Stockholders’ Deficit for the Three and Nine months Ended July 31, 2025 and July 31, 2024 | 8 | |
| Unaudited Condensed Statements of Cash Flows for the Nine months Ended July 31, 2025 and July 31, 2024 | 9 | |
| Notes to Unaudited Condensed Financial Statements | 10 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 27 |
| Item 4. | Controls and Procedures | 27 |
| PART II | OTHER INFORMATION | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 |
| Item 5. | Other Information | 28 |
| Item 6. | Exhibits | 29 |
| Signatures | 30 |
| 4 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
| HNO INTERNATIONAL, INC. CONDENSED BALANCE SHEETS (Unaudited) | ||||||||
| July 31, | October 31, | |||||||
| 2025 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Long term asset, net | ||||||||
| Right-of-use asset | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued payroll | ||||||||
| Accrued interest payable | ||||||||
| Lease liability | ||||||||
| Payroll tax | ||||||||
| Advances, related party | ||||||||
| Convertible note payable, at fair value | ||||||||
| Customer deposits | ||||||||
| 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 $ per share; shares authorized; shares issued and outstanding as of July 31, 2025 and October 31, 2024, respectively | ||||||||
| Series A, par value $ per share; shares authorized; and shares issued and outstanding as of July 31, 2025 and October 31, 2024, respectively | ||||||||
| Series B, par value $ per share; shares authorized; and shares issued and outstanding as of July 31, 2025 and October 31, 2024, respectively | ||||||||
| Common stock, par value $ per share; shares authorized; and shares issued and outstanding as of July 31, 2025 and October 31, 2024, respectively | ||||||||
| 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 July 31, |
For the Nine Months Ended July 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (As Restated) | (As Restated) | |||||||||||||||
| 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 | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss on fair value of convertible note | ( |
) | ( |
) | ||||||||||||
| Loss on write-off of intangible asset | ( |
) | ||||||||||||||
| 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 and nine months ended July 31, 2025 and 2024 (As Restated) (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 | ||||||||||||||||||||||||||||||||||
| Balance at October 31, 2023 (Restated) | $ | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||
| Regulation A stock issuances | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended January 31, 2024 | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Balance at January 31, 2024 (Restated) | $ | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||
| Regulation A stock issuances | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended April 30, 2024 | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Balance at April 30, 2024 (Restated) | $ | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||
| Regulation A stock issuances | — | — | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Regulation D stock issuances | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Shares cancelled as per settlement agreement - Vivaris Capital | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended July 31, 2024 | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Balance at July 31, 2024 | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| 7 |
| HNO INTERNATIONAL, INC. CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT (CONTINUED) For the three months and nine months ended July 31, 2025 and 2024 (As Restated) (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 | ||||||||||||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||
| Regulation D stock issuances | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended April 30, 2025 | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Balance at April 30, 2025 | $ | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||||||||||
| Regulation D stock issuances | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Net loss for the three months ended July 31, 2025 | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
| Balance at July 31, 2025 | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| The accompanying notes are an integral part of these condensed unaudited financial statements. | ||||||||||||||||||||||||||||||||||||||||||||
| 8 |
| HNO INTERNATIONAL, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
| For the Nine Months Ended July 31, | ||||||||
| 2025 | 2024 | |||||||
| (As Restated) | ||||||||
| Cash Flow from Operating Activities | ||||||||
| Net loss | $ | ( |
) | $ | ( |
) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Legal services provided in exchange for convertible note | ||||||||
| Loss on fair value of convertible note | ||||||||
| Loss on write-off of intangible asset | ||||||||
| Stock-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in due from related party | ||||||||
| Decrease in accounts payable | ( |
) | ( |
) | ||||
| Decrease in accrued payroll | ( |
) | ||||||
| Decrease in accrued interest payable | ||||||||
| Operating lease ROU assets and lease liabilities, net | ||||||||
| Decrease payroll taxes | ( |
) | ||||||
| Net Cash Used in Operating Activities | ( |
) | ( |
) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from related party advances | ||||||||
| Repayment of related party advances | ( |
) | ||||||
| Proceeds from security deposits | ||||||||
| Proceeds from customer deposits | ||||||||
| 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 | ( |
) | ( |
) | ||||
| Purchase of long term asset | ( |
) | ||||||
| Net Cash Used in Investing Activities | ( |
) | ( |
) | ||||
| Net increase (decrease) in cash | ( |
) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental Disclosure of Interest and Income Taxes Paid: | ||||||||
| Interest paid during the period | $ | $ | ||||||
| Income taxes paid during the period | $ | $ | ||||||
| Supplemental Disclosure for Non-Cash Investing and Financing Activities: | ||||||||
| Property and equipment acquired through accounts payable | $ | $ | ||||||
| Common stock cancellation per share exchange agreement | $ | ( |
) | $ | ( |
) | ||
| Series B preferred stock issuance per exchange agreement | $ | $ | ||||||
| Record right-to-use asset and lease liability per ASC 842 | $ | $ | ||||||
| Convertible note issued in exchange for legal services, recorded at fair value | $ | $ | ||||||
| The accompanying notes are an integral part of these condensed unaudited financial statements. | ||||||||
| 9 |
HNO INTERNATIONAL, INC.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
JULY 31, 2025
NOTE 1 – ORGANIZATION AND BASIS OF ACCOUNTING
Organization
HNO International, Inc. (the “Company”) was incorporated in the State of Nevada on May 2, 2005.
The Company specializes in the design, integration, and development of green hydrogen-based clean energy technologies. 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 hydrogen for various applications including fuel cell electric vehicles, hydrogen internal combustion engines, heating and cooking applications. A 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 – FINANCIAL STATEMENT RESTATEMENT
In connection with the Company’s re-audit of its financial statements for the year ended October 31, 2023, the Company’s management, in consultation with its independent registered public accounting firm, identified corrections to the valuation of service stock issued during the year ended October 31, 2023, and the termination of the patent agreement entered into on January 24, 2023. The corrections made that impact the condensed financial statements for the quarter ended July 31, 2024, are summarized as follows:
These adjustments have been reflected in the restated financial statements for the quarter ended July 31, 2024.
Impact of the Restatement
The impact of the restatement on the financial statements for the affected period is presented below. In addition to the below, the related notes to the financial statements have also been adjusted as appropriate to reflect the impact of the restatement.
| 10 |
The impact of the restatement on the relevant line items within the previously reported Condensed Unaudited Statement of Operations for the three and nine months ended July 31, 2024, previously filed is as follows:
| Statement of Operations for the three months ended July 31, 2024 | As Previously Reported | Adjustment | As Restated | |||||||||
| Depreciation and amortization | $ | $ | ( |
) | $ | |||||||
| Total Operating 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 | ||||||||||||
| Statement of Operations for the nine months ended July 31, 2024 | As Previously Reported | Adjustment | As Restated | |||||||||
| Operating expenses | ||||||||||||
| General and administrative expenses | $ | $ | ( |
) | $ | |||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total Operating 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 impact of the restatement on the relevant line items within the previously reported Condensed Unaudited Statement of Changes in Stockholders’ Deficit for the three and nine months ended July 31, 2024, previously filed is as follows:
| Changes in Statement of Stockholders' Deficit for the three months ended July 31, 2024 | As Previously Reported | Adjustment | As Restated | |||||||||
| Beginning Additional Paid-in Capital - Balance at April 30, 2024 | $ | $ | $ | |||||||||
| Beginning Accumulated Deficit - Balance at April 30, 2024 | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Beginning Total Stockholders' Deficit - Balance at April 30, 2024 | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Series A preferred issued pursuant to patent agreement, shares | ( |
) | ||||||||||
| Series A preferred issued pursuant to patent agreement, amount | $ | $ | ( |
) | $ | |||||||
| Net loss for the three months ended July 31, 2024 | $ | ( |
) | $ | $ | ( |
) | |||||
| Ending Additional paid in capital - Balance at July 31, 2024 | $ | $ | $ | |||||||||
| Ending Accumulated Deficit - Balance at July 31, 2024 | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Ending Total Stockholders' Deficit - Balance at July 31, 2024 | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| 11 |
| Changes in Statement of Stockholders' Deficit for the nine months ended July 31, 2024 | As Previously Reported | Adjustment | As Restated | |||||||||
| Beginning Additional Paid-in Capital - Balance at October 31, 2023 | $ | $ | $ | |||||||||
| Beginning Accumulated Deficit - Balance at October 31, 2023 | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Beginning Total Stockholders' Deficit - Balance at October 31, 2023 | $ | ( |
) | ( |
) | ( |
) | |||||
| Series A preferred issued pursuant to patent agreement, shares | ( |
) | ||||||||||
| Series A preferred issued pursuant to patent agreement, amount | $ | $ | ( |
) | $ | |||||||
| Net loss for the nine months ended July 31, 2024 | $ | $ | ( |
) | $ | |||||||
| Ending Additional paid in capital - Balance at July 31, 2024 | $ | $ | $ | |||||||||
| Ending Accumulated Deficit - Balance at July 31, 2024 | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
| Ending Total Stockholders' Deficit - Balance at July 31, 2024 | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||
The impact of the restatement relevant on the line items within the previously reported Condensed Unaudited Statement of Cash Flows for the nine months ended July 31, 2024, previously filed is as follows:
| Statement of Cash Flows for the nine months ended July 31, 2024 | As Previously Reported | Adjustment | As Restated | |||||||||
| Cash Flow from Operating Activities | ||||||||||||
| Net loss | $ | ( |
) | $ | $ | ( |
) | |||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Increase/(Decrease) in accounts payable | $ | $ | ( |
) | $ | ( |
) | |||||
| Operating lease ROU assets and lease liabilities, net | $ | $ | $ | |||||||||
| Net Cash Used in Operating 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 Non-Cash Investing and Financing Activities: | ||||||||||||
| Record right-to-use asset and lease liability per ASC 842 | $ | ( |
) | $ | ( |
$ | ( |
) | ||||
| 12 |
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed 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 and nine months ended July 31, 2025.
Out-of-Period Adjustment
During the nine months ended July
31, 2025, the Company recorded an out-of-period adjustment to write off the full gross amount of a previously capitalized intangible asset
related to the prototype Compact Hydrogen Refueling Station (“CHRS”). The asset was originally recorded at $
Management evaluated the error,
both qualitatively and quantitatively, and concluded that the adjustment was not material to any prior interim or annual period. The Company
recorded an expense of $
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 July 31, 2025, and October 31, 2024, 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.
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 income statement 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.
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Employee Benefits
During the three months ended July 31, 2025,
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, 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.
During the nine months ended July 31,
2025, the Company recognized $
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.
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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.
| 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, is classified as a liability and measured at fair value on a recurring basis in accordance with ASC 480, Distinguishing Liabilities from Equity, 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 Topic 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:
| · | 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. |
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Assets and liabilities measured at fair value on a recurring basis as of July 31, 2025 were as follows:
| Total | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
| Liabilities | ||||||||||||||||
| Convertible note payable | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
The fair value of the convertible note increased by $
NOTE 4 – GOING CONCERN
On
July 31, 2025, 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 5 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
July 31, 2025 | October 31, 2024 | |||||||
| Vehicles | $ | $ | ||||||
| Small equipment | ||||||||
| Large equipment | ||||||||
| Property and Equipment, Gross | $ | $ | ||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and Equipment, Net | $ | $ | ||||||
Depreciation
expenses for the nine months ended July 31, 2025 and 2024 were $
NOTE 6 – LEASES
Operating leases
The Company has an operating lease agreement for office space in Murrieta, California, expiring on November 30, 2026.
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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 July 31, 2025, the ROU asset was
$
Remaining lease term as of July 31, 2025:
| Year | Operating Lease Payment | |||
| 2025 | $ | |||
| 2026 and above | ||||
| Total Payments | $ | |||
NOTE 7 – COMMON STOCK
Stock Issued
During the quarter ended January 31, 2024,
the Company issued shares of common stock for $
During the quarter ended April 30, 2024,
the Company issued shares of common stock for $
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). Whereby the Company privately sold a total of shares of its common stock for an
aggregate cash purchase price of $
During
the quarter ended January 31, 2025, the Company's Board of Directors granted approval for the issuance of shares of our common
stock valued at $
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During the quarter ended
April 30, 2025, the Company entered into Stock Subscription Agreements with accredited investors (under Rule 506(b) of Regulation D under
the Securities Act of 1933, as amended). Whereby the Company privately sold a total of shares of its common stock, for a cash
purchase price of $
During the quarter ended
July 31, 2025, the Company entered into Stock Subscription Agreements with accredited investors (under Rule 506(b) of Regulation D under
the Securities Act of 1933, as amended). Whereby the Company privately sold a total of shares of its common stock, for a cash
purchase price of $
During
the quarter ended July 31, 2025, the Company's Board of Directors granted approval for the issuance of shares of our common
stock valued at $
Stock Receivable
As of July 31, 2025 and October 31, 2024,
the Company issued shares of common stock under Regulation A offering to various shareholders that have not yet paid for shares;
therefore, $
Stock Payable
As of July 31, 2025, the Company sold
shares of common stock under its Regulation A offering to various shareholders that have not yet been issued by the transfer agent;
therefore, $
NOTE 8 – PREFERRED STOCK
Series A Preferred Stock
On January 24,
2023, the Company issued shares of its Series A Preferred Stock to Donald Owens, the Company’s Chief Executive Officer
(CEO) and Chairman, valued at $
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 shares of the Company’s common stock for shares of Series B Preferred Stock. On January 9, 2025, shares of common stock held by Donald Owens were cancelled, and shares of Series B Preferred Stock were issued to Donald Owens.
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 shares of the Company’s common stock for shares of Series B Preferred Stock. On January 9, 2025, shares of common stock held by HNO Green Fuels, Inc. were cancelled, and shares of Series B Preferred Stock were issued to HNO Green Fuels, Inc.
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NOTE 9 – RELATED PARTY TRANSACTIONS
Notes Payable, Related Party
On December 1, 2021, the Company issued a note
payable in the amount of $
On May 31, 2022, the Company issued a
note payable in the amount of $
On
September 29, 2022, the Company issued a note payable in the amount of $
On October 20, 2022, the Company issued
a note payable in the amount of $
On March 1, 2023, the Company issued a
note payable in the amount of $
On March 8, 2023, the Company issued a
note payable in the amount of $
On March 23, 2023, the Company issued
a note payable in the amount of $
On April 3, 2023, the Company issued a
note payable in the amount of $
On April 13, 2023, the Company issued
a note payable in the amount of $
On April 17, 2023, the Company issued
a note payable in the amount of $
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As of July 31, 2025 and October 31, 2024,
these current and long-term notes payable had an aggregate outstanding balance of $
As of July 31, 2025 and October 31, 2024,
the Company has recorded $
Advances from Related Party
During the year ended October 31, 2024,
the Company’s CEO, advanced $
During the year ended October 31, 2024,
HNO Green Fuels advanced $
During the nine months ended July 31,
2025, the Company repaid $
During
the nine months ended July 31, 2025, HNO Green Fuels, advanced $
These advances are non-interest bearing and due on demand.
As of July 31, 2025 and October 31, 2024,
related party advances had an outstanding balance of $
NOTE 10 – CONVERTIBLE PROMISSORY NOTE
On
April 7, 2025, the Company entered into a Legal Services Agreement with Newlan Law Firm, PLLC, pursuant to which the Company issued a
$
On
the issuance date, April 7, 2025, the Company determined the fair value of the note to be $
As of July
31, 2025, the fair value of the note was remeasured using the closing share price on that date. The resulting increase in fair value of
$
As of July 31, 2025, the
Company would have accrued $
Following is the maturity schedule for the Company’s convertible notes payable as of July 31, 2025:
| Fiscal year ended October 31, | Amount Due | |
| 2025 | $ | |
| 2026 | $ | |
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NOTE 11 – TERMINATION OF PATENT AGREEMENT
Patent Purchase Agreement
On January 24,
2023, the Company entered into a Patent Purchase Agreement with the Company’s CEO, to acquire several patents related to hydrogen
supplemental systems for on-demand hydrogen generation for internal combustion engines and a method and apparatus for increasing combustion
efficiency and reducing particulate matter emissions in jet engines. In exchange for these patents, the Company issued shares
of its Series A Preferred Stock to Mr. Owens, valued at $
Termination of Patent Purchase Agreement
On March 13, 2025, the Company and Donald Owens mutually agreed to terminate the Patent Purchase Agreement as of January 24, 2023. As part of the termination, the patents were returned to Mr. Owens, and the shares of Series A Preferred Stock were canceled. See Note 2 – Correction of Previously Issued Financial Statements. A copy of the Termination Agreement was attached to the Company’s Annual Report on Form 10-K as Exhibit 10.27.
NOTE 12 – SUBSEQUENT EVENTS
Subsequent events have been evaluated through September 12, 2025, 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.
Common Stock Issued
The Company entered into a Stock Subscription Agreement
with an accredited investors (under Rule 506(b) of Regulation D under the Securities Act of 1933, as amended), whereby the Company privately
sold a total of shares of its common stock, $ par value per share (“common stock”), for a cash purchase price
of $
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
HNO International, Inc. 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 International 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;
(iv) decentralized clean power generation through the newly launched EcoFlare Power division, which captures and converts flared natural gas into electricity and hydrogen for data centers, Bitcoin mining, and industrial use; and
(v) distributed hydrogen infrastructure through the newly introduced HyGrid™ intelligent microgrid system, a solar-hydrogen hybrid
platform enabling off-grid hydrogen production, storage, and refueling.
Results of Operations
For the three months ended July 31, 2025 and 2024
Revenue
For the three months ended July 31, 2025 and 2024, the Company recognized revenue of $0 and $4,241, respectively. Revenue in the prior year was generated from hydrogen engineering services and combustion solutions.
Cost of Goods Sold
For the three months ended July 31, 2025 and 2024, total cost of sales was $0 and $3,688, respectively. The cost of goods sold in prior year consisted of expenses related to contract labor associated with revenue generation.
Gross Profit
For the three months ended July 31, 2025 and 2024, gross profit was $0 and $553, respectively. The decrease from the prior year reflects the absence of revenue-generating activities in the current quarter.
Operating Expenses
General and administrative expenses were $421,940 for the three months ended July 31, 2025, compared to $430,693 during the same period in 2024, a decrease of $8,751. The current period included $241,380 of stock-based compensation expense. No stock-based compensation was recorded during the same period in 2024. Excluding stock-based compensation, general and administrative expenses decreased by $250,133, primarily due to reduced professional fees, lower consultant costs, and a general reduction in administrative overhead.
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Depreciation and amortization expense increased by $17,815, totaling $66,742 for the three months ended July 31, 2025, compared to $48,927 for the three months ended July 31, 2024, due to depreciation associated with additional property and equipment acquired during recent prior periods.
Advertising and marketing expenses were $2,610 for the three months ended July 31, 2025, compared to $9,593 for the same period in 2024. 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.
Other Income (Expenses)
Other expenses decreased from $6,924 for the three months ended July 31, 2024 to $6,718 for the period ended July 31, 2025.
Net Loss
Net loss for the three months ended July 31, 2025, was $498,010 compared to a net loss of $495,584 during the same period in 2024.
For the nine months ended July 31, 2025 and 2024
Revenue
For the nine months ended July 31, 2025 and 2024, the Company recognized revenue of $43,708 and $4,241, respectively. Revenue in the current period was generated from the facilitation of delivery of hydrogen equipment and related integration support. The Company concluded that it acted as an agent with respect to the equipment component of the arrangement, as it did not take control of the goods and the third-party supplier shipped directly to the customer. As a result, revenue was recognized on a net basis, limited to the Company’s retained margin. Revenue in the prior year was generated from hydrogen engineering services and combustion solutions.
Cost of Goods Sold
Cost of Goods Sold consists of direct expenses related to hydrogen engineering services and combustion solution projects, including materials, subcontracted labor, and other project-specific implementation costs. For the nine months ended July 31, 2025 and 2024, total cost of sales was $0 and $3,688, respectively. The Company acted as an agent in facilitating delivery of certain hydrogen refueling equipment during the 2025 period and did not generate separate cost of sales. The prior year’s cost of goods sold related to contract labor expenses associated with revenue-generating activities.
Gross Profit
For the nine months ended July 31, 2025 and 2024, gross profit was $43,708 and $553, respectively. The increase reflects revenue generated from the facilitation of delivery of hydrogen equipment and integration support services. As the Company was acting as an agent with respect to the equipment delivered by a third-party vendor, no cost of goods sold was recognized, and gross profit equaled the margin retained.
Operating Expenses
General and administrative expenses were $6,130,926 for the nine months ended July 31, 2025, compared to $1,421,333 during the same period in 2024, a decrease of $4,709,593. The current period included $5,333,937 of stock-based compensation expense. No stock-based compensation was recorded during the same period in 2024. Excluding stock-based compensation, general and administrative expenses decreased by $358,842, primarily due to reduced professional fees, lower consultant costs, and a general reduction in administrative overhead.
Depreciation and amortization expense increased by $50,736 to $178,730 for the nine months ended July 31, 2025, compared to $127,994 for the same period in 2024, reflecting depreciation on additions to property and equipment.
Advertising and marketing expenses were $22,770 for the nine months ended July 31, 2025, compared to $9,593 for the same period in 2024. The increase reflects the Company’s expanded outreach and promotional activities supporting its hydrogen engineering and combustion solutions offerings.
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Other Income (Expenses)
Other expenses increased from $15,145 for the nine months ended July 31, 2024 to $140,751 for the period ended July 31, 2025, the increase primarily related to $15,000 loss on fair value of convertible note related to the issuance of a convertible note in exchange for legal services and $105,190 loss on the write-off of intangible asset as a result of an out-of-period adjustment due to the incorrect capitalization of costs associated with developed intellectual property.
Net Loss
Net loss for the nine months ended July 31, 2025, was $6,429,469 compared to a net loss of $1,573,512 during the same period in 2024.
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 July 31, 2025 of $498,010 and had an accumulated deficit of $51,864,163 at July 31, 2025. At July 31, 2025, we had a cash balance of $31,984, compared to a cash balance of $20,255 at October 31, 2024. At July 31, 2025, the working capital deficit was $2,424,655, compared to a working capital deficit of $1,969,965 at October 31, 2024. 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 Nine months Ended July 31, 2025 and 2024
The following table summarizes our cash flows for the periods indicated below:
For the Nine months Ended July 31, 2025 | For the Nine months Ended July 31, 2024 | |||||||
| Cash Used in Operating Activities | $ | (877,827 | ) | $ | (1,382,728 | ) | ||
| Cash Provided by Financing Activities | 1,067,500 | 1,592,612 | ||||||
| Net cash used in investing activities | $ | (177,944 | ) | $ | (366,126 | ) | ||
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Cash Used in Operating Activities
During the nine months ended July 31, 2025, cash used in operating activities amounted to $(877,827), primarily reflecting our net loss of $(6,429,469). This impact was largely offset by non-cash items, primarily $5,333,937 in stock-based compensation, along with depreciation and amortization of $178,730, a $105,190 loss on write-off of an intangible asset, and $60,000 related to a convertible note issued for legal services, including $45,000 recognized as legal expense and a $15,000 fair value adjustment. Changes in working capital included a decrease in accounts payable of $(129,137) and a decrease in accrued payroll of $(17,762), partially offset by a $20,569 increase in accrued interest payable.
During the nine months ended July 31, 2024, cash used in operating activities totaled $(1,382,728), primarily reflecting our net loss of $(1,573,512). This was offset by non-cash charges such as depreciation and amortization amounting to $127,994. Additionally, there was a decrease in due from related party of $56,392 and an increase in accrued interest payable of $20,643 and a decrease in payroll taxes of $14,802, contributing to the overall cash movements during the period.
Cash provided by Financing Activities
During the nine months ended July 31, 2025, cash provided by financing activities was $1,067,500, which consisted of net proceeds from related party advances of $131,000 and proceeds from the sale of common stock of $936,500.
During the nine months ended July 31, 2024, cash provided by financing activities was $1,592,612, which consisted of proceeds from related party advances of $800,585, $706,429 from the sale of common stock, $14,501 in proceeds from common stock subscription payable, and a $100,000 refund of a security deposit.
Cash Used in Investing Activities
During the nine months ended July 31, 2025, cash used in investing activities was $(177,944), which consisted of the purchase of property.
During the nine months ended July 31, 2024, cash used in investing activities was $(366,126), which consisted of the purchase of property and equipment and purchase 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 nine months ended July 31, 2025, the Company incurred a net loss of $6,429,469 and used cash in operating activities of $877,827, and on July 31, 2025, had stockholders’ deficit of $1,556,423. 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.
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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 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 income statement 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.
As of the report date, the Company has not established any plans to issue dividends on stock-based awards.
Employee Benefits
During the quarter ended July 31, 2025, 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 to determine whether an instrument should be equity classified, or liability classified. The Company issued a $45,000 convertible note in connection with a legal service agreement during the period that allows for a fixed dollar amount to be settled in a variable number of shares which requires liability classification and was measured at fair value on initial recognition.
On the issuance date, the Company determined the fair value of the note to be $59,985 and recorded the full amount as a liability. The excess of $14,985 over the $45,000 principal amount was recognized as a loss on fair value of the convertible note in the condensed statements of operations.
Fair value is determined in accordance with ASC 820 using available market inputs. Instruments classified as liabilities and measured at fair value are evaluated on a recurring basis, with changes in fair value recognized in the statements of operations. For the three months ended July 31, 2025, the Company recorded an additional $15 loss in connection with the change in fair value of the convertible note.
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.
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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 July 31, 2025, the following securities were outstanding:
Common Stock: 95,920,491 shares
Series A Preferred Stock: 5,000,000 shares
Series B Preferred Stock: 360,000 shares
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.
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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, 2025, 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 July 31, 2025 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
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 July 31, 2025:
| Date | Name | Consideration | Securities | Exemption from Registration |
| 5/13/2025 | Johnny Smith | Cash | 400,000 | Rule 506 (b) of Regulation D |
| 5/13/2025 | Samuel Austin Cutler | Cash | 100,000 | Rule 506 (b) of Regulation D |
| 5/23/2025 | Ubong E. Ituen | Cash | 1,000,000 | Rule 506 (b) of Regulation D |
| 5/30/2025 | Theodore O. Spaulding III | Cash | 400,000 | Rule 506 (b) of Regulation D |
| 6/2/2025 | Samuel Austin Cutler | Cash | 300,000 | Rule 506 (b) of Regulation D |
| 6/5/2025 | Eno Ituen | Cash | 1,000,000 | Rule 506 (b) of Regulation D |
| 6/18/2025 | Vindicated Phoenix Corp. | Cash | 400,000 | Rule 506 (b) of Regulation D |
| 6/18/2025 | Samuel Austin Cutler | Cash | 100,000 | Rule 506 (b) of Regulation D |
| 6/18/2025 | Jyi Chao Li | Cash | 340,000 | Rule 506 (b) of Regulation D |
| 6/18/2025 | Deborah D. Phillips | Cash | 1,200,000 | Rule 506 (b) of Regulation D |
| 7/7/2025 | Eno Ituen | Cash | 1,000,000 | Rule 506 (b) of Regulation D |
| 7/3/2025 | Ubong E. Ituen | Cash | 1,000,000 | Rule 506 (b) of Regulation D |
| 6/30/2025 | Vindicated Phoenix Corporation | Cash | 1,000,000 | Rule 506 (b) of Regulation D |
| 7/23/2025 | Vindicated Phoenix Corporation | Cash | 100,000 | Rule 506 (b) of Regulation D |
| 7/30/2025 | Stephen Z Morrell | Cash | 4,800,000 | Rule 506 (b) of Regulation D |
| 7/10/2025 | Samuel Austin Cutler | Cash | 50,000 | Rule 506 (b) of Regulation D |
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
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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.
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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.
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HNO INTERNATIONAL INC.
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| September 19, 2025 |
By: /s/ Donald Owens Donald Owens, Chief Executive Officer (Principal Executive Officer) |
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By: /s/ Hossein Haririnia Hossein Haririnia, Treasurer (Principal Financial and Accounting Officer) |
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