HNOI 10-K & 10-Q changes, risk factors and insider trading

The following are important factors we have identified that could affect an investment in our securities. You should consider them carefully when evaluating an investment in ourHNO International, Inc. securities, because these factors could cause actual results to differ materially from historical results or any forward-looking statements. The risks described below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, operating results, and prospects.

OurWe independenthave registeredconcluded public accounting firmthat reports on our audited financial statements for the years ended October 31, 2024conditions and 2023, indicate that there are a number of factors thatevents raise substantial risksdoubt about ourthe Company’s ability to continue as a going concern.concern Suchfor factorsa identifiedperiod inof at least 12 months from the reportdate the financial statements are ourissued. Management considered, among other factors, the Company’s accumulated deficit sincedeficit, inception,history ourof failureoperating to attain profitable operations,losses, the excess of liabilities over assets, and ourthe Company’s dependence upon on obtaining adequate additional financing to paymeet ourits liabilities.obligations as they become due. If we are not ableunable to continue as a going concern, we may be forced to significantly curtail or cease operations, and investors could lose all or a portion of their investments.investment.

Our Chairman,Chairman and Chief Executive Officer, Donald Owens, is the sole holder of our Series A Preferred Stock and, along with his ownership of a substantial percentage of our Common Stock, controls a majority of the voting power of our Company. For so long as Mr. Owens holds all of the shares of Series A Preferred Stock and a substantial percentage of our Common Stock, he is expected to hold a majority of our outstanding voting power and he will control the outcome of matters submitted to a stockholder vote, including the appointment of all directors of the Company.

Our Chairman,Chairman and Chief Executive Officer, Donald Owens, owns all of the shares of our Series A Preferred Stock that gives him the rights to 55 votes per share of our Company as well as is ownership of a substantial percentage of our Common Stock. Other members of our management also own shares of our Common Stock. Therefore, our management effectively controls all corporate activities and can approve transactions, including possible mergers, issuance of shares and compensation levels, without the approval of other stockholders. The decisions of our management may not be consistent with or in the best interests of other stockholders.

OurWe management hashave limited personal liability.

The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required significant changes in corporate governance practices of public companies.companies, which increase our ongoing compliance costs and make certain activities more time-consuming and costly. As a public company, we expect these new rules and regulations to increase our compliance costs in 2023 and beyond and to make certain activities more time consuming and costly. As a public company, we also expect that these new rules and regulations may also make it more difficult and expensive for us to obtain director and officer liability insurance in the futurefuture, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our Board of Directors or as executive officers.

As part of our vertical integration strategy, we are developing and constructing green hydrogen production facilities at locations across the United States and Canada. Our ability to successfully complete and operate these projects is not guaranteed. These projects will impact our ability to meet and supplement the hydrogen demands for our products and services, for both existing and prospective customers. Our hydrogen production projects are dependent, in part, upon our ability to meetobtain ourand internaldeploy demandthe for electrolyzersequipment required for such projects. ElectrolyzerDemand demandfor such equipment by external customers may concurrently affect our ability to meet the internal electrolyzerrequirements demand fromfor our hydrogen production projects. The The timing and cost to complete the construction of our hydrogen production projects are subject to a number of factors outside of our control control and such projects may take longer and cost more to complete and become operational than we expect.

We rely on certain key suppliers for critical components in our products, and there are numerous other components for our products that are sole sourced. If we fail to maintain our relationships with our suppliers or build relationships with new suppliers, or if suppliers are unable to meet our demand, we may be unable to manufacture our products, or our products may be available only at a higher cost or after a delay. In addition, to the extent that our supply partners use technology or manufacturing processes that are proprietary, we may be unable to obtain comparable components from alternative sources. Furthermore, we may become increasingly subject to domestic content sourcing requirements and Buy America preferences, as required under certain United States federal infrastructure funding sources. Domestic content preferences and and Buy America requirements potentialmay mandate that we source certain components and materials from within the United States. Conformity with these provisions potentially depends upon our ability to increasingly source components or certain materials from within the United States. An inability to meet these requirements could have a material adverse effect on our ability to successfully compete for certain projects or awards utilizing federal funds subject to such mandates.

Operating as a public company is more expensive than operating as a private company, including additional funds required to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be more costly than planned. We may also be required to hire additional staff to comply with SEC reporting requirements. We anticipate that these costs will be approximately $200,000-$300,000 annually. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our results of operations, cash flow and financial condition.

Our growth depends on external sources of capital, which may not be available on favorable terms or at all. In addition, investors, banks and other financial institutions may be reluctant to enter into any lending or financial transactions with us, because we intend to enterengage intoin aenvironmentally miningregulated excavationenergy operationinfrastructure activities that could have environmental impacts if not managed properly. If any of the source of funding is unavailable to us, our growth may be limited, and our operating profit may be impaired.

Our access to capital will depend upon several factors over which we have little or no control, including general market conditions and the market’s perception of our current and potential future earnings. If general economic instability or downturn leads to an inability to obtain capital to finance, the operation could be negatively impacted. In addition, investors, banks and other financial institutions may be reluctant to enter into financing transactions with us, because we intend to engage in environmentally regulated energy infrastructure activities that could operate a mining excavation operation. If this source of funding is unavailable to us, our growth may be limited, and our operating profit may limited.be impaired.

Your percentage of ownership may become diluted if we issue new Common Stock or other securities.securities, including shares that are eligible for exchange.

Our board of directors is authorized, without your approval, to cause us to issue additional Common Stock to raise capital through the issuance of Common Stock (including equity or debt securities convertible into Common Stock), and other rights, on terms and for consideration as our board of directors in its sole discretion may determine. Any such issuance could result in dilution of the equity of our shareholders.

The market valuation of companies, such as ours, frequently fluctuates fluctuate due to factors unrelated to the past or present operating performance of such companies. Our market valuation may fluctuate significantly in response to a number of factors, many of which are beyond our control, including:

HNO International, Inc., a Nevada corporation, 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.

WeHNO provideprovides 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, steel, mining, electronics, semiconductors, and fuel cell electric vehicles; (iii) and the gasoline and diesel engine emissions and maintenance reduction product and services market.

During the year ended October 31, 2024, cash used in operating activities wastotaled $1,802,678.$1,802,678, Thisprimarily reflectsreflecting our net lossesloss forof the$3,338,590. period,This adjustedwas offset by non-cash charges such as depreciation and amortization amounting to $179,672. Additionally, there was a decrease in due from related party of $56,392 and share-baseda compensation. Changesdecrease in workingaccrued capitalinterest accountspayable alsoof contributed to cash usage, primarily due to increases in accounts payable$12,425 and decreasesa decrease in payroll taxes andof accrued interest payable.$14,802.

During the year ended October 31, 2024,2025, cash provided by financing activities was $2,002,612.$1,176,701, This primarilywhich consisted of net proceeds from related party advances totalingof $960,585, along with $958,929 raised through the Company's Regulation A offering$127,800 and proceeds from customerthe deposits.sale of common stock of $1,049,000.

In comparison, during the year ended October 31, 2023, 2024, cash provided by financing activities was $2,426,833,$2,002,612, primarilywhich reflectingconsisted of proceeds from the Company’s Regulation A offering and related party loans.advances of $960,585, $958,929 from the sale of common stock, $17,011 in proceeds from common stock subscription payable, and a $100,000 refund of a security deposit.

ForDuring the year ended October 31, 2023,2025, cash used in investing activities was $908,699,$226,943, which included significant purchasesconsisted of propertythe andpurchase equipmentof as well as investments in a SAFE agreement.property.

For the three months ended AprilJuly 30,31, 2026 and 2025

ForAll revenue recognized in the current fiscal year was earned in the three monthsquarter ended April 30, 2026 and 2025, the Company recognized revenue of $33,821 and $43,708, respectively. Revenue in the current period was generated from the facilitation of the delivery of hydrogen equipment and related integration support. The Company concluded that it acted as an agent with respect to the equipment component of thethat arrangement, as it did not take control of the goods and the third-party supplier shipped directly to the customer. As a result,Accordingly, revenue was recognized on a net basis, limited to the Company’s retained margin.

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 three months ended AprilJuly 30,31, 2026 and 2025, total cost of sales was $0 and $0, respectively.respectively, Theas the Company actedrecognized asno an agentrevenue in facilitatingeither delivery of certain hydrogen refueling equipment during the 2026 period and did not generate separate cost of goods sold.period.

General and Administrativeadministrative expenses were $165,081$186,014 for the three months ended AprilJuly 30,31, 2026, compared to $314,323$180,560 during the same period in 2025, aan decreaseincrease of $149,242, reflecting lower professional fees, reduced consultant costs, and a general decline in administrative overhead.$5,454.

Depreciation expense increaseddecreased by $5,897$3,026 to $63,436$63,716 for the three months ended AprilJuly 30,31, 2026, compared to $57,539$66,742 for the same period in 2025, reflecting depreciationa $1,229 reversal onof additionsprior-period toover-depreciation propertyrecorded in the current quarter and equipment.small equipment reaching the end of its depreciable life, partially offset by depreciation on equipment additions.

Advertising and marketing expenses were $1,706$0 for the three months ended AprilJuly 30,31, 2026, compared to $14,810$2,610 for the same period in 2025. The decrease was due to reduced outreach activities compared to the prior year, which had higher spending to support the Company’s hydrogen engineering and combustion solutions.

Net loss for the three months ended AprilJuly 30,31, 2026, was $400,825$532,209 compared to a net loss of $470,066$498,010 during the same period in 2025.

For the sixnine months ended AprilJuly 30,31, 2026 and 2025

For the sixnine months ended AprilJuly 30,31, 2026 and 2025, the Company recognized revenue of $33,821 and $43,708, respectively. Revenue in the current period was generated from the facilitation of the 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.

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 sixnine months ended AprilJuly 30,31, 2026 and 2025, total cost of sales was $0 and $0, respectively. The Company acted as an agent in facilitating delivery of certain hydrogen refueling equipment during the 2026 period and did not generate separate cost of goods sold.

For the sixnine months ended AprilJuly 30,31, 2026 and 2025, gross profit was $33,821 and $43,708, respectively. These amounts reflect revenue generated from the facilitation of the 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.

General and Administrativeadministrative expenses were $286,570$472,583 for the sixnine months ended AprilJuly 30,31, 2026, a decrease of $5,422,415$324,406 from $5,708,985$796,989 in the comparable period of 2025. The declinedecrease was drivenattributable primarily byto stock-baseda compensation, which totaled $5,092,557decrease in thecontract 2025labor periodcosts, andpartially wasoffset nilby increases in 2026.other Excluding stock-basedoperating compensation, general and administrative expenses decreased by $329,858, reflecting lower professional fees, reduced consultant costs, and a general decline in administrative overhead.costs.

Depreciation expense increased by $16,665$13,639 to $128,653$192,369 for the sixnine months ended AprilJuly 30,31, 2026, compared to $111,988$178,730 for the same period in 2025, reflecting depreciation on additions to property and equipment.

Advertising and marketing expenses were $2,559 for the sixnine months ended AprilJuly 30,31, 2026, compared to $20,160$22,770 for the same period in 2025.2025, a decrease of $20,211. The decrease was due to reduced outreach activities compared to the prior year, which had higher spending to support the Company’s hydrogen engineering and combustion solutions.

Net loss for the sixnine months ended AprilJuly 30,31, 2026, was $582,894$1,159,592 compared to a net loss of $5,931,459$6,429,469 during the same period in 2025.

We incurred a net loss for the three months ended AprilJuly 30,31, 2026 of $400,825$532,209 and had an accumulated deficit of $52,633,084$53,209,782 at AprilJuly 30,31, 2026. At AprilJuly 30,31, 2026, we had a cash balance of $145,670,$69,427, compared to a cash balance of $9,525 at October 31, 2025. At AprilJuly 30,31, 2026, the working working capital deficit was $2,613,968,$3,031,505, compared to a working capital deficit of $2,422,574 at October 31, 2025. The increase principally reflects the recognition of $450,164 of derivative liabilities associated with the April and May 2026 convertible note financings and growth in related-party advances and convertible notes payable during the period, partially offset by cash provided by financing activities. 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.

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. While we do not currently generate sufficient cash from operations, we have access to certain external sources of financing. These include the Equity Purchase Agreement we entered into with Lambda Ventures LLC on April 27, 2026, under which we may sell up to $30,000,000 of our common stock over a period of up to 24 months; our ongoing Regulation A offering; and convertible note financings, including the Jefferson Street Capital and Lambda Ventures notes issued in April 2026 and the noteMonroe Street Capital Partners and Lambda Ventures notes issued in May 2026. Our ability to access these sources is subject to significant conditions and limitations. Sales under the Equity Purchase Agreement are subject to the effectiveness of a resale registration statement covering the underlying shares, per-put dollar limits, and the prevailing market price of our common stock, and amounts realizable under our Regulation A offering and any future note financings depend on investor demand and market conditions. There can be no assurance that financing from these sources will be available in amounts sufficient, or on terms acceptable, to meet our needs. Accordingly, we will need to raise additional capital through equity financings or other means in order to continue operations and meet our obligations, and failure to obtain additional funding could have a material adverse effect on our financial condition and results of operations.

For the SixNine months Ended AprilJuly 30,31, 2026 and 2025

During the sixnine months ended AprilJuly 30,31, 2026, cash used in operating activities amounted to $(337,687437,226), primarily reflecting our net loss of $(582,8941,159,592). This was partially offset by non-cash items, including depreciation of $128,653,$192,369, non-cash interest expense of $12,531,$111,685, a loss on change in fair value of convertible notes of $88,160, and$231,390, a loss on derivative liability of $9,214.$98,878 and commitment shares issued for financing expense of $55,000. Changes in operating assets and liabilities included a decrease in accounts receivable of $332,669, a decrease in other receivable of $1,000, a decrease in accounts payable of $340,023,$320,180, an increase in accrued interest payable of $13,637,$20,568, and a net change in operating lease right-of-use assets and lease liabilities of $(6341,013).

During the sixnine months ended AprilJuly 30,31, 2025, cash used in operating activities amounted to $(671,197877,827), primarily reflecting our net loss of $(5,931,4596,429,469). This was largely largely offset by non-cash items, primarily $5,092,557$5,333,937 of stock-based compensation, depreciation of $111,988,$178,730, a loss on write-off of intangible assets of $105,190, legal services provided in exchange for a convertible note of $45,000, and a loss on change in fair value of convertible notes of $14,985.$15,000. Changes in operating assets and liabilities included an increase in accounts receivable of $8,450, a decrease in accounts payable of $106,116,$129,137, a decrease in accrued payroll of $8,881,$17,762, an increase in accrued interest payable of $13,864,$20,569, and a net change in operating lease right-of-use assets and lease liabilities of $125.$115.

During the sixnine months ended AprilJuly 30,31, 2026, cash provided by financing activities was $487,000,$510,295, which consisted of net proceeds from related party advances of $200,000,$185,045, proceeds from the sale of common stock of $62,500,$67,500, and proceeds from the sale of common stock subscription payable of $60,000, and proceeds from issuance of convertible notes payable of $164,500.$407,750, partially offset by the repayment of the CFI Capital convertible note of $150,000.

During the sixnine months months ended AprilJuly 30,31, 2025, cash provided by financing activities was $901,500,$1,067,500, which consisted of net proceeds from related party advances of $359,000$131,000 and proceeds from the sale of common stock of $542,500.$936,500.

During the sixnine months months ended AprilJuly 30,31, 2026, cash used in investing activities was $(13,16813,167), which consisted of the purchase of property and equipment and long-term assets.

During the sixnine months months ended AprilJuly 30,31, 2025, cash used in investing activities was $(177,944), which consisted of the purchase of property and equipment and and long-term assets.

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 sixnine months ended AprilJuly 30,31, 2026, the Company incurred a net loss of $582,894$1,159,592 and used cash in operating activities of $337,687,$437,226, and on AprilJuly 30,31, 2026, had stockholders’ deficit of $1,961,103.$2,457,321. 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.

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,the valuationfair value of intangiblederivative assetsliabilities and embedded conversion features, the useful lives of property and equipment, 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.

The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 requires that the cost of equity instrument awards, issued in exchange for services, including those issued to employees and predominantly to consultants, be measured at the grant-date fair value. The Company does not adhere to a formal stock-based compensation plan; rather, it issues stock awards on a discretionary basis as part of compensation agreements with selected consultants and employees. Compensation for stock-based awards is recognized as a non-cash expense on the income statement. The fair value of restricted stock grants is determined using the closing market price on the grant date, adjusted for an appropriate discount to reflect the restrictions on transferability and marketability of the shares. The discount is calculated using a weighted average of comparable restricted stock transactions, which better reflects the economic impact of larger issuances and provides a more accurate representation of fair value under ASC 718. The cost is recognized over the period during which the award recipient is required to perform services, typically known as the vesting period. The total compensation cost related to vested stock-based awards is recognized afteras adjustingthe awards vest; the Company accounts for estimatedforfeitures as forfeituresthey at the time of vesting.occur. 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. The Company has elected to account for forfeitures as they occur. Accordingly, compensation cost is recognized for all awards granted, and previously recognized compensation cost for unvested awards is reversed in the period an award is forfeited. Stock-based compensation expense is presented as a separate line item in the condensed consolidated statements of operations. As of the report date, the Company has not established any plans to issue dividends on stock-based awards. AnyExcess tax benefits and tax benefitsdeficiencies arising from deductionsshare-based for thesepayment awards are recordedrecognized as a component of income tax expense or benefit in the period in additional paid-in capital, provided they exceedwhich the cumulativeawards vest or are settled. The Company maintains a full valuation allowance against its deferred tax assets; accordingly, no income tax benefit has been recognized in connection with share-based compensation costfor recognized.the periods presented.

During the sixnine months ended AprilJuly 30,31, 2026, the Company paid $2,970 in employer retirement contributions, representing 3% of semi-monthly payroll for one employee over threetwelve pay periods. During the three months ended July 31, 2026, the Company paid $1,485 in such contributions, representing six pay periods. These contributions are made in accordance with the terms of the Company’sCompany's state-mandated retirement plan for eligible employees and are recorded as employee benefits expense in the period incurred.

The Company evaluates convertible financial instruments inat accordanceissuance withto determine the appropriate classification and measurement model. The Company first assesses whether an instrument is within the scope of ASC 480, Distinguishing Liabilities from Equity (“ASC— 480”), to determineincluding whether it embodies an instrumentunconditional obligation should be classified as a liability or as equity. Instruments that are required to be settled in a variable number of shares for a fixed monetary amount are classified as liabilities— and measuredthen atevaluates fairany valueembedded onconversion afeatures recurringunder ASC basis,815, withDerivatives changesand in fair value recognized in earnings.Hedging.

The Company recognized no revenue during the three months ended July 31, 2026 and 2025. During the threenine months ended AprilJuly 30,31, 2026 and April 30, 2025, the Company recognized $33,821 and $43,708$43,708, respectively, in revenue related to the facilitation of delivery of hydrogen refueling equipment and related services. Based on its evaluation of the arrangement, the Company determined that it acted as an agent with respect to the facilitation of delivery of equipment, as it did not obtain control of the goods and the third-party vendor delivered directly to the customer. As a result, revenue was recognized on a net basis, excluding gross billings and associated third-party costs, in accordance with ASC 606.

As of AprilJuly 30,31, 2026, the following securities were outstanding: