Annual Report for Fiscal Year Ending October 31, 2025 (Form 10-K)

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

General

This Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the operating results and financial condition of the Company for the fiscal years ended October 31, 2025 and 2024. The discussion and analysis set forth below is intended to assist you in understanding the financial condition and results of our operations and should be read in conjunction with our audited financial statements and the accompanying notes included elsewhere in this Form 10-K. Our results of operations and financial condition, as reflected in the accompanying statements and related notes, are subject to management's evaluation and interpretations of business conditions, changing market conditions and other factors. Historical results and trends that might appear should not be taken as indicative of future operations. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of various factors, including those discussed elsewhere in this Form 10-K.

These forward-looking statements include statements relating to our anticipated financial performance and business prospects, including debt reduction, currency values and financial impact, foreign exchange counterparty exposures, the impact of pending legal proceedings, adequate liquidity levels, dividends, share repurchases or other capital deployment initiatives and/or statements preceded by, followed by or that include the words "believe," "will," "will be," "will continue," "will likely result," "may," "predicts," "so we can," "when," "anticipate," "intend," "estimate," "expect," "project," "aim," "could," "plans," "seeks" and similar expressions. These forward-looking statements speak only as of the date stated, and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control. These risks and uncertainties, including those disclosed in the "Risk Factors" section in our registration statement on Form S-1, as amended (File No. 333-284062) (the "S-1 Registration Statement") could cause actual results to differ materially from those suggested by the forward-looking statements and include, without limitation:

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Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter.

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Our success depends heavily on our executive officers, senior management team and highly trained employees; difficulty hiring officers and employees of equal competency or ineffective succession planning, could adversely affect our business.

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Competition could cause downward pressure on prices, fewer customer orders, reduced margins, inability to take advantage of new business opportunities, and the loss of market share.

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Our competitors may be better capitalized, have greater revenues, and have more industry or management experience.

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Our competitors may develop technologies and products that are more effective than those we develop or that render our technology and products obsolete or noncompetitive.

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Our projections of future financial results are based on a number of assumptions by our management, some or all of which may prove to be incorrect, and actual results may differ materially and adversely from such projections.

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Our estimated and projected market for our products and services may be inaccurate and may not reach our expected potential.

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We will incur significant expenses and capital expenditures to execute our business plan; there are no assurances that we will obtain adequate financing to meet these expenditures.

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We may invest significant resources in developing new products, services and technologies in pursuit of applications and revenue opportunities that may never materialize.

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Our ability to grow our business depends on our ability to develop new products, and services to satisfy changing customer demands and respond to changing industry cycles in a timely and cost-effective manner.

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Our business may be adversely affected by changes in budgetary priorities of the U.S. Government.

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Technology failures or cyber security breaches or other unauthorized access to our information technology systems or sensitive or proprietary information could have an adverse effect on the Company's business and operations.

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Federal contracting is subject to significant regulation, including rules related to bidding, billing and accounting kickbacks and false claims, and non-compliance could subject us to fines and penalties.

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Our inability to secure additional U.S. government contracts and funding may adversely affect our business, financial condition and results of operations.

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The U.S. government's budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year and consequently having to shut down or operate on funding levels equivalent to its prior fiscal year pursuant to a "continuing resolution," could have an adverse impact on our business, financial condition, results of operations and cash flows.

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Our common stock has historically experienced limited trading and you may have difficulty liquidating your shares.

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Our stock price may be volatile and purchasers of our common stock could incur substantial losses.

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We do not expect to pay dividends in the foreseeable future, and you must rely on price appreciation of your shares of common stock for return on your investment.

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Our Company's founders, directors and executive officers own or control a majority of the Company and you will have little or no management control over our business or corporate mattes.

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Our operating results may continue to be adversely affected as a result of unfavorable market, economic, social and political conditions.

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

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

Overview

Overview of Operations

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

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

Trends, Events, and Uncertainties

Government Budget Uncertainty and Proposed NASA Cuts

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

One key emerging trend is the proposed shift in federal budget priorities under the Trump administration. In April 2025, the administration released its draft budget proposal for fiscal year 2026, which recommends a significant reduction in overall discretionary spending, including an approximately 50% cut to NASA's Science Mission Directorate. If enacted, this proposal would have reduced funding for core science programs such as astrophysics, heliophysics, Earth science, and planetary science-areas directly aligned with Heliospace's technical capabilities and historical contract activity. Subsequent actions by Congress have restored NASA's budget to near 2024 levels, including $7 billion for science programs that represent a core customer for Heliospace.

While NASA funding has largely been restored, the magnitude of the proposed cuts and the administration's stated intent to reprioritize government resources away from space science programs present a material uncertainty for our future growth. Any resulting reduction, delay, or cancellation of NASA programs could reduce the number of available contracts, increase competition for limited awards, and adversely impact our future revenue and profitability.

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

As we execute our expansion plans, we have continued to increase the percentage of revenue from private and commercial sources, are actively working to expand our offerings to defense agencies whose budgets remain a priority for the current administration and Congress, and expanding into the new business line of SBSP. However, these plans are subject to risks and uncertainties, and there can be no assurance that they will succeed or fully offset the effects of any reduction in government spending.

Cybersecurity Risk and Ongoing Threat Landscape

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

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

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

Results of Operations

Comparison of the Year Ended October 31, 2025 to the Year Ended October 31, 2024

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

		Years Ended
		October 31,
		2025				2024				Change				%
Revenues		$	3,875,793			$	6,891,223				(3,015,430	)			(44	)%
Costs of revenue			2,952,619				4,153,190				(1,200,571	)			(29	)%
Operating expenses			4,621,928				4,483,188				138,740				3	%
Operating (loss)			(3,698,754	)			(1,745,155	)			(1,953,599	)			112	%
Interest expense, net			(327,873	)			(89,178	)			(238,695	)			268	%
Amortization of debt discount			(8,188	)			-				(8,188	)			Increase from zero
Change in fair value of derivative liability			4,344				-				4,344				Increase from zero
Loss on debt extinguishment			-				(28,350	)			28,350				Decrease to zero
Net (loss)		$	(4,030,471	)		$	(1,862,683	)			(2,167,788	)			116	%
Loss per share basic and diluted		$	(0.36	)		$	(0.17	)

Revenue

Revenue for the year ended October 31, 2025 decreased by 44% to $3,875,793 from $6,891,223 for the year ended October 31, 2024, reflecting a lower overall volume of work compared to the prior years. Contributing factors include continuing budget cuts to NASA programs enacted by the current administration, combined with the extended government shutdown. During the year ended October 31, 2025, we serviced eleven customers, two of which were direct government customers, four were private or commercial customers and three were non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer. Two commercial customers were serviced whose source of funds was private investment. For the years ended October 31, 2024, we serviced thirteen customers, of which two were direct government customers and seven were private foundations, and four were non/not-for-profit customers for whom we manufactured products as a subcontractor for their government customer.

Cost of Revenue

The 29% decrease in cost of revenue for the year ended October 31, 2025 to $2,952,619 from $4,153,190 for the year ended October 31, 2024 mainly reflected the decreased business volume described above. As a percentage of revenue, cost of sales amounted to 75% and 60% in the years ended October 31, 2025 and 2024, respectively. Cost of sales as a percentage of revenue increased by approximately 15% due to a lower overall revenue against certain fixed costs, a loss on one fixed price contract, and charges to one services contract beyond the hours originally allocated to that contract.

Operating Expenses

		Years Ended October 31,
		2025				2024				Change				%
Operating expenses
Personnel expenses		$	436,947			$	473,527			$	(36,580	)			(8	)%
Facilities expense			692,262				736,062				(43,800	)			(6	)%
Professional fees			462,592				359,077				103,515				29	%
Depreciation expense			22,663				22,663				-				0	%
Other general and administrative(1)			3,007,464				2,891,859				115,605				4	%
Total		$	4,621,928			$	4,483,188			$	138,740				3	%

(1)	Including right of use asset amortization.

Overall operating expenses increased by $138,740, or 3%, to $4,621,928 for the year ended October 31, 2025, as compared to $4,483,188 for the year ended October 31, 2024, driven by professional fees incurred in connection with a public offering attempt and higher G&A expenses associated with this and R&D activities.

Other Expense

Our other expenses are comprised of interest expense, amortization of debt discount, change in fair value of derivative liability and loss on debt extinguishment. Overall other expenses increased by $214,189, or 182%, to $331,717 for the year ended October 31, 2025, as compared to $117,528 for the year ended October 31, 2024. We recorded $327,873 in interest expense in the year ended October 31, 2025 compared to $89,178 in the year ended October 31, 2024, reflecting our increased amount of average outstanding debt and increased rates of interest thereunder. In the year ended October 31, 2025 we recorded amortization of debt discount of $8,188 and the change in fair value of derivative liability of ($4,344), which was due to the issuance of convertible debt in August 2025.

We have not recorded income tax expense or benefit in the years ended October 31, 2025 and 2024 (because of our tax loss carryforwards). We had approximately $3,179,000 of net operating loss carry forwards to offset future federal taxable income as of October 31, 2025.

The NOL carry forward is subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Under the Internal Revenue Code ("IRC") Sections 382 and 383, annual use of the Company's net operating loss carryforwards and research credit carryforwards to offset taxable income and tax, respectively, may be limited based on cumulative changes in ownership. The Company has not completed an analysis to determine whether any such limitations have been triggered as of October 31, 2025. The annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.

Net Loss

Our net loss for the year ended October 31, 2025 was $4,030,471, compared to a net loss of $1,862,683 for the year ended October 31, 2024. The change was due to the reasons discussed above.

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

Liquidity and Capital Resources

As of October 31, 2025, the Company had cash and cash equivalents of $7,305 and has historically incurred operating losses and negative cash flows from operations. The Company has funded its working capital, research and development activities, capital expenditures, and other commitments primarily through loans from the Company's executive officers and directors and other debt financings. The Company has also issued equity securities in non-cash transactions, including in connection with services rendered and debt-related arrangements. The Company expects to continue to incur operating losses and negative operating cash flows as it advances its business and executes its strategic initiatives.

The Company's primary liquidity requirements include funding operating expenses, research and development activities, engineering and technical personnel costs, general and administrative expenses, professional fees, and costs associated with maintaining its public company reporting obligations. As of October 31, 2025, the Company's ability to meet its obligations as they become due depend, and is expected to continue to depend, on its ability to obtain additional financing through debt or equity issuances, strategic transactions, or other capital-raising activities.

During fiscal year 2025 and subsequent to October 31, 2025, the Company completed multiple financing transactions to support its liquidity needs.

On August 26, 2025, the Company entered into a securities purchase agreement with an accredited investor pursuant to which it issued a convertible promissory note with an aggregate principal amount of $275,000 for gross proceeds of $200,000 net of an original issue discount of $25,000 and expenses of $75,000 withdrawn from the original proceeds. The note bears interest at 10% per annum and matures on August 26, 2026. In connection with the transaction, the Company also issued unregistered shares of its common stock as commitment shares. Net proceeds were used for general corporate and working capital purposes.

On September 18, 2025, the Company obtained a short-term loan, which totaled $ 63,000, from a single lender to fund operations. The loan is secured by expected (i) future cash receipts of the Company, and (ii) all other tangible and intangible personal property. Payments are expected on a weekly basis for 30 weeks. The Company is expected to repay an aggregate of $91,980 to the lender over the nominal term. The repayment amount decreases for earlier payoff dates.

On September 30, 2025, the Company obtained a short-term loan, which totaled $ 60,000, from a single lender to fund operations. The loan is secured by expected (i) future cash receipts of the Company, and (ii) all other tangible and intangible personal property. Payments are expected on a weekly basis for 18 weeks. The Company is expected to repay an aggregate of $89,940 to the lender over the nominal term. The repayment amount decreases for earlier payoff dates.

On September 30, 2025, the Company obtained a short-term loan, which totaled $ 60,000, from a single lender to fund operations. The loan is secured by expected (i) future cash receipts of the Company, and (ii) all other tangible and intangible personal property. Payments are expected on a weekly basis for 18 weeks. The Company is expected to repay an aggregate of $89,940 to the lender over the nominal term. The repayment amount decreases for earlier payoff dates

On September 30, 2025, the Company obtained a short-term loan, which totaled $ 80,000, from a single lender to fund operations. The loan is secured by expected (i) future cash receipts of the Company, and (ii) all other tangible and intangible personal property. Payments are expected on a weekly basis for 24 weeks. The Company is expected to repay an aggregate of $120,000 to the lender over the nominal term. The repayment amount decreases for earlier payoff dates.

Subsequent to October 31, 2025, on December 19, 2025, the Company issued unsecured promissory notes and an unsecured convertible promissory note to institutional investors for aggregate gross proceeds of approximately $250,000, reflecting original issue discounts. These notes bear interest at 12% per annum and mature in 2026.

In addition, on January 12, 2026 and January 14, 2026, the Company issued additional convertible promissory notes to accredited investors for aggregate gross proceeds of $300,000, reflecting original issue discounts of $30,000.

The securities issued in connection with these transactions, including shares of common stock issued or issuable upon conversion of the notes or as consideration for services, were issued in transactions exempt from registration under the Securities Act of 1933, as amended. See "Unregistered Sales of Equity Securities" included elsewhere in this Annual Report for additional information.

Debt Obligations and Contractual Commitments

As of October 31, 2025, the Company had outstanding unsecured notes to related parties with an aggregate principal balance of $1,336,613, bearing interest at rates between 6.5% and 11.25% per annum. $841,613 of these notes mature in fiscal year 2026, with the remaining balance maturing in fiscal years 2027 and 2028.

As of October 31, 2025, the Company also had outstanding debt from unrelated parties under notes payable with an aggregate principal balance of $1,887,034. These notes bear interest at rates of 9.75% and 12.00% per annum and mature within the next two fiscal years. Certain of these notes are secured by the Company's accounts receivable and by shares of common stock pledged by a shareholder, and certain notes permit acceleration upon the occurrence of specified events. A discussion of the notes issued during the fiscal year ended October 31, 2025 and subsequent thereto is included above.

The Company's ability to service its debt obligations will depend on its future operating performance and its ability to obtain additional financing.

Subsequent Events

As previously disclosed in Current Reports on Form 8-K filed with the SEC in November 2025, December 2025 and February 2026, the Company received notices of default relating to certain outstanding promissory notes.

As previously disclosed in a Current Report on Form 8-K filed on November 26, 2025, on November 20, 2025, the Company received an email from counsel to the holders of (i) the Company's secured promissory note dated October 15, 2024 in the original principal amount of $400,000, bearing interest at 9.75% per annum, and (ii) the Company's secured promissory note dated October 16, 2024 in the original principal amount of $500,000, bearing interest at 9.75% per annum (collectively, the "$900,000 Notes"). The $900,000 Notes are secured by a first-priority security interest in the Company's accounts receivable. The email asserted that the Company's failure to repay the $900,000 Notes at their November 5, 2025 maturity date constituted an event of default and stated that it constituted a notice of default. The holders have demanded repayment of the outstanding principal and accrued interest. The Company did not repay the $900,000 Notes on the maturity date. As of February 13, 2026, the total amount outstanding under the $900,000 Notes, including accrued interest, was $865,335.

As previously disclosed in a Current Report on Form 8-K filed on December 2, 2025, on December 1, 2025, the Company received a notice from a noteholder asserting that the Company was in default under its Amended and Restated Secured Promissory Note dated October 15, 2024 in the original principal amount of $250,000, bearing interest at 9.75% per annum (the "$250,000 Secured Note"), due to the Company's failure to repay the outstanding amount within the applicable grace period following its November 5, 2025 maturity date. The Company did not repay the $250,000 Secured Note on the maturity date. As of February 13, 2026, the total amount outstanding under the $250,000 Secured Note, including accrued interest, was $289,045.

As previously reported in a Current Report on Form 8-K filed on February 12, 2026, on February 7, 2026, the Company received notices of default and demand for payment (collectively, the "February Default Notices") from the holders of (i) a promissory note dated March 18, 2024 in the original principal amount of $50,000, (ii) a promissory note dated April 16, 2025 in the original principal amount of $150,000, and (iii) a promissory note dated March 18, 2024 in the original principal amount of $50,000 (collectively, the "Extended Notes").

In September 2025, the Company entered into loan extension agreements with respect to the Extended Notes pursuant to which the maturity dates were extended and installment payments were scheduled through December 31, 2025. Under the terms of the extension agreements, if payments were not made in accordance with the agreed schedule, interest accrues at a rate of 18% per annum deemed to have commenced on July 1, 2025. As of February 13, 2026, the amounts outstanding under the Extended Notes were $61,877 under the $50,000 note dated March 18, 2024, $169,837 under the $150,000 note dated April 16, 2025, and $61,877 under the $50,000 note dated March 18, 2024.

The Company has not entered into any written waiver or forbearance agreement with respect to the foregoing indebtedness and is in discussions with the respective holders regarding potential repayment arrangements; however, no assurance can be given that such discussions will result in a resolution.

Capital Requirements and Going-Concern Considerations

Because of historical and expected operating losses and negative operating cash flows, there is substantial doubt about the Company's ability to continue as a going concern for one year from the issuance of the consolidated financial statements. Management's plans to address this uncertainty include pursuing additional debt and equity financings, strategic partnerships, and other capital-raising initiatives. However, there can be no assurance that such financing or other arrangements will be available on acceptable terms, or at all.

If the Company is unable to obtain additional capital when needed, it may be required to reduce or delay expenditures, curtail operations, delay or limit strategic initiatives, or pursue other strategic alternatives.

Cash Flows

Comparison of the Years Ended October 31, 2025 to the Years Ended October 31, 2024.

		Years Ended October 31,
		2025				2024
Cash used in operating activities		$	(2,065,017	)		$	(1,560,375	)
Cash provided by (used in) investing activities		$	-			$	-
Cash provided by financing activities		$	1,520,770			$	1,607,592
Cash on hand (end of period)		$	7,305			$	551,552

Cash Flows from/used in Operating Activities

For the year ended October 31, 2025, net cash used in operating activities was $(2,065,017), compared to cash used in operating activities of $(1,560,375) for the year ended October 31, 2024.

Our operating cash flow results were affected by the aging and timing of certain working capital items. During the years ended October 31, 2025 and 2024, our negative operating cash flow was attributed mainly to our net loss, as described above.

During the year ended October 31, 2025, the Company reported $(2,065,017) of cash used in operating activities. The Company's negative operating cash flow was attributed mainly to a net loss of $(4,030,471), decrease in lease obligations of $410,572, and an increase in prepaid expenses and other current assets. This was offset by decreases in right of use asset amortization of $393,016, increase in accrued compensation of $125,150, decrease in accounts receivable of $900,776, decrease in work in progress of $343,218, and an increase in accounts payable and accrued expenses of $133,497.

During the year ended October 31, 2024, the Company reported ($1,560,375) of cash used by operating activities. The Company's negative operating cash flow was attributed mainly to a net loss of ($1,862,683), increased work in progress of $343,218, decrease in lease obligations of $340,543, and decrease in accounts payable of $223,330. This was offset by decreases in right of use asset amortization of $370,266, increase in accrued compensation of $205,224, and decrease in accounts receivable of $357,977.

Cash Flows used in Investing Activities

During the years ended October 31, 2025 and 2024, net cash used in investing activities was $0.

Cash Flows from/used in Financing Activities

During the year ended October 31, 2025, net cash provided by financing activities was $1,520,770, which included the incurrence of new debt proceeds amounting to $1,944,772, offset by repayments of debt totaling $424,002.

During the year ended October 31, 2024, net cash provided by financing activities was $1,607,592, which included $1,570,000 in net proceeds from incurrence of debt and merger recapitalization of $81,818, offset by repayments of debt totaling $44,226.

Material Cash Commitments

The Company's material future cash commitments, to be paid from cash flows from operations, are to repay its current debt obligations and payments under leases for its facilities. The Company does not have any material commitments for capital expenditures. The following table shows the material future commitments for the years ending October 31st:

		Leases				Debt				Total
2026		$	477,956			$	2,853,647			$	3,331,603
2027			283,626				260,000				543,626
2028			-				385,000				385,000
2029			-				-				-
Total		$	761,582			$	3,498,647			$	4,260,229

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements or relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this quarterly report, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates.

We believe our most critical accounting policies and estimates relate to the following:

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Revenue Recognition

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Work in Progress

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Lease Accounting

Revenue Recognition

Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.

Revenues from cost-plus and time and materials contracts are recognized with each invoice. For fixed price contracts including purchase orders with specific priced milestone deliveries, revenue is recognized upon invoicing for each milestone completed. Revenue on fixed price contracts that are still in progress at month end are otherwise recognized on the percentage-of-completion method, measured by the percentage of total costs incurred to date to the estimated total costs for each contract. This method is used because management considers total costs to be the best available measure of progress on these contracts.

Work in Progress

Inventory consists of work in progress and consists of estimated revenue calculated on a percentage of completion based on direct labor and materials in relation to the total contract value. The Company does not maintain raw materials nor finished goods.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use ("ROU") assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Leases with a lease term of 12 months or less at inception are not recorded on our balance sheet and are expensed on a straight-line basis over the lease term in our statement of operations.