10-Q/A: HNO International Amends Q1 Report, Reveals Higher Loss

Sentiment:

Quarterly Report Amendment 19 September 2025 6:14 PM

HNO International, Inc. filed an amended quarterly report to correct service stock valuation, leading to a significant increase in stock-based compensation expense and net loss.

Delay expectedSeveral notes payable to related party HNO Green Fuels, which had original maturity dates in 2022, 2023, and early 2024, were extended multiple times, with the latest extension pushing maturity to December 31, 2025.

Capital raiseThe company privately sold a total of 29,293 common shares for $15,000 to accredited investors during the quarter ended January 31, 2025.Subsequent to the quarter end, the company privately sold 4,558,333 common shares for a cash purchase price of $527,500 to accredited investors between February and March 2025.The company entered into a Legal Services Agreement on April 7, 2025, issuing a $45,000 principal amount convertible promissory note in payment for legal services, convertible at 75% of the closing price 180 days from issue.Management explicitly states it will be required to raise additional funds through public or private financing, additional collaborative relationships, or other arrangements to fund ongoing operations.Management is evaluating options to raise additional funds, including obtaining loans and selling common stock.

Worse than expectedThe net loss for the three months ended January 31, 2025, increased significantly to $5,461,393 compared to a restated net loss of $507,073 for the same period in 2024.The increase in net loss was primarily driven by a substantial non-cash stock-based compensation expense of $5,092,557 in Q1 2025, which was not present in the prior year.The company continues to report no revenue, indicating a lack of operational income generation.The accumulated deficit and working capital deficit both worsened, highlighting ongoing financial strain and liquidity challenges.The disclosure of 'not effective' internal controls and 'substantial doubt' about going concern status indicates significant operational and financial weaknesses.

Summary

HNO International, Inc. (HNOI) filed an Amendment No. 1 to its Quarterly Report on Form 10-Q for the quarter ended January 31, 2025, to correct the valuation of service stock issuances.
The revised stock valuation increased stock-based compensation expense by $4,827,055 for the quarter ended January 31, 2025.
This non-cash adjustment resulted in a corresponding increase to additional paid-in capital and a related adjustment to accumulated deficit.
The company also restated its financial statements for the quarter ended January 31, 2024, adjusting the stock price valuation from $0.001 to $0.23 and increasing stock-based compensation.
The restatement for Q1 2024 also included the termination of a patent purchase agreement with Donald Owens, canceling 5,000,000 Series A Preferred Stock shares and reversing an $82,500 intangible asset value.
Net loss for the three months ended January 31, 2025, was $5,461,393, significantly higher than the restated net loss of $507,073 for the same period in 2024.
The increase in net loss for Q1 2025 was primarily driven by $5,092,557 in stock-based compensation expense, which was not recorded in the prior year period.
The company reported no revenue for both the three months ended January 31, 2025, and January 31, 2024.
As of January 31, 2025, the company had an accumulated deficit of $50,896,087 and a working capital deficit of $2,448,140.
Substantial doubt exists about the company's ability to continue as a going concern due to recurring losses and insufficient cash from operations.

Sentiment

Score: 2

Explanation: The sentiment is very negative due to a significant increase in net loss, zero revenue, worsening accumulated and working capital deficits, and explicit 'going concern' doubt. The ineffective internal controls and reliance on related party financing further contribute to the poor outlook, despite some capital raising efforts.

Positives

Cash balance increased to $47,900 as of January 31, 2025, from $20,255 as of October 31, 2024.
Property and equipment, net, increased to $1,125,228 as of January 31, 2025, from $994,898 as of October 31, 2024, indicating continued investment in assets.
Management is actively seeking additional sources of capital through equity sales, related party advances, and strategic partnerships.
The company successfully settled a dispute with Vivaris Capital, LLC, for $15,500, resolving an outstanding stock receivable issue.

Negatives

Net loss for the three months ended January 31, 2025, significantly increased to $5,461,393 from a restated $507,073 in the prior year, primarily due to higher stock-based compensation.
The company generated no revenue for the three months ended January 31, 2025, and January 31, 2024.
Accumulated deficit grew to $50,896,087 as of January 31, 2025, from $45,434,694 as of October 31, 2024.
Working capital deficit worsened to $2,448,140 as of January 31, 2025, from $1,969,965 as of October 31, 2024.
Disclosure controls and procedures were deemed not effective due to material weaknesses, including inadequate segregation of duties and insufficient written policies.
The company relies heavily on related party advances and equity financings to fund operations, indicating a lack of self-sustaining cash flow.

Risks

Substantial doubt exists about the company's ability to continue as a going concern for one year from the issuance of these financial statements due to recurring net losses and insufficient cash from operating activities.
Failure to obtain additional funding through public or private financing, collaborative relationships, or other arrangements could materially adversely affect financial condition and results of operations.
Material weaknesses in internal control over financial reporting, including inadequate segregation of duties and insufficient written policies, pose risks to financial reporting reliability.
Remediation of internal control weaknesses is dependent on securing additional financing, which may not be successful.
The company recognizes the possibility of future increases in labor or material costs, which could further impact financial performance.
Potential increasing government regulation in the green energy sector may require serious corrective actions or changes to the business plan.

Future Outlook

The company acknowledges the possibility of future increases in labor or material costs due to evolving market conditions, potential inflation, and global economic dynamics. It is actively monitoring these aspects to anticipate and navigate forthcoming rises in expenses. The company is also assessing alterations in the relationship between cost of sales and revenue, examining factors like price shifts and fluctuations in service volume to maintain a balanced cost-to-revenue structure. Management is actively seeking additional capital through equity sales, advances from related parties, and exploring strategic partnerships, alongside implementing cost-saving measures and diversifying through acquisitions or new markets.

Management Comments

"We are actively monitoring these aspects to anticipate and navigate any forthcoming rises in labor or material expenses."
"Understanding the impact of these elements is crucial for maintaining a balanced and effective cost-to-revenue structure."
"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."

Industry Context

HNO International, Inc. operates in the rapidly evolving green hydrogen-based clean energy sector, specializing in systems engineering design, integration, and product development. The company's focus on scalable products like the Compact Hydrogen Refueling System (CHRS) and Compact Hydrogen Production System (CHPS) aligns with global decarbonization efforts and the growing demand for zero-emission vehicle infrastructure and cleaner industrial fuels. While the industry is characterized by significant investment and technological advancements, HNOI's current financial state, marked by no revenue and substantial losses, indicates it is in an early, capital-intensive development phase, facing challenges common to innovative but pre-revenue companies in high-growth sectors.

Comparison to Industry Standards

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
CEO and Chairman	NA	Donald Owens	NA	Donald Owens is identified as the CEO and Chairman, and was involved in a share exchange agreement and patent agreement termination. No change in role is indicated.
Treasurer and Board Member	NA	Hossein Haririnia	NA	Hossein Haririnia is identified as the Treasurer and a Board Member, and was involved in a stock subscription agreement. No change in role is indicated.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Weaknesses	Disclosure controls and procedures were not effective due to inadequate segregation of duties, ineffective risk assessment, and insufficient written policies and procedures for accounting and financial reporting.	January 31, 2025	These material weaknesses indicate a high risk of financial misstatement and lack of oversight, potentially impacting investor confidence and regulatory compliance. Remediation is contingent on securing additional financing.

Legal Proceedings

A dispute with Vivaris Capital, LLC regarding 10,000,000 common shares issued in connection with an Advisory Agreement was settled on May 3, 2024. The settlement involved the cancellation of the shares and a payment of $15,500 by the company, recorded as a legal expense.

Related Party Transactions

Donald Owens, CEO and Chairman, advanced $16,000 to the company during Q1 2025 to cover operating expenses.
HNO Green Fuels, Inc., of which Donald Owens is CEO, advanced $343,000 to the company during Q1 2025 to cover operating expenses.
The company has aggregate outstanding notes payable of $1,375,000 to HNO Green Fuels as of January 31, 2025, with several notes having their maturity dates extended to December 31, 2025.
Donald Owens exchanged 245,000,000 common shares for 245,000 Series B Preferred Stock on January 2, 2025.
HNO Green Fuels, Inc. exchanged 115,000,000 common shares for 115,000 Series B Preferred Stock on January 2, 2025.
The Patent Purchase Agreement with Donald Owens, under which 5,000,000 Series A Preferred Stock were issued, was mutually terminated on March 13, 2025, with patents returned to Mr. Owens and shares canceled.

Stakeholder Impact

**Shareholders:** Face significant dilution risk from ongoing equity raises, increased net losses, and substantial doubt about the company's ability to continue as a going concern. The restatement and internal control weaknesses may erode confidence.
**Creditors (especially related parties):** Continue to provide significant financing through advances and notes, but face extended maturity dates and the company's precarious financial position.
**Employees/Consultants:** Stock-based compensation is a significant non-cash expense, indicating reliance on equity for compensation, which could be impacted by stock price volatility and going concern issues.
**Customers:** No revenue generated, implying no current customer base or significant sales, thus no direct impact on customers from this filing.

Next Steps

Management plans to appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management.
Management plans to adopt sufficient written policies and procedures for accounting and financial reporting.
The company will continue to seek additional sources of capital through equity sales, advances from related parties, and strategic partnerships.
Management will continue to implement cost-saving measures and explore opportunities to diversify through acquisitions or entering into new markets.
The company is evaluating the impact of ASU No. 2024-01 on its financial statements as the adoption date approaches (effective for public companies for fiscal years beginning after December 15, 2024).

Key Dates

Date	Description
2005-05-02	Company incorporated in Nevada under the name American Bonanza Resources Limited.
2009-03-19	Company changed its name to Clenergen Corporation.
2009-04-01	Clenergen Corporation Limited (UK) acquired assets of Rootchange Limited.
2009-08-04	Company acquired Clenergen Corporation Limited (UK).
2020-07-08	Company changed its name to Excoin Ltd.
2020-11-18	Company entered into an operating lease with Demarius Holdings, Inc. for office spaces (Suites B and C).
2020-12-01	Operating lease for office spaces commenced.
2021-08-31	Company changed its name to HNO International, Inc.
2021-11-19	Company issued a $20,000 note payable to HNO Green Fuels.
2021-12-01	Company issued a $500,000 note payable to HNO Green Fuels.
2022-03-31	Company issued 10,000,000 shares of common stock to Vivaris Capital, LLC in connection with an Advisory Agreement.
2022-05-31	Company issued a $590,000 note payable to HNO Green Fuels.
2022-09-29	Company issued a $50,000 note payable to HNO Green Fuels.
2022-10-20	Company issued a $50,000 note payable to HNO Green Fuels.
2022-12-19	Maturity date of $20,000 note payable to HNO Green Fuels.
2022-12-26	$20,000 principal of note payable to HNO Green Fuels settled with issuance of 20,000,000 common shares.
2023-01-02	Board of Directors granted approval for issuance of 2,025,000 common shares for services rendered.
2023-01-04	Board of Directors and stockholders approved increasing authorized capital stock to 1,000,000,000 shares.
2023-01-06	Company filed Certificate of Amendment to Articles of Incorporation to increase authorized capital stock.
2023-01-11	Company entered into Stock Subscription Agreement with Hossein Haririnia for 2,000,000 common shares.
2023-01-17	Company entered into Stock Subscription Agreement with William Parker for 5,000,000 common shares.
2023-01-24	Company entered into Patent Purchase Agreement with Donald Owens, issuing 5,000,000 Series A Preferred Stock for patents.
2023-01-31	Company entered into Stock Subscription Agreements with Donald Owens for 100,000,000 common shares (recorded as stock payable).
2023-02-01	100,000,000 common shares to Donald Owens (previously stock payable) were issued.
2023-03-01	Company issued a $50,000 note payable to HNO Green Fuels.
2023-03-08	Company issued a $50,000 note payable to HNO Green Fuels.
2023-03-23	Company issued a $50,000 note payable to HNO Green Fuels.
2023-04-03	Company issued a $50,000 note payable to HNO Green Fuels.
2023-04-13	Company issued a $20,000 note payable to HNO Green Fuels.
2023-04-17	Company issued a $30,000 note payable to HNO Green Fuels.
2023-05-03	Regulation A offering qualified by the SEC.
2023-06-09	Company entered into Stock Subscription Agreement with Hossein Haririnia for 8,000,000 common shares.
2023-07-10	Company entered into a Simple Agreement for Future Equity (SAFE) with Varea, Inc. for $500,000 investment.
2023-08-28	Company entered into a Purchase and Sale Agreement (PSA) with TCF Elrod, LLC to purchase property for $10,800,000.
2023-10-09	Company issued 24,753 common shares valued at $20,000 as a commitment fee for equity financing.
2023-11-14	Lease for Suite B extended for 36 months to November 30, 2026.
2023-11-30	Original lease for office spaces ended.
2023-12-04	TCF Elrod, LLC refunded $100,000 earnest money deposit to the Company after PSA termination.
2023-12-06	SAFE with Varea, Inc. terminated; intellectual property for CHRS retained by HNO International, Inc.
2024-01-04	Lease for Suite C extended for 34 months to November 30, 2026.
2024-01-17	Extension to promissory notes with HNO Green Fuels (for $500,000, $50,000, $50,000 notes) extending maturity to December 31, 2024.
2024-03-01	Extension to promissory notes with HNO Green Fuels (for $50,000, $50,000, $50,000, $50,000, $20,000, $30,000 notes) extending maturity to December 31, 2024.
2024-04-15	Receivable from HNO Hydrogen Generators totaling $56,392 fully settled through asset transfer.
2024-05-03	Settlement Agreement with Vivaris Capital, LLC executed, canceling 10,000,000 shares and paying $15,500.
2024-07-03	$5,185 accrued interest from HNO Hydrogen Generators fully received.
2024-08-21	Company repaid accrued interest of $40,000 to HNO Green Fuels; specific interest payments also made for individual notes.
2024-11-13	Grishmeshwar Prasad Sinha purchased 11,111 common shares for cash.
2024-12-05	Dharunkumar Sadasivam purchased 9,091 common shares for cash.
2024-12-19	Company executed another extension to several promissory notes with HNO Green Fuels, further extending maturity to December 31, 2025.
2025-01-02	Company entered into Share Exchange Agreements with Donald Owens and HNO Green Fuels, Inc. for Series B Preferred Stock.
2025-01-07	Dharunkumar Sadasivam purchased 9,091 common shares for cash.
2025-01-09	Common shares held by Donald Owens (245,000,000) and HNO Green Fuels, Inc. (115,000,000) were cancelled, and Series B Preferred Stock was issued.
2025-01-31	End of the quarter covered by the amended report.
2025-02-19	Issued 1,500,000 common shares to accredited investors for cash.
2025-02-26	Issued 125,000 common shares to accredited investors for cash.
2025-02-28	Issued 500,000 common shares to accredited investors for cash.
2025-03-03	Issued 75,000 common shares to accredited investors for cash.
2025-03-10	Issued 1,333,333 common shares to accredited investors for cash.
2025-03-12	Issued 300,000 common shares to accredited investors for cash.
2025-03-13	Company and Donald Owens mutually agreed to terminate the Patent Purchase Agreement as of January 24, 2023.
2025-03-14	Issued 250,000 common shares to accredited investors for cash.
2025-03-17	Issued 50,000 common shares to accredited investors for cash.
2025-03-20	Original Form 10-Q filed; Issued 350,000 common shares to accredited investors for cash.
2025-03-26	Issued 75,000 common shares to accredited investors for cash.
2025-04-07	Company entered into a Legal Services Agreement with Newlan Law Firm, PLLC, issuing a $45,000 convertible promissory note.
2025-04-09	Date financial statements were available to be issued (subsequent events evaluated through this date).
2025-04-17	Latest practicable date for common stock outstanding count (80,150,491 shares).
2025-09-19	Signature date of the Form 10-Q/A by Donald Owens and Hossein Haririnia.
2025-12-31	Extended maturity date for several related party notes payable.
2026-04-07	Maturity date of the $45,000 convertible promissory note for legal services.
2026-11-30	Extended lease term for office spaces (Suites B and C) expires.
2030-05-31	Maturity date of $590,000 note payable to HNO Green Fuels.

Recommendation

strong sell

The filing reveals a dire financial situation for HNO International, Inc. The company reported zero revenue, a significantly increased net loss of over $5.4 million for the quarter, and an accumulated deficit exceeding $50 million. Management explicitly states 'substantial doubt' about the company's ability to continue as a going concern, indicating severe liquidity issues and an inability to generate sufficient cash from operations. Furthermore, the disclosure of 'not effective' internal controls due to material weaknesses highlights significant governance and operational risks. While the company is attempting to raise capital, its heavy reliance on related party financing and continuous losses without revenue generation make it a highly speculative and risky investment. A seasoned investor would view these factors as strong indicators to exit any position or avoid investment.

Keywords

Green Hydrogen, SEC Filing, 10-Q/A, Financial Restatement, Stock-Based Compensation, Net Loss, Going Concern, Internal Controls, Capital Raise, Related Party Transactions, Clean Energy, Hydrogen Fuel Cell, CHRS, CHPS

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