Executive Summary / Key Takeaways

• Helio Corporation (OTC:HLEO), through its Heliospace subsidiary, possesses deep technical expertise in space-qualified hardware and engineering services, evidenced by contributions to major NASA missions and recent SBIR awards, positioning it in a high-potential aerospace market.
• Despite technical strengths, the company faces severe financial distress, marked by significant revenue declines (29% decrease in the six months ended April 30, 2025) driven by program delays and market downturns, leading to widening net losses ($1.93M for the six months ended April 30, 2025) and negative operating cash flow.
• A critical liquidity situation exists, with minimal cash on hand ($15,699 as of April 30, 2025) and substantial debt obligations, resulting in "substantial doubt about the Company’s ability to continue as a going concern."
• The company is urgently pursuing a registered public offering (targeting $3M-$5M) and bridge financing to address liquidity, repay debt, and fund strategic growth initiatives, but the success and terms of these efforts are uncertain.
• Key risks include heavy reliance on government contracts, potential significant cuts to NASA's science budget, cybersecurity threats, and identified material weaknesses in internal financial controls, all of which could impede recovery and growth plans.

Setting the Scene: Expertise in Orbit, Challenges on the Ground

Helio Corporation, operating primarily through its wholly-owned subsidiary Heliospace Corporation, is an aerospace technology and engineering firm deeply embedded in the complex world of space exploration and satellite technology. Founded in 2018 as Heliospace, the company built a reputation for designing, engineering, assembling, and testing space flight qualified hardware, alongside providing sophisticated systems engineering and mission support services. This foundation allowed it to secure work on prestigious projects for clients ranging from NASA and foreign space agencies to universities and private companies. The current structure, under the Helio Corporation name since January 2024 following a recapitalization, maintains this core aerospace focus.

The company operates within a competitive landscape populated by both large, diversified aerospace and defense contractors and more specialized space technology firms. Established players like HEICO (HEI) offer broad component expertise and financial stability, while innovative ventures like SpaceX dominate specific areas like launch services with cost advantages derived from reusable technology. Other players like Virgin Galactic (SPCE) and Iridium Communications (IRDM) focus on commercial spaceflight and satellite communications, respectively, overlapping with HLEO in areas like hardware and antenna systems. Helio Corporation carves out its niche by emphasizing specialized hardware solutions and comprehensive systems engineering services tailored to the unique demands of scientific and exploration missions. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, HLEO's participation in significant government programs suggests a recognized capability in its specific areas of expertise. However, compared to larger, more profitable competitors like HEICO and Iridium, HLEO currently operates at a significant financial disadvantage, exhibiting negative margins and a challenging liquidity profile.

The Technical Edge: Enabling Complex Missions

Helio Corporation's strategic position is underpinned by its technical capabilities. The company specializes in critical components and services required for successful space missions. This includes the design and delivery of space-qualified hardware such as radar antennas, deployable systems, and sensors. Their expertise extends to complex systems engineering, integration, and testing, essential for ensuring mission success in the harsh environment of space.

Evidence of this technical prowess is found in their project portfolio. Heliospace designed, assembled, and tested the radar antennas for the NASA Europa Clipper mission, successfully deployed in January 2025. They have also contributed antennas for the SunRISE CubeSat constellation and developed deployable systems and sensors for lunar landers and the ambitious Mars Sample Return program. Beyond hardware, their systems engineering support has been integral to missions like the James Webb Space Telescope, Roman Space Telescope, and the Atmospheric Observing System.

Recent developments highlight ongoing innovation. In May 2025, Heliospace received NASA SBIR Phase II awards for its QuasiStatic Release Mechanism™ (QSRM™) and a 6 Meter Antenna and Boom System for CubeSats (part of the SABER™ family). The QSRM™ is described as a "next generation release mechanism that generate negligible shock upon actuation," addressing a critical need in sensitive space deployments. The 6 Meter Antenna and Boom System aims to provide modular solutions for CubeSat-class missions. While specific quantifiable performance improvements for these new technologies are not detailed in the filing, these awards signify NASA's continued validation of Heliospace's innovative capabilities and potential for future contributions.

For investors, this technical foundation is the core asset. It allows HLEO to compete for high-value, complex contracts with demanding clients like NASA. The ability to deliver specialized, reliable hardware and sophisticated engineering services provides a competitive moat, differentiating it from firms focused solely on commodity components or standard services. The ongoing R&D, supported by SBIR awards, suggests a pipeline of potential future products and capabilities designed to meet evolving market needs.

Financial Performance: Headwinds and Widening Losses

Despite its technical strengths, Helio Corporation's recent financial performance reflects significant challenges. For the three months ended April 30, 2025, total revenue decreased by 29% to $1.17 million, down from $1.66 million in the same period of 2024. The six-month comparison shows a similar trend, with revenue falling 29% to $2.60 million from $3.67 million.

This decline is attributed by management primarily to a "lower overall volume of work compared to the prior... months due to the ongoing reformulation of the NASA Mars Sample Return program, coupled with an overall downturn in NASA hardware contract awards and a delay in at least one commercial contract." Breaking down the revenue streams reveals that while Service Fees saw a 34.2% increase in the three-month period (though only 1.1% for the six months), Engineering Fees plummeted by 68.4% (54.7% for six months) and Materials revenue dropped by 67.1% (50.9% for six months). This indicates a significant contraction in the company's hardware and related engineering work, which historically constituted a larger portion of revenue.

The shift in revenue mix towards a lower proportion of higher-margin service fees and a higher proportion of lower-margin engineering and materials work impacted profitability. The cost of revenue as a percentage of revenue increased substantially, from 64% to 83% for the three months and from 62% to 77% for the six months. This resulted in a sharp decline in gross profit, from $599,171 to $194,365 for the three months and from $1.39 million to $605,093 for the six months.

Operating expenses saw a 16% decrease for the three months, mainly due to lower professional fees and general administrative costs following the Business Combination and public offering preparation, as well as reduced labor, insurance, and R&D product costs. However, for the six months, operating expenses increased slightly by 2%, driven by higher professional fees and labor costs related to the same corporate activities.

Compounding the operational losses, interest expense surged dramatically, increasing by 337% for the three months and 376% for the six months, reflecting "increased amount of average outstanding debt and increased rates of interest thereunder."

The combined effect of declining revenue, compressed gross margins, and increased interest expense resulted in a significant widening of the net loss. The net loss for the three months ended April 30, 2025, was $1.02 million, a 35% increase from the $753,388 loss in the prior year period. For the six months, the net loss nearly doubled, reaching $1.93 million compared to $995,113 in the previous year. This financial performance underscores the severe impact of the market downturns and program delays on the company's bottom line.

Comparing HLEO's TTM financial ratios to its competitors highlights its current financial fragility. While HLEO's TTM Gross Profit Margin of 34.80% is respectable, it trails HEICO (39%) and significantly lags Iridium (79%). More critically, HLEO's TTM Operating Profit Margin (-31.89%) and Net Profit Margin (-33.73%) are deeply negative, starkly contrasting with the profitability of HEICO (21% Operating, 13% Net) and Iridium (24% Operating, 14% Net). This quantitative comparison underscores the operational and financial challenges HLEO faces relative to more established, profitable players in the broader aerospace sector.

Liquidity and the Race for Capital

The most pressing concern for Helio Corporation is its liquidity position. As of April 30, 2025, the company held a mere $15,699 in cash and cash equivalents, a precipitous drop from $551,552 just six months prior. This rapid decline reflects the significant cash used in operating activities, which totaled $1.23 million for the six months ended April 30, 2025.

The company explicitly states that "Additional financing or capital investment will be necessary to sustain operations for one year from the issuance of these unaudited condensed consolidated financial statements." This critical need has led management to conclude that there is "substantial doubt about the Company’s ability to continue as a going concern."

To address this, the company is actively pursuing two parallel financing paths. First, it is working towards a "best-efforts registered offering of its securities" with anticipated gross proceeds in the range of approximately $3 million to $5 million. This offering, which involves units consisting of common stock and warrants, is being conducted under an amendment to an existing S-1 registration statement. However, the filing cautions that the timing, size, and terms are "subject to market conditions and the successful negotiation of terms with prospective investors," with "no assurance that the Company will proceed with the offering or that, if commenced, it will be completed on favorable terms or at all."

Concurrently, the company is engaged in negotiations with two prospective lenders for potential bridge financing arrangements. These discussions are ongoing, and similarly, there is "no assurance that the Company will enter into definitive agreements or that any such financing will be completed on favorable terms or at all."

Subsequent to the April 30, 2025 balance sheet date, the company secured some short-term funding, including a $250,000 loan in May 2025 (net proceeds $242,500) and entered into a Receivables Sale Agreement in June 2025, selling $192,000 of receivables for $150,000 (net proceeds $148,000). While providing temporary relief, these transactions also highlight the urgent need for capital and come with associated costs and repayment obligations.

The company's debt structure includes $1.14 million in outstanding unsecured notes to related parties and $1.50 million in notes payable to unrelated parties as of April 30, 2025. These notes carry interest rates between 6.5% and 12% and have various maturity dates, with a significant portion ($1.35 million of unrelated party notes and $565,469 of related party notes) classified as current liabilities maturing in the remainder of fiscal year 2025. Certain notes also have acceleration clauses triggered by the completion of an offering, adding complexity to the financing efforts.

The expected use of proceeds from the potential registered offering and bridge financing is crucial: repaying certain outstanding promissory notes and supporting key operational initiatives, including investments in R&D, expansion of sales/marketing, facility enhancements, manufacturing improvements, and working capital. Failure to secure adequate capital would necessitate delaying or curtailing operations and could impact the ability to service existing debt. The company acknowledges the need for "substantial additional capital" over the longer term to execute its full business plan.

Risks on the Horizon

Investing in Helio Corporation at this juncture involves significant risks, many of which are amplified by its current financial state.

A primary risk is the company's heavy reliance on government contracts, particularly with NASA. The proposed draft budget for fiscal year 2026, recommending an approximately 50% cut to NASA's Science Mission Directorate, poses a "material uncertainty for our future growth." Such cuts, if enacted, could drastically reduce available contracts, intensify competition, and negatively impact future revenue and profitability. While the company is strategically working to diversify into private/commercial and defense markets, there is "no assurance that they will succeed or fully offset the effects of any reduction in government spending." Broader federal fiscal instability, including budget deficits and potential government shutdowns, also introduces uncertainty regarding contract funding and payments.

Cybersecurity is another critical concern. Operating in the sensitive aerospace and defense sector, the company is a potential target for sophisticated cyber threats. Despite implementing security protocols, the evolving threat landscape means there is "no assurance that our efforts will prevent all attacks or unauthorized access." A successful breach could disrupt operations, compromise sensitive data, damage reputation, and lead to significant financial and legal consequences.

Furthermore, the company has identified material weaknesses in its internal control over financial reporting as of April 30, 2025. Specifically, a "Lack of Segregation of Duties" and "Insufficient Accounting and Financial Reporting Expertise" increase the risk of material misstatements in financial statements not being prevented or detected timely. While remediation plans are underway (hiring personnel, implementing procedures), these weaknesses highlight operational vulnerabilities that need to be addressed for sound financial management and investor confidence.

The competitive environment itself presents risks. Competitors, some of whom are "better capitalized, have greater revenues, and have more industry or management experience," could exert downward pressure on prices, capture market share, or develop superior technologies. HLEO's current financial constraints could limit its ability to invest in R&D or compete aggressively on price or terms.

Finally, the substantial doubt about the company's ability to continue as a going concern is a paramount risk. The success of the planned financing efforts is not guaranteed, and failure to secure sufficient capital could lead to severe operational limitations or inability to meet obligations.

Outlook: A Pivotal Moment

Helio Corporation stands at a pivotal juncture. Its technical foundation, built on years of contributing to complex space missions and validated by recent project successes and SBIR awards, positions it in a market with long-term growth potential. The strategic intent to diversify its customer base beyond NASA science programs towards commercial and defense sectors is a necessary response to current market uncertainties.

However, the immediate outlook is dominated by the urgent need for capital. The successful execution of the proposed registered offering and bridge financing is not merely a strategic step; it is essential for the company's near-term survival, debt management, and the ability to invest in the very initiatives designed to drive future growth. The outcome of these financing efforts, coupled with the company's ability to secure new contracts in its target markets and effectively address its internal control weaknesses, will determine its trajectory.

While specific quantitative financial guidance is not provided, the stated goals of the financing underscore the operational priorities: strengthening R&D, expanding sales, and improving infrastructure. The ability to achieve these goals hinges directly on overcoming the current liquidity crisis.

The story of Helio Corporation is currently less about market expansion and more about financial stabilization. Can a company with proven technical capabilities secure the necessary funding to weather the current storm and capitalize on future opportunities in the dynamic aerospace sector? That question remains unanswered, making the outcome of its financing efforts the single most critical factor for investors to watch in the coming months.

Conclusion

Helio Corporation possesses a solid technical core, rooted in its Heliospace subsidiary's expertise in space-qualified hardware and engineering services for demanding clients like NASA. Its contributions to significant missions and recent innovation awards demonstrate its potential value in the aerospace market. However, this technical strength is currently overshadowed by severe financial challenges. Declining revenue driven by program specific issues and market softness, coupled with widening losses and a precarious cash position, have cast substantial doubt on the company's ability to continue operations without immediate external funding.

The company is actively pursuing a registered offering and bridge financing, efforts that are critical for addressing liquidity, managing debt, and enabling strategic investments necessary for future growth and diversification. The success of these initiatives, which are subject to market conditions and negotiation outcomes, is paramount. Investors considering HLEO must weigh the company's proven technical capabilities and long-term market potential against the immediate, significant risks posed by its financial distress, dependency on government budgets, and the uncertainty surrounding its capital raising efforts. The coming months will be decisive in determining if Helio Corporation can secure the necessary resources to translate its technical expertise into sustainable financial performance.