Executive Summary / Key Takeaways

• Helio Corporation, through its Heliospace subsidiary, is a specialized aerospace technology and engineering firm with proven capabilities in space flight hardware, evidenced by a recent successful lunar mission.
• The company's core technological differentiators, including its QuasiStatic Release Mechanism™ (QSRM™) and Spiral Actuated Boom - Extended and Rigidized (SABER™) products, offer unique advantages in precision and deployability for critical space applications.
• Despite its technological prowess and strategic focus on expanding into defense and commercial markets, Helio faces significant financial headwinds, reporting substantial revenue declines and recurring net losses in the nine months ended July 31, 2025.
• Liquidity remains a critical concern, with the company acknowledging substantial doubt about its ability to continue as a going concern for the next year without additional financing.
• The investment thesis hinges on Helio's ability to leverage its specialized technology and recent mission successes to secure new contracts, diversify its revenue streams beyond a volatile NASA budget, and successfully raise the necessary capital to fund its ambitious business plan.

The Dawn of a Niche Innovator in the Space Economy

Helio Corporation (HLEO) stands at a pivotal juncture within the rapidly expanding yet intensely competitive aerospace and defense industry. As an aerospace technology, engineering, and research and development holding company, its wholly-owned subsidiary, Heliospace Corporation, specializes in the intricate design, engineering, assembly, and testing of space flight qualified hardware. This includes critical components like radar antennas for the NASA Europa Clipper mission, antennas for the SunRISE CubeSat constellation, and deployable systems and sensors vital for lunar landers and the Mars Sample Return program. Heliospace also provides sophisticated systems engineering, integration, and test services, contributing to landmark projects such as the James Webb Space Telescope and the Roman Space Telescope.

The company's journey began with Heliospace's incorporation in 2018, building a foundation in specialized aerospace services. A significant corporate restructuring in January 2024 saw Web3 Corporation acquire Heliospace and subsequently rebrand as Helio Corporation, with Heliospace becoming the accounting acquirer. This strategic move consolidated Heliospace's deep technical expertise under a new corporate umbrella, aiming to better position the combined entity for growth. The broader industry landscape, characterized by increasing investment in space infrastructure and a growing commercial space economy, presents both immense opportunities and formidable challenges for specialized players like Helio.

Technological Edge: Precision and Deployability in Extreme Environments

Helio Corporation's competitive positioning is fundamentally underpinned by its differentiated technological capabilities, which are critical in the demanding space environment. The company's expertise in deployable mechanisms and sensors has been recently validated with the successful completion of mission objectives on the Moon in September 2025. Aboard the Firefly Aerospace Blue Ghost Mission 1, Heliospace's unique Remote Electrodes successfully deployed up to 60 feet from the lander, towing cables to form a large low-frequency antenna on the lunar surface. This "first-of-its-kind event" for direct measurements validated the company's systems in the uniquely challenging lunar environment. This operational success demonstrates the tangible benefit of its technology: reliable deployment and performance in extreme conditions, which is paramount for mission success and scientific data acquisition.

Further enhancing its technological moat, Heliospace has secured two NASA SBIR Phase II awards in May 2025. One award is for its QuasiStatic Release Mechanism™ (QSRM™), a "next generation release mechanism that generate negligible shock upon actuation." This technology offers a critical advantage by minimizing the disruptive forces typically associated with deployment, thereby protecting sensitive payloads and increasing mission reliability. The other award is for its "6 Meter Antenna and Boom System for CubeSats," part of its Spiral Actuated Boom - Extended and Rigidized (SABER™) product family. This modular system provides versatile technical solutions for CubeSats, enabling extended reach and rigidization in a compact form factor. These R&D initiatives aim to deliver qualitatively superior performance in precision deployment and structural integrity, directly contributing to Helio's ability to offer advanced solutions for increasingly complex space missions. For investors, these technological differentiators translate into a potential for higher-value contracts, improved customer loyalty, and a stronger competitive position against larger, more diversified aerospace firms.

Financial Performance: A Challenging Orbit

Despite its technological achievements, Helio Corporation's financial performance reflects significant headwinds. For the three months ended July 31, 2025, total revenue plummeted by 53% to $784,587 from $1.66 million in the prior year. This sharp decline was primarily attributed to a lower overall volume of work, stemming from the ongoing reformulation of the NASA Mars Sample Return program, a general downturn in NASA hardware contract awards, and delays in at least one commercial contract. The nine-month period ending July 31, 2025, also saw a substantial revenue decrease of 37% to $3.38 million from $5.34 million in the comparable prior year period.

Profitability metrics underscore the operational challenges. The cost of revenue, while decreasing in absolute terms due to lower business volume, increased significantly as a percentage of revenue. For the three months ended July 31, 2025, cost of sales amounted to 87% of revenue, up from 66% in 2024, reflecting lower overall revenue against certain fixed costs and billing one services contract beyond its allocated hours. This resulted in a gross profit of only $98,390 for the quarter, a steep drop from $560,708 previously.

Operating expenses also rose by 10% to $1.00 million for the quarter, driven by professional fees related to a public offering attempt and higher general and administrative expenses associated with R&D activities. Consequently, the company reported a net loss of $950,754 for the three months and $2.88 million for the nine months ended July 31, 2025, compared to losses of $374,686 and $1.37 million, respectively, in the prior year periods.

Liquidity and Capital Resources: A Critical Need for Fuel

Helio Corporation's liquidity position is precarious, with cash and cash equivalents standing at a mere $43,933 as of July 31, 2025, a significant decrease from $551,552 at October 31, 2024. The company has historically experienced negative cash flows from operations and recurring net losses, necessitating continuous external financing. Net cash used in operating activities for the nine months ended July 31, 2025, was $1.55 million.

The company explicitly states that "additional financing or capital investment will be necessary to sustain operations for one year from the issuance of these condensed consolidated financial statements." Helio is actively engaged in negotiations for bridge financing and potential convertible notes or equity investments, with proceeds earmarked for repaying outstanding promissory notes and supporting key operational initiatives, including R&D, sales and marketing expansion, and infrastructure enhancements. As of July 31, 2025, Helio had $1.16 million in outstanding unsecured notes to related parties and $1.83 million in debt from unrelated parties, with significant portions maturing in the current and next fiscal years. The company's financial statements are prepared under the going concern basis, but management acknowledges "substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the unaudited condensed consolidated financial statements, which is not alleviated by management’s plans."

Competitive Landscape and Strategic Positioning

Helio operates in a highly competitive aerospace and defense market, vying for contracts against industry giants such as Lockheed Martin (LMT), Northrop Grumman (NOC), Boeing (BA), and Raytheon Technologies (RTX). These larger competitors possess significantly greater capital, revenues, and industry experience, enabling them to invest heavily in R&D and leverage economies of scale. For instance, Lockheed Martin and Northrop Grumman consistently demonstrate strong profitability margins and robust cash flow generation in their space segments, benefiting from extensive government contracts and diversified portfolios.

Helio's strategic response to this competitive environment involves leveraging its niche expertise and agility. While it cannot match the scale of its larger rivals, its focus on specialized hardware and systems engineering, particularly in areas like deployable mechanisms and sensors, allows it to offer tailored solutions. The company's CEO, Greg Delory, emphasized that "Flight-proven hardware on the Moon puts us in a rarified class," validating its systems in challenging environments and positioning it as an "ideal partner for the growing number of commercial and government missions heading to the Moon and beyond." This qualitative advantage in mission-critical performance and rapid prototyping for commercial payloads could enable Helio to capture opportunities in faster-growing segments.

However, Helio's smaller scale and potential supply chain dependencies represent vulnerabilities. These factors could lead to increased costs and reduced profitability, making it challenging to compete on price for larger contracts. The company is actively working to expand its offerings to defense agencies, whose budgets remain a priority for the current administration, and to increase revenue from private and commercial sources. This diversification strategy is crucial to mitigate the impact of government budget uncertainties, such as the proposed 50% cut to NASA’s Science Mission Directorate in the fiscal year 2026 draft budget, which directly impacts Helio's core science programs.

Risks and Outlook: Charting a Course Through Uncertainty

Helio Corporation faces several material risks that could significantly impact its investment thesis. The most prominent is the uncertainty surrounding U.S. federal government spending, particularly the proposed cuts to NASA's Science Mission Directorate. A reduction in funding for core science programs directly aligned with Heliospace's capabilities could severely limit contract opportunities and adversely affect future revenue and profitability. Broader fiscal challenges, such as government shutdowns or continuing resolutions, also pose risks of funding delays and increased planning uncertainty.

Cybersecurity risks are another critical concern. As a government contractor and developer of advanced aerospace technology, Helio is a potential target for sophisticated cyber threats. While the company invests in security protocols and training, a successful breach could disrupt operations, compromise confidential data, and lead to significant financial and reputational damage. Furthermore, management has identified material weaknesses in internal control over financial reporting, including a lack of segregation of duties and insufficient accounting expertise, which increase the risk of financial misstatements. The company is actively working on remediation plans, including hiring additional qualified personnel.

The outlook for Helio Corporation is intrinsically linked to its ability to secure additional financing and successfully execute its strategic diversification. While no specific quantitative guidance has been provided, the company's forward-looking statements acknowledge that actual results could differ materially from expectations. The successful validation of its hardware on the Moon and the receipt of NASA SBIR awards demonstrate its technical capabilities and potential for innovation. However, converting these technical achievements into sustainable financial performance and alleviating the going concern doubt will require significant capital infusion and effective management of its debt obligations.

Conclusion

Helio Corporation presents a compelling, albeit high-risk, investment proposition. Its core strength lies in its specialized aerospace technology and engineering expertise, validated by recent mission successes and ongoing R&D initiatives like the QSRM™ and SABER™ systems. These technological differentiators position Helio as a valuable partner in niche segments of the burgeoning space economy, offering precision and reliability in critical applications. The company's strategic pivot towards defense agencies and commercial clients is a necessary response to the volatile nature of government funding.

However, the immediate future for Helio is clouded by significant financial challenges, including declining revenues, persistent operating losses, and a critical need for additional capital. The "substantial doubt" about its ability to continue as a going concern underscores the urgency of its financing efforts. For investors, the narrative for Helio Corporation is one of a technically capable innovator in a high-growth industry, currently grappling with the financial realities of scaling in a competitive landscape. The long-term viability of HLEO will depend on its capacity to translate its technological leadership into a robust and diversified revenue stream, secure the necessary funding to fuel its growth, and effectively mitigate the inherent risks of its operating environment.