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Item 2. Management’s Discussion and Analysis

2024-06-27 compared with 2024-03-18 · 85 added, 185 removed, 161 unchanged (63% of the section changed)

1 unchanged sentence

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

HNO International 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.

HNO International, Inc.

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.

HNO stands for Hydrogen and Oxygen and our experienced

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On May 16, 2023, the Company began accepting subscription

agreements from investors as part of a $75 million offering under Regulation A.

As of January 31, 2024, the Company has issued 2,118,033

shares of common stock under the Regulation A offering.

agreements from investors as part of an offering under Regulation A.

This offering concluded automatically on May 5, 2024.

period, the Company issued 2,457,461 shares of common stock under the Regulation A offering.

Results of Operations

For the Three Months Ended January 31, 2024 and

For the three months ended January

31, 2024, we generated no revenue compared to $13,000 for the three months ended January 31, 2023.

For the three months ended April 30, 2024 and

For the three months ended

April 30, 2024, we generated no revenue, consistent with no revenue for the three months ended April 30, 2023.

Operating Expenses

Operating expenses for the three months ended April

30, 2024, were $570,225 compared to $297,849 for the same period in 2023.

This increase is attributable to the Company’s efforts

to expand operations, which resulted in increased costs related to contract labor and general and administrative expenses.

As 2024 progressed,

we experienced a significant increase in hiring contract labor to support our Research and Development program.

We also expanded our staff

to support increased sales and marketing efforts.

Net loss for the three months ended April 30, 2024,

was $565,033 compared to a net loss of $297,848 during the same period in 2023.

General and Administrative, and Contract Labor

General and Administrative, and Contract Labor expenses

were $279,239 for the three months ended April 30, 2024, as compared to $196,935 during the same period in 2023.

Operating expenses changed

due to the Company’s efforts to expand operations, resulting in increased costs related to contract labor and general and administrative

For the six months ended April 30, 2024 and

For the six months ended

April 30, 2024, we generated no revenue compared to $13,000 for the six months ended April 30, 2023.

Revenue generated was from hydrogen

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Operating Expenses

Operating expenses for

the three months ended January 31, 2024 were $523,084 compared to $217,376 for the same period in 2023, an increase of $305,708.

is attributable to the Company’s efforts to expand operations, which resulted in increased costs related to contract labor and general

and administrative expenses.

As 2024 progressed, we experienced a significant increase in hiring contract labor to support our Research

and Development program.

Operating expenses for the six months ended

April 30, 2024, were $1,092,389 compared to $509,340 for the same period in 2023.

This is attributable to the Company’s

efforts to expand operations, which resulted in increased costs related to contract labor and general and administrative expenses.

As 2043 progressed, we experienced a significant increase in hiring contract labor to support our Research and Development program.

We also expanded our staff to support increased sales and marketing efforts.

Net loss for the six months ended April 30, 2023,

was $1,087,817 compared to a net loss of $502,221 during the same period in 2023.

General and Administrative, and Contract Labor

General and administrative, and contract labor expenses were $222,997 for the three months ended January 31, 2024, as compared

to $110,337 during the same period in 2023.

Operating expenses changed due to the Company’s efforts to expand operations, resulting

in increased costs related to contract labor and general and administrative expenses.

incurred a net loss of $522,717 for the three months ended January 31, 2024, compared to a net loss of $204,374 for the three months ended

January 31, 2023.

Management will continue to make an effort to lower operating expenses and increase revenue.

General and Administrative, and Contract Labor expenses

were $502,282 for the six months ended April 30, 2024, as compared to $301,387 during the same period in 2023.

Operating expenses changed

due to the Company’s efforts to expand operations, resulting in increased costs related to contract labor and general and administrative

Forward-Looking Considerations

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Liquidity and Capital Resources

a net loss for the three months ended January 31, 2024 and had an accumulated deficit of $42,132,662 at January 31, 2024.

At January 31,

a net loss for the three months ended April 30, 2024 and had an accumulated deficit of $42,697,762 at April 30, 2024.

At April 30, 2024,

we had a cash balance of $77,459, compared to a cash balance of $235,159 at October 31, 2023.

At January 31, 2024, working capital

At April 30, 2024, the working capital deficit

was $1,637,583, compared to a working capital deficit of $553,284 at October 31, 2023.

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and the results of operations.

For the Three Months Ended January 31, 2024 and

For the Six Months Ended April 30, 2024 and 2023

The following table summarizes our cash flows for

the periods indicated below:

For the Three Months Ended January 31,

For the Six Months Ended April 30,

Cash Used in Operating Activities

Cash Provided by Financing Activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash Used in Operating Activities

During the three months ended January 31, 2024, cash

used in operating activities of $394,086 primarily reflected our net losses for the period, adjusted by non-cash charges such as depreciation

and share based compensation, as well as changes in our working capital accounts, primarily consisting of an increase in accrued interest

payable, payroll taxes and accounts payable, and a decrease in security deposit.

During the three months ended January 31, 2023, cash

used in operating activities of $188,614 primarily reflected our net losses for the period, adjusted by non-cash charges of share based

compensation, as well as changes in our working capital accounts, primarily consisting of an increase in accrued interest payable, and

a decrease in security deposit.

During the six months ended

April 30, 2024, cash used in operating activities was $(951,373), primarily reflecting our net losses for the period, adjusted by non-cash

charges such as depreciation and amortization, as well as changes in our working capital accounts.

These changes mainly consisted of an

increase in accrued interest payable, payroll taxes, and accounts payable, a decrease in the security deposit, and the settlement of a

receivable from HNO Hydrogen Generators.

The receivable, totaling $56,392, was fully settled through a transfer of equipment in connection

with a settlement agreement effective April 15, 2024.

The settlement agreement involved the transfer of large equipment valued at $32,327

and small equipment valued at $24,065.

During the six months ended April 30, 2023, cash used

in operating activities was $(483,467), primarily reflecting our net losses for the period, adjusted by non-cash charges of share-based

compensation, as well as changes in our working capital accounts.

These changes mainly consisted of an increase in accrued interest payable,

and a decrease in the security deposit.

Cash Provided by Financing Activities

During the three months ended January 31, 2024, cash

provided by financing activities was $391,085, which consisted of proceeds from related party note payable of $265,585 and $125,500 in

proceeds obtained through the Company’s active Regulation A offering sale of common stock.

During three months ended January 31, 2023, cash provided

by financing activities was $282,000, which consisted of proceeds from sale of common stock of $282,000.

During the six months ended

April 30, 2024, cash provided by financing activities was $1,069,735, which consisted of proceeds from related party advances of $710,585,

proceeds from the sale of common stock subscription payable of $47,249, and proceeds from the sale of common stock of $211,901.

During the six months ended April 30, 2023, cash provided

by financing activities was $621,300, which consisted of proceeds from related party advances of $230,000 and proceeds from the sale of

common stock of $384,500.

Cash Provided by Investing Activities

During the three months ended January 31, 2024, cash

used in investing activities was $163,289, which consisted of purchase of property and equipment and long term asset.

During the three months ended January 31, 2023, cash

used in investing activities was $20,379, which consisted of the purchase of plant and equipment.

During the six months ended

April 30, 2024, cash used in investing activities was $(276,062), which consisted of the purchase of property and equipment and long-term

During the six months ended April 30, 2023, cash used

in investing activities was $(175,724), which consisted of the purchase of plant and equipment.

Going Concern

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 three months ended January 31, 2024, the Company incurred a

net loss of $522,717 and used cash in operating activities of $394,086.

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.

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 six months ended April 30, 2024, the Company incurred a net loss of $1,087,817 and used cash

in operating activities of $951,373, and on April 30, 2024, had stockholders’ deficit of $920,868.

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.

Off-Balance Sheet Arrangements

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This standard is effective for fiscal years and interim

periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning January

periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning October

Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within

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Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements.

RELATED PARTY TRANSACTIONS

Notes Payable, Related Party

On November 19, 2021, we issued a note payable in

the amount of $20,000 to HNO Green Fuels, of which Donald Owens is Chief Executive Officer.

This note bears an interest rate of 2% per

annum and had a maturity date of December 19, 2022.

The Company agreed to issue 20,000,000 shares of its common stock for settlement of

the $20,000 note payable dated November 19, 2021 to HNO Green Fuels.

The note matured on December 19, 2022 and was settled in full on

December 26, 2022 with the issuance of these shares.

The shares are ‘restricted securities’ under Rule 144 and the issuance

of the shares was made in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act of 1933, as amended.

On December 1, 2021, the Company issued a note payable in the amount of

$500,000 to HNO Green Fuels, of which Donald Owens is Chief Executive Officer.

This note bears an interest rate of 2% per annum.

the year ended October 31, 2023, $65,000 of principal was repaid.

At October 31, 2023, there is $435,000 of principal and $19,199 of accrued

interest due on this note.

This note had a maturity date of January 1, 2023.

On May 31, 2022, the Company issued a note payable

in the amount of $590,000 to HNO Green Fuels, of which Donald Owens is Chief Executive Officer.