HNO International, Inc. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2024 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to __________ Commission File Number: 000-56568 HNO INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) Nevada 20-2781289 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 41558 Eastman Drive Suite B Murrieta , California (Address of principal executive offices) 92562 (Zip Code) ( 951 ) 305-8872 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered N/A N/A N/A Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 1 Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller reporting company x Emerging growth company ¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of September 20, 2024, the registrant had 417,087,865 outstanding shares of Common Stock. 2 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This report on Form 10-Q contains "forward-looking statements" that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in our Form 10-K filed on January 29, 2024, and other filings we make with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law. The following discussion and analysis of financial condition and results of operations is based upon and should be read in conjunction with our audited financial statements and related notes thereto included elsewhere in this report, and in our Annual Report on Form 10-K filed on January 29, 2024. 3 HNO INTERNATIONAL, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JULY 31, 2024 TABLE OF CONTENTS PAGE PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) 5 Unaudited Condensed Balance Sheets as of July 31, 2024 and October 31, 2023 5 Unaudited Condensed Statements of Operations for the Three and Nine Months Ended July 31, 2024 and July 31, 2023 6 Unaudited Condensed Statement of Stockholders’ Deficit for the Three and Nine Months Ended July 31, 2024 and July 31, 2023 7 Unaudited Condensed Statements of Cash Flows for the Nine Months Ended July 31, 2024 and July 31, 2023 8 Notes to Unaudited Condensed Financial Statements 9 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3. Quantitative and Qualitative Disclosures About Market Risk 23 Item 4. Controls and Procedures 23 PART II OTHER INFORMATION Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 24 Item 5. Other Information 26 Item 6. Exhibits 26 Signatures 27 4 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. HNO INTERNATIONAL, INC. CONDENSED BALANCE SHEETS (Unaudited) July 31, October 31, 2024 2023 ASSETS Current Assets Cash $ 78,917 $ 235,159 Due from related party — 56,392 Total Current Assets 78,917 291,551 Non-Current Assets Property and equipment, net 993,578 767,938 Intangible assets, net 76,236 79,324 Long term asset, net 129,889 103,821 ROU asset 135,875 — Security deposits — 100,000 Total Non-Current Assets 1,335,578 1,051,083 TOTAL ASSETS $ 1,414,495 $ 1,342,634 LIABILITIES AND STOCKHOLDERS' DEFICIT LIABILITIES Current Liabilities Accounts payable 22,052 925 Accrued interest payable 61,913 41,270 Lease liability 56,051 — Payroll tax 2,838 17,640 Advances, related party 800,585 — Customer deposits 99 — Notes payable, related party 785,000 785,000 Total Current Liabilities 1,728,538 844,835 Non-Current Liability Lease liability 80,668 — Long term notes payable, related party 590,000 590,000 Total Non-Current Liability 670,668 590,000 Total Liabilities 2,399,206 1,434,835 STOCKHOLDERS’ DEFICIT Preferred stock, par value $ 0.001 per share; 15,000,000 shares authorized — — Series A, par value $ 0.001 per share; 10,000,000 shares authorized; 10,000,000 and 10,000,000 shares issued and outstanding as of July 31, 2024 and October 31, 2023, respectively 10,000 10,000 Common stock, par value $ 0.001 per share; 985,000,000 shares authorized; 410,739,392 and 419,341,584 shares issued and outstanding as of July 31, 2024 and October 31, 2023, respectively 410,739 419,341 Common stock payable 17,750 32,251 Common stock subscription receivable ( 13,750 ) ( 23,750 ) Additional paid-in capital 41,784,933 41,079,902 Accumulated deficit ( 43,194,383 ) ( 41,609,945 ) Total Stockholders’ Deficit ( 984,711 ) ( 92,201 ) TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $ 1,414,495 $ 1,342,634 The accompanying notes are an integral part of these unaudited condensed financial statements. 5 HNO INTERNATIONAL, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended July 31, For the Nine Months Ended July 31, 2024 2023 2024 2023 Revenue $ 4,241 $ — $ 4,241 $ 13,000 Cost of goods sold ( 3,688 ) — ( 3,688 ) ( 5,885 ) Gross Profit 553 — 553 7,115 Operating expenses Advertising and marketing 9,593 — 9,593 3,000 General and administrative expenses 430,693 437,472 1,440,197 927,082 Depreciation and amortization 49,964 16,103 120,056 20,450 Total Operating Expenses 490,250 453,575 1,569,846 950,532 Other Income (Expenses) Interest income 7 996 5,499 1,000 Interest expense ( 6,931 ) ( 7,227 ) ( 20,644 ) ( 19,611 ) Total Other (Expenses) ( 6,924 ) ( 6,231 ) ( 15,145 ) ( 18,611 ) Loss from Operations $ ( 496,621 ) $ ( 459,806 ) $ ( 1,584,438 ) $ ( 962,028 ) Net Loss $ ( 496,621 ) $ ( 459,806 ) $ ( 1,584,438 ) $ ( 962,028 ) PER SHARE AMOUNTS Basic and diluted net loss per share ( 0.00 ) ( 0.00 ) ( 0.00 ) ( 0.00 ) Weighted average number of common shares outstanding - basic and diluted 410,591,730 414,622,749 416,515,952 329,924,011 The accompanying notes are an integral part of these unaudited condensed financial statements. 6 HNO INTERNATIONAL, INC. CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT For the three and nine months ended July 31, 2024 and 2023 (Unaudited) Series A Preferred Stock Common Stock Stock Share Subscription Additional Paid-in Accumulated Total Stockholders' Shares Amount Shares Amount Payable Receivable Capital Deficit Deficit Balance at October 31, 2023 10,000,000 $ 10,000 419,341,584 $ 419,341 32,251 $ ( 23,750 ) $ 41,079,902 $ ( 41,609,945 ) $ ( 92,201 ) Regulation A stock issuances — — 91,501 92 33,999 — 91,409 — 125,500 Net loss — — — — — — — ( 522,784 ) ( 522,784 ) Balance at January 31, 2024 10,000,000 $ 10,000 419,433,085 $ 419,433 $ 66,250 $ ( 23,750 ) $ 41,171,311 $ ( 42,132,729 ) $ ( 489,485 ) Regulation A stock issuances — — 120,400 120 13,250 — 120,280 — 133,650 Net loss — — — — — — — ( 565,033 ) ( 565,033 ) Balance at April 30, 2024 10,000,000 $ 10,000 419,553,485 $ 419,553 $ 79,500 $ ( 23,750 ) $ 41,291,591 $ ( 42,697,762 ) $ ( 920,868 ) Regulation A stock issuances 219,028 219 ( 61,750 ) — 218,809 — 157,278 Regulation D stock issuances 966,879 967 — — 274,533 — 275,500 Shares cancelled as per settlement agreement - Vivaris Capital — — ( 10,000,000 ) ( 10,000 ) — 10,000 — — — Net loss — — — — — — — ( 496,621 ) ( 496,621 ) Balance at July 31, 2024 10,000,000 $ 10,000 410,739,392 $ 410,739 $ 17,750 $ ( 13,750 ) $ 41,784,933 $ ( 43,194,383 ) $ ( 984,711 ) Balance at October 31, 2022 5,000,000 $ 5,000 105,265,299 $ 105,265 $ — $ ( 10,000 ) $ 38,957,921 $ ( 40,168,611 ) $ ( 1,110,425 ) Regulation D stock issuances — — 182,000,000 182,000 — — — — 182,000 Common stock issued for services — — 2,025,000 2,025 — — — — 2,025 Common stock issued for settlement of debt — — 20,000,000 20,000 — — — — 20,000 Common stock to be issued from Reg D cash proceeds — — — — 100,000 — — — 100,000 Series A preferred issued pursuant to patent agreement 5,000,000 5,000 — — — — 77,500 — 82,500 Net loss — — — — — — — ( 204,373 ) ( 204,373 ) Balance at January 31, 2023 10,000,000 $ 10,000 309,290,299 $ 309,290 $ 100,000 $ ( 10,000 ) $ 39,035,421 $ ( 40,372,984 ) $ ( 928,273 ) Regulation D stock issuances — — 100,000,000 100,000 ( 100,000 ) — — — — Net loss — — — — — — — ( 297,848 ) ( 297,848 ) Balance at April 30, 2023 10,000,000 $ 10,000 409,290,299 $ 409,290 $ — $ ( 10,000 ) $ 39,035,421 $ ( 40,670,832 ) $ ( 1,226,121 ) Regulation D stock issuances — — 8,000,000 8,000 — — — — 8,000 Regulation A stock issuances — — 1,968,032 1,968 19,750 ( 13,750 ) 1,966,064 — 1,974,032 Net loss — — — — — — — ( 459,806 ) ( 459,806 ) Balance at July 31, 2023 10,000,000 $ 10,000 419,258,331 $ 419,258 $ 19,750 $ ( 23,750 ) $ 41,001,485 $ ( 41,130,638 ) $ 296,105 The accompanying notes are an integral part of these unaudited condensed financial statements. 7 HNO INTERNATIONAL, INC. CONDENSED STATEMENT OF CASH FLOWS (Unaudited) For the Nine Months Ended July 31, 2024 2023 Cash Flow from Operating Activities Net loss $ ( 1,584,438 ) $ ( 962,028 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 120,056 20,450 Shares issued for services — 2,025 Changes in operating assets and liabilities: Decrease in due from related party 56,392 — Increase in accounts payable 21,127 925 Increase in accrued interest payable 20,643 19,610 Payments of lease liabilities 844 — (Decrease) increase in payroll taxes ( 14,802 ) 14,653 Net Cash Used in Operating Activities ( 1,380,178 ) ( 904,365 ) Cash Flows from Financing Activities Proceeds from related party advances 800,585 — Proceeds from related party note payable — 250,000 Proceeds from security deposits 100,000 6,800 Proceeds from customer deposits 99 — Proceeds from common stock subscriptions payable ( 14,501 ) — Proceeds from sale of common stock 706,429 2,264,032 Repayment of related party note payable — ( 15,000 ) Net Cash Provided by Financing Activities 1,592,612 2,505,832 Cash Flows from Investing Activities Purchase of property and equipment ( 335,772 ) ( 396,630 ) Purchase of long term asset ( 32,904 ) ( 29,250 ) Net Cash Used in Investing Activities ( 368,676 ) ( 425,880 ) Net increase (decrease) in cash ( 156,242 ) 1,175,587 Cash at beginning of period 235,159 51,109 Cash at end of period $ 78,917 $ 1,226,696 Supplemental Disclosure of Interest and Income Taxes Paid: Interest paid during the period $ — $ — Income taxes paid during the period $ — $ — Supplemental Disclosure for Non-Cash Investing and Financing Activities: Series A preferred stock issued pursuant to patent agreement $ — $ 82,500 Cancellation of common stock $ ( 10,000 ) $ — Common stock issued for conversion of debt $ — $ 20,000 The accompanying notes are an integral part of these unaudited condensed financial statements. 8 HNO INTERNATIONAL, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS JULY 31, 2024 (Unaudited) NOTE 1 – ORGANIZATION AND BASIS OF ACCOUNTING Organization HNO International, Inc. (the “Company”) was incorporated in the State of Nevada on May 2, 2005 under the name American Bonanza Resources Limited. On August 4, 2009, the Company acquired Clenergen Corporation Limited (UK), a United Kingdom corporation (“Limited”), and succeeded to the business of Limited. Limited acquired the assets of Rootchange Limited, a biofuel and biomass research and development company, in April 2009. On March 19, 2009, the Company changes its name to Clenergen Corporation. On July 8, 2020, the Company changed its name to Excoin Ltd. and on August 31, 2021, the Company changed its name to HNO International, Inc. its current name. The Company specializes in the design, integration, and development of green hydrogen-based clean energy technologies. With the Company’s management having over 13 years of experience in the field of green hydrogen production, the Company is committed to providing scalable products that help businesses and communities decarbonize, reduce emissions, and cut operational costs. HNO stands for Hydrogen and Oxygen. The Company is at the forefront of developing innovative solutions, such as the Compact Hydrogen Refueling System (CHRS) and the Compact Hydrogen Production System (CHPS), which can be used to produce green hydrogen for various applications including fuel cell electric vehicles, hydrogen internal combustion engines, heating, and cooking. The CHPS is highly scalable, capable of producing 100-2,000 (or more) kilograms of hydrogen per day for commercial use in various applications. In addition, the Company develops energy systems that complement the zero-emissions EV infrastructure, reduce harmful emissions, and cut maintenance costs of commercial diesel fleets. By integrating components from leading industry partners, the Company aims to transition fossil fuels to cleaner alternatives and promote lower emissions. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company for the nine months ended July 31, 2024. Use of Estimates The preparation of the condensed financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amount of revenues and expenses during the reporting period. The management makes its best estimate of the outcome for these items based on information available when the condensed financial statements are prepared. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Employee Stock-Based Compensation The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) 718 Compensation - Stock Compensation (“ASC 718”). ASC 718 addresses all forms of share-based payment (“SBP”) awards including shares issued under employee stock purchase plans and stock incentive shares. Under ASC 718 awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated number of awards that are expected to vest and will result in a charge to operations. 9 Income Taxes Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. Revenue Recognition We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers . The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation. During the nine months ended July 31, 2024 and 2023, the Company had revenue of $ 4,241 and $ 13,000 . Revenue was recognized from hydrogen engineering services and combustion solutions. Basic and Diluted Net Loss per Common Share Basic loss per common share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding for each period. Diluted loss per share is computed by dividing the net loss by the weighted average. Number of shares of common stock outstanding plus the dilutive effect of shares issuable through the common stock equivalents. The weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. Property and Equipment Property and equipment are carried at cost and, less accumulated depreciation. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposal. The Company examines the possibility of decreases in the value of property and equipment when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. The Company’s property and equipment mainly consists of computer and laser equipment. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Schedule of estimated useful lives Useful life Small equipment 3 Years Large equipment 7 Years Vehicles 4 Years Intangible Assets Intangible assets consist of patents acquired in an asset purchase agreement (see Note 5). The estimated useful life of these assets was determined to be 20 years. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives. 10 Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of a long-lived asset, management evaluates whether the estimated future undiscounted net cash flows from the asset are less than its carrying amount. If impairment is indicated, the long-lived asset would be written down to fair value. Fair value is determined by an evaluation of available price information at which assets could be bought or sold, including quoted market prices, if available, or the present value of the estimated future cash flows based on reasonable and supportable assumptions. Leases The Company accounts for leases in accordance with ASC 842, Leases (“ASC 842”). At contract inception, the Company determines if an arrangement is or contains a lease. Where the Company is the lessee, for each lease with a term greater than twelve months, the Company records a right-of-use asset and lease liability. A right-of-use asset represents the economic benefit conveyed to the Company by the right to use the underlying asset over the lease term. A lease liability represents the obligation to make lease payments arising from the use of the asset over the lease term. As most of the Company’s leases do not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease. Leases with an initial expected term of 12 months or less are not recorded in the Balance Sheet and the related lease expense is recognized on a straight-line basis over the lease term. Adoption of Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. NOTE 3 – GOING CONCERN On July 31, 2024, we had an accumulated deficit of $ 43,194,383 . We have not been able to generate sufficient cash from operating activities to fund our ongoing operations. We will be required to raise additional funds through public or private financing, additional collaborative relationships, or other arrangements until we are able to raise revenues to a point of positive cash flow. We are evaluating various options to further reduce our cash requirements to operate at a reduced rate, as well as options to raise additional funds, including obtaining loans and selling common stock. There is no guarantee that we will be able to generate enough revenue and/or raise capital to support operations. Based on the above factors, substantial doubt exists about our ability to continue as a going concern for one year from the issuance of these condensed financial statements. NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following: Schedule of property and equipment July 31, 2024 October 31, 2023 Vehicles $ 60,702 $ 60,702 Small equipment $ 32,943 $ 8,879 Large equipment 1,047,005 735,297 Property and Equipment, Gross $ 1,140,650 $ 804,878 Less: Accumulated depreciation ( 147,072 ) ( 36,940 ) Property and Equipment, Net $ 993,578 $ 767,938 11 Depreciation expenses for the nine months ended July 31, 2024, and 2023 were $ 110,132 and $ 18,314 , respectively. NOTE 5 – INTANGIBLE ASSETS Patents Acquired Under Patent Purchase Agreement On January 24, 2023, the Company entered into a Patent Purchase Agreement with Donald Owens, the Company's Chairman of the Board of Directors, to acquire several patents related to hydrogen supplemental systems for on-demand hydrogen generation for internal combustion engines and a method and apparatus for increasing combustion efficiency and reducing particulate matter emissions in jet engines. In exchange for these patents, the Company issued 5,000,000 shares of its Series A Preferred Stock to Mr. Owens, valued at $ 82,500 . The details of the patents acquired are listed in the table below, which includes information on the patent numbers, titles, and status in various countries. COUNTRY APPLN NO PATENT NUMBER TITLE STATUS US 13/844,267 8757107 HYDROGEN SUPPLEMENTAL SYSTEM FOR ON-DEMAND HYDROGEN GENERATION FOR INTERNAL COMBUSTION ENGINES Issued US 13/922,351 9453457 HYDROGEN SUPPLEMENTAL SYSTEM FOR ON-DEMAND HYDROGEN GENERATION FOR INTERNAL COMBUSTION ENGINES Issued US 14/016,388 9476357 METHOD AND APPARATUS FOR INCREASING COMBUSTION EFFICIENCY AND REDUCING PARTICULATE MATTER EMISSIONS IN JET ENGINES Issued US 14/326,801 9267468 HYDROGEN SUPPLEMENTAL SYSTEM FOR ON-DEMAND HYDROGEN GENERATION FOR INTERNAL COMBUSTION ENGINES Issued US 17/047,041 10920717 HYDROGEN PRODUCING SYSTEM AND DEVICE FOR IMPROVING FUEL EFFICIENCY AND REDUCING EMISSIONS OF INTERNAL COMBUSTION AND/OR DIESEL ENGINES Issued AUSTRALIA 2019405749 2019405749 HYDROGEN PRODUCING SYSTEM AND DEVICE FOR IMPROVING FUEL EFFICIENCY AND REDUCING EMISSIONS OF INTERNAL COMBUSTION AND/OR DIESEL ENGINES Issued CHINA 201980092511 .1 HYDROGEN PRODUCING SYSTEM AND DEVICE FOR IMPROVING FUEL EFFICIENCY Pending EUROPE 19900413.6. HYDROGEN PRODUCING SYSTEM AND DEVICE FOR IMPROVING FUEL EFFICIENCY Pending JAPAN 2021-535288 HYDROGEN PRODUCING SYSTEM AND DEVICE FOR IMPROVING FUEL EFFICIENCY Pending Intangible assets as at July 31, 2024 and October 31, 2023, consisted of the following: Schedule of intangible assets Useful Life (years) July 31, 2024 October 31, 2023 Patents 20 $ 82,500 $ 82,500 Less: Accumulated amortization ( 6,264 ) ( 3,176 ) Intangible assets, net $ 76,236 $ 79,324 Amortization expenses for the nine months ended July 31, 2024, and 2023 was $ 3,088 and $ 2,136 , respectively. 12 NOTE 6 – LEASES Operating leases The Company has an operating lease agreement for office space in Murrieta, California, expiring on November 30, 2026. On November 18, 2020, the Company entered into an operating lease with the landlord, Demarius Holdings, Inc., commencing on December 1, 2020, and ending on November 30, 2023, for the office spaces located at 41558 Eastman Drive, Suites B and C, Murrieta, California 92562. The monthly rent was $4,183. Both suites are approximately 2,088 square feet of space. The Company’s principal executive office is located at 41558 Eastman Drive, Suite B, Murrieta, California 92562. Suite C is utilized for testing and research equipment. On November 14, 2023, the lease for Suite B was extended for 36 months to November 30, 2026. The monthly rental amount for Suite B is $2,501 for the period from December 1, 2023, to November 30, 2024, with an increase to $2,573 for the period from December 1, 2024, to November 30, 2025, and an increase to $2,647 for the period from December 1, 2025, to November 30, 2026. On January 4, 2024, the lease for Suite C was extended for 34 months to November 30, 2026. The monthly rental amount for Suite C is $2,434 for the period from February 1, 2024, to November 30, 2024, with an increase to $2,506 for the period from December 1, 2024, to November 30, 2025, and an increase to $2,555 for the period from December 1, 2025, to November 30, 2026. The Company has active operating lease arrangements for office space. The Company is typically required to make fixed minimum rent payments relating to its right to use the underlying leased assets. The Company was required to classify such leases as operating leases in accordance with the provisions of ASC 842. Therefore, the Company recognized operating lease liabilities with corresponding Right-Of-Use ("ROU") assets based on the present value of the minimum rental payments of such leases . As most of the Company’s leases do not provide an implicit interest rate, the lease liability is calculated at lease commencement as the present value of unpaid lease payments using the Company’s estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease. As of July 31, 2024, the ROU asset was $ 135,875 and operating lease liabilities were $ 136,719 . The operating lease liabilities consist of a current portion of $ 56,051 and a non-current portion of $ 80,668 . The weighted average remaining lease term was 2.34 years and the weighted average discount rate was 4.14 %. Operating Cash Flows Related to Leases During the nine months ended July 31, 2024, the Company made cash payments totaling $844 related to its operating leases. These payments are included in the Condensed Statement of Cash Flows under operating activities as "Payments of lease liabilities." Remaining lease term as of July 31, 2024: Schedule of remaining lease term Year Operating Lease Payment 2024 $ 15,227 2025 $ 60,909 2026 and above $ 65,986 Total Payments $ 142,122 NOTE 7 – COMMON STOCK The Company is authorized to issue 985,000,000 shares of common stock, par value $ 0.001 . Increase in Authorized Capital Stock On January 4, 2023, the Board of Directors and a majority of the Company’s stockholders approved the proposal to increase the number of shares of capital stock that the Company is authorized to issue to 1,000,000,000 . On January 6, 2023, the Company filed a Certificate of Amendment to the Articles of Incorporation with the Secretary of State of Nevada to increase the total authorized capital from 510,000,000 shares to 1,000,000,000 shares consisting of 985,000,000 shares of common stock, par value $ 0.001 , and 15,000,000 shares of preferred stock, par value $ 0.001 . 13 Stock Issued During the quarter ended January 31, 2023, the Company entered into Stock Subscription Agreements with Donald Owens, the Company’s Chairman of the Board of Directors, whereby the Company privately sold a total of 175,000,000 shares of its common stock for a cash purchase price of $ 175,000 . Donald Owens was an “accredited investor” (under Rule 506 (b) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”)). The $ 175,000 in proceeds from the sale of common stock will be used for operating capital. The shares were ‘restricted securities’ under Rule 144 of the Securities Act. On January 17, 2023, the Company entered into a Stock Subscription Agreement with William Parker, a member of the Company’s Board of Directors, whereby the Company privately sold a total of 5,000,000 shares of its common stock for a cash purchase price of $ 5,000 . William Parker was an “accredited investor” (under Rule 506 (b) of Regulation D under the Securities Act). The $ 5,000 in proceeds from the sale of common stock will be used for operating capital. The shares were ‘restricted securities’ under Rule 144 of the Securities Act. On January 11, 2023, the Company entered into a Stock Subscription Agreement with Hossein Haririnia, the Company’s Treasurer and a member of the Board of Directors, whereby the Company privately sold a total of 2,000,000 shares of its common stock for a cash purchase price of $ 2,000 . Hossein Haririnia was an “accredited investor” (under Rule 506 (b) of Regulation D under the Securities Act). The $ 2,000 in proceeds from the sale of common stock will be used for operating capital. The shares were ‘restricted securities’ under Rule 144 of the Securities Act. The Company's Board of Directors granted approval for the issuance of 2,025,000 shares of our common stock with a value of $ 0.001 on January 2, 2023, in exchange for services rendered to the Company. These shares were considered "restricted securities" under Rule 144 and were issued under the exemption provided by Section 4(a)(2) of the Securities Act. On January 31, 2023, the Company entered into Stock Subscription Agreements with Donald Owens, the Company’s Chairman of the Board of Directors, whereby the Company privately sold a total of 100,000,000 shares of its common stock for a cash purchase price of $ 100,000 . Donald Owens was an “accredited investor” (under Rule 506 (b) of Regulation D under the Securities Act). The $ 100,000 in proceeds from the sale of common stock will be used for operating capital. The shares were ‘restricted securities’ under Rule 144 of the Securities Act. As of January 31, 2023, these shares had not yet been issued and therefore were recorded as stock payable. On February 1, 2023, these shares were issued. On June 9, 2023, the Company entered into a Stock Subscription Agreement with Hossein Haririnia, the Company’s Treasurer and a member of the Board of Directors, whereby the Company privately sold a total of 8,000,000 shares of its common stock for a cash purchase price of $ 8,000 . Hossein Haririnia was an “accredited investor” (under Rule 506 (b) of Regulation D under the Securities Act). The $ 8,000 in proceeds from the sale of common stock will be used for operating capital. The shares were issued as ‘restricted securities’ under Rule 144 of the Securities Act. During the quarter ended July 31, 2023, the Company issued 1,968,032 shares of common stock for $ 1,968,032 in cash under its Regulation A offering, qualified on May 3, 2023. Additionally, the Company issued 13,750 Regulation A shares, resulting in $ 13,750 classified as common stock receivable due to unpaid balances, and sold 19,750 Regulation A shares, which were classified as $ 19,750 common stock payable. During the quarter ended October 31, 2023, the Company issued 52,500 shares of common stock for $ 52,500 in cash under its Regulation A offering, qualified by the SEC on May 3, 2023. The Company also issued 6,000 Regulation A shares previously classified as common stock payable and sold 18,501 Regulation A shares, classified as $ 18,501 common stock payable. On October 9, 2023, the Company issued 24,753 shares of common stock valued at $ 20,000 as a commitment fee for equity financing. The shares were issued in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act, and Rule 506(b) of Regulation D under the Securities Act, based, in part, on the representations of the investor. During the quarter ended January 31, 2024, the Company issued 74,500 shares of common stock for $ 74,500 in cash under its Regulation A offering, qualified by the SEC on May 3, 2023. The Company also issued 17,001 Regulation A shares previously classified as common stock payable and sold 51,000 Regulation A shares, classified as $ 51,000 common stock payable. During the quarter ended April 30, 2024, the Company issued 64,900 shares of common stock for $ 69,400 in cash under its Regulation A offering, qualified by the SEC on May 3, 2023. The Company also issued 51,000 Regulation A shares previously classified as common stock payable and sold 64,250 Regulation A shares, classified as $ 64,250 common stock payable. 14 During the quarter ended July 31, 2024, the Company issued 158,278 shares of common stock for $ 158,278 in cash under its Regulation A offering, qualified by the SEC on May 3, 2023. The Company also issued 60,750 Regulation A shares previously classified as common stock payable and sold 1,000 Regulation A shares, classified as $ 1,000 common stock payable. During the quarter ended July 31, 2024, the Company entered into a Stock Subscription Agreement with accredited investors (under Rule 506 (b) of Regulation D under the Securities Act of 1933, as amended). Whereby the Company privately sold a total of 966,879 shares of its common stock, $ 0.001 par value per share, (“common stock”) for a cash purchase price of $ 275,500 . The proceeds from the sale of common stock will be used for operating capital. The shares were issued as ‘restricted securities’ under Rule 144 of the Securities Act. As of July 31, 2024 and October 31, 2023, the Company had 410,739,392 and 419,341,584 shares of common stock issued and outstanding, respectively. Stock Receivable As of July 31, 2024, the Company issued 13,750 shares of common stock under Regulation A offering to various shareholders that have not yet paid for shares; therefore, $ 13,750 has been classified as common stock receivable. On March 31, 2022, the Company issued 10,000,000 shares of common stock to Vivaris Capital, LLC, in connection with an Advisory Agreement. However, Vivaris Capital, LLC never paid for the shares, and a dispute arose. The dispute centered around the respective performance under the Advisory Agreement. On May 3, 2024, the Company and Vivaris Capital, LLC executed a Settlement Agreement. As part of this agreement, the Company paid Vivaris Capital, LLC a settlement amount of $ 15,500 , and the 10,000,000 shares issued to Vivaris Capital, LLC were canceled. This settlement nullifies any outstanding receivables related to the stock issuance and fully resolves the dispute between the parties. As per the Settlement Agreement and Mutual Release of All Claims executed on May 3, 2024, the Company and Vivaris Capital, LLC have resolved their dispute. The settlement terms include the cancellation of the 10,000,000 shares issued to Vivaris Capital, LLC. Additionally, the Company agreed to pay Vivaris Capital, LLC a settlement amount of $ 15,500 , which has been recorded as a legal expense. This agreement nullifies any outstanding receivable related to the stock issuance and resolves the dispute in full. Stock Payable As of July 31, 2024, the Company sold 17,750 shares of common stock under its Regulation A offering to various shareholders that have not yet been issued by the transfer agent; therefore, $ 17,750 has been classified as common stock payable. NOTE 8 – PREFERRED STOCK The Company is authorized to issue 15,000,000 shares of preferred stock, par value $ 0.001 . Series A Preferred Stock The Company is authorized to issue 10,000,000 shares of Series A preferred stock, par value $ 0.001 . On January 24, 2023, the Company issued 5,000,000 shares of its Series A Preferred Stock to Mr. Owens, valued at $ 82,500 for patents specified in Note 5. As of July 31, 2024, and October 31, 2023, the Company had 10,000,000 and 10,000,000 shares of Series A preferred stock issued and outstanding, respectively. NOTE 9 – RELATED PARTY TRANSACTIONS Notes Payable, Related Party On November 19, 2021, the Company 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 the $ 20,000 principal was settled 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. The accrued interest of $ 436 remains due in connection with this note. 15 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. During the year ended October 31, 2023, $ 65,000 of principal was repaid. At July 31, 2024, there is $ 435,000 of principal and $ 25,325 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. This note bears an interest rate of 2 % per annum and has a maturity date of May 31, 2030 . At July 31, 2024, there is $ 590,000 of principal and $ 25,604 of accrued interest due on this note. On September 29, 2022, the Company issued a note payable in the amount of $ 50,000 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 October 31, 2023 . At July 31, 2024, there is $ 50,000 of principal and $ 1,838 of accrued interest due on this note. On October 20, 2022, the Company issued a note payable in the amount of $ 50,000 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 November 20, 2023 . At July 31, 2024, there is $ 50,000 of principal and $ 1,781 of accrued interest due on this note. On March 1, 2023, the Company issued a note payable in the amount of $ 50,000 to HNO Green Fuels, of which Donald Owens is Chief Executive Officer. This note bears an interest rate of 2 % per annum and has a maturity date of March 1, 2024 . At July 31, 2024, there is $ 50,000 of principal and $ 1,419 of accrued interest due on this note. On March 8, 2023, the Company issued a note payable in the amount of $ 50,000 to HNO Green Fuels, of which Donald Owens is Chief Executive Officer. This note bears an interest rate of 2 % per annum and has a maturity date of March 8, 2024 . At July 31, 2024, there is $ 50,000 of principal and $ 1,400 of accrued interest due on this note. On March 23, 2023, the Company issued a note payable in the amount of $ 50,000 to HNO Green Fuels, of which Donald Owens is Chief Executive Officer. This note bears an interest rate of 2 % per annum and has a maturity date of March 23, 2024 . At July 31, 2024, there is $ 50,000 of principal and $ 1,359 of accrued interest due on this note. On April 3, 2023, the Company issued a note payable in the amount of $ 50,000 to HNO Green Fuels, of which Donald Owens is Chief Executive Officer. This note bears an interest rate of 2 % per annum and has a maturity date of April 3, 2024 . At July 31, 2024, there is $ 50,000 of principal and $ 1,329 of accrued interest due on this note. On April 13, 2023, the Company 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 has a maturity date of April 13, 2024 . At July 31, 2024, there is $ 20,000 of principal and $ 520 of accrued interest due on this note. On April 17, 2023, the Company issued a note payable in the amount of $ 30,000 to HNO Green Fuels, of which Donald Owens is Chief Executive Officer. This note bears an interest rate of 2 % per annum and has a maturity date of April 17, 2024 . At July 31, 2024, there is $ 30,000 of principal and $ 774 of accrued interest due on this note. As of July 31, 2024, and October 31, 2023, these current and long-term notes payable had an outstanding balance of $ 1,375,000 and $ 1,375,000 , respectively. As of July 31, 2024, and October 31, 2023, the Company has recorded $ 61,786 and $ 41,270 , respectively in accrued interest in connection with these notes in the accompanying condensed financial statements. Extension of Promissory Notes On January 17, 2024, the Company entered into an Extension to Promissory Note (the "1 st Extension") with HNO Green Fuels, pursuant to the terms set forth in the 1 st Extension. The 1 st Extension amends the Promissory Note issued on December 1, 2021, extending the Maturity Date to December 31, 2024. All prior defaults were waived by HNO Green Fuels. 16 On January 17, 2024, the Company entered into an Extension to Promissory Note (the "2 nd Extension") with HNO Green Fuels, pursuant to the terms set forth in the 2 nd Extension. The 2 nd Extension amends the Promissory Note issued on September 29, 2022, extending the Maturity Date to December 31, 2024. All prior defaults were waived by HNO Green Fuels. On January 17, 2024, the Company entered into an Extension to Promissory Note (the "3 rd Extension") with HNO Green Fuels, pursuant to the terms set forth in the 3 rd Extension. The 3 rd Extension amends the Promissory Note issued on October 20, 2022, extending the Maturity Date to December 31, 2024. All prior defaults were waived by HNO Green Fuels. On March 1, 2024, the Company entered into an Extension to Promissory Note (the "4 th Extension") with HNO Green Fuels, pursuant to the terms set forth in the 4 th Extension. The 4 th Extension amends the Promissory Note issued on March 1, 2023, extending the Maturity Date to December 31, 2024. All prior defaults were waived by HNO Green Fuels. On March 1, 2024, the Company entered into an Extension to Promissory Note (the "5 th Extension") with HNO Green Fuels, pursuant to the terms set forth in the 5 th Extension. The 5 th Extension amends the Promissory Note issued on March 8, 2023, extending the Maturity Date to December 31, 2024. All prior defaults were waived by HNO Green Fuels. On March 1, 2024, the Company entered into an Extension to Promissory Note (the "6 th Extension") with HNO Green Fuels, pursuant to the terms set forth in the 6 th Extension. The 6 th Extension amends the Promissory Note issued on March 23, 2023, extending the Maturity Date to December 31, 2024. All prior defaults were waived by HNO Green Fuels. On March 1, 2024, the Company entered into an Extension to Promissory Note (the "7 th Extension") with HNO Green Fuels, pursuant to the terms set forth in the 7 th Extension. The 7 th Extension amends the Promissory Note issued on April 3, 2023, extending the Maturity Date to December 31, 2024. All prior defaults were waived by HNO Green Fuels. On March 1, 2024, the Company entered into an Extension to Promissory Note (the "8 th Extension") with HNO Green Fuels, pursuant to the terms set forth in the 8 th Extension. The 8 th Extension amends the Promissory Note issued on April 13, 2023, extending the Maturity Date to December 31, 2024. All prior defaults were waived by HNO Green Fuels. On March 1, 2024, the Company entered into an Extension to Promissory Note (the "9 th Extension") with HNO Green Fuels, pursuant to the terms set forth in the 9 th Extension. The 9 th Extension amends the Promissory Note issued on April 17, 2023, extending the Maturity Date to December 31, 2024. All prior defaults were waived by HNO Green Fuels. Advances from Related Party During the nine months ended July 31, 2024, Donald Owens, the Company's Chairman of the Board of Directors, advanced $ 800,585 to the Company to cover operating expenses. NOTE 10 – RECEIVABLE SETTLEMENT WITH RELATED PARTY As of January 31, 2024, October 31, 2023 and October 31, 2022, the Company had a receivable from HNO Hydrogen Generators totaling $ 56,392 on its balance sheet, which was unsecured and due on demand. The receivable was fully settled through a transfer of assets in connection with a settlement agreement effective April 15, 2024. The settlement agreement involved the transfer of equipment, categorized into large and small equipment, with a combined value of $56,392. Specifically, large equipment was valued at $32,327, and small equipment at $24,065. This settlement agreement fully resolved all claims associated with the receivable. On the date of settlement, $ 5,185 was calculated as 5 % interest and was recorded on the balance sheet as accrued interest receivable. The $ 5,185 balance of accrued interest was fully received on July 3, 2024. NOTE 11 – INTELLECTUAL PROPERTY: PROTOTYPE COMPACT HYDROGEN REFUELING STATION (CHRS) On July 10, 2023, the Company entered into a Simple Agreement for Future Equity (the “SAFE”) with Varea, Inc. ("Varea"), a Delaware corporation. Pursuant to the SAFE, the Company is investing $ 500,000 (the "Purchase Amount") in Varea in exchange for the right to certain shares of Varea's Capital Stock. The agreement specifies that the Purchase Amount will be used for the Company's business operations over the next 12 months, subject to an agreed-upon budget. Prior to entering into this SAFE, the Company had an existing financial arrangement with Varea LLC, whereby Varea LLC invoiced the Company for services rendered, which were recorded as expenses by HNOI. However, recognizing the potential for a more mutually beneficial arrangement, Varea Inc. proposed a revised approach. Under the newly proposed approach, Varea Inc. would submit a detailed budget outlining their anticipated monthly expenses, and HNO International, Inc. would view these expenses as an investment opportunity rather than mere costs. In exchange for funding Varea Inc.'s expenses, HNO International, Inc. would receive a post-money SAFE, which represents a future right to certain shares of Varea's Capital Stock. The transition from the previous invoicing system to the investment-based financial arrangement was agreed by both parties. The terms and conditions of the agreement, including the conversion of expenses into a potential future return on investment, were thoroughly assessed and discussed. 17 On December 6, 2023, the SAFE was terminated as part of a Mutual Release Agreement between HNO International, Inc., and Varea, Inc. Under the terms of this Mutual Release Agreement, the intellectual property related to the prototype Compact Hydrogen Refueling Station (CHRS), developed with the funds provided under the SAFE, was retained by HNO International, Inc. The balance of the SAFE on December 6, 2023, and October 31, 2023, was $ 136,725 and $ 103,821 , respectively. Following the termination of the SAFE, the amount previously recorded under the SAFE was reclassified, and the intellectual property associated with the CHRS is now fully owned and recognized as a long-term intangible asset on HNO International, Inc.'s balance sheet. This long-term asset is solely the intellectual property associated with the CHRS and does not include any physical equipment. Amortization The intellectual property associated with the CHRS is being amortized over a useful life of 5 years, beginning on December 6, 2023. The amortization expense for the current period is $ 6,836 , recognizing the straight-line amortization of the asset over the remaining useful life. Schedule of amortization expense Useful Life (years) July 31, 2024 October 31, 2023 Long term asset 5 $ 136,725 $ 103,821 Less: Accumulated amortization ( 6,836 ) — Long term asset, net $ 129,889 $ 103,821 NOTE 12 – TERMINATION OF PROPERTY ACQUISITION AGREEMENT On August 28, 2023, the Company entered into a Purchase and Sale Agreement (the “PSA”) with TCF Elrod, LLC. Pursuant to the PSA, the Company agreed to purchase property located in Harris County, Texas, including real property, improvements, development rights, and a lease. The purchase price for the property was $ 10,800,000 . The Company paid a non-refundable earnest money deposit of $ 100,000 , which was applied towards the purchase price of the sale proceeds as planned. Specific conditions in the PSA were not met, the Company chose to exercise its right to terminate the PSA. Consequently, TCF Elrod, LLC refunded the $ 100,000 earnest money deposit to the Company on December 4, 2023 . NOTE 13 – SUBSEQUENT EVENTS Subsequent events have been evaluated through September 20, 2024, which represents the date the financial statements were available to be issued, and no events, other than discussed below have occurred through that date that would impact the financial statements. Common Stock Issued On August 16, 2024, the Company issued 2,500 shares of common stock under Regulation A for stock payables. The Company entered into Stock Subscription Agreements with accredited investors (under Rule 506(b) of Regulation D under the Securities Act of 1933, as amended), whereby the Company privately sold a total of 1,295,973 shares of its common stock, $ 0.001 par value per share (“common stock”), for a cash purchase price of $ 250,000 . The Company issued 629,306 shares on August 19, 2024 and 666,667 shares on September 16, 2024, as ‘restricted securities’ under Rule 144 of the Securities Act. The proceeds from the sale of common stock will be used for operating capital. On August 13, 2024, the Company’s Board of Directors approved the issuance of 5,050,000 shares of our common stock in exchange for services rendered to the Company. 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 August 21, 2024, the Company made a payment of $ 40,000 to HNO Green Fuels, of which Donald Owens is Chief Executive Officer, repaying accrued interest payable on outstanding notes payable. 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview 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 management team has over 14 years of expertise in the green hydrogen production industry. HNO International provides green hydrogen systems engineering design, integration, and products to multiple markets, which include: (i) the zero-emission vehicle and mobile equipment market consisting of hydrogen fuel cell electric passenger vehicles, material handling equipment such as forklifts and airport ground support equipment, as well as the medium and heavy-duty truck market; (ii) the current and emerging hydrogen gas markets encompassing ammonia, fertilizer, steel, mining, electronics, semiconductors, and fuel cell electric vehicles; (iii) and the gasoline and diesel engine emissions and maintenance reduction product and services market. Hydrogen Project Agreement On September 13, 2024, HNO International, Inc. formalized a Hydrogen Purchase and Sale Agreement with a leader in zero-emission transportation. This agreement will see HNO International constructing and operating a hydrogen electrolysis plant and refueling station in Katy, Texas, producing 0.5 metric tons of high-purity gaseous hydrogen daily. The hydrogen will be used for refueling Class 8 fuel cell electric trucks, promoting cleaner transportation options. The initial three-year agreement, with the potential for extension, underscores HNO's commitment to advancing hydrogen as a sustainable fuel alternative. Results of Operations For the three months ended July 31, 2024 and 2023 Revenue For the three months ended July 31, 2024, we generated $4,241 in revenue, compared to no revenue for the three months ended July 31, 2023. Revenue was recognized from hydrogen engineering services and combustion solutions. Operating Expenses Operating expenses for the three months ended July 31, 2024, were $490,250 compared to $453,575 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. We also expanded our staff to support increased sales and marketing efforts. Net Loss Net loss for the three months ended July 31, 2024, was $496,621 compared to a net loss of $459,806 during the same period in 2023. General and Administrative, and Contract Labor Expenses General and Administrative, and Contract Labor expenses were $430,693 for the three months ended July 31, 2024, as compared to $437,472 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. For the nine months ended July 31, 2024 and 2023 Revenue For the nine months ended July 31, 2024, was $4,241 compared to $13,000 for the nine months ended July 31, 2023. Revenue generated was from hydrogen engineering services and combustion solutions. 19 Operating Expenses Operating expenses for the nine months ended July 31, 2024, were $1,569,846 compared to $950,532 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 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 Net loss for the nine months ended July 31, 2024, was $1,584,438 compared to a net loss of $962,028 during the same period in 2023. General and Administrative, and Contract Labor Expenses General and Administrative, and Contract Labor expenses were $1,440,197 for the nine months ended July 31, 2024, as compared to $927,082 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. Forward-Looking Considerations The Company recognizes the possibility of future increases in labor or material costs. Factors such as evolving market conditions, potential inflation, and global economic dynamics are considered. We are actively monitoring these aspects to anticipate and navigate any forthcoming rises in labor or material expenses. Cost-to-Revenue - The Company is assessing alterations in the relationship between cost of sales and revenue. We are examining the factors influencing these changes, including shifts in prices and fluctuations in the volume of services sold. Understanding the impact of these elements is crucial for maintaining a balanced and effective cost-to-revenue structure. Liquidity and Capital Resources We incurred a net loss for the three months ended July 31, 2024 of $496,621 and had an accumulated deficit of $43,194,383 at July 31, 2024. At July 31, 2024, we had a cash balance of $78,917, compared to a cash balance of $235,159 at October 31, 2023. At July 31, 2024, the working capital deficit was $1,649,621, compared to a working capital deficit of $553,284 at October 31, 2023. Our existing and available capital resources are not expected to be sufficient to satisfy our funding requirements through one year from the date of this filing in the absence of share issuances or other sources of financing. We have not been able to generate sufficient cash from operating activities to fund our ongoing operations. We have raised capital through sales of common stock and debt securities. The effect of existing or probable government regulations on our business is not known at this time. Due to the nature of our business, it is anticipated that there may be increasing government regulation that may cause us to have to take serious corrective actions or make changes to the business plan. There are no external sources of liquidity available to the Company at this time. The Company will need to raise additional capital through equity financings or other means in order to continue operations and meet its obligations. Failure to obtain additional funding could have a material adverse effect on our financial condition and the results of operations. Cash Flow For the Nine Months Ended July 31, 2024 and 2023 The following table summarizes our cash flows for the periods indicated below: For the Nine Months Ended July 31, 2024 For the Nine Months Ended July 31, 2023 Cash Used in Operating Activities $ (1,380,178 ) $ (904,365 ) Cash Provided by Financing Activities 1,592,612 2,505,832 Net cash used in investing activities $ (368,676 ) $ (425,880 ) 20 Cash Used in Operating Activities During the nine months ended July 31, 2024, cash used in operating activities was $(1,380,178), 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 nine months ended July 31, 2023, cash used in operating activities was $(904,365), primarily reflecting our net losses for the period, adjusted by non-cash charges of depreciation and amortization, as well as an increase in accrued interest payable and payroll taxes. Cash Used in Financing Activities During the nine months ended July 31, 2024, cash provided by financing activities was $1,592,612, which consisted of proceeds from related party advances of $800,585, proceeds from the sale of common stock and proceeds from the sale of common stock of $706,429. During the nine months ended July 31, 2023, cash provided by financing activities was $2,505,832, which consisted of proceeds from related party notes payable of $235,000 and proceeds from the sale of common stock of $2,264,032. Cash Provided by Investing Activities During the nine months ended July 31, 2024, cash used in investing activities was $(368,676), which consisted of the purchase of property and equipment and long-term assets. During the nine months ended July 31, 2023, cash used in investing activities was $(425,880), 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 nine months ended July 31, 2024, the Company incurred a net loss of $1,584,438 and used cash in operating activities of $1,380,178, and on July 31, 2024, had stockholders’ deficit of $984,711. 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. 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. However, there can be no assurance that these efforts will result in sufficient funding, and the Company may continue to face substantial uncertainty regarding its ability to achieve profitable operations and sustain its business. Off-Balance Sheet Arrangements There are no off-balance sheet arrangements with any party. Critical Accounting Policies Our discussion and analysis of results of operations and financial condition are based upon our condensed financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. 21 STOCK-BASED COMPENSATION The Company accounts for stock incentive awards issued to employees and non-employees in accordance with FASB ASC 718, Stock Compensation. Accordingly, stock-based compensation is measured at the grant date, based on the fair value of the award. Stock-based awards to employees are recognized as an expense over the requisite service period, or upon the occurrence of certain vesting events. Additionally, stock-based awards to non-employees are expensed over the period in which the related services are rendered. DERIVATIVE LIABILITY In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Paragraph 815-15-25-1 the conversion feature and certain other features are considered embedded derivative instruments, such as a conversion reset provision, a penalty provision and redemption option, which are to be recorded at their fair value as its fair value can be separated from the convertible note and its conversion is independent of the underlying note value. The Company records the resulting discount on debt related to the conversion features at initial transaction and amortizes the discount using the effective interest rate method over the life of the debt instruments. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The Company follows ASC Section 815-40-15 (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 810-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then that the related fair value is reclassified to equity. The Company utilizes the binomial option pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The binomial option pricing model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time equal to the remaining contractual term of the instrument granted. REVENUE RECOGNITION In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We recognize revenue for the sale of our products upon delivery to a customer. RECENT ACCOUNTING PRONOUNCEMENTS In August 2020, the FASB issued ASU 2020-06, Debt— Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. 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 October 31, 2024. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2020-06 on our financial statements. 22 Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future financial statements. PROPOSED TRANSACTIONS The Company is not anticipating any transactions. CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION There were no recent accounting pronouncements that have or will have a material effect on the Company’s financial position or results of operations. FINANCIAL INSTRUMENTS The main risks of the Company’s financial instruments are exposed to are credit risk, market risk, foreign exchange risk, and liquidity risk. OUTSTANDING SHARE DATA As of July 31, 2024, the following securities were outstanding: Common stock: 410,739,392 shares Series A Preferred Stock: 10,000,000 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item. ITEM 4. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending October 31, 2024, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner. 23 Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There were no changes in our internal control over financial reporting during the quarter ended July 31, 2024 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. The following table includes all unregistered sales of securities made by the Company during the quarter ended July 31, 2024: Date Name Consideration Securities Exemption from Registration 5/1/24 Christopher Kirby & Angela Kirby, JTWROS Cash 1,000 Regulation A 5/1/24 Ani N Rooney Cash 40,000 Regulation A 5/1/24 Jefferson Davis Lewis III Cash 1,000 Regulation A 5/1/24 Lorna Karen Haynes Cash 1,000 Regulation A 5/1/24 Charles W Smith Cash 1,000 Regulation A 5/1/24 Alice Jones Cash 1,000 Regulation A 5/1/24 Sarita R Allen Cash 1,000 Regulation A 5/1/24 Joanne Simone Rollocks Cash 1,500 Regulation A 5/1/24 Jarodrick Mixon Cash 15,000 Regulation A 5/1/24 Stevie Lavell Harris Cash 1,000 Regulation A 5/1/24 Raymond Williams, Jr. Cash 1,000 Regulation A 5/2/24 Donte Small Cash 2,000 Regulation A 5/2/24 Johnny Smith Cash 20,000 Regulation A 5/2/24 Jacqueline Annmarie Bogle & Kedora Nekeisha Henry, JTWROS Cash 1,500 Regulation A 5/2/24 Michael Aquilizan Chai Cash 1,000 Regulation A 5/2/24 Kerry Troy Henry & Kedora Nekeisha Henry Cash 3,000 Regulation A 5/2/24 Dwayne M. Emmanuel Cash 1,328 Regulation A 5/2/24 Corey Darnelle Flowers Cash 1,200 Regulation A 5/2/24 Darrell Lee Goolsby Cash 1,000 Regulation A 5/2/24 Sonia Hansen Cash 2,000 Regulation A 5/2/24 Thrillisa Nadia Morrison Cash 4,000 Regulation A 5/3/24 Christopher Alagie Jammeh Cash 1,000 Regulation A 5/3/24 Maurice Brown Jr Cash 1,500 Regulation A 5/3/24 Nathaniel Harris Cash 1,000 Regulation A 24 Date Name Consideration Securities Exemption from Registration 5/3/24 Hakim Johnson Cash 1,000 Regulation A 5/3/24 Arielle Wallace Cash 3,750 Regulation A 5/3/24 Porshe Shenika Nicole Rice Cash 1,000 Regulation A 5/3/24 Ivory and Crystal Johnson JTWROS Cash 1,000 Regulation A 5/3/24 Tywan Donta Purnell Cash 2,000 Regulation A 5/3/24 Nathaniel B Beamon Cash 2,000 Regulation A 5/3/24 Corneal Westbrooks Cash 1,000 Regulation A 5/3/24 Ibrahim D Balogun Cash 2,000 Regulation A 5/3/24 Gaylon White Cash 2,000 Regulation A 5/3/24 Jennifer Vicens Cash 2,000 Regulation A 5/3/24 Albert Earl Clay Sr & Rosa Ann Clay Cash 1,000 Regulation A 5/3/24 Shawndu Maurice McMillan Cash 1,000 Regulation A 5/3/24 Anne Wanjiku Jnoroge Mrs Cash 10,000 Regulation A 5/3/24 Kerry Troy Henry & Kedora Nekeisha Henry Cash 3,000 Regulation A 5/3/24 Jordan Michael Woods Cash 5,000 Regulation A 5/6/24 Courtney Brown Cash 1,000 Regulation A 5/6/24 Melinda Christine Molina Cash 2,000 Regulation A 5/6/24 Yvonne Angela Cash 1,000 Regulation A 5/6/24 Anthony Zerante Cash 1,000 Regulation A 5/6/24 Carla Michelle Bronner Cash 1,000 Regulation A 5/6/24 Courtney-O'Niel Brown Cash 1,000 Regulation A 5/6/24 Anthony Pierre Cash 1,500 Regulation A 5/6/24 Cole Kala'Alohi Solomon Cash 1,000 Regulation A 5/6/24 Gunasekaran Seetharaman Cash 1,000 Regulation A 5/6/24 Sy Phan Cash 1,000 Regulation A 5/6/24 Tangula Renee Hudson Cash 1,000 Regulation A 5/7/24 Edward Joe Bentley Cash 3,000 Regulation A 5/10/24 Theresa Johnson Cash 1,000 Regulation A 5/23/2024 Ausey Johnson Cash 6,579 Rule 506 (b) of Regulation D 6/6/2024 Jose De Hoyos Cash 78,182 Rule 506 (b) of Regulation D 6/7/2024 Pamela E. Gibson Cash 36,364 Rule 506 (b) of Regulation D 6/7/2024 Johnny Smith Cash 250,000 Rule 506 (b) of Regulation D 6/11/2024 Ronnie Taylor Cash 36,364 Rule 506 (b) of Regulation D 6/14/2024 Antoninette Verna Richard Cash 36,364 Rule 506 (b) of Regulation D 6/14/2024 Gordon E. Mosby Cash 500,000 Rule 506 (b) of Regulation D 6/14/2024 Daryl Dewayne Branch Cash 9,868 Rule 506 (b) of Regulation D 6/25/2024 Raymond Williams Cash 6,579 Rule 506 (b) of Regulation D 6/20/2024 Calvin Brown Cash 6,579 Rule 506 (b) of Regulation D No commissions were paid in connection with the sales of securities above. Proceeds from the sale of common stock were applied toward operating capital to support the Company's operations. 25 ITEM 5. OTHER INFORMATION Securities Trading Plans of Directors and Executive Officers None of our directors or executive officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (as such terms are defined in Item 408(c) of Regulation S-K) during the three months ended July 31, 2024. ITEM 6. EXHIBITS Incorporated by reference Exhibit Exhibit Description Filed herewith Form Period ending Exhibit Filing date 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X 32.1* Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 32.2* Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 101.INS Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document XBRL Instance Document X 101.SCH Inline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Definition X 104 Cover page formatted as Inline XBRL and contained in Exhibit 101 * Furnished, not filed. 26 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HNO INTERNATIONAL INC. September 20, 2024 By: /s/ Paul Mueller Paul Mueller, Chief Executive Officer (Principal Executive Officer) By: /s/ Hossein Haririnia Hossein Haririnia, Treasurer (Principal Financial and Accounting Officer) 27