OTC: HLEO

The
cost of access to space has seen dramatic reductions in the past decade. The domain of space activities, once confined to low-earth and
geostationary orbit, now extends to the Moon and beyond. There is a growing need for a diversity of systems and approaches tailored to
unique applications and environments. With our current existing hardware, services and solutions, we aim to meet the needs and demands
of these growing commercial and government activities in an agile, cost-effective and innovative manner.

The
Company’s common stock is quoted on the OTCID marketplace operated by OTC Markets Group under the symbol “HLEO.”

Recent
Developments

The
following summarizes certain material developments occurring subsequent to the Company’s fiscal year ended October 31, 2025, as
well as certain late-fiscal-year events necessary to provide context.

Management
and Board Appointments

Appointment
of Chief Executive Officer and Chairman (January 5, 2026).

On
January 5, 2026, the Company appointed Edward Cabrera as Chief Executive Officer and Chairman of the Board, replacing Gregory T. Delory,
who transitioned to the role of Chief Technology Officer and remains a member of the Board. In connection with Mr. Cabrera’s appointment,
the Company entered into an executive employment agreement and issued shares of common stock as compensation.

Appointment
of Manager of Investor Relations (January 5, 2026).

On
January 5, 2026, the Company entered into an employment agreement with Edward W. Cabrera pursuant to which he serves as the Company’s
Manager of Investor Relations. In connection with the agreement, the Company issued shares of common stock as compensation for services.
The employment agreement and issuance of shares were approved by the Company’s Board of Directors. Mr. Cabrera is the son of Edward
Cabrera, the Company’s Chief Executive Officer and Chairman of the Board. See “Related Party Transactions.”

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Appointment
of Chief Financial Officer (January 19, 2026).

On
January 19, 2026, the Company appointed Mark Knauf as Chief Financial Officer. In connection with his appointment, the Company entered
into an executive employment agreement providing for equity-based compensation, subject to vesting, and a cash salary payable only upon
the Company achieving specified fundraising milestones.

Board
Appointments (January 21 and January 26, 2026).

On
January 21, 2026 and January 26, 2026, the Company appointed Vikas “Vik” Parti, Mario Martinez, and Bruce T. Campbell to
its Board of Directors. Mr. Martinez was appointed Chairman of the Audit Committee, Mr. Campbell was appointed Chairman of the Compensation
Committee, and Mr. Parti was appointed Chairman of Intellectual Property.

Financings

Convertible
Note Financing (August 26, 2025).

On
August 26, 2025, the Company entered into a securities purchase agreement with an accredited investor pursuant to which it issued a convertible
promissory note with an aggregate principal amount of $275,000 for gross proceeds of $250,000, reflecting an original issue discount.
The note bears interest at 10% per annum and matures on August 26, 2026. In connection with the financing, the Company also issued 25,000
unregistered shares of common stock as commitment shares. Net proceeds were used for general corporate and working capital purposes.
Network 1 Financial Securities acted as placement agent in connection with the transaction.

Issuance
of Bridge and Convertible Notes (December 19, 2025).

On
December 19, 2025, the Company entered into purchase agreements with institutional investors pursuant to which it issued unsecured bridge
notes and an unsecured convertible promissory note for aggregate gross proceeds of approximately $250,000, reflecting original issue
discounts. The notes bear interest at 12% per annum, mature in 2026, and contain customary default provisions. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Convertible
Note Financings (January 12 and January 14, 2026).

On
January 12, 2026 and January 14, 2026, the Company entered into securities purchase agreements with accredited investors pursuant to
which it issued convertible promissory notes for aggregate gross proceeds of $300,000, reflecting original issue discounts of $30,000.
The Company received net proceeds after fees, and the notes are convertible into shares of the Company’s common stock subject to
specified terms and limitations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity
and Capital Resources.”

Recent
Moon Mission

Our
delivered space qualified hardware continues to perform on space recent flight missions. On March 17, 2025, the Company announced the
successful deployment of its hardware on Firefly Aerospace’s Blue Ghost Mission 1 (BGM1) lander. Heliospace provided deployable
mechanisms and sensors as part of the Lunar Magnetotelluric Sounder (LMS) experiment. Led by Southwest Research Institute, LMS is designed
to study the interior of the Moon by measuring low frequency electromagnetic fields. Heliospace designed and built unique Remote Electrodes
that deploy in four directions up to 60 feet away from the lander, forming a large low frequency antenna on the lunar surface. Heliospace
also provided a separate compact boom which deploys a magnetometer sensor upwards from the lander deck to make accurate measurements
of magnetic fields. These systems work together to enable the LMS experiment to achieve key scientific objectives in resolving the internal
structure of Moon’s mantle.

Market
Overview

The
global space marketplace is projected to grow from $350 billion today to over $1 trillion by 2040 (Morgan Stanley, Citi forecast, 2021-2022).
We believe the growing recognition of the commercial potential of in-space activities, sustained science and technology efforts by both
government and private entities, together with defense agency priorities driven by increasing geopolitical concerns will continue to
accelerate this trend. Our target market, Satellite System Manufacturing, is expected to have an average market size per year of $2.3
billion for Science & Technology, $750 million for Earth Observation, $5.2 billion for Space Domain Awareness and $1.5 billion for
In-Orbit Services from 2025 through 2030 (according to our estimates based on Analysys Mason Ltd., Q4 2022 projections). We intend to
continue expansion into the Science & Technology segment, for which we believe we have a significant foothold with our existing products
and services, to then develop new opportunities in Space Based Solar Power generation.

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The
market for space hardware, systems and services is highly fragmented, with few scaled, capable competitors. The capabilities of existing
players have been shaped by longstanding government procurements as well as the established communications and navigation equipment markets.
There has been significant consolidation over the past few decades, resulting in fewer and less agile or innovative organizations. Cost
control, performance and quality remain a challenge for some established incumbents. Meanwhile, the rapidly growing space economy will
present a host of new applications and revenue opportunities that many current hardware and services providers are ill equipped to address.
To succeed in this evolving market, aerospace companies in particular must be both innovative and agile to answer the needs of emerging
new applications and customers. Heliospace aims to expand into these growing market segments by offering responsive, tailored solutions
to both established and new customers.

Customer
Concentration

Our
customers are concentrated in the space industry. While we have a strategy to diversify our sources of revenue (See “Company Growth
Strategy” for a description of our strategy), approximately 70% and 75% of our revenue for the fiscal year ended October 31, 2025
and the fiscal year ended October 31, 2024, respectively, was derived, directly or indirectly, from U.S. government sources, either as
a prime contractor or as a subcontractor. In each of these periods, more than 67% of our revenue was attributable to three customers.
One of these customers, a prime contractor under an indefinite delivery/indefinite quantity (“IDIQ”) contract with NASA,
accounted for approximately 31% of our revenue in the fiscal year ended October 31, 2025, and 27% of our revenue in the fiscal year ended
October 31, 2024.

Current
Hardware and Services Capabilities

We
have successfully scaled as a space hardware and services company providing solutions to government, commercial and non-profit customers.
This includes hardware and services for over five space missions and hardware deliveries for over three additional missions launching
in the near term. We leverage decades of management experience developing hardware capabilities that were successfully used in space
for NASA and other space agencies and organizations. Our current commercial-stage hardware includes deployable mechanisms, antennas,
booms, structures, and sensors. Our hardware is generally custom designed to customer specifications, assembled, tested and delivered
fully qualified and ready for flight as a complete end-to-end solution. We offer systems engineering, modeling & analyses,
integration & test, verification, mission formulation and architecture and other services to NASA and commercial customers.
These services span a complete integrated analysis suite including structural, thermal, electromagnetic, optical, deployables and other
tools to optimize both system and mission design. Integration and test support includes system-level planning, coupled with personnel
to assist or observe test flows and ensure proper verification of requirements. Hardware and services are typically provided on a per-project
basis using Time and Materials, Cost-Plus, or Fixed Price contracts with monthly payments, and range in size from $100,000 to over $10 million
depending on system complexity, customer requirements, and schedule.

Development
and Manufacturing

Hardware
development occurs at our main facility in Berkeley, California, with over 20,000 sq ft of facilities including assembly and test areas,
R&D labs, clean rooms, and thermal-vacuum test equipment. Heliospace leverages existing relationships with an array of vendors vetted
under our internal quality control processes to support hardware construction. Our hardware is generally custom designed to customer
specifications and translated to drawings including all dimensional and material details. The manufactured components are then sent out
for competitive bid to third-party fabricators, who manufacture the components to the required specifications and deliver them to us.
We also purchase some finished components from vendors for assemblies, including release mechanisms, heaters, switches, and other specialty
components. These components are then assembled, tested and delivered fully qualified and ready for flight as a complete end-to-end solution.
Heliospace maintains a vendor management system, which includes vendor surveys and an approved vendor list with specific approval criteria.
A quality assurance process is in place for all components we receive, including inspections, paperwork requirements documenting the
origin and authenticity of raw materials used, inspection reports, and other evidence that all incoming components meet the specification
requirements and applicable regulations. We try to maintain multiple sources for the same component or material, in order to have qualified,
alternate sources of supply if our primary source is delayed or does not meet our specifications or quality standards

Raw
Materials and Suppliers

Heliospace
engages in manufacturing activities at the piece-part and component level, and thus does not maintain an inventory of raw materials.
Therefore, we have limited direct exposure to fluctuations in the supply of raw materials. Most of the value we provide with respect
to our hardware comes from our design, engineering, assembly and test activities. While some of the components in our hardware require
relatively scarce raw materials, our third-party fabricators have historically not experienced difficulty in procuring those materials.

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Examples
of our Space Qualified Hardware

Deployable
radar antennas on the NASA Europa Clipper mission, which will probe the subsurface of Europa

● Technology
developed by Heliospace provided a low mass, small form factor solution for the radar antennas
required for the NASA Europa Clipper Mission. The mission launched in October 2024. When
stowed, our antennas are sufficiently compact to mount on the spacecraft solar arrays, thus
simplifying the design and saving NASA significant cost. When deployed, these large dipole
antennas extend to more than 55 feet in length. Heliospace designed, assembled, tested, and
delivered these antennas under contract with Caltech as part of the Radar for Europa Assessment
and Sounding: Ocean to Near-surface (REASON) instrument onboard Europa Clipper. REASON is
a dual-frequency ice penetrating radar instrument designed to characterize and sound Europa’s
icy crust from the near-surface to the ocean, revealing the hidden structure of Europa’s
ice shell and potential water within. Europa is one of the solar system’s most fascinating
objects, where conditions for life may exist, making this an exciting mission for which we
were able to provide critical technology. Large deployable mechanisms present a continuing
challenge in the space industry for which we have specialized expertise and demonstrated
capability. This work was conducted from 2017-2024 pursuant to an $11.8 million cost
plus contract. These radar antennas are now fully deployed and operating successfully on
the Europa Clipper mission.

Low-cost
antennas for the NASA SunRISE CubeSat constellation

● We
developed a solution to provide NASA with a high quantity of compact antennas that will deploy
from a constellation of CubeSat class spacecraft on the SunRISE mission. The mission is expected
to launch in the summer of 2026, and is designed to image solar eruptions that impact space
weather at the Earth causing satellite and communications disruptions. The Heliospace solution
enabled four antennas to deploy to over eight feet in length from each cereal-box size SunRISE
CubeSat. Compact, deployable antennas and booms for small spacecraft remain a challenge in
the space industry, and Heliospace was awarded a NASA Small Business Innovation Research
Award Phase I in August of 2024, followed by a Phase II in June of 2025, to further commercialize
this technology for broader use throughout the industry. The SunRISE antennas were delivered
over a 2-year period pursuant to a $1.1 million contract.

Deployable
sensors and mechanisms for use on three lunar landers as part of the NASA Commercial Lunar Payload Services program

● Our
scientists and engineers developed a unique system that deployed four sensors on ballistic
trajectories from a lunar lander at distances up to 60 ft, which worked with other
instruments to explore the subsurface structure of the Moon. This unique solution is the
first of its kind to be used in space for planetary geophysics investigations and has been
selected to fly on two missions as part of the NASA Commercial Lunar Payload Services (CLPS)
program. The first mission carrying our hardware launched on January 15, 2025, aboard the
Firefly Aerospace Blue Ghost Lander and successfully landed and operated in March 2025. These
projects are ongoing with combined contract values of $1.37 million.

● We
provided four deployable antennas for a NASA experiment in lunar radio astronomy which flew
on the Intuitive Machines (IM-1) lunar mission. They were provided in record time using a
simple purchase order requisition, delivered to NASA and successfully deployed in-flight
and on the Moon during the IM-1 mission.

After
expanding our market into the commercial realm in 2023, in 2025 we provided an antenna calibration system for a lunar orbiter being built
by Firefly Aerospace.

● Under
contract with Firefly Aerospace, we designed, built, and delivered a deployable dipole antenna
for the Blue Ghost Transfer vehicle, a lunar orbit mission which will provide a radio frequency
calibration source. A lunar lander mission called Lusee-Night will then use this source to
calibrate its radio telescope to perform astrophysics observations from the lunar far side.
Our solution displaced another vendor’s offering due to its heritage and performance.
In an expansion of our previous offerings, we are responsible for both the mechanical and
radiofrequency testing and performance of the delivered hardware pursuant to a $1.1 million
contract in FY 2025.

Prototype
mechanisms for the Mars Sample Return program

● In
2023 and early 2024, while the program was active, we utilized our specialized system-level
capabilities and awareness of the NASA Mars Sample Return architecture to play a key role
in the design and testing of sample handling hardware involving sample transfer from the
rover to an ascent vehicle from the Martian surface, and the subsequent transfer of that
sample to an orbiting vehicle for eventual return to Earth.

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Heliospace
Hardware Projects

Examples
of our services include:

Systems
engineering, integration, test and operations support for the James Webb Space Telescope.

● We
have provided systems engineering support for the James Webb Space Telescope including system
development and testing. With the successful launch of Webb in 2021, our support has continued
into the post-launch operational phase. This includes requirements, thermal, structural,
deployables and optical system analyses, test and verification approach and results, and
in-flight performance and anomaly resolution.

Systems
Engineering for Roman Space Telescope, Habitable Worlds Observatory and Atmospheric Observing System, and Mars Sample Return.

● We
have provided systems engineering support for these NASA programs at the mission, spacecraft,
and payload level. Activities include requirements definition, implementation, and verification,
as well as thermal, structural, and other analyses. For Mars Sample Return, we provided unique
insight and stringent eject dynamics performance analysis for the Honeybee Robotics Spin
Eject Mechanism as well as formulation engineering of the Capture Containment and Return
System for NASA.

Both
groups of services above were conducted under Indefinite Delivery/Indefinite Quantity (IDIQ) Time & Materials contracts totaling
$11.2 million through September 2022, with a second follow-on contract in place for $8.1 million that continues through
September 2027.

Expansion
into the commercial market includes systems engineering, analysis and architecture for the Blue Origin Mk I and II lunar landers.

●
Under a subcontract, we provided system
architecture studies, modeling, analysis, and recommendations for the Cargo Offloading Subsystem and Surface Access Subsystems as
part of the Blue Origin lunar lander designs. These services were concluded under purchase orders totaling $1.25 million to
date.

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Heliospace
Services Projects

Products
and Services in Development

Based
on the successful foundation of our current products and services, Helio will continue to expand its current offerings to include advanced
deployable systems, sensing and deployable payloads, mission systems architectures and integrated solutions. These endeavors focus on
the customer objectives for a given space application or mission, optimizing hardware, system design, payload and mission capabilities
to enable customers to meet their stated objectives. Examples include payloads such as radar and RF systems, payload integration and
test, as well as mission formulation and implementation optimized for customer requirements for applications including remote sensing,
science & technology missions. These offerings leverage system-level expertise and awareness, providing turn-key solutions to
the growing space economy. In addition to the specialty solutions above, we are currently funded under NASA contract to commercialize
flight qualified release mechanisms and a standard deployable antenna design, each of which can be sold in high quantities at high margins.

Examples
of some candidate development areas for potential future products and services include:

Payloads
such as radar, RF systems and optical

● We
have pioneered distributed RF and Radar mission architectures with Department of Defense
(DoD) seed funding of $109,341 that was received under an AFWERX SBIR Phase I in FY 2024.
We have developed new advanced deployable antenna concepts and designs under jointly funded
programs with the NASA Jet Propulsion Laboratory with applications in Earth remote sensing
and intelligence. Optical payload development is also progressing with our contributions
to the telescope design for the NASA UVEX mission, with follow-on hardware work in 2025 and
our own prototype demonstrators by the end of 2027.

Payload
integration and test, mission formulation and implementation optimized for customer requirements.

● We
have been selected by EarthGuard™, a commercial space endeavor offering a revolutionary
concept for directly mitigating the accelerating rate of global climate change, as its space
systems engineering development partner. We completed a Mission Architecture Study, which
successfully reached its major milestones in November of 2025.

● We
are currently under contract with The Breakthrough Foundation for a feasibility study of
the mission formulation, implementation, and payload design for a dedicated lunar lander
performing radio frequency observations on the far side of the Moon. Mission development
is expected to start in FY 2026 and launch in mid-2028.

Space
Based Energy Solutions

● Our
support of science and technology missions is currently well established with our hardware
and service lines; we intend to expand these offerings into larger integrated solutions in
the form of Space Based Solar Power, pursuing large addressable markets with significant
revenue growth potential.

Our
Competitive Advantages

We
believe that we have few direct competitors of similar size and capabilities that provide the breadth of products, solutions and expertise
that we offer our customers. Given the market fragmentation, we face competition from different competitors across individual products
and applications. Competition within our product offerings range from divisions of large corporations who are challenged by cost control
and inflexibility, to small, privately held companies with singular capabilities that lack the infrastructure and capacity to scale.
System-level, mission focused engineering combined with deep expertise in the production of space qualified hardware is what we believe
will enable Heliospace to effectively scale from current offerings to comprehensive solutions for existing and new customers.

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Our
competitive advantages include the following:

● Our
experienced, award-winning leadership team is recognized in the field of space science, hardware
and system development, with deep expertise in the implementation of space missions in government
and commercial settings. The Heliospace company leadership has ensured that technical excellence
and customer responsiveness is embedded throughout the organization to achieve mission success,
as embodied by our best subcontractor of the year award from NASA JPL, NASA Agency Honor
awards for work on the James Webb Space Telescope and repeat customers from NASA (2019-present).

● We
have established a successful capability in developing flight qualified instruments and space
mechanisms, a challenging and specialized field for which there are few competitors. The
Heliospace leadership team has overseen successful development of over 125 instruments and
mechanisms on over 40 space flight missions throughout their careers, both at Heliospace
and at the various other institutions at which members of our leadership team served, giving
our products and methods extensive real-world testing and proven design heritage.

● Heliospace
is becoming a leader in the development of payloads and systems for lunar exploration, having
delivered hardware for three lunar landers, providing system engineering support to the Blue
Origin lunar landers, with two additional lunar spacecraft and lander hardware projects in
progress. The Company’s founding team has deep expertise in lunar exploration and applications
gained throughout their careers, which we believe competitively positions us to leverage
new commercial transportation options to the Moon in order to further develop new initiatives
in lunar science, exploration and domain awareness.

● Leveraging
our successful Small Business Innovation Research (SBIR) grants, government funding and our
own resources, we have developed significant in-house processes and capabilities, including
vertical integration of key technologies such as our unique SABER™ deployable booms,
release mechanism development and unique assembly and testing capabilities that streamline
our production while improving our cost effectiveness.

● The
Heliospace team possesses extensive system-level design expertise that transcends the niche
offerings of market competitors, enabling us to provide comprehensive solutions that take
into account the entire mission chain in the achievement of customer objectives. This system
level awareness feeds into hardware and payload design to ensure mission success and enables
our expansion into larger, more ambitious turnkey solutions as we gain new customers.

Company
Growth Strategy

Our
company growth strategy builds upon our successful hardware and services capabilities, which provides a source of recurring revenue,
to expand into providing an emerging new source of energy for humanity: Space Based Solar Power (SBSP). The global demand for electricity
has been increasing substantially. In the United States, projections are rapidly accelerating due to data center growth, domestic
industrial expansion, and increasing electrification of overall energy use (U.S. Energy Information Administration, 2025; Inner City
Fund (ICF) 2025). To meet this accelerated demand, significant expansion of both fossil fuel based and clean sources of energy are forecasted.
The growing possibility of a supply/demand imbalance results in a projected cost of electricity that exceeds the rate of inflation, impacting
residential, commercial, and industrial users.

To
meet projected demand in the U.S. and globally, new utility-scale power generation will be required. Meeting this demand using clean
renewable energy sources remains a challenge, as these have historically been unable to provide baseload capacity – i.e., the ability
to provide reliable, constant energy over long periods. Globally, ground-based solar and wind are projected to expand, but have significant
variability and low utilization, and are unable to provide baseload capacity. Energy storage to increase reliability and peak capacity
are forecast to have an increasing role, but are resource intensive and difficult to deploy at the required scale. Natural gas is increasingly
forecast to meet demand due to cost effectiveness and baseload capability, but remains a non-renewable source with environmental impact,
and is subject to price volatility. Nuclear energy faces significant challenges in cost of energy, site selection, availability of fuel,
vulnerability to natural disasters, and public perception. The problem of energy available is significant: individual large users (i.e.,
data centers) are increasingly developing their own behind-the-meter sources. Meanwhile for residential customers, electricity prices
will increase at a rate faster than inflation, effectively doubling by 2050.

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Space
Based Solar Power (SBSP) leverages our best source of energy – our Sun, a giant fusion reactor that will last billions of years.
Solar energy in space is abundant, efficient, scalable and constant – a clean source of energy that can provide baseload capability,
displacing the role of coal and natural gas and other carbon emitting sources. Falling launch costs combined with advancements in space
systems are bringing use of SBSP within the realm of economic feasibility. Using our experience and in-house intellectual property Helio
plans to offer a modular, scalable SBSP plant based on HelioSat, our advanced deployable system that expands into large solar collection
areas from small spacecraft.

The
global market opportunity for electricity supply is substantial, nearly USD $2 trillion in 2025, expanding to $3.7 trillion by 2035.
By 2050 global consumption is predicted to double. Within this is a potential fourfold increase forecast to be from clean/renewable sources.
A clean renewable source such as SBSP can provide baseload capability to this growing market at a Levelized Cost of Energy (LCOE) of
$0.10/kWh over a lifetime of 20 years. Expansion of this system to 100 GW capability yields $811B lifetime profit and an IRR at 11% annually.
Helio plans to demonstrate an initial in-space SBSP system by 2030, followed by larger capacity in the following decade. In parallel
with this development, the current hardware and services capabilities will continue to expand as well, leveraging the advances we achieve
in SBSP for use in adjacent applications for civil, commercial, and defense related use.

Our
Challenges

Notwithstanding
the foregoing, we operate in a very competitive and rapidly changing environment. While we believe our competitive strengths will contribute
to the growth and success of our company, our business is subject to challenges and uncertainties that may prevent us from achieving
our business objectives or otherwise adversely affect our business, results of operations or financial condition.

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Among
the challenges we face in implementing our growth strategy is the need to be agile in answering the needs of emerging new applications
such as SBSP, including through successful innovation and continued refinement both of current and newly developed technologies, products,
and services. Developing future innovations and satisfying or responding to changing customer demands and industry cycles safely and
in a timely and cost-effective manner will require significant capital,and require us to overcome technological hurdles and navigate
highly regulated environments. These will be ongoing challenges for our business.

While
our growth strategy is achieving an increasing market share from private and commercial customers, a significant amount of our current
revenue relies on U.S. government contracts. The changing political landscape, including the new Executive and Congressional leadership
and priorities, the increasing U.S. budget deficit and national debt, and disruptions in the U.S. government budget process,
impacts our inability to secure additional U.S. government contracts and represents a continuing challenge to our ability to implement
our growth strategy.

Investment
Highlights

●
We
have successfully scaled as a space hardware and services company providing solutions to
government, commercial and non-profit customers. This includes hardware and services for
over five active space missions and hardware deliveries for over two additional missions
expected to launch in 2026 or later.

● We
expect to expand our capabilities to more advanced hardware and services, and payload and
mission system solutions by mid-2026, with a focus on SBSP solutions.

● The
global space marketplace is projected to grow from $350 billion today to over $1 trillion
by 2040 (Morgan Stanley, Citi forecast, 2021-2022). Large addressable markets in energy
use add substantially to future revenue potential.

● Our
leadership team has overseen successful development of over 125 instruments and mechanisms
on over 40 space flight missions throughout their careers, giving our products and methods
extensive real-world testing and proven design heritage. The leadership team’s systems
engineering and architecture experience on noteworthy NASA space missions such as Hubble,
James Webb Space Telescope, and the International Space Station provides comprehensive optimized
solutions that ensure customer objectives are achieved in the context of the overall mission,
including spacecraft, launch vehicle, payload and destination.

● Our
combination of system-level expertise, hands-on capabilities in the development of space
qualified hardware, and demonstrated track record of mission success in space provide an
ideal foundation for the development of an ambitious but essential project of SBSP.

Our
principal executive offices are located at 2448 Sixth Street, Berkeley, CA 94710.

Implications
of Being an Emerging Growth Company and Smaller Reporting Company

The
Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS
Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to
the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to avail itself
of this exemption from new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting
standards as public companies that are not emerging growth companies.

For
so long as we are an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies. These include, but are not limited to:

● Being
permitted to present only two years of audited financial statements, in addition to
any required unaudited interim financial statements, with correspondingly reduced “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” disclosure
in this filing (notwithstanding this reduced requirement, have presented three years
of audited consolidated financial statements in this filing);

● Not
being required to comply with the auditor attestation requirements of Section 404 of
the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley Act”) in
the assessment of our internal control over financial reporting;

● Not
being required to comply with any requirement that may be adopted by the Public Company Accounting
Oversight Board regarding mandatory audit firm rotation or a supplement to the auditors’
report providing additional information about the audit and the financial statements;

● Reduced
disclosure obligations regarding executive compensation in our periodic reports, proxy statements
and registration statements; and

● Exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and
shareholder approval of any golden parachute payments not previously approved.

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The
Company will cease to be an emerging growth company upon the earliest of: (i) the last day of the fiscal year in which the Company has
total annual gross revenues of $1.235 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the Company’s
first sale of common equity securities pursuant to an effective registration statement under the Securities Act of 1933, as amended;
(iii) the date on which the Company has issued more than $1.0 billion in non-convertible debt during the previous three-year period;
or (iv) the date on which the Company becomes a “large accelerated filer,” as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended.

In
addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for
complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting
standards until those standards would otherwise apply to private companies.

We
are also a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). To the extent that we continue to qualify as a smaller reporting company after we cease
to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be
available to us as a smaller reporting company, including: (i) not being required to comply with the auditor attestation requirements
of Section 404(b) of the Sarbanes-Oxley Act; (ii) scaled executive compensation disclosures; and (iii) the requirement
to provide only two years of audited financial statements, instead of three years.

Intellectual
Property and Protection

The
Company has certain proprietary products and processes which are maintained as trade secrets. The Company has no filed or registered
copyrights, trademarks or patents. Work on government contracts is generally conducted under the Federal Acquisition Regulation (FAR)
rights in data clause, for which we claim limited rights to key technologies on a case-by-case basis. For non-government contracts, proprietary
products are protected by non-disclosure agreements, and allocation of rights agreements as appropriate. In addition, each employee signs
a proprietary information and inventions agreement. In general, critical details of proprietary products are withheld from release in
customer interactions based on the judgment of company leadership.

Seasonality
in Our Business

We
do not believe our business is subject to significant seasonal variation.

Government
Regulation

Our
business is subject to a wide range of laws and regulations at the federal, state, and local levels, including employment, health care
and safety, privacy, data security, environmental, and other requirements. Compliance with these laws and regulations requires management
by the Company, including legal assistance, use of professional employment organizations, and other resources on an ongoing basis. Changes
in laws and regulations, and their variations in local jurisdictions, require monitoring and research in order to ensure compliance and
obtain the appropriate licenses, certificates, permits, and other documentation necessary to conduct business. Many of these laws and
regulations are typical of most business activities, whereas we describe additional regulations at the federal level specific to our
Company below.

We
currently hold and will continue to pursue contracts with NASA and other U.S. government agencies and will thus be subject to FAR.
U.S. government contracts require specialized accounting procedures involving direct and indirect cost, and with fee amounts limited
by government or agency policies. Government contracts require both financial and compliance audits that may result in the recovery of
funds after expenditure and other cost adjustments. Additional scrutiny may result in additional audits and reviews, triggered by technical
or programmatic failures or other events. Gross violations of these policies can result in administrative sanctions such as suspension
or debarment from doing business with the U.S. government, or civil and criminal penalties. Contracts subject to the Federal
Civil False Claims Act include provisions allowing individuals such as employees to file claims on behalf of the U.S. government
for contract violations and other unlawful activities. In addition, working with the U.S. government requires disclosure of certain
company information, and mandatory labor, non-discrimination, and environmental compliance, among many other requirements. These aspects
of the U.S. government regulation of contracts increase the overhead costs associated with contract compliance and add additional
risks in conducting these transactions, while the limited fee structure allowed may limit profit under these contracts.

11

International
space law dictates that all commercial activities in space must obtain the authorization and ongoing supervision of a state, which typically
takes the form of a license, and all U.S. space companies are therefore subject to U.S. space policies and regulations. The
licenses, approvals, and legality of these activities will vary with customers and applications and evolve over time as political bodies
and other stakeholders influence the space law framework. The legal framework of each new contract involving activities in space needs
to be individually evaluated. Significant ongoing regulations in this context include the protection and oversight of any transfer of
hardware or technology to foreign entities, as governed by the International Traffic and Arms Regulations (ITAR) or the U.S. Department
of Commerce. U.S. space companies are responsible for ensuring that foreign persons or entities do not have access to applicable
technology under ITAR without obtaining an approved government license. ITAR compliance requires registration with the Directorate of
Defense Trade Controls (DDTC), followed by generation and submission of ITAR-compliant export licenses. Protection of data subject to
ITAR requires employee training and cybersecurity measures. The Company believes these efforts can collectively cost more than tens of
thousands of dollars between both fees and personnel costs but has not incurred any material costs related to ITAR registration to date.
For technology not subject to ITAR, shipment or transfer of space technology to foreign entities must obtain a license under the U.S. Department
of Commerce. Significant resources can be required to assess and manage these processes to avoid civil or criminal liability. Obligations
required under these regulations include registration with the Directorate of Defense Trade Controls (DDTC) and familiarization with
the classification of commodities according to Export Administration Regulations (EAR). Ongoing monitoring of changes in export control
laws is an important activity that must be maintained to ensure compliance. Additional obligations include the acknowledgment and proper
management of customer-supplied technology or information subject to ITAR or EAR.

Employees

As
of February 13, 2026, we had approximately 12 employees, ten of whom were hourly ranging from full to part time, and an additional two
personnel under consultant agreements. Most of our full-time employees are highly trained, primarily in the areas of mechanical,
structural, and systems engineering and thermal analysis. We are not party to any collective bargaining agreements. Our employees are
critical to our long-term success and essential to helping us meet our goals. It is crucial that we continue to attract, retain and motivate
exceptional and high-performing employees. To that end, we provide competitive salaries, paid time off, compensatory time and employee
stock options.