UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period
ended March 31, 2024
or
☐ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD
FROM __________ TO __________
COMMISSION FILE NUMBER:
000-54437
SUNHYDROGEN, INC.
(Name of registrant in its
charter)
| Nevada | | 26-4298300 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer
Identification No.) |
| BioVentures Center, 2500 Crosspark Road, Coralville, IA 52241 |
| (Address of principal executive offices) (Zip Code) |
Issuer’s telephone Number: (805) 966-6566
Former address, if changed since last report
Securities registered pursuant
to Section 12(b) of the Act:
| Title
of each class |
|
Ticker
symbol(s) |
|
Name
of each exchange on which registered |
| N/A |
|
N/A |
|
N/A |
Indicate by check mark whether
the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 ☒ 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 ☒ 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.
| | Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | | | 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 ☒
The number of shares of registrant’s
common stock outstanding, as of May 15, 2024 was 5,087,245,974.
SUNHYDROGEN, INC.
INDEX
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
SUNHYDROGEN, INC.
CONDENSED BALANCE SHEETS
| | |
March
31,
2024 | | |
June
30,
2023 | |
| | |
(Unaudited) | | |
| |
| ASSETS | |
| | |
| |
| CURRENT ASSETS | |
| | |
| |
| Cash and cash
equivalent | |
$ | 39,215,765 | | |
$ | 37,185,989 | |
| Marketable securities at
cost | |
| - | | |
| 3,188,040 | |
| Interest receivable | |
| 56,921 | | |
| - | |
| Short term investment at
fair value, related party | |
| 2,976,192 | | |
| 7,655,601 | |
| | |
| | | |
| | |
| TOTAL
CURRENT ASSETS | |
| 42,248,878 | | |
| 48,029,630 | |
| | |
| | | |
| | |
| OTHER
ASSETS | |
| | | |
| | |
| | |
| | | |
| | |
| INVESTMENT | |
| | | |
| | |
| Convertible notes receivable,
related party | |
| 3,000,000 | | |
| 3,000,000 | |
| | |
| | | |
| | |
| TOTAL
INVESTMENTS | |
| 3,000,000 | | |
| 3,000,000 | |
| | |
| | | |
| | |
| PROPERTY
& EQUIPMENT | |
| | | |
| | |
| Machinery and equipment | |
| 33,814 | | |
| 33,814 | |
| Computers and peripherals | |
| 11,529 | | |
| 11,529 | |
| Vehicle | |
| 155,000 | | |
| 155,000 | |
| | |
| 200,343 | | |
| 200,343 | |
| Less: accumulated depreciation | |
| (110,592 | ) | |
| (83,468 | ) |
| | |
| | | |
| | |
| NET
PROPERTY AND EQUIPMENT | |
| 89,751 | | |
| 116,875 | |
| | |
| | | |
| | |
| INTANGIBLE
ASSETS | |
| | | |
| | |
| Domain, net of amortization of $5,315 and $5,286, respectively | |
| - | | |
| 29 | |
| Trademark, net of amortization of $800 and $714, respectively | |
| 343 | | |
| 428 | |
| Patents, net of amortization of $41,268 and $36,344, respectively | |
| 59,875 | | |
| 64,799 | |
| | |
| | | |
| | |
| TOTAL
INTANGIBLE ASSETS | |
| 60,218 | | |
| 65,256 | |
| | |
| | | |
| | |
| TOTAL
OTHER ASSETS | |
| 3,149,969 | | |
| 3,182,131 | |
| | |
| | | |
| | |
| TOTAL
ASSETS | |
$ | 45,398,847 | | |
$ | 51,211,761 | |
| | |
| | | |
| | |
| LIABILITIES,
PREFERRED STOCK SUBJECT TO REDEMPTION AND SHAREHOLDERS’ DEFICIT | |
| | | |
| | |
| | |
| | | |
| | |
| CURRENT
LIABILITIES | |
| | | |
| | |
| Accounts payable and other
payables | |
$ | 382,745 | | |
$ | 232,893 | |
| Accrued expenses | |
| 56,436 | | |
| 628 | |
| Loan payable, related party | |
| 55,735 | | |
| 106,728 | |
| | |
| | | |
| | |
| TOTAL
CURRENT LIABILITIES | |
| 494,916 | | |
| 340,249 | |
| | |
| | | |
| | |
| LONG
TERM LIABILITIES | |
| | | |
| | |
| Loan payable, related party | |
| 9,206 | | |
| 36,731 | |
| | |
| | | |
| | |
| TOTAL
LONG TERM LIABILITIES | |
| 9,206 | | |
| 36,731 | |
| | |
| | | |
| | |
| TOTAL
LIABILITIES | |
| 504,122 | | |
| 376,980 | |
| | |
| | | |
| | |
| COMMIMENTS
AND CONTINGENCIES (SEE NOTE 9) | |
| | | |
| | |
| | |
| | | |
| | |
| Series C 10% Preferred Stock, 8,851 and 10,951 shares issued and outstanding, redeemable value of $885,100 and $1,095,100, respectively | |
| 885,100 | | |
| 1,095,100 | |
| | |
| | | |
| | |
| SHAREHOLDERS’
EQUITY | |
| | | |
| | |
| Preferred Stock, $0.001 par value; 5,000,000 authorized preferred shares outstanding | |
| - | | |
| - | |
| Common Stock, $0.001 par value; 10,000,000,000 authorized common shares 5,087,245,974 and 4,821,298,283 shares issued and outstanding, respectively | |
| 5,087,246 | | |
| 4,821,298 | |
| Additional Paid in Capital | |
| 128,392,402 | | |
| 126,889,423 | |
| Accumulated deficit | |
| (89,470,023 | ) | |
| (81,971,040 | ) |
| | |
| | | |
| | |
| TOTAL
SHAREHOLDERS’ EQUITY | |
| 44,009,625 | | |
| 49,739,681 | |
| | |
| | | |
| | |
| TOTAL
LIABILITIES, PREFERRED STOCK SUBJECT TO REDEEMPTION AND SHAREHOLDERS’ EQUITY | |
$ | 45,398,847 | | |
$ | 51,211,761 | |
The accompanying notes are
an integral part of these condensed unaudited financial statements
SUNHYDROGEN, INC.
CONDENSED STATEMENTS
OF OPERATIONS
FOR THE THREE AND NINE
MONTHS ENDED MARCH 31, 2024 AND 2023
(Unaudited)
| | |
THREE MONTHS ENDED | | |
NINE MONTHS ENDED | |
| | |
March 31,
2024 | | |
March 31,
2023 | | |
March 31,
2024 | | |
March 31,
2023 | |
| | |
| | |
| | |
| | |
| |
| REVENUE | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
| Selling and Marketing | |
| 554 | | |
| - | | |
| 44,554 | | |
| 87,745 | |
| General and administrative expenses | |
| 1,070,340 | | |
| 500,455 | | |
| 2,072,845 | | |
| 4,011,604 | |
| Research and development cost | |
| 750,583 | | |
| 764,919 | | |
| 1,945,910 | | |
| 2,845,239 | |
| Depreciation and amortization | |
| 10,382 | | |
| 11,064 | | |
| 32,162 | | |
| 32,504 | |
| | |
| | | |
| | | |
| | | |
| | |
| TOTAL OPERATING EXPENSES | |
| 1,831,859 | | |
| 1,276,438 | | |
| 4,095,471 | | |
| 6,977,092 | |
| | |
| | | |
| | | |
| | | |
| | |
| LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES) | |
| (1,831,859 | ) | |
| (1,276,438 | ) | |
| (4,095,471 | ) | |
| (6,977,092 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| OTHER INCOME/(EXPENSES) | |
| | | |
| | | |
| | | |
| | |
| Investment income | |
| 520,319 | | |
| 507,991 | | |
| 1,480,912 | | |
| 951,646 | |
| Dividend expense | |
| (18,362 | ) | |
| (6,750 | ) | |
| (61,882 | ) | |
| (20,250 | ) |
| Unrealized Gain(loss) on investments, related party | |
| (2,740,574 | ) | |
| (3,451,984 | ) | |
| (4,679,409 | ) | |
| 4,668,652 | |
| Realized gain (loss) | |
| 14,916 | | |
| (24,617 | ) | |
| (173,124 | ) | |
| (24,617 | ) |
| Realized Gain(Loss) on redemption of marketable securties | |
| 35,080 | | |
| (104,035 | ) | |
| 35,080 | | |
| (149,962 | ) |
| Gain (Loss) on change in derivative liability | |
| - | | |
| 6,118,044 | | |
| - | | |
| 7,059,883 | |
| Interest expense | |
| (1,684 | ) | |
| (19,561 | ) | |
| (5,089 | ) | |
| (64,611 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| TOTAL OTHER INCOME (EXPENSES) | |
| (2,190,305 | ) | |
| 3,019,088 | | |
| (3,403,512 | ) | |
| 12,420,741 | |
| | |
| | | |
| | | |
| | | |
| | |
| NET INCOME (LOSS) | |
$ | (4,022,164 | ) | |
$ | 1,742,650 | | |
$ | (7,498,983 | ) | |
$ | 5,443,649 | |
| | |
| | | |
| | | |
| | | |
| | |
| BASIC EARNINGS (LOSS) PER SHARE | |
$ | (0.00 | ) | |
$ | 0.00 | | |
$ | (0.00 | ) | |
$ | 0.00 | |
| | |
| | | |
| | | |
| | | |
| | |
| DILUTED EARINGINS (LOSS) PER SHARE | |
$ | (0.00 | ) | |
$ | 0.00 | | |
$ | (0.00 | ) | |
$ | 0.00 | |
| | |
| | | |
| | | |
| | | |
| | |
| WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | |
| | | |
| | | |
| | | |
| | |
| BASIC | |
| 5,094,214,845 | | |
| 4,542,170,528 | | |
| 5,008,173,456 | | |
| 4,397,662,987 | |
| | |
| | | |
| | | |
| | | |
| | |
| DILUTED | |
| 5,094,214,845 | | |
| 5,536,927,470 | | |
| 5,008,173,456 | | |
| 5,392,419,929 | |
The accompanying notes are
an integral part of these condensed unaudited financial statements
SUNHYDROGEN, INC.
CONDENSED STATEMENTS
OF SHAREHOLDERS’ EQUITY/(DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED
MARCH 31, 2024 AND 2023
| | |
THREE MONTHS ENDED MARCH 31, 2024 | |
| | |
| | |
| | |
| | |
| | |
| | |
Additional | | |
| | |
| |
| | |
Preferred stock | | |
| | |
Common stock | | |
Paid-in | | |
Accumulated | | |
| |
| | |
Shares | | |
Amount | | |
Mezzanine | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Total | |
| Balance at December 31, 2023 (unaudited) | |
| - | | |
$ | - | | |
$ | 885,100 | | |
| 5,092,814,633 | | |
$ | 5,092,815 | | |
$ | 127,509,819 | | |
$ | (85,447,859 | ) | |
$ | 47,154,775 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of common stock upon partial conversion of purchase agreement for cash | |
| - | | |
| - | | |
| - | | |
| 35,931,341 | | |
| 35,931 | | |
| 306,044 | | |
| - | | |
| 341,975 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cancellation of restricted stock awards | |
| - | | |
| - | | |
| - | | |
| (41,500,000 | ) | |
| (41,500 | ) | |
| (576,500 | ) | |
| - | | |
| (618,000 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock compensation expense | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,153,039 | | |
| - | | |
| 1,153,039 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (4,022,164 | ) | |
| (4,022,164 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance at March 31, 2024 (unaudited) | |
| - | | |
$ | - | | |
$ | 885,100 | | |
| 5,087,245,974 | | |
$ | 5,087,246 | | |
$ | 128,392,402 | | |
$ | (89,470,023 | ) | |
$ | 44,009,625 | |
| | |
THREE MONTHS ENDED MARCH 31, 2023 | |
| | |
| |
|
| | |
| | |
| | |
| | |
Additional | | |
| | |
| |
| | |
Preferred stock | | |
| | |
Common stock | | |
Paid-in | | |
Accumulated | | |
| |
| | |
Shares | |
|
Amount | | |
Mezzanine | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Total | |
| Balance at December 31, 2022
(unaudited) | |
| - | |
|
$ | - | | |
$ | 540,000 | | |
| 4,449,997,804 | | |
$ | 4,449,998 | | |
$ | 107,063,659 | | |
$ | (79,245,024 | ) | |
$ | 32,268,633 | |
| | |
| | |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of common stock upon partial conversion of purchase agreement for cash | |
| - | |
|
| - | | |
| - | | |
| 24,815,655 | | |
| 24,815 | | |
| 463,135 | | |
| - | | |
| 487,950 | |
| | |
| | |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of common stock for conversion of debt and acrued interest | |
| - | |
|
| - | | |
| - | | |
| 154,198,530 | | |
| 154,199 | | |
| -7,710 | | |
| - | | |
| 146,489 | |
| | |
| | |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock compensation expense | |
| - | |
|
| - | | |
| - | | |
| - | | |
| - | | |
| 99,887 | | |
| - | | |
| 99,887 | |
| | |
| | |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Adjustment due to rounding | |
| - | |
|
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 4 | | |
| 4 | |
| | |
| | |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Income | |
| - | |
|
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,742,650 | | |
| 1,742,650 | |
| | |
| | |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance at March 31, 2023
(unaudited) | |
| - | |
|
$ | - | | |
$ | 270,000 | | |
| 4,629,011,989 | | |
$ | 4,629,012 | | |
$ | 107,618,971 | | |
$ | (77,502,370 | ) | |
$ | 34,745,613 | |
| | |
NINE MONTHS ENDED MARCH 31, 2024 | |
| | |
| | |
| | |
| | |
| | |
| | |
Additional | | |
| | |
| |
| | |
Preferred stock | | |
| | |
Common stock | | |
Paid-in | | |
Accumulated | | |
| |
| | |
Shares | | |
Amount | | |
Mezzanine | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Total | |
| Balance at June 30, 2023 | |
| - | | |
$ | - | | |
$ | 1,095,100 | | |
| 4,821,298,283 | | |
$ | 4,821,298 | | |
$ | 126,889,423 | | |
$ | (81,971,040 | ) | |
$ | 49,739,681 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of common stock upon partial conversion of purchase agreement for cash | |
| - | | |
| - | | |
| - | | |
| 86,395,059 | | |
| 86,395 | | |
| 792,530 | | |
| - | | |
| 878,925 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of common stock upon conversion of Series C Preferred stock | |
| - | | |
| - | | |
| (210,000 | ) | |
| 221,052,632 | | |
| 221,053 | | |
| (11,053 | ) | |
| - | | |
| 210,000 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Cancellation of restricted stock awards | |
| - | | |
| - | | |
| - | | |
| (41,500,000 | ) | |
| (41,500 | ) | |
| (576,500 | ) | |
| - | | |
| (618,000 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock compensation expense | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,298,002 | | |
| - | | |
| 1,298,002 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (7,498,983 | ) | |
| (7,498,983 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance at March 31, 2024 (unaudited) | |
| - | | |
$ | - | | |
$ | 885,100 | | |
| 5,087,245,974 | | |
$ | 5,087,246 | | |
$ | 128,392,402 | | |
$ | (89,470,023 | ) | |
$ | 44,009,625 | |
| | |
NINE MONTHS ENDED MARCH 31, 2023 | |
| | |
| | |
| | |
| | |
| | |
| | |
Additional | | |
| | |
| |
| | |
Preferred stock | | |
| | |
Common stock | | |
Paid-in | | |
Accumulated | | |
| |
| | |
Shares | | |
Amount | | |
Mezzanine | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Total | |
| Balance at June 30, 2022 | |
| - | | |
| - | | |
$ | 270,000 | | |
| 4,271,749,146 | | |
$ | 4,271,749 | | |
$ | 103,311,733 | | |
$ | (82,946,019 | ) | |
$ | 24,637,463 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of common stock upon partial conversion of purchase agreement for cash | |
| - | | |
| - | | |
| - | | |
| 81,130,461 | | |
| 81,130 | | |
| 1,824,920 | | |
| - | | |
| 1,906,050 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of common stock for conversion of debt and acrued interest | |
| - | | |
| - | | |
| - | | |
| 274,198,530 | | |
| 274,199 | | |
| (13,710 | ) | |
| - | | |
| 260,489 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Issuance of common stock for the conversion of stock options | |
| - | | |
| - | | |
| - | | |
| 1,933,852 | | |
| 1,934 | | |
| 30,941 | | |
| - | | |
| 32,875 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock compensation for conversion of restricted stock awards | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,365,200 | | |
| - | | |
| 2,365,200 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock compensation expense | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 99,887 | | |
| - | | |
| 99,887 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 5,443,649 | | |
| 5,443,649 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance at March 31, 2023
(unaudited) | |
| - | | |
$ | - | | |
$ | 270,000 | | |
$ | 4,629,011,989 | | |
$ | 4,629,012 | | |
$ | 107,618,971 | | |
$ | (77,502,370 | ) | |
$ | 34,745,613 | |
The accompanying notes are
an integral part of these condensed unaudited financial statements
SUNHYDROGEN, INC.
CONDENSED STATEMENTS
OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2024 AND
2023
(Unaudited)
| | |
Nine Months Ended | |
| | |
March 31,
2024 | | |
March 31,
2023 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | |
| |
| Net Loss | |
| (7,498,983 | ) | |
| 5,443,649 | |
| Adjustment to reconcile net income (loss) to net cash (used in) provided by
operating activities | |
| | | |
| | |
| Depreciation & amortization expense | |
| 32,162 | | |
| 32,504 | |
| Conversion of stock options for services | |
| - | | |
| 32,875 | |
| Stock based compensation expense for services | |
| 1,298,002 | | |
| 99,887 | |
| Cancellation of restricted stock awards | |
| (618,000 | ) | |
| - | |
| Realized loss on sale of investment | |
| 188,040 | | |
| - | |
| Net stock compensation expense for conversion of restricted stock awards | |
| - | | |
| 2,365,200 | |
| Loss on redemption of marketable securities | |
| - | | |
| 149,962 | |
| Net (Gain) Loss on change in derivative liability | |
| - | | |
| (7,059,883 | ) |
| Unrealized gain on change in fair value of investment, related party | |
| 4,679,409 | | |
| (4,668,652 | ) |
| Change in assets and liabilities : | |
| | | |
| | |
| Prepaid expense | |
| - | | |
| 17,394 | |
| Interest receivable on bonds | |
| (56,921 | ) | |
| - | |
| Accounts payable | |
| 149,852 | | |
| 179,071 | |
| Accrued expenses | |
| 55,808 | | |
| 639 | |
| Accrued interest on convertible notes | |
| - | | |
| 60,585 | |
| | |
| | | |
| | |
| NET CASH USED IN OPERATING ACTIVITIES | |
| (1,770,631 | ) | |
| (3,346,769 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
| Marketable securities purchased | |
| (253,920,231 | ) | |
| (6,475,678 | ) |
| Marketable securities redeemed | |
| 235,384,616 | | |
| 20,443,798 | |
| Marketable securities transferred to new account | |
| 18,535,615 | | |
| - | |
| Purchase of certificate of deposit | |
| (5,000,000 | ) | |
| - | |
| Redemption of certificate of deposit | |
| 5,000,000 | | |
| - | |
| Purchase of investment, related party | |
| - | | |
| (7,000,000 | ) |
| Purchase of long term convertible note, related party | |
| - | | |
| (3,000,000 | ) |
| Redemption of short term investments in corporate securities | |
| 3,000,000 | | |
| - | |
| Purchase of tangible assets | |
| - | | |
| (33,814 | ) |
| | |
| | | |
| | |
| NET PROVIDED BY INVESTING ACTIVITIES: | |
| 3,000,000 | | |
| 3,934,306 | |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Repayment of related party note payable | |
| (78,518 | ) | |
| (42,432 | ) |
| Net proceeds from purchase agreements | |
| 878,925 | | |
| 1,906,050 | |
| | |
| | | |
| | |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | |
| 800,407 | | |
| 1,863,618 | |
| | |
| | | |
| | |
| NET INCREASE IN CASH | |
| 2,029,776 | | |
| 2,451,155 | |
| | |
| | | |
| | |
| CASH, BEGINNING OF PERIOD | |
| 37,185,989 | | |
| 27,681,485 | |
| | |
| | | |
| | |
| CASH, END OF PERIOD | |
| 39,215,765 | | |
| 30,132,640 | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |
| | | |
| | |
| Interest paid | |
$ | 5,089 | | |
$ | 19,561 | |
| Taxes paid | |
| | | |
$ | - | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS | |
| | | |
| | |
| Fair value of common stock upon conversion of convertible notes, and accrued interest | |
$ | - | | |
$ | 260,489 | |
| Fair value of stock options issued through a cashless exercise | |
$ | - | | |
$ | 32,875 | |
| Reclassification of related party accrued salary to loan payable | |
$ | - | | |
$ | 211,750 | |
| Conversion of Series C Preferred shares to common stock | |
$ | 210,000 | | |
$ | - | |
| Cancellation of restricted stock units | |
$ | (618,000 | ) | |
$ | - | |
The accompanying notes are
an integral part of these condensed unaudited financial statements
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
The accompanying unaudited condensed
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for
interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion
of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for
the nine months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ended June 30, 2024.
For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for the year
ended June 30, 2023.
|
2. |
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES |
This summary of significant accounting
policies of SunHydrogen, Inc. is presented to assist in understanding the Company’s financial statements. The financial statements
and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the
preparation of the financial statements.
Cash and Cash Equivalent
The Company considers all highly liquid
investments with an original maturity of three months or less to be cash equivalents.
Concentration risk
Cash includes amounts deposited in
financial institutions in excess of insurable Federal Deposit Insurance Company (FDIC) limits. At times throughout the year, the Company
may maintain cash balances in certain bank accounts in excess of the FDIC limits. As of March 31, 2024, the cash balance in excess of
the FDIC limits was $34,893,596. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant
credit risk in these accounts.
Marketable Securities
Corporate bonds and U.S. Treasuries
are considered current, based on their liquidity. The investments are generally valued using quoted prices and are classified in Level
2 of the fair value hierarchy as prices are not always from active markets. We consider our investments held to maturity and we believe
there are no other than temporary declines in fair value. Our investments are recorded at historical cost.
Use of Estimates
In accordance
with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as
well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
These estimates and assumptions relate to useful lives and impairment of tangible and intangible assets, accruals, income taxes, stock-based
compensation expense, Binomial lattice valuation model inputs, derivative liabilities and other factors. Management believes it has exercised
reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
2. |
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued) |
Property
and Equipment
Property
and equipment are stated at cost and are depreciated using straight line over its estimated useful lives.
| Computers and peripheral equipment | |
| 5 Years | |
| Vehicle | |
| 5 Years | |
The Company
recognized depreciation expense of $27,124 and $27,229 for the nine months ended March 31, 2024 and 2023, respectively.
Intangible Assets
The Company has patent applications
to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic
solar modules traditionally made from petroleum-based film. Intangible assets that have finite useful lives continue to be amortized
over their useful lives.
| | |
Useful Lives | |
3/31/2024 | | |
6/30/2023 | |
| | |
| |
| | |
| |
| Domain-gross | |
15 years | |
$ | 5,315 | | |
$ | 5,315 | |
| Less accumulated amortization | |
| |
| (5,315 | ) | |
| (5,286 | ) |
| Domain-net | |
| |
$ | - | | |
$ | 29 | |
| | |
| |
| | | |
| | |
| Trademark-gross | |
10 years | |
$ | 1,143 | | |
$ | 1,143 | |
| Less accumulated amortization | |
| |
| (800 | ) | |
| (714 | ) |
| Domain-net | |
| |
$ | 343 | | |
$ | 428 | |
| | |
| |
| | | |
| | |
| Patents-gross | |
15 years | |
$ | 101,143 | | |
$ | 101,143 | |
| Less accumulated amortization | |
| |
| (41,268 | ) | |
| (36,344 | ) |
| Patents-net | |
| |
$ | 59,875 | | |
$ | 64,799 | |
The
Company recognized amortization expense of $5,038 and $7,033 for the nine months ended March 31, 2024 and December 31, 2023, respectively.
Net Earnings (Loss) per
Share Calculations
Net earnings (Loss) per share dictates
the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing
by the weighted average number of common shares outstanding during the nine months ended March 31, 2024. Diluted net earnings (loss)
per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the effect of stock
options and stock-based awards (Note 4).
Nine months ended March 31,
2024
The Company calculated the dilutive
impact of 269,894,499 outstanding stock options and awards, 86,495,239 common stock purchase warrant, and 8,851 shares of Series C Preferred
shares, which are convertible into shares of common stock. Stock options and awards, common stock purchase warrants, Series C Preferred
shares were not included, in the calculation of net earnings per share, because their impact on income per share is antidilutive.
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
2. |
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued) |
Nine months ended March 31,
2023
The Company calculated the dilutive
impact of 209,394,499 outstanding stock options, 94,895,239 common stock purchase warrants, and the convertible debt and accrued interest
of $819,359, which is convertible into shares of common stock. The common stock purchase warrants, stock options, and convertible debt
and accrued interest, were included in the calculation of net earnings per share, because their impact on income per share is dilutive.
| | |
Nine Months Ended | |
| | |
March 31, | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| Income (Loss) to common shareholders (Numerator) | |
$ | (7,498,982 | ) | |
$ | 5,443,649 | |
| | |
| | | |
| | |
| Basic weighted average number of common shares outstanding (Denominator) | |
| 5,008,173,456 | | |
| 4,397,662,987 | |
| | |
| | | |
| | |
| Diluted weighted average number of common shares outstanding (Denominator) | |
| 5,008,173,456 | | |
| 5,392,419,929 | |
Stock Based Compensation
The Company accounts for stock option
grants issued and vesting to employees and non-employees in accordance with the authoritative guidance of the Financial Accounting Standards
Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance
commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee
stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where
there are no future performance requirements by the non-employee, option grants are immediately vested, and the total stock-based compensation
charge is recorded in the period of the measurement date.
Warrant Accounting
The Company accounts for the warrants
to purchase shares of common stock using the estimated fair value on the date of issuance as calculated using the Black-Scholes valuation
model.
Fair Value of Financial
Instruments
Fair value of financial instruments
requires disclosure of the fair value information, whether or not recognized on the balance sheet, where it is practicable to estimate
that value. As of March 31, 2024, the amounts reported for cash, accrued interest and other expenses, notes payables, convertible notes,
and derivative liability approximate the fair value because of their short maturities.
We adopted ASC Topic 820 for financial
instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair
value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.
Fair value is defined as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements)
and the lowest priority to unobservable inputs (level 3 measurements).
Reclassification of Expenses
Certain amounts in the 2023 financial statements have been reclassified to conform to the presentation used in the 2024 fianancial statements.
There was no material effect on the Company’s previously issued financial statements.
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
2. |
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued) |
These tiers include:
| ● | Level
1, defined as observable inputs such as quoted prices for identical instruments in active
markets. |
| ● | Level
2, defined as inputs other than quoted prices in active markets that are either directly
or indirectly observable such as quoted prices for similar instruments in active markets
or quoted prices for identical or similar instruments in markets that are not active. |
| ● | Level
3, defined as unobservable inputs in which little or no market data exists, therefore requiring
an entity to develop its own assumptions, such as valuations derived from valuation techniques
in which one or more significant inputs or significant value drivers are unobservable. |
We measure certain financial instruments
at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows (See Note 6):
| | |
Total | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
| Assets: | |
| | |
| | |
| | |
| |
| Cash and cash equivalents at March 31, 2024 | |
$ | 39,215,765 | | |
$ | 39,215,765 | | |
$ | - | | |
$ | - | |
| Marketable securities measured at fair value March 31, 2024 | |
$ | 2,976,192 | | |
$ | - | | |
$ | 2,976,192 | | |
$ | - | |
| | |
$ | 42,191,957 | | |
$ | 39,215,765 | | |
$ | 2,976,192 | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| Cash and cash equivalents at June 30, 2023 | |
$ | 37,185,989 | | |
$ | 37,185,989 | | |
$ | - | | |
$ | - | |
| Marketable securities measured at fair value June 30, 2023 | |
$ | 10,843,641 | | |
$ | - | | |
$ | 10,843,641 | | |
$ | - | |
| | |
$ | 48,029,630 | | |
$ | 37,185,989 | | |
$ | 10,843,641 | | |
$ | - | |
| | |
| | | |
| | | |
| | | |
| | |
| Liabilities: | |
| - | | |
| - | | |
| - | | |
| - | |
As of March 31, 2024, the Company
had no derivative liabilities for which Level 3 inputs were reported.
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
2. |
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (Continued) |
Research and Development
Research and development costs are
expensed as incurred. Total research and development costs were $1,945,910 and $2,845,239 for the nine months ended March 31, 2024
and 2023, respectively.
Advertising and Marketing
Advertising and marketing cost are
expensed as incurred. Total advertising and marketing costs were $44,554 and $87,745 for the nine months ended March 31, 2024 and 2023,
respectively.
Accounting for Derivatives
The Company evaluates all of its financial
instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative
financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is
then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative
financial instruments, the Company uses a probability weighted average series Binomial lattice formula pricing models to value the derivative
instruments at inception and on subsequent valuation dates.
The classification of derivative instruments,
including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement
of the derivative instrument could be required within 12 months of the balance sheet date.
Recently Issued Accounting Pronouncements
Management does not believe that any
other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying
unaudited financial statements as of March 31, 2024.
Series C Preferred Stock
On December 15, 2021, the Company
filed a certificate of designation of Series C Preferred Stock with the Secretary of State of Nevada, designating 17,000 shares of preferred
stock as Series C Preferred Stock. Each share of Series C Preferred Stock has a stated value of $100 and is convertible into shares of
common stock of the Company at a conversion price equal to $0.00095. The Series C Preferred Stockholders are entitled to receive out
of any funds and assets of the Company legally available prior and in preference to any declaration or payment of any dividend on the
common stock of the Company, cumulative dividends, at an annual rate of 10% of the stated value, payable in cash or shares of common
stock. In the event the Company declares or pays a dividend on its shares of common stock (other than dividend payable in shares of common
stock), the holders of Series C Preferred Stock will also be entitled to receive payment of such dividend on an as-if-converted basis.
The Series C Preferred Stock confers no voting rights on holders, except with respect to matters that materially and adversely affect
the voting powers, rights or preferences of the Series C Preferred Stock or as otherwise required by applicable law.
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
3. |
PREFERRED STOCK (Continued) |
Series C Preferred Stock (Continued)
On December 15, 2021, the Company entered
into a securities purchase agreement with an accredited investor for an exchange of convertible debt to equity. Under the purchase agreement,
the Company and investor acknowledged there was $187,800 of principal remaining under the note issued to the investor by the Company on
February 3, 2017, plus $80,365 of accrued interest, representing a total aggregate note balance of $268,165. Pursuant to the purchase
agreement, the Company sold to the investor 2,700 shares of the Company’s newly designated Series C Preferred Stock for a total
purchase price of $268,165, and a loss on settlement of debt of $1,835. On April 15, 2023, the Company entered into another securities
purchase agreement with the investor to exchange the remaining notes with principal of $550,000, plus accrued interest of $126,455, representing
a total aggregate note balance of $676,455, and a loss on settlement of debt of $45. Pursuant to the purchase agreement, the Company sold
6,765 shares of the Company’s Series C Preferred Stock to the investor, for a total purchase price of $676,455. The investor tendered
the Note to the Company for cancellation and agreed to forgo all future accrued interest under the Note, as the total purchase price for
the shares. As of June 30, 2023, the Company had a total of 9,465 shares of Series C Preferred Stock outstanding with a fair value of
$946,500, and a stated value of one hundred dollars ($100) (“share value’) per share, convertible into shares of common stock
of the Company. The stock was presented as mezzanine equity because it is redeemable at a fixed or determinable amount upon an event that
is outside of the issuer’s control. Upon liquidation, dissolution and winding up of the Company, the holder of each outstanding
share of Series C Preferred Stock shall be entitled to receive, out of the assets of the Company available for distribution to its shareholders
upon such liquidation, before any payments shall be made or any assets distributed to the holders of the common stock, the stated value
of the Series C Preferred Shares plus any declared but unpaid dividends. No other current or future equity holders of the Company shall
have higher priority of liquidation preference than holders of Series C Preferred Stock. The holder has the right, at any time, at its
election, to convert shares of Series C Preferred Stock into common stock at a conversion price of $0.00095 per share. During the three
months ended September 30, 2023, the investor converted 2,100 preferred shares with a face value of $210,000, at a conversion price of
$0.00095. The preferred shares were converted into 221,052,632, no gain or loss was recognized in the financial statements. As of March
31, 2024, 7,365 of such shares of Series C Preferred Stock outstanding.
On June 19, 2023, the Company entered
into a securities purchase agreement with an accredited investor for an exchange of convertible debt to equity. Under the purchase agreement,
the Company and investor acknowledged there was an aggregate of $100,000 of principal outstanding under the Note issued to the investor
by the Company on August 10, 2018, plus $48,603 of accrued interest, representing a total aggregate note balance of $148,603. Pursuant
to the Purchase Agreement, the Company issued and sold to the investor 1,486 shares of the Company’s Series C Preferred
Stock for a total purchase price of $148,603, and a gain on settlement of debt of $3. The investor tendered the Note to the Company for
cancellation and agreed to forego all future accrued interest under the Note, as the total purchase price for the shares. As of March
31, 2024, 1,486 of such shares of Series C Preferred Stock were outstanding.
As of March 31, 2024, the Company had
an aggregate total of 8,851 shares of Series C Preferred Stock outstanding with a fair value of $885,100, and a stated value of one hundred
dollars ($100) (“share value’) per share, convertible into shares of common stock of the Company. Upon liquidation, dissolution
and winding up of the Company, the holder of each outstanding share of Series C Preferred Stock shall be entitled to receive, out of the
assets of the Company available for distribution to its shareholders upon such liquidation, before any payments shall be made or any assets
distributed to the holders of the common stock, the stated value of the Series C Preferred Shares plus any declared but unpaid dividends.
No other current or future equity holders of the Company shall have higher priority of liquidation preference than holders of Series C
Preferred Stock. The holder has the right, at any time, at its election, to convert shares of Series C Preferred Stock into common stock
at a conversion price of $0.00095 per share.
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
3. |
PREFERRED STOCK (Continued) |
Series C Preferred Stock (Continued)
During the fiscal year ended June
30, 2023, the Company entered into a purchase agreement with investors for an exchange of convertible debt into equity. The investors
exchanged convertible notes in the amount of $837,800, plus interest in the amount of $255,423, and an aggregate loss of $1,877 for an
aggregate total of $1,095,100 in exchange for 10,951 shares of the Company’s Series C Preferred Stock. The extinguishment of the
convertible debt and derivative was recognized in the Company’s financial statement as a loss on settlement of convertible notes
and derivative liability in the amount of $664,627. A valuation was prepared based on a stock price of $0.020 as of April 15, 2023 and
$0.0185 as of June 19, 2023, with a volatility of 96.6%, as of April 15, 2023 and 82.9% as of June 19, 2023 based on an estimated term
of 5 years.
The stock was presented as mezzanine
equity because it is redeemable at a fixed or determinable amount upon an event that is outside of the issuer’s control.
On January 27, 2022, the holder of
the majority of the voting power of the shareholders of the Company, and the Company’s chief executive officer, approved by written
consent (i) an amendment to the Company’s articles of incorporation to increase the Company’s authorized shares of common
stock from 5,000,000,000 to 10,000,000,000, (ii) an amendment to the Company’s articles of incorporation to effect a reverse stock
split of the Company’s common stock by a ratio of not less than 1-for-100 and not more than 1-for-500 at any time prior to the
one year anniversary of filing the definitive information statement with respect to the reverse split, with the board of directors having
the discretion as to whether or not the reverse split is to be effected, and with the exact ratio of any reverse split to be set at a
whole number within the above range as determined by the board in its discretion, and (iii) the adoption of the Company’s 2022
Equity Incentive Plan. Shareholder approval for such actions became effective 20 days after the definitive information statement relating
to such actions was mailed to shareholders.
Nine months ended March 31,
2024
On November 11, 2022, the Company entered
into a Purchase Agreement with an investor for the sale of up top $45,000,000 of shares of common stock. For the nine months ended
March 31, 2024, the Company issued 86,395,059 shares of common stock for $900,000 under a purchase agreement at prices
of $0.00944 - $0.0132, pursuant to the purchase notices received from the investor. The finance cost of $21,075 was deducted
from the gross proceeds.
Nine months ended March 31,
2023
During the nine months ended March
31, 2023, the Company issued 274,198,530 shares of common stock upon conversion of convertible notes in the amount of $177,500 of
principal, plus accrued interest of $82,989 based upon a conversion price of $0.00095 per share. The notes were converted per
the terms of their respective agreements and therefore no gain or loss on the conversion was recorded.
On November 11, 2022, the Company
entered into a Purchase Agreement with an investor for a total of $45,000,000 to purchase shares of common stock. During the nine
months ended March 31, 2023, the Company issued 81,130,461 shares of common stock for $1,950,000 under a purchase agreement
at prices of $0.01968 - $0.02608, pursuant to the purchase notices received from the investor. The finance cost of $43,950 was
deducted from the gross proceeds converted, with net proceeds of $1,906,050.
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
4. |
COMMON STOCK (Continued) |
During the nine months ended March
31, 2023, a consultant exercised 3,071,412 nonqualified stock options with an exercise price of $0.01 and a market price
of $0.027 per share. Upon exercise of the stock options, the Company issued 1,933,852 shares of common stock through a
cashless exercise at the price of $0.017 per share for compensation expense of $32,875.
During the nine months ended March
31, 2023, two employees were granted 150,000,000 restricted stock awards for services, which vested immediately. The Company
withheld 62,400,000 shares at a price of $0.027 to pay for the taxes owed by the employees in the amount of $1,684,800,
and the remaining 87,600,000 shares priced at $0.027 per share in the amount of $2,365,200 in stock compensation
was reported in the financial statements.
|
5. |
RESTRICTED STOCK
UNITS |
On March 30, 2023, the Board of Directors
determined that in the best interest of the Company and the Shareholders to grant an employee a restricted stock units in consideration
of services to be rendered to the Company. The Board granted 21,500,000 shares of restricted stock units, which vested on March 30, 2023.
Under the 2019 Equity Incentive Plan, an employee was granted 21,500,000 restricted stock units at a price of $0.025 per share
for services, which vested on March 30, 2023. The stock units of 21,500,000 were cancelled at a unit price of $0.012 in the amount of
$258,000, which was netted against the stock compensation expense during the period.
On December 20, 2022 and January 1,
2023, the Board of Directors determined that in the best interest of the Company and the Shareholders, to grant certain employees, a director,
and a consultant restricted stock units in consideration of services to be rendered to the Company. The Board granted 33,000,000 shares
of restricted stock units under the 2022 Equity Incentive Plan, whereby, 23,000,000 shares vested on January 1, 2023 and 10,000,000 shares,
which were to vest on January 1, 2024, but were not granted. During the period ended March 31, 2024, the Company cancelled 20,000,000
of the stock units at a price of $0.012 in the amount of $240,000, which was netted against the stock compensation expense during the
period. The remaining 10,000,000 units were to vest on January 1, 2024 were not granted. As of March 31, 2024, there remained a balance
of 3,000,000 stock units, with an exercise price of $0.025.
The total stock units cancelled consisted
of 21,500,000 units for the 2019 Equity Incentive Plan and 20,000,000 units for the 2022 Equity Incentive Plan for an aggregate total
of 41,500,000, The price per stock unit was $0.025.As of March 31, 2024, the Company recorded stock compensation expense of $125,000.
The fair value of the cancellation
of the units was $618,000 for the 41,500,000 stock units.
| | |
3/31/2024 | | |
3/31/2023 | |
| | |
| | |
Weighted | | |
| | |
Weighted | |
| | |
Number | | |
average | | |
Number | | |
average | |
| | |
Of | | |
exercise | | |
Of | | |
exercise | |
| | |
Units | | |
price | | |
Units | | |
price | |
| Outstanding, beginning of period | |
| 54,500,000 | | |
$ | 0.025 | | |
| - | | |
$ | - | |
| Granted | |
| - | | |
| - | | |
| 54,500,000 | | |
$ | 0.025 | |
| Stock units not granted | |
| (10,000,000 | ) | |
| - | | |
| - | | |
| - | |
| Cancellation of units | |
| (41,500,000 | ) | |
$ | 0.025 | | |
| - | | |
| - | |
| Outstanding, end of period | |
| 3,000,000 | | |
$ | 0.025 | | |
| 54,500,000 | | |
$ | 0.025 | |
| Exercisable at the end of period | |
| 3,000,000 | | |
$ | 0.025 | | |
| 54,500,000 | | |
$ | 0.025 | |
|
6. |
STOCK OPTIONS AND WARRANTS |
The Company accounts for stock options
..granted to employees and non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas
the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment
is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based
compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are
no future performance requirements by the non-employee, option grants are immediately vested, and the total stock-based compensation
charge is recorded in the period of the measurement date.
SUNHYDROGEN,
INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
6. |
STOCK OPTIONS AND WARRANTS
(Continued) |
2019 Equity Stock Incentive Plan
On December 17, 2018, the Board of
Directors approved and adopted the 2019 Equity Incentive Plan (“the Plan”), with 300,000,000 shares reserved for issuance
pursuant to the Plan. The purpose of the Plan is to promote the success of the Company and to increase stockholder value by providing
an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons.
The awards are performance-based compensation that are granted under the Plan as incentive stock options (ISO) or nonqualified stock
options. The per share exercise price for each option shall not be less than 100% of the fair market value of a share of common stock
on the date of grant of the option. The Company periodically issues stock options and warrants to employees and non-employees in non-capital
raising transactions for services and for financing cost.
2022 Equity Stock Incentive Plan
On January 27, 2022, the Company adopted
the 2022 Equity Incentive Plan, to enable the Company to attract and retain the types of employees, consultants, and directors who will
contribute to the Company’s long-range success. The maximum number of shares of common stock that may be issued under the 2022
Plan is initially 400,000,000. The number of shares will automatically be increased on the first day of the Company’s fiscal
year beginning in 2023 so that the total number of shares issuable will at all times equal fifteen percent (15%) of the Company’s
fully diluted capitalization on the first day of the Company’s fiscal year, unless the Board adopts a resolution providing
that the number of shares issuable under the 2022 Plan shall not be so increased.
As of July 1, 2023, the 2022 Equity
Incentive Plan increased by 15% to 723,194,742 shares, based on the Company’s fully diluted capitalization on leaving a reserve
of 660,194,742 as of March 31, 2024.
During the period ended March 31, 2024,
the Company granted 103,000,000 stock options at an exercise price of $0.012 per share, which vested immediately on January 30, 2024.
As of March 31, 2024, 266,394,499 stock options were outstanding, and the Company recognized stock compensation expense of $1,173,002.
A summary of the Company’s stock
option activity and related information follows:
| | |
3/31/2024 | | |
3/31/2023 | |
| | |
| | |
Weighted | | |
| | |
Weighted | |
| | |
Number | | |
average | | |
Number | | |
average | |
| | |
Of | | |
exercise | | |
Of | | |
exercise | |
| | |
Options | | |
price | | |
Options | | |
price | |
| Outstanding, beginning of period | |
| 163,394,499 | | |
$ | 0.0095 | | |
| 157,965,711 | | |
$ | 0.0089 | |
| Granted | |
| 103,000,000 | | |
$ | 0.012 | | |
| - | | |
| - | |
| Exercised | |
| - | | |
| | | |
| - | | |
| - | |
| Redemption of options | |
| - | | |
| | | |
| (3,071,212 | ) | |
$ | (0.01 | ) |
| Outstanding, end of period | |
| 266,394,499 | | |
$ | 0.0107 | | |
| 154,894,499 | | |
$ | 0.0124 | |
| Exercisable at the end of period | |
| 263,144,499 | | |
$ | 0.0105 | | |
| 154,394,499 | | |
$ | 0.0124 | |
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
6. |
STOCK OPTIONS AND WARRANTS
(Continued) |
STOCK OPTIONS (Continued)
The weighted average remaining contractual life of options
outstanding as of March 31, 2024 and 2023 was as follows:
| 3/31/2024 | | |
3/31/2023 | |
Exercise
Price | | |
Stock
Options
Outstanding | | |
Stock
Options
Exercisable | | |
Weighted
Average
Remaining
Contractual
Life (years) | | |
Exercise
Price | | |
Stock
Options
Outstanding | | |
Stock
Options
Exercisable | | |
Weighted
Average
Remaining
Contractual
Life (years) | |
| $ | 0.016 | | |
| 9,000,000 | | |
| 5,250,000 | | |
| 2.17 | | |
| - | | |
| - | | |
| - | | |
| - | |
| $ | 0.012 | | |
| 103,000,000 | | |
| 103,000,000 | | |
| 5.84 | | |
| - | | |
| - | | |
| - | | |
| - | |
| $ | 0.0097 | | |
| 6,000,000 | | |
| 6,000,000 | | |
| 1.84 | | |
$ | 0.0097 | | |
| 6,000,000 | | |
| 6,000,000 | | |
| 1.84 | |
| $ | 0.0099 | | |
| 138,894,499 | | |
| 138,894,499 | | |
| 1.82 | | |
$ | 0.0099 | | |
| 138,894,499 | | |
| 138,894,499 | | |
| 2.82 | |
| $ | 0.0060 | | |
| 10,000,000 | | |
| 10,000,000 | | |
| 2.31 | | |
$ | 0.0060 | | |
| 10,000,000 | | |
| 10,000,000 | | |
| 3.31 | |
| | | | |
| 266,894,499 | | |
| 263,144,499 | | |
| | | |
| | | |
| 154,894,499 | | |
| 154,894,499 | | |
| | |
WARRANTS
During the nine months ended March
31, 2024, 8,400,000 common stock purchase warrants expired leaving an aggregate of 78,095,239 common stock purchase warrants outstanding,
with exercise prices ranging from $0.12 - $0.13125 per share. The warrants were estimated at fair value on the date of issuance as calculated
using the Black-Scholes valuation model. The derivative liability calculated on all warrants outstanding as of the nine months ended
March 31, 2024, was removed with the exchange of the convertible notes and accrued interest for preferred shares. The warrants can be
exercised over a period of three (3) years.
A summary of the Company’s warrant
activity and related information follows for the nine months ended March 31, 2024
| | |
3/31/2024 | |
| | |
| | |
Weighted | |
| | |
| | |
average | |
| | |
Number of | | |
exercise | |
| | |
Warrants | | |
price | |
| Outstanding, beginning of period | |
| 86,495,239 | | |
$ | 0.12 | |
| Granted | |
| - | | |
| - | |
| Exercised | |
| - | | |
| - | |
| Forfeited/Expired | |
| (8,400,000 | ) | |
$ | (0.0938 | ) |
| Outstanding, end of period | |
| 78,095,239 | | |
$ | 0.12 | |
| Exercisable at the end of period | |
| 78,095,239 | | |
$ | 0.12 | |
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
6. |
STOCK OPTIONS AND WARRANTS
(Continued) |
WARRANTS (Continued)
The weighted average remaining contractual life of warrants
outstanding as of March 31, 2024 was as follows:
| 3/31/2024 | | |
Weighted Average | |
Exercise
Price | | |
Warrants
Outstanding | | |
Warrants
Exercisable | | |
Remaining Contractual
Life (years) | |
| $ | 0.13125 | | |
| 6,666,667 | | |
| 6,666,667 | | |
| 1.90 | |
| $ | 0.12 | | |
| 71,428,572 | | |
| 71,428,572 | | |
| 1.92 | |
| | | | |
| 78,095,239 | | |
| 78,095,239 | | |
| | |
At March 31, 2024, the aggregate intrinsic
value of the warrants outstanding was $0.
|
7. |
CASH, CASH EQUIVALENTS,
MARKETABLE SECURITIES, AND EQUITY INVESTMENT, RELATED PARTY |
As of March 31, 2024, the Company
invested in marketable securities, which have been recognized in the financial statements at cost. The related party, short-term investment
is recognized in the financial statements at fair value.
As of March 31, 2024, the components
of the Company’s cash, cash equivalents, and short -term investments are summarized as follows:
| | |
Adjusted
Cost | | |
Unrealized
Gains | | |
Unrealized
Losses | | |
Fair
Value | | |
Cash and
Cash
Equivalents | | |
Short-Term
Marketable
Securities | |
| Cash | |
$ | 30,623,941 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 30,623,941 | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Subtotal | |
| 30,623,941 | | |
| - | | |
| - | | |
| - | | |
| 30,623,941 | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Level 1 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| U.S. Treasury bills | |
| 8,591,824 | | |
| - | | |
| - | | |
| - | | |
| 8,591,824 | | |
| - | |
| Subtotal | |
| 8,591,824 | | |
| - | | |
| - | | |
| - | | |
| 8,591,824 | | |
| - | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Level 2 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Teco Investment, related party | |
| 7,000,000 | | |
| | | |
| (4,023,808 | ) | |
| 2,976,192 | | |
| - | | |
| 2,976,192 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Subtotal | |
| 7,000,000 | | |
| - | | |
| (4,023,808 | ) | |
| 2,976,192 | | |
| - | | |
| 2,976,192 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total | |
$ | 46,215,765 | | |
$ | - | | |
$ | (4,023,808 | ) | |
$ | 2,976,192 | | |
$ | 39,215,765 | | |
$ | 2,976,192 | |
The Company has invested in marketable
securities, which mature within ninety days from date of purchase, and are held to maturity. The current trading prices or fair market
value of the securities vary, and we believe any decline in fair value is temporary. All securities are current and not in default.
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
| 7. |
CASH, CASH EQUIVALENTS,
MARKETABLE SECURITIES, AND EQUITY INVESTMENT, RELATED PARTY (CONTINUED) |
During the nine months ended March
31, 2024, the Company recognized interest income pertaining to the investments of $1,073,293 in the financial statements, which is recorded
as part of investment income in the statement of operations.
The Company over the past year has
considered many companies in the hydrogen space for strategic investments, and believed that TECO 2030 ASA (TECO)’s fuel cell technology,
designed with their development partner AVL, has shown incredible potential to become a key player in the fuel cell market. On November
11, 2022, the Company entered into a subscription agreement with TECO a public limited company incorporated in Norway. Pursuant to the
subscription agreement, the Company purchased 13,443,875 shares of TECO stock for an aggregate consideration of $7 million in USD, at
an exchange rate of NOK 10.4094. The stocks purchased are adjusted to fair value based on unrealized gain or loss at the end of each
period. The Company has an 8.3% interest as a shareholder of TECO. The CEO is also a director of TECO, which makes this a related party.
|
8. |
EQUITY INVESTMENT IN
SECURITIES -RELATED PARTY AND BOND RECEIVABLE -RELATED PARTY |
The Company purchased a bond receivable
of TECO for a subscription amount of $3 million in USD. The issuance of the bond receivable is through a Tap Issue Addendum to TECO’s
secured convertible notes agreement dated June 1, 2022, pursuant to which Nordic Trustee AS is acting as the security agent on behalf
of the note holders. The bond receivable matures on June 1, 2025, and bears interest at the rate of 8% per annum paid quarterly in arrears
and are convertible into shares of TECO at a rate of NOK 5.0868 per share. For the nine months ended March 31, 2024, the Company recognized
interest income of $171,573 in the financial statements. All interest income has been paid timely each quarter.
The CEO of the Company is a director
of TECO, which makes this a related party relationship.
| | |
Cost Basis | | |
Unrealized
Gain
6/30/2023 | | |
Unrealized
Loss
3/31/2024 | | |
Fair Value
3/31/2024 | |
| Short term equity investments at fair value, related party | |
$ | 7,000,000 | | |
$ | 655,601 | | |
$ | (4,679,409 | ) | |
$ | 2,976,192 | |
During the nine months ended March
31, 2024, the Company recognized an unrealized loss of $(4,679,409) in the financial statements.
|
9. |
SHORT TERM INVESTMENTS |
On September 12, 2023, the Company
invested in a $5,000,0000 certificate of deposit (CD), which matured on March 12, 2024. CDs should be reported as part of cash
and cash equivalents at cost plus accrued interest if less than 90 days from the purchase date, and on its own line in the financial
statements if the purchase is greater than 90 days. The CD has been classified as a short term investment due to the length of time to
maturity at acquisition and is measured using Level 2. The Company recognized interest income of $171,573 in the financial statements
as of March 31, 2024.
| 10. COMMITMENTS AND
CONTINGENCIES |
Effective October 1, 2022, the Company
extended its research agreement with the University of Iowa through March 31, 2024. As consideration under the research agreement, the
University of Iowa will receive a maximum of $343,984 from the Company in four equal installments of $85,996. The agreement can
be terminated by either party upon sixty (60) days prior written notice to the other. As of March 31, 2024, the contract was paid in
full.
SUNHYDROGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS –UNAUDITED
MARCH 31, 2024 AND 2023
|
10. |
COMMITMENTS AND CONTINGENCIES
(Continued) |
Effective October 1, 2022, the Company
extended its research agreement with the University of Michigan through March 31, 2024. As consideration under the research agreement,
the University of Michigan will receive a maximum of $298,194, from the Company in four equal installments of $74,549. In the event of
early termination by the Sponsor, the Sponsor will pay all costs accrued by the University as of the date of termination, including non-cancellable
obligations. As of March 31, 2024, there remains a balance of $149,098 per the agreement.
The Company rented lab space with
the University of Iowa as of February 2022. The monthly rent was $1,468, plus an additional $500 for the rental of a lab on a month-to-month
basis and is cancellable with a thirty (30) day notice. On July 1, 2022, the Company increased the space needed for its’ lab work
for a monthly rental of $5,468 per month. Due to the rental being month-to-month, ASC 842 lease accounting is not applicable.
In the normal course of
business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course
of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. In the opinion
of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s
financial position or results of operation.
Shareholders Loan
As of March 31, 2024, the Company
reported an accrual associated with the CEO’s prior years’ salary in the amount of $211,750 for the current year, which is
recorded in related party accrued expenses. The Company began accruing the salary in 2011 and used the funds for operating expenses.
During the period ended December 31, 2022, the accrued salary was reclassified as a loan from the CEO, with an interest rate of five
percent (5%). The loan will be repaid with monthly payments of $9,290, including interest and principal over a two-year period. As of
March 31, 2024, the principal balance remaining on the loan was $64,941, and interest paid during the nine months ended March 31, 2024
was $5,090.
Other Related Party Activity
As discussed in Note 8, the Company
purchased an interest in a company that the CEO became a director of subsequent to the purchase.
Management evaluated subsequent events
as of the date of the financial statements pursuant to ASC TOPIC 855 and had no subsequent events to report.
Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations.
Cautionary Statement Regarding Forward-Looking
Statements
The information in this
report may contain forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements
regarding our capital needs, business strategy and expectations. Any statements that are not of historical fact may be deemed to be forward-looking
statements. These forward-looking statements involve substantial risks and uncertainties. In some cases you can identify forward-looking
statements by terminology such as “may,” “will,” “should,” “expect,” “plan,”
“intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,”
or “continue”, the negative of the terms or other comparable terminology. Actual events or results may differ materially
from the anticipated results or other expectations expressed in the forward-looking statements. In evaluating these statements, you should
consider various factors, including the risks included from time to time in our reports filed with the Securities and Exchange Commission,
or the SEC. These factors may cause our actual results to differ materially from any forward-looking statements. We disclaim any obligation
to publicly update these statements, or disclose any difference between actual results and those reflected in these statements, except
as may be required under applicable law.
Unless the context otherwise
requires, references in this Form 10-Q to “we,” “us,” “our,” or the “Company” refer to
SunHydrogen, Inc.
Overview
At
SunHydrogen, our goal is to replace fossil fuels with clean, renewable hydrogen.
Hydrogen
is the most abundant chemical element in the universe. When hydrogen fuel is used to power transportation and industry, the only byproduct
left behind is pure water, unlike hydrocarbon fuels such as oil, coal and natural gas that emit carbon dioxide and other harmful pollutants
into the atmosphere. However, naturally occurring elemental hydrogen is rare – so rare, in fact, that today about 95% of hydrogen
is produced from steam reforming of natural gas (Source: US Department of Energy, Hydrogen Fuel Basics). This process
is both economically and environmentally unsound.
The
SunHydrogen solution offers an efficient and cost-effective way to produce truly green hydrogen using sunlight and any source of water.
Our core technology is a self-contained, nanoparticle-based hydrogen generator that mimics photosynthesis to split water molecules, resulting
in hydrogen. By optimizing the science of water electrolysis at the nano-level, we believe we have developed a low-cost method to potentially
produce environmentally friendly renewable hydrogen.
We
believe renewable hydrogen has already proven itself to be a key solution in helping the world meet climate targets, and we believe our
technology potentially offers solutions to the challenges that the hydrogen future presents, including cost of production and transportation.
Because
our process only requires sunlight and water, our technology can be installed near the point of hydrogen use. This eliminates the need
for pipelines and trucks that result in high carbon emissions and high capital investment. Additionally, because our process directly
uses the electrical charges created by sunlight to generate hydrogen, our nanoparticle technology does not rely on grid power or require
the costly power electronics that conventional electrolyzers do. Lastly, our planned scalable system configuration of many individual
hydrogen-generating panels ensures redundancy, security and stability.
With
a target cost of $2.50/kg., we aspire for our technology to be cost-competitive with brown hydrogen and below the cost of clean hydrogen
competitors. We believe our solution has the potential to clear a path for green hydrogen to compete with natural gas hydrogen and gain
mass market acceptance as a true replacement for fossil fuels.
Our
technology is primarily developed at three laboratories – our independent laboratory in Coralville, Iowa, the SunHydrogen laboratory
at the University of Iowa, and the Singh laboratory at University of Michigan.
Additionally,
in parallel to the ongoing development of our own technology, we are well-capitalized to begin pursuing synergistic strategic investments
in the hydrogen space. SunHydrogen is committed to furthering renewable hydrogen technology to grow the hydrogen ecosystem, and we are
actively pursuing opportunities for investment and acquisition of complimentary hydrogen technologies. We are fortunate to have the resources
to maximize our impact in this fast-growing industry.
Critical Accounting Policies
Our discussion
and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements
requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to impairment
of property, plant and equipment, intangible assets, deferred tax assets and fair value computation using the Binomial valuation option
pricing model. We base our estimates on historical experience and on various other assumptions, such as the trading value of our common
stock and estimated future undiscounted cash flows, that we believe to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including
those for the above-described items, are reasonable.
Use of Estimates
In
accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements
as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
These estimates and assumptions relate to useful lives and impairment of tangible and intangible assets, accruals, income taxes, stock-based
compensation expense, Binomial lattice valuation model inputs, derivative liabilities and other factors. Management believes it has exercised
reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.
Fair Value of Financial
Instruments
Fair
value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where
it is practicable to estimate that value. As of March 31, 2024, the amounts reported for cash, investment in affiliate, accrued interest
and other expenses, notes payables, and derivative liability approximate the fair value because of their short maturities.
We
adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established
a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures
about fair value measurements.
Recently Issued Accounting
Pronouncements
Management
reviewed currently issued pronouncements during the three months ended March 31, 2024, and does not believe that any recently issued,
but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial
statements. Pronouncements are disclosed in notes to the financial statements.
Results of Operations for the Three Months
ended March 31, 2024 compared to Three Months Ended March 31, 2023
Operating Expenses
Operating
expenses for the three months ended March 31, 2024 were $1,831,859, compared to $1,276,438 for the three months ended March 31, 2023.
The net change of $555,421 in operating expenses consisted primarily of an increase in salaries expense.
Other Income/(Expenses)
Other
income and (expenses) for the three months ended March 31, 2024 were $(2,190,305), compared to $3,019,088 for the three months ended
March 31, 2023. The decrease in other income of $5,209,393 was the result of a decrease in non-cash loss on change in derivative and
unrealized gain in related party investments.
Net Income/(Loss)
For
the three months ended March 31, 2024, our net loss was $(4,022,164), compared to net income of $1,742,650 for the three months ended
March 31, 2023. The majority of the decrease in net income of $(5,764,814), was related primarily to the decrease in unrealized gain
in related party investments and net change of derivative instruments estimated each period. These estimates are based on multiple inputs,
including the market price of our stock, interest rates, our stock price, volatility, variable conversion prices based on market prices
defined in the respective agreements and probabilities of certain outcomes based on managements’ estimates. These inputs are subject
to significant changes from period to period, therefore, the estimated fair value of the derivative liabilities will fluctuate from period
to period, and the fluctuation may be material. The Company has not generated any revenues.
Results of Operations for the Nine months
ended March 31, 2024 compared to Nine Months Ended March 31, 2023.
Operating Expenses
Operating
expenses for the nine months ended March 31, 2024 were $4,095,472, compared to $6,977,092 for the nine months ended March 31,2023. The
net decrease of $2,881,620 in operating expenses consisted primarily of a decrease in salary expenses.
Other Income/(Expenses)
Other
income and (expenses) for the nine months ended March 31, 2024 were $(3,403,512), compared to $12,420,741, for the nine months ended
March 31, 2023. The net increase in other expenses of $15,824,253 was the result of a decrease in non-cash net change in derivatives.
Net Income/(Loss)
For
the nine months ended March 31, 2024, our net loss was $(7,498,984), compared to net income of $5,443,649, for the nine months ended
March 31, 2023. The majority of the decrease in net income of $12,942,633 was related primarily to the decrease in unrealized gain in
related party investments, and a non-cash gain in change in derivative. Company has not generated any revenues.
Liquidity and Capital Resources
Liquidity is the ability
of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing
basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts
payable and capital expenditures.
As of March 31, 2024, we
had working capital of $41,753,962, compared to $47,689,381 as of June 30, 2023. This decrease in working capital of $5,935,419 was primarily
due to a decrease in marketable securities and fair market value of short term investment.
Cash used in operating activities
was $1,770,631 for the nine months ended March 31, 2024, compared to $3,346,769 for the nine months ended March 31, 2023. The net decrease
of $1,576,138 in cash used in operating activities was due to a decrease in salary expense. The Company has had no revenues.
Cash provided by investing
activities during the nine months ended March 31, 2024 and March 31, 2023 was $3,000,000 and $3,934,306, respectively. The net decrease
of $934,306 in cash used in investing activities was due to a decrease in the purchase of marketable securities.
Cash provided by financing
activities during the three months ended March 31, 2024 and March 31, 2023 was $800,407 and $1,863,618, respectively. The net decrease
of $1,063,211 in cash provided by financing activities was due to a decrease in net proceeds from cash purchase agreements.
Our
ability to continue as a going concern is dependent upon raising capital through financing transactions and future revenue. Our capital
needs have primarily been met from the proceeds of private placements and registered offerings of our securities, as we have not generated
any revenues to date.
We
have historically obtained funding from investors, through private placements and registered offerings of equity and debt securities.
Management believes that the Company will be able to continue to raise funds through the sale of its securities to its existing shareholders
and prospective new investors, which will provide the additional cash needed to meet the Company’s obligations as they become due
and will allow the Company to continue to develop its core business. There can be no assurance that we will be able to continue raising
the required capital for our operations on terms and conditions that are acceptable to us, or at all. If we are unable to obtain sufficient
funds, we may be forced to curtail and/or cease our operation.
Off-Balance Sheet Arrangements
We do not have any off-balance
sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, result
of operations, liquidity or capital expenditures.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk.
Not required for smaller
reporting companies.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period
covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and
chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act).
Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures
are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act
is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and
(ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, or person performing
similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial
Reporting
There was no change to our
internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party
to, nor is any of our property currently the subject of, any material legal proceeding.
Item 1A. Risk Factors.
There are no material changes
from the risk factors previously disclosed in our annual report on Form 10-K filed with the SEC on September 29, 2023.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the quarter ended March
31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule
10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 6. Exhibits.
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
| May 21, 2024 |
SUNHYDROGEN, INC. |
| |
|
|
| |
By: |
/s/
Timothy Young |
| |
|
Timothy Young
Chief Executive Officer and
Acting Chief Financial Officer
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer) |
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In connection with the Quarterly
Report of SunHydrogen, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2024 as filed with the Securities
and Exchange Commission the date hereof (the “Report”), I, Timothy Young, Chief Executive Officer & Acting Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that: