Item 1A. Risk Factors.
Risks related to our business and industry
Our limited operating history does not afford
investors a sufficient history on which to base an investment decision.
We were formed in February
2009 and are currently developing a new technology that has not yet gained market acceptance. There can be no assurance that we will ever
commercialize our technology, operate profitably or that we will have adequate working capital to meet our obligations as they become
due.
11
Investors must consider the
risks and difficulties frequently encountered by early-stage companies, particularly in rapidly evolving markets. Such risks include the
following:
● competition;
● need for acceptance of products;
● ability to continue to develop and extend brand identity;
● ability to anticipate and adapt to a competitive market;
● ability to effectively manage rapidly expanding operations;
● dependence upon key personnel.
We cannot be certain that
our business strategy will be successful or that we will successfully address these risks. In the event that we do not successfully address
these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected, and we
may have to curtail our business.
We have a history of losses and have never
realized revenues to date. We expect to continue to incur losses and no assurance can be given that we will realize revenues. Accordingly,
we may never achieve and sustain profitability.
As of June 30, 2025, we have
an accumulated deficit of $100,078,550. For the year ended June 30, 2025, we incurred a net loss of $8,226,307. We expect to incur net
losses until we are able to realize revenues to fund our continuing operations. We may fail to achieve any or significant revenues from
sales or achieve or sustain profitability. Accordingly, we may never be profitable or be able to maintain profitability.
We have historically raised
funds through various capital raising transactions. We will require additional funds in the future to fund our business plans, either
through additional equity or debt financings or collaborative agreements or from other sources. We have no commitments to obtain such
additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all. In the event
we are unable to obtain additional financing, we may be unable to implement our business plan. Even with such financing, we have a history
of operating losses and there can be no assurance that we will ever become profitable.
We may be unable to manage our growth or
implement our expansion strategy.
We may not be able to develop
our product or implement the other features of our business strategy at the rate or to the extent presently planned. Our potential growth
will place a significant strain on our administrative, operational and financial resources. If we are unable to successfully manage our
future growth, establish and continue to upgrade our operating and financial control systems, recruit and hire necessary personnel or
effectively manage unexpected expansion difficulties, our financial condition and results of operations could be materially and adversely
affected.
We may not be able to successfully develop
and commercialize our technologies which would result in continued losses and may require us to curtail or cease operations.
We are currently working to
scale the lab-scale prototypes of our nanoparticle technology to larger, commercial-scale prototypes. However, we have not completed a
large-scale commercial prototype of our technology and are uncertain at this time when completion of a commercial scale prototype will
occur. We may be unable to commercialize our technology.
Our revenues will be dependent upon acceptance
of our products by the market, the failure of which would cause us to curtail or cease operations.
We believe that virtually
all of our revenues will come from the sale or license of our products. As a result, we will continue to incur substantial operating losses
until such time as we are able to develop our product and generate revenues from the sale or license of our products. There can be no
assurance that businesses and customers will adopt our technology and products, or that businesses and prospective customers will agree
to pay for or license our products. Even if we complete development of our technology and product, , it may not gain market acceptance
due to various factors such as not enough cost savings between our method of producing hydrogen and other more conventional methods. If
that occurs, our financial condition and results of operations will be materially and adversely affected.
12
We anticipate that we will face intense
competition, and many of our competitors have substantially greater resources than we do.
We operate in a competitive
environment that is characterized by price fluctuation and technological change. We anticipate that we will compete with major international
and domestic companies. Some of our current and future potential competitors may have greater market recognition and customer bases, longer
operating histories and substantially greater financial, technical, marketing, distribution, purchasing, manufacturing, personnel and
other resources than we do. In addition, competitors may be developing similar technologies with a cost similar to, or lower than, our
projected costs. As a result, they may be able to respond more quickly to changing customer demands or to devote greater resources to
the development, promotion and sales of solar and solar-related products than we can.
Our business plan relies on
sales of our products based on either a demand for truly renewable clean hydrogen or economically produced clean hydrogen. If we fail
to compete successfully, our business would suffer and we may lose or be unable to gain market share. Neither the demand for our product
nor our ability to manufacture at commercial scale have yet been proven.
Because our industry is highly competitive
and has low barriers to entry, we may lose market share to larger companies that are better equipped to weather a deterioration in market
conditions due to increased competition.
We believe that our ability
to compete depends in part on a number of factors outside of our control, including:
● the price at which others offer comparable services and equipment;
● the extent of our competitors’ responsiveness to customer needs; and
● installation technology.
Currently, competing methods
of hydrogen production include steam reforming of natural gas or methane, which dominates due to its easy availability and low price;
partial oxidation of petroleum oil; steam gasification of coal; and electrolyzers powered by solar or wind energy. There can be no assurance
that we will be able to compete successfully against current and future competitors. If we are unable to compete effectively, or if competition
results in a deterioration of market conditions, our business and results of operations would be adversely affected.
Reductions in U.S. federal funding for renewable hydrogen projects
may slow industry growth and could adversely affect our long-term opportunities.
In 2025, the U.S. Department of Energy (DOE) reduced
certain funding allocations for renewable hydrogen development. While we currently have sufficient capital to carry on our operations
and advance our technology development, these changes may slow overall industry momentum in the United States by limiting the pace of
project development, infrastructure buildout, and adoption of hydrogen technologies. A slower rate of industry expansion could, in turn,
impact the timing and scale of potential commercial opportunities available to us in the U.S. market. Although we continue to pursue growth
through our own resources and potential partnerships, reduced government support could adversely affect the broader competitive landscape
and may negatively influence investor and customer interest in renewable hydrogen solutions.
Our business depends on proprietary
technology that we may not be able to protect and may infringe on the intellectual property rights of others.
Our success will depend, in
part, on our technology’s commercial viability and on the strength of our intellectual property rights. We currently hold patents
in the US, China, Australia, and Europe but still have several patents pending in multiple countries. There is no guarantee the
pending patents will be granted. In addition, any agreements we enter into with our employees, consultants, advisors, customers and strategic
partners will contain restrictions on the disclosure and use of trade secrets, inventions and confidential information relating to our
technology may not provide meaningful protection in the event of unauthorized use or disclosure.
Third parties may assert that
our technology, or the products we, our customers or partners commercialize using our technology, infringes upon their proprietary rights.
We have yet to complete an infringement analysis and, even if such an analysis were available at the current time, it is virtually impossible
for us to be certain that no infringement exists, particularly in our case where our products have not yet been fully developed.
13
We may need to acquire licenses
from third parties in order to avoid infringement. Any required license may not be available to us on acceptable terms, or at all.
We could incur substantial
costs in defending ourselves in suits brought against us for alleged infringement of another party’s intellectual property rights
as well as in enforcing our rights against others, and if we are found to infringe, the manufacture, sale and use of our or our customers’
or partners’ products could be enjoined. Any claims against us, with or without merit, would likely be time-consuming, requiring
our management team to dedicate substantial time to addressing the issues presented. Furthermore, the parties bringing claims may have
greater resources than we do.
We do not maintain theft or casualty insurance
and only maintain liability and property insurance coverage and therefore, we could incur losses as a result of an uninsured loss.
We do not maintain theft,
casualty insurance, or property insurance coverage. We may incur uninsured liabilities and losses as a result of the conduct of our business.
Any such uninsured or insured loss or liability could have a material adverse effect on our results of operations.
If we lose key employees and consultants
or are unable to attract or retain qualified personnel, our business could suffer.
Our success is highly dependent
on our ability to attract and retain qualified scientific, engineering and management personnel. We are highly dependent on our Chief
Technical Officer, Dr. Syed Mubeen, our development team in Iowa and our industrial partners and vendors. There can be no assurance
that they will remain associated with us. Our management’s efforts will be critical to us as we continue to develop our technology
and as we attempt to transition from a development stage company to a company with commercialized products and services. If we were to
lose Dr. Mubeen, one of our development partners, any other key employees or consultants, we may experience difficulties in competing
effectively, developing our technology and implementing our business strategies.
The loss of strategic alliances used in
the development of our products and technology could impede our ability to complete our product and result in a material adverse effect
causing the business to suffer.
We pursue strategic alliances
with other companies in areas where collaboration can produce technological and industry advancement. For example, we have entered into
a sponsored research agreement with the University of Michigan which, which was extended through September 30, 2026. If we are unable
to extend the terms of this agreement, or any of our other agreements with our partners as described in this report, we could suffer delays
in product development or other operational difficulties which could have a material adverse effect on our results of operations.
Risks relating to our common stock
There is a limited trading market for our
common stock.
Our common stock is not listed
on any national securities exchange. Accordingly, investors may find it more difficult to buy and sell our shares than if our common stock
was traded on an exchange. Although our common stock is quoted on the OTCQB, it is an unorganized, inter-dealer, over-the-counter market
which provides significantly less liquidity than the Nasdaq Capital Market or other national securities exchange. Further, there is limited
trading in our common stock. These factors may have an adverse impact on the trading and price of our common stock.
Our common stock could be subject to extreme
volatility.
The trading price of our common
stock may be affected by a number of factors, including events described in the risk factors set forth in this report, as well as our
operating results, financial condition and other events or factors. In addition to the uncertainties relating to future operating performance
and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable, factors,
many of which are beyond our control, may have a negative effect on the market price of our common stock. In recent years, broad stock
market indices, in general, and smaller capitalization companies, in particular, have experienced substantial price fluctuations. In a
volatile market, we may experience wide fluctuations in the market price of our common stock and wide bid-ask spreads. These fluctuations
may have a negative effect on the market price of our common stock. In addition, the securities market has, from time to time, experienced
significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations
may also materially and adversely affect the market price of our common stock.
14
We anticipate that our issuance of common
stock upon conversion of Series C Preferred Stock, exercise of outstanding warrants and options, will result in dilution to our stockholders.
As of June 30, 2025, we have
outstanding shares of Series C Preferred Stock with an aggregate stated value of $665,100 that are convertible into common stock at a
fixed conversion price of $0.00095 (see Note 3 to the financial statements included in this report). We anticipate that our issuance of
common stock upon conversion of outstanding preferred shares will result in dilution to holders of our common stock, which may have a
negative effect on the price of our common stock. In addition, as of June 30, 2025, we have outstanding warrants to purchase 78,095,239
shares of common stock and options to purchase 428,965,911 shares of common stock, and our issuance of shares of common stock upon exercise
of outstanding warrants or options may result in additional dilution to our stockholders.
We have never paid common stock dividends
and have no plans to pay dividends in the future, as a result our common stock may be less valuable because a return on an investor’s
investment will only occur if our stock price appreciates.
Holders of shares of our common
stock are entitled to receive such dividends as may be declared by our Board of Directors. To date, we have paid no cash dividends on
our shares of common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future. We intend to retain
future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our common stock will be
in the form of appreciation in the market value of our shares of common stock, which may not occur.
Our common stock is subject to the SEC’s
penny stock rules.
Unless our common stock is
listed on a national securities exchange, including the Nasdaq Capital Market, or we have stockholders’ equity of $5,000,000 or
less and our common stock has a market price per share of less than $5.00, transactions in our common stock will be subject to the SEC’s
“penny stock” rules. If our common stock remains subject to the “penny stock” rules promulgated under the Securities
Exchange Act of 1934, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities
may be adversely affected.
In accordance with these rules,
broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document that describes the
risks associated with such stocks, the broker-dealer’s duties in selling the stock, the customer’s rights and remedies and
certain market and other information. Furthermore, the broker-dealer must make a suitability determination approving the customer for
low-priced stock transactions based on the customer’s financial situation, investment experience and objectives. Broker-dealers
must also disclose these restrictions in writing to the customer, obtain specific written consent from the customer, and provide monthly
account statements to the customer. The effect of these restrictions will probably decrease the willingness of broker-dealers to make
a market in our common stock, decrease liquidity of our common stock and increase transaction costs for sales and purchases of our common
stock as compared to other securities. Our management is aware of the abuses that have occurred historically in the penny stock market.
This may make it more difficult
for investors to dispose of our common stock and cause a decline in the market value of our stock.
Our articles of incorporation allow for
our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights
of the holders of our common stock.
Our board of directors has
the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors has the authority to
issue up to 5,000,000 shares of our preferred stock without further stockholder approval. As a result, our board of directors could authorize
the issuance of a series of preferred stock that would grant to holders of preferred stock the right to our assets upon liquidation, or
the right to receive dividend payments before dividends are distributed to the holders of common stock. In addition, our board of directors
could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible
into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders.
15
Additional stock offerings in the future
may dilute then-existing shareholders’ percentage ownership of the Company.
Given our plans and expectations
that we will need additional capital, we anticipate that we will need to issue additional shares of common stock or securities convertible
or exercisable for shares of common stock, including convertible preferred stock, convertible notes, stock options or warrants. We anticipate
that our issuance of additional common stock or securities convertible into or exercisable into common stock in the future will dilute
the percentage ownership of then current stockholders.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Due to the current small
size and limited commercial operations of the Company, we have no formal cybersecurity policies and processes in place, however, the Board
and management believe cybersecurity represents an important component of the Company’s overall approach to risk management and
oversight.
Cybersecurity threats have
not materially affected, and are not reasonably likely to affect, the Company, including its business strategy, results of operations
or financial condition while we are strategically focused on developing an efficient and cost-effective way to produce truly renewable
hydrogen using sunlight and any source of water and have minimal commercial operations. The Company is not aware of any material security
breach to date. Accordingly, the Company has not incurred any expenses over the last two years relating to information security breaches.
The occurrence of cyber-incidents, or a deficiency in our cybersecurity or in those of any of our third-party service providers could
negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information and
systems, or damage to our business relationships or reputation, all of which could negatively impact our business and results of operations.
There can be no assurance that the Company’s third-party vendors’ and service providers’ cybersecurity risk management processes,
including their policies, controls or procedures, will be effective in protecting the Company’s systems and information.
Item 2. Properties.
Our principal office address
and independent laboratories are located at the BioVentures Center at 2500 Crosspark Rd., Coralville, IA 52241. The Company rents this
space on a month-to-month basis. The current monthly rent is $7,900.
Item 3. Legal Proceedings.
We are not currently a party
to, nor is any of our property currently the subject of, any material legal proceedings.
Item 4. Mine Safety Disclosures.
Not Applicable.
16
PART II
Item 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock is quoted
on the OTCQB under the symbol “HYSR.”
Common Stock
Our Articles of Incorporation,
as amended, authorizes the issuance of 10,000,000,000 shares of common stock, $0.001 par value per share and 5,000,000 shares of preferred
stock, par value $0.001 per share.
All outstanding shares of
common stock are of the same class and have equal rights and attributes. The holders of our common stock are entitled to one vote
per share on all matters submitted to a vote of our stockholders. All stockholders are entitled to share equally in dividends, if any,
as may be declared from time to time by the Board of Directors out of funds legally available. In the event of liquidation, the holders
of our common stock are entitled to share ratably in all assets remaining after payment of all liabilities. The stockholders do not
have cumulative or preemptive rights.
As of September 10, 2025
our common stock was held by approximately 95 stockholders of record. A substantially greater
number are ‘street name’ or beneficial holders, whose shares are held by banks, brokers and other financial
institutions.”
Dividend Policy
We have never declared or
paid any cash dividends on our common stock. We do not anticipate paying any cash dividends to stockholders in the foreseeable future.
In addition, any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent
upon our financial condition, results of operations, capital requirements, and such other factors as the Board of Directors deem relevant.
There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
Item 6. [Reserved.]
Item 7. Management’s Discussion and Analysis
of Financial Conditions and Results of Operations.
Certain statements in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” below, and elsewhere in this annual report, are not related
to historical results, and are forward-looking statements.
Forward-looking statements
present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly
to historical or current facts. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance
or achievements expressed or implied by such forward-looking statements. Forward-looking statements frequently are accompanied by such
words such as “may,” “will,” “should,” “could,” “expects,” “plans,”
“intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential”
or “continue,” or the negative of such terms or other words and terms of similar meaning. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements,
or timeliness of such results. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such
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.
17
Subsequent written and oral
forward looking statements attributable to us or to persons acting in our behalf are expressly qualified in their entirety by the cautionary
statements and risk factors set forth below and elsewhere in this annual report, and in other reports filed by us with the SEC.
You should read the following
description of our financial condition and results of operations in conjunction with the financial statements and accompanying notes included
in this Annual Report beginning on page F-1.
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 renewable 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 renewable 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 may 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.
Results of Operations for the Year Ended June
30, 2025 compared to the Year Ended June 30, 2024
Operating Expenses
For the year ended June 30, 2025, operating expenses
were $5,816,192 compared to $5,001,300, for the year ended June 30, 2024. Operating expenses consist primarily of research and development
expenses and general and administrative expenses incurred in connection with the operation of our business. The increase of $814,892 in
operating expenses was primarily due to an increase in salary expenses and an increase in research and development costs offset by a decrease
in professional fees.
18
Other Income/(Expenses)
Other income and (expenses) for the year ended
June 30, 2025, were $(2,410,115) compared to $(4,879,903) for the year ended June 30, 2024. The net increase of $2,469,788 in other income
and (expenses) was the result of a decrease in dividend expense of $37,506, a decrease in unrealized loss on related party equity investments
of $2,592,099, a decrease in realized loss of $172,440, an increase in unrealized loss on change in fair value of short-term investments
$30,615, and a decrease in interest expense of $3,932 offset by a decrease in investment income of $276,558, a decrease in capital gain
on sale of vehicle of $55,166, and a decrease in realized gain on redemption of marketable securities of $35,080.
Net Income (Loss)
For the year ended June 30,
2025, our net loss was $8,226,307, compared to a net loss of $9,881,203 for the year ended June 30, 2024. The majority of the decrease
in net loss of $1,654,896, was related primarily to the decrease in other income (expenses) offset by the increase in operating expenses
as explained above.
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 June 30, 2025, we had
a working capital surplus of $37,048,679, compared to a working capital surplus of $42,386,683 as of June 30, 2024. This decrease in working
capital surplus of $5,338,004 was primarily due to a decrease in cash and equity securities, related party offset by an increase in short-term
investments.
Cash flow used in operating
activities was $3,647,278 for the year ended June 30 2025, compared to $1,842,726 for the year ended June 30, 2024. The increase of $1,804,552
in cash used by operating activities was primarily due to a decrease in non-cash expenses, an increase in prepaid expenses, other receivables,
and accrued expenses, and decrease in accounts payable. The Company had no revenues during the years ended June 30, 2025 and 2024.
Cash provided by (used in)
investing activities for the year ended June 30, 2025 was $(2,924,988), compared to $2,920,237 for the year ended June 30, 2024. The decrease
of $5,845,225 in cash provided by (used in) investing activities was due to the net purchase of short-term investments of $2,907,988 and
purchase of vehicles of $17,000 compared to $3,000,000 in the redemption of short-term investments in corporate securities, $53,487 for
the purchase of a related party convertible note, $5,000,000 for purchase of certificate of deposit, $5,000,000 for redemption of certificate
of deposit, purchase of research and development equipment for $3,016, and purchase of vehicles for $23,260.
Cash provided by financing
activities during the year ended June 30, 2025 was $2,156,096, compared to $781,295 for the year ended June 30, 2024. The increase in
cash provided by financing activities was primarily due to an increase in net proceeds from purchase agreements.
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.
19
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.
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 June 30, 2025 and June 30, 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 year ended June 30, 2025, 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.
Item 7A. Quantitative and Qualitative Disclosure
About Market Risk.
Not required for a smaller
reporting company.
Item 8. Financial Statements.
All financial information
required by this Item is attached hereto at the end of this report beginning on page F-1 and is hereby incorporated by reference.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
None.
20
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
Our management, with the participation
of our CEO and our Acting CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and
Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our CEO and our Acting
CFO concluded that, due to the material weaknesses disclosed below, our disclosure controls and procedures as of the end of the period
covered by this report were not effective to ensure that information required to be disclosed is made known to management and others,
as appropriate, to allow timely decision regarding required disclosure and that the information required to be disclosed by us in 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 CEO and Acting CFO, or persons
performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management, including
our principal executive officer and acting principal financial officer, does not expect that our disclosure controls and procedures or
our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any,
have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort
to ensure our financial statements included in this Annual Report have been prepared in accordance with generally accepted accounting
principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects
our financial condition, results of operations and cash flows for the periods presented.
Management’s Annual Report on Internal
Control over Financial Reporting.
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities
Exchange Act, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2025.
In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) in Internal Control-Integrated Framework (2013). A material weakness is a deficiency, or a combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s
annual or interim financial statements will not be prevented or detected on a timely basis. We have identified the following material
weaknesses:
Changes in Internal Controls
There has been no change in
our internal control over financial reporting that occurred during the quarter ended June 30, 2025 that has materially affected or is
reasonably likely to materially affect our internal control over financial reporting.
Item 9B. Other Information.
During the quarter ended June
30, 2025, 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 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections.
Not applicable.
21
PART III
Item 10. Directors, Executive Officers and
Corporate Governance.
The following table sets forth
information about our executive officers and directors:
Name Age Position
David Raney 70 Director
Dr. Syed Mubeen Jawahar Hussaini 43 Chief Technology Officer
Timothy Young – President, CEO, Acting
CFO and Chairman of the Board of Directors
Tim Young is an accomplished
executive with over fifteen years of management experience in media and Internet technology companies. Mr. Young was appointed President,
CEO and Chairman of the Company in August 2009. Mr. Young was appointed Acting CFO in 2010.
Through his outreach to the
public and to leaders in the renewable energy field, Mr. Young has bolstered the company’s visibility as a key player in the developing
renewable hydrogen market and rallied a strong investor base. Mr. Young’s proven fundraising ability, along with his leadership
and direction of SunHydrogen’s long-term and short-term goals and strategies, has enabled the company to engage international industrial
partners, attract top industry scientists, and most importantly continue to hit milestones toward commercializing its nanoparticle-based
renewable hydrogen technology.
Prior to founding SunHydrogen,
Mr. Young demonstrated a track record of success in management and leadership positions bringing new products to the market in the digital,
cable and broadcast media industries. Mr. Young was the President of Rovion, a digital advertising
company, where he increased revenues through a channel sales strategy that included companies such as Clear Channel, Disney, CBS, and
Fox Television and bolstered the company’s technical capabilities through strategic acquisitions.
Prior
to Rovion, Mr. Young enjoyed a decade-long career at Time Warner Inc. where he served as Vice President and Regional Vice President of
various divisions including America Online and Time Warner Cable. During his tenure, Mr. Young built some of the highest performing sales
organizations at Time Warner with responsibilities ranging from product development and marketing to staff training and leadership development.
He led the California and Hawaii sales teams which accounted for over $200 million in revenues with 250 sales and marketing personnel.
Mr. Young’s track record
of success and over fifteen years of management and leadership experience bringing new products to the market qualifies him to be a board
member of the Company.
David Raney – Director
Mr. Raney has been a director
of the Company since October 2024. Mr. Raney, most recently founded and served as chief executive officer of the Texas Hydrogen Alliance
(“Alliance”), a non-profit trade organization that brings together policymakers, regulators, industry leaders and innovators
to advocate for policies that advance the hydrogen economy, from 2022 to 2023. He currently serves as Executive Director Emeritus of Alliance.
Prior to that, Mr. Raney served as a corporate executive for Toyota Motor North America from 2014 to 2021. Mr. Raney holds over 40 years
of experience in the transportation industry, where he routinely served as a technical liaison between corporate R&D and executive
teams and environmental and safety federal and state government regulators. Namely, he has held leadership roles at prominent automotive
companies such as Deere & Company, Saab-Scania of America, General Motors, American Honda Motor Company and Toyota Motor North America.
Mr. Raney’s energy industry experience qualifies him to serve on our board of directors.
22
Dr. Syed Mubeen Jawahar Hussaini – Chief
Technology Officer
Prior to his appointment as
chief technology officer in February 2025, Dr. Mubeen served as the Company’s chief scientific officer from January 2022. Since
April 2021, he has also been Associate Professor, Department of Chemical and Biochemical Engineering, at the University of Iowa. From
August 2014 to March 2021, Dr. Mubeen was Assistant Professor, Department of Chemical and Biochemical Engineering, at the University of
Iowa. As the Company’s chief scientific officer, Dr. Mubeen has led the strategic direction and execution of the Company’s
technology development, focusing on advancing the Company’s Gen 2 and Gen 3 hydrogen panel systems. Dr. Mubeen received his Ph.D.
in Chemical and Environmental Engineering from the University of California, Riverside, followed by postdoctoral research at the University
of California, Santa Barbara.
Directors are elected at our
annual meeting of shareholders and serve for one year until the next annual meeting of shareholders or until their successors are elected
and qualified.
Family Relationships
There are no family relationships
among our executive officers and directors.
Board Leadership Structure and Role in Risk
Oversight
Although we have not adopted
a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have traditionally determined
that it is in the best interests of the Company and its shareholders to combine these roles. Currently, our Chief Executive Officer also
serves as Chairman of the Board. Due to the small size and early stage of the Company, we believe it is currently most effective to have
the Chairman and Chief Executive Officer positions combined.
Involvement in Certain Legal Proceedings
During the past ten years,
none of our directors, executive officers, promoters, control persons, or nominees has been:
23
Committees of the Board
Due to the small size of the
Company and its Board of Directors, we currently have no audit committee, compensation committee or nominations and governance committee
of our board of directors. We do not have an audit committee financial expert.
Code of Ethics
We have adopted a Code of
Ethics that applies to all of our directors, officers and employees. A copy of the Code of Ethics is available on our website at www.sunhydrogen.com
and can be obtained without charge upon request to Timothy Young, CEO and President, BioVentures Center, 2500 Crosspark Road, Coralville,
IA 52241 and is also being incorporated by reference herein. Any waiver of the provisions of the Code of Ethics for executive officers
and directors may be made only by the Board of Directors. Any such waivers will be promptly disclosed to our shareholders.
Changes in Nominating Procedures
None.
Insider Trading Policies
We have not adopted an
insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees.
Item 11. Executive Compensation
The table below sets forth
the compensation earned by our named executive officers during the last two fiscal years.
24
Outstanding Equity Awards at Fiscal Year-End
The following table discloses
information regarding outstanding equity awards granted or accrued as of June 30, 2025, for our named executive officers.
Outstanding Equity Awards
Option Awards Stock Awards
Director Compensation
The following table sets forth
compensation information regarding the Company’s non-employee directors in fiscal 2025:
Mark Richardson $ - $ - $ - - - - - - $ -
25
Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.
The following table sets forth
certain information, as of September 10, 2025, concerning the number of shares of our common stock owned by: (i) each of our directors
and executive officers; (ii) all of our named executive officers as a group; and (iii) each person or group known by us to beneficially
own more than 5% of our outstanding shares of common stock.
We believe that all persons
named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.
A person is deemed to be the
beneficial owner of securities that can be acquired by him within 60 days of September 10, 2025, upon the exercise or conversion of options,
warrants or convertible securities. Each beneficial owner’s percentage ownership is determined by assuming that options, warrants
or convertible securities that are held by him, but not those held by any other person, and which are exercisable within 60 days of September
10, 2025 or have been exercised and converted.
Shares Beneficially Held Percentage of Common Stock(1)
David Raney - 0.0 %
All officers and directors as a group (3 persons) 259,462,947 4.6 %
* Less than 1%
(2) Includes 125,812,947 shares underlying options.
(3) Includes 63,000,000 shares underlying options.
The address for each of the officers and directors is c/o SunHydrogen, Inc. BioVentures Center, 2500 Crosspark Road, Coralville, IA 52241
Securities authorized for issuance under equity
compensation plans
On January 23, 2019, our Board
adopted the Company’s 2019 Equity Incentive Plan (the “2019 Plan”). The purpose of the 2019 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 maximum number of shares of the Company’s common stock that can be
issued under the 2019 Plan is 300,000,000. The 2019 Plan has been approved by stockholders.
On
January 27, 2022, our Board adopted the Company’s 2022 Equity Incentive Plan (the “2022 Plan”). The purpose of the 2022