PART I

Item 1. Business.

Unless otherwise stated or the context requires otherwise, references in this annual report on Form 10-K to “SunHydrogen”, the “Company”, “we”, “us”, or “our” refer to SunHydrogen, Inc.

Overview

At SunHydrogen, our goal is to replace fossil fuels with clean, renewable hydrogen.

Our patented low-cost technologyHydrogen is intendedthe most abundant chemical element in the universe. When hydrogen fuel is used to produce renewable hydrogen using sunlightpower transportation and any source ofindustry, the only byproduct left behind is pure water, including seawater and wastewater. Unlike non-renewableunlike hydrocarbon fuels such as oil, coal and natural gas wherethat emit carbon dioxide and other contaminants are releasedharmful pollutants into the atmosphere when used, hydrogen fuel produces pure water as the only product. By optimizing the science of photoelectrolysis at the nano-level, our low-cost nanoparticles mimic photosynthesis to efficiently use sunlight to split water molecules into renewable hydrogen. Using our low-cost method to produce renewable hydrogen, we intend to enable a world of distributed hydrogen production for renewable electricity and hydrogen fuel cell vehicles.

Hydrogen is the lightest and most abundant chemical element, constituting roughly 75% of the universe’s chemical elemental mass (Palmer, D. (13 September 1997). “Hydrogen in the Universe.” NASA). In its purest form, hydrogen is a non-toxic colorless and odorless gas.atmosphere. However, naturally occurring elemental hydrogen is relatively rare on earth and hydrogen gas is most often produced using fossil fuels. Industrial production– so rare, in fact, that today about 95% of all hydrogen is mainlyproduced from the steam reforming of natural gas (Source: US Department of Energy, Hydrogen Fuel Basics). This process is both economically and is usually employed near its production site, with the two largest applications being crude oil processing (hydrocracking) and ammonia production, mostly for the fertilizer market. environmentally unsound.

We are developing whata technology that we believe is a cleanerhas the potential to offer an efficient and greenercost-effective way to produce hydrogen.

Hydrogen astruly green hydrogen using sunlight and any source of water. Just like a fuel, likesolar panel is comprised of multiple cells that generate electricity, is an energy carrier ratherour hydrogen panel encases multiple hydrogen generators immersed in water. Each hydrogen generator contains billions of electroplated nanoparticles, autonomously splitting water into hydrogen and oxygen. Our technology has the potential to be one of – if not the most – economical green hydrogen solutions: Unlike traditional water electrolysis for hydrogen, our process requires no external power other than an energy source. We believe that if hydrogen was easily accessible for the world to depend on it, the challenging global issues associated with the widespread usages of fossil fuels, such as global climate changesunlight and air pollution would be erased.

Over 99% of hydrogen produced today is produced using a fossil fuel, methane (natural gas) in a method called steam methane reforming (SMR). Although commercially optimized over decades, the SMR process is capital intensiveuses efficient and will remain so due to the fundamental nature of the process which includes: (1) three separate reactors with different catalysts operating at different temperatures, (2) large amounts of heat transfer needed for the endothermic reforming and exothermic water gas shift, and (3) the need to remove all carbon oxides using capital and energy intensive methods. (source: Nikolaidis, P.; Poullikkas, A., A comparative overview of hydrogen production processes. Renewable and Sustainable Energy Reviews 2017, 67, 597-611.)low-cost materials.

Besides being capital intensive, the SMR method releases harmful levels of carbon dioxide and other pollutants into the air further contributing to our global climate crisis.

We believe renewable hydrogen ishas already proven itself to be a key solution in helping the fuel ofworld meet climate targets, and we believe our technology potentially offers solutions to the future. The main challenge has beenchallenges that the highhydrogen future presents, including cost of hydrogen production and transportation. Many of today’s green hydrogen producers transport their product over long distances, so although the hydrogen itself is green, the delivery and transport infrastructure comes with a high carbon footprint and a significant capital investment. The SunHydrogen solution is fully self-contained, offering on-site solar hydrogen generation and local distribution to eliminate carbon footprint altogether and significantly reduce capital investments for transport and delivery.

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.

With a target cost of $2.50/kg., 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 our independent laboratory in Coralville, Iowa. Development efforts are also aided by our sponsored research agreements with the University of Iowa and the University of Michigan, and by our relationships with specialized industry partners.

The 2023 fiscal year saw our Coralville, Iowa laboratory space grow with the addition of talented engineers and chemists, state-of-the-art equipment, and a demonstration-ready setup fit for presenting our process to new and existing industrial partners.

Led by Chief Scientific Officer Dr. Syed Mubeen and Director of Technology Dr. Joun Lee, our Iowa team is focused on building tandem photoelectrosynthetic heterostructures (nanoparticle-based tandem semiconductor units) and evaluating their manufacturability at scales relevant for commercialization. This involves porous substrate fabrication and development of SunHydrogen’s two proprietary semiconductor nanoparticle units within these porous substrates (dual junction devices).

In the past year, our Iowa team has achieved several key milestones toward commercialization. Namely, we have:

(1) Unveiled the largest version to-date of SunHydrogen’s nanoparticle-based green hydrogen technology, featuring 16-times more hydrogen generator area than the previous small-scale model. The 1.5 sq. ft. prototype is currently the only self-contained nanoparticle-based hydrogen generation device of its kind that splits water molecules into high-purity hydrogen and oxygen using the sun’s energy.

(2) Achieved open circuit photovoltages over 0.9 volts with a single-junction semiconductor unit; open circuit photovoltages over 1.8 volts with a dual-junction semiconductor unit; and photocurrent densities as high as 13.2 milliamps per square centimeter per substrate with a single-junction semiconductor unit. These results confirm that SunHydrogen has consistently reached commercializable photovoltages and photocurrent densities using our nanoparticle units.

 While the above accomplishments provide encouragement that we are on the right track toward our goal of delivering the most affordable green hydrogen solution, we remain focused on the additional milestones we must meet to reach commercialization.

Foremost, to achieve commercially-viable solar-to-hydrogen efficiency targets, we require a second junction unit capable of producing photocurrent densities similar to or higher than our first junction, which we are currently working toward. Our team is currently pursuing multiple approaches to bolster our operational photocurrent densities, and our next milestone is translating our existing lab-scale success to larger scales.

In parallel, we are optimizing our panel design to increase hydrogen production rates and durability while decreasing the cost per kilogram of hydrogen produced. We believeare working to increase the hydrogen generator area to panel area ratio, minimize voltage loss, and improve power conversion efficiency.

Led by Dr. Nirala Singh, one of the lead inventors on SunHydrogen Patent No. 9,593,053B1, the University of Michigan team is focused on understanding the requirements of the generator housing including hydrogen collection efficiency and optimizing and testing potential oxygen evolution and hydrogen evolution electrocatalysts to accelerate scaleup and increased efficiency of photoelectrochemically active heterostructures.

In the past year, they identified the most promising configurations to minimize the significant energy losses and produce hydrogen at a low-cost distributed productionhigh rate. They further tested these configurations in the Generator Housing with oxygen evolution and hydrogen evolution catalysts synthesized in the previous year and measured the collection efficiency of hydrogen following its production. The stability of the hydrogen evolution catalyst and oxygen evolution catalyst synthesized in the previous year were also evaluated for continuous operation in a three-electrode setup. University of Michigan is developing strategies to mitigate the high series resistance in the device and improved the kinetics of the oxygen evolution electrocatalyst to lower the overpotentials while maintaining high stability of the catalyst.

University of Michigan demonstrated the use of the system in the Generator Housing without membranes while maintaining a low crossover of the generated gases. The elimination of the membrane can assist with reducing capital and processing costs. University of Michigan also tested the ionic and liquid crossover of the membrane integrated configuration fabricated by partners. They evaluated the ionic conductivity as well as mechanical, chemical, and electrochemical stability.

To evaluate the hydrogen collection efficiency, University of Michigan integrated a gas collection system to the Generator Housing. This system underwent successive modifications to increase efficiency of hydrogen collection process to match the desired values motivated by technoeconomic analysis. Consequently, a high faradaic efficiency of hydrogen generation process with high hydrogen collection efficiency was successfully achieved.

University of Michigan also identified various voltage losses in the Generator Housing and compared with the model values calculated in the previous year. The oxygen evolution catalyst and series resistance in the device were identified as two major sources of voltage loss.

Outside of our central research and development hub in Iowa and our work with the University of Iowa and the University of Michigan, we have further expanded our industrial partnerships across the U.S., Germany, South Korea, and Japan.

Our current industrial partners include: COTEC Corp.; MSC Co. LTD; Chromis Technologies; the National Renewable Energy Laboratory (NREL); Geomatec; and InRedox. By diversifying our commercialization strategy in this way, we have formed relationships with industrial partners who are specialized in individual components of our technology such as electroplating, substrate processing and catalyst/membrane integration.

InRedox and Geomatec are focused on facilitating our transition to large-scale substrate manufacturing, while MSC Co. LTD is focused on developing large-scale electroplating chemistries.

With the SunHydrogen technology,National Renewable Energy Agency, we are working to improve the overall power conversion efficiency of our hydrogen panels.

With COTEC Corp. we are working to reproduce existing lab-scale achievements using industrial electroplating processes. We expect our initial exploration phase with COTEC to be completed by December 31, 2023. Following this phase, our next step is to produce 1m² hydrogen panels to be utilized in multiple commercial-scale pilot projects.

We are working with Chromis Technologies to integrate both proton exchange membranes (PEM) and anion exchange membranes (AEM) into our proprietary substrates and evaluate performance metrics for sustainable hydrogen production.

We also recently announced the approval of $3.1M in funding for Project NanoPEC, which brings us together with six partners at the cutting edge of industry and science in Germany, including: SCHMID Group; Fraunhofer; WAVELABS Solar Metrology Systems GmbH; ECH Elektrochemie Halle GmbH; Zahner-Elektrik; and Helmholtz-Zentrum Berlin.

We believe working with some of the most innovative leaders in German industry and science can accelerate our progress toward commercialization.

Finally, we remain well-capitalized to pursue strategic investments in the hydrogen space, as evidenced by our November 2022 investment of $10M in Norway-based TECO2030 ASA.

With their zero-emission PEM hydrogen fuel cells stacks and modules, TECO2030 ASA is accelerating the transition to clean energy in the maritime and heavy-duty transportation sectors, and has formed strong relationships with world-leading companies in the fuel cell industry in the process. Their longtime development partner AVL is the wayworld’s largest independent company for the development, simulation and testing of powertrain systems. TECO 2030 ASA is also partnered with thyssenkrupp Automation Engineering, which holds over 100 years of fuel cell experience and €34 billion in revenue in 2021.

Every day in the US, hundreds of thousands of diesel-powered trucks travel through routes with abundant land and sun. Envision SunHydrogen panels along and around these highways, producing green hydrogen at and near refueling sites: Our technology would eliminate the need to enabletransport hydrogen fuel over long distances, lowering the high costs and hydrogen losses that would otherwise happen in long-distance transport. In the future, we believe our green hydrogen panels along major trucking routes worldwide, together with the proliferation of TECO 2030 ASA ’s hydrogen fuel cell technology, can make a worldsignificant mark on the industry.

While we remain dedicated to our primary goal of cleandeveloping our nanoparticle technology to commercialization, we will also seek to further the renewable hydrogen ecosystem through investment in, and renewable energy.

Market Opportunity

acquisition of, complementary hydrogen technologies. We believe we have the resources to maximize our impact in this fast-growing industry.

Additionally, we believe our recent uplisting to the OTCQB Venture Market will allow us to expose a broader range of investors to our mission of producing low-cost, truly green hydrogen. With additional compliance and quality standards, the OTCQB provides investors improved visibility to enhance trading decisions.

Looking ahead to the upcoming months, we continue making steady progress toward strengthening our operational photocurrent densities, optimizing our panel design, and engaging quality manufacturing partners that can take our existing lab-scale process to commercial-scale.

Market Opportunity

Hydrogen generation is projected to become a $1 trillion per year market by 2050 (Source: Goldman Sachs, Carbonomics: The clean hydrogen revolution). Current fossil fuels can’t sustain future energy requirements environmentally or economically, and hydrogen fuel technologies are stillbeing adopted across all sectors as the world moves toward renewable alternatives.

Over 110 countries have set goals to achieve net-zero emissions by 2050, and as governments are looking to clean energy sources like hydrogen to help them meet their targets (Source: United Nations, The race to zero emissions, and why the world depends on it). It is estimated that nearly 25% of global energy will come from clean hydrogen alone by 2050 (Source: Goldman Sachs, Green Hydrogen: The next transformational driver of the Utilities industry).

In the US, California is leading the way in hydrogen strategies, with more fuel cell passenger vehicles on the road than any other state and one of the largest hydrogen refueling station networks in the early stagesworld (Source: Sierra Nevada Ally, Hydrogen Fuel Cell Vehicles are Building Momentum in California). Globally, over 1,000 green hydrogen production demonstration projects have been announced around the world, and policy leaders have put forth ambitious strategies to utilize hydrogen and fuel cell technologies across all sectors of the economy including transportation, feedstock and industrial heat use (Source: The Hydrogen Council and McKinsey & Company, Hydrogen Insights 2023).

Existing Market Growth

As supply chain challenges and geopolitical conflicts continue to affect fuel prices globally, the hydrogen market is rallying support from consumers and yet, thisgovernments alike.

In August 2022, The Inflation Reduction Act, which allotted $369 billion to renewable energy and climate projects, was signed into law in the US. “Among its features, the law has a 10-year extension of solar and wind tax credits and incentives to support new technology, with hydrogen and energy storage set to be the greatest beneficiaries,” according to Morningstar’s chief US market continuesstrategist Dave Sekera (Source: Markets Insider, Clean energy stocks are set to grow exponentially. Onebe the big winners of the reasonssweeping Inflation Reduction Act just signed by Biden, Morningstar says). Specifically, the Act included a tax credit that will award up to $3/kg for this growth islow carbon hydrogen, with exact credit amounts to be determined by calculating a given project’s greenhouse gas emissions (Source: S&P Global, Hydrogen tax credits preserved in new US Inflation Reduction Act).

In the year since the passage of the Inflation Reduction Act, the US has seen additional promising legislation in favor of the adoption of hydrogen fuel technologies withinas a replacement for fossil fuels. Most recently, the US Department of Energy released its intent to invest up to an increased number of major industriesadditional $1 billion to support the Regional Clean Hydrogen Hubs program, an already-$7 billion initiative to create six to ten regional clean hydrogen hubs across the country (DOE, Biden-Harris Administration to Jumpstart Clean Hydrogen Economy with New Initiative to Provide Market Certainty and spanning many applications.

Furthermore, recent government mandates for renewable energy have created a real and sustainable market opportunity for renewable hydrogen. Most states in the United States have legislative mandates to use between 10-45% of renewable energy by 2050, some states have mandates for 100% by 2050. These include California (100% by 2045), Colorado (100% by 2050), Hawaii (100% by 2045), Virginia (100% by 2050), Washington (100% by 2045), Washington DC (100% by 2032) and Puerto Rico (100% by 2050)Unlock Private Investment). (https://www.ncsl.org/research/energy/renewable-portfolio-standards.aspx)

While solar and wind electricity have been the dominate form of renewable energy, the sun does not always shine and the wind does not always blow. Therefore, we believe a direct solar-to-hydrogen technology which immediately stores solar energy as hydrogen can turn solar energy into a primary and reliable source of energy just like coal and natural gas – but cleaner and greener.

Existing Market Growth

According to a Global Market Insights study released in June 2019,the DOE, America’s growing hydrogen economy has the potential to add 100,000 net new direct and indirect jobs by 2030 (DOE, DOE’s Pathways to Commercial Liftoff: Clean Hydrogen report).

An additional factor currently driving the global hydrogen generation market size is predicted to be valued at $180 billion by 2024. Strict regulatory normsthe need to reduce sulfur content with measures to reduce the carbon footprint is expected to drive the global hydrogen generation market size.in petroleum products. U.S. federal and state governments have adopted various programs, including the Tier 3 program, to reduce the sulfur content in gasoline, motor oil and diesel and which aims to lower the gasoline sulfur content up to 10 ppm in 2017.

Growingdiesel. Particularly, there is a growing demand for petroleum products from developing countries is anticipated to also drive the hydrogen generation market size in the coming years.countries. Hydrogen is used in various refining processes including hydrocracking and hydrodesulfurization to crack bigger molecules into lighter ones and produce more usable products.

Strong investment for the expansion

For all these reasons and upgrade of refineries to fulfill emission and sulfur content regulation is expected to stimulate the growth of the hydrogen generation market. Increasing heavy crude oil consumption demand will complement the industry landscape. Positive outlook towards the chemical industry including ammonia and methanol will also positively influence growth.

We believe increasing demand for clean fuel energy will be affected by:

It is within these industries thatmore, we believe our renewable hydrogen producinghydrogen-producing technology possesses significant early market opportunity, especially as innovation and infrastructure continue to develop.

Utility Scale Hydrogen Electricity

According to a March 2013 report from NREL, a national laboratory of the U.S. Department of Energy, Hydrogen can be blended into the existing natural gas pipeline networks, thus bypassing the high cost of dedicated hydrogen pipelines in order to use hydrogen at a large scale. If implemented with relatively low concentrations, less than 5%–15% hydrogen by volume, this strategy of storing and delivering renewable hydrogen to markets appears to be viable without significantly increasing risks associated with utilization of the gas blend in end-use devices (such as household appliances), overall public safety, or the durability and integrity of the existing natural gas pipeline network. (https://www.nrel.gov/docs/fy13osti/51995.pdf).

Hydrogen Fuel Cell VehiclesMobility

One ofThe auto-manufacturing and vehicle industries are among the most recognized applications for hydrogen fuel technologies falls within the auto manufacturing and vehicles industries. The three leading manufacturers oftechnologies. According to a 2023 study by Information Trends, over 56,000 hydrogen fuel cell vehicles (FCVs)had been sold by year-end 2022 (Source: Information Trends, Global Market for Hydrogen Fuel Cell Vehicles).

Historically, sales have been held back due to the lack of a solid hydrogen refueling infrastructure, but the numbers are in order, Toyota, Hyundai,projected to rise quickly, and Honda – three internationally recognized companies. Industry reports cite the need for increased infrastructure, such as fueling stations, for the industry to garner even greater market acceptance. However, the same report indicates there will be 22.2 million hydrogen fuel cell vehicles soldare gaining momentum around the world. Specifically, hydrogen stands to make a significant impact on the heavy-duty, long-haul trucking industry. Hydrogen-powered trucks and hydrogen refueling stations present a variety of cost, scalability, and sustainability-related benefits over battery power, according to a recent McKinsey & Company report. Namely, hydrogen-fueled trucks can refuel faster and carry a lower weight penalty than battery-powered trucks because tanks weigh considerably less than batteries. And at scale, the infrastructure is less costly to create than e-truck charging infrastructure because it does not require grid upgrades and has a smaller carbon footprint. Faster refueling speed also means the hydrogen infrastructure can be used by many more trucks (McKinsey & Company, Unlocking hydrogen’s power for long-haul freight transport).

Additionally, hydrogen has emerged as an ideal solution for a myriad of mobility-related applications beyond fuel cell cars and trucks.

In a 2022 report from the Ocean Conservancy, researchers concluded that green hydrogen-based fuels are the best option to transition the shipping industry away from fossil fuels. “Producing green hydrogen-based fuels can kickstart the transition to new shipping fuels along promising green corridor routes within the U.S. and can make key down payments that will drive further investment in renewable energy and feed the demand for climate action within the global transportation sector,” said Daniel Hubbell, shipping emissions campaign manager for Ocean Conservancy (Source: Ocean Conservancy, Green Hydrogen-Based Fuels are the Best Option to Transition the Shipping Industry Away from Fossil Fuels, New Report Finds).

In March 2023, French rail transport manufacturing company Alstom announced the debut of North America’s first green hydrogen-powered train, which began transporting passengers this summer (Smithsonian Magazine, North America’s First Hydrogen-Powered Train Will Debut This Summer). This follows Germany’s monumental 2022 accomplishment of completing the first-ever rail line to be entirely run on hydrogen-powered trains. Germany’s hydrogen trains have a range of 1,000 kilometers, meaning they can run for an entire day on the network on a single tank of hydrogen, and a hydrogen filing station has already been established on the route (Source: CNN, The world’s first hydrogen-powered passenger trains are here).

Hydrogen is even powering factory forklifts for commerce leaders like Walmart and Amazon: In 2022, Walmart purchased hydrogen from Plug Power to fuel as many as 9,500 machines across the retailer’s fulfillment and distribution centers (Source: Bloomberg, Walmart Will Run Forklifts on ‘Green’ Hydrogen in Plug Power Deal). In August 2023, Walmart opened a green hydrogen plant with energy company Engie at its Quilcura distribution center in Chile, in alignment with its desire to replace lead-acid batteries in forklifts with hydrogen fuel cells. “We are moving away from lead-acid batteries to reduce the time our associates spend on the battery charge process, which we expect will now improve up to 80%,” a company spokesperson said (Source: Hydrogen Insight, Walmart replaces battery-electric forklifts with hydrogen fuel-cell models to reduce charging times).

Amazon and Plug Power have entered a similar agreement, with Plug Power providing Amazon with 10,950 tons of liquefied hydrogen per year that will be used to fuel transportation and building operations starting in 2025 (Source: Forbes, Amazon To Buy Plug Power’s ‘Green’ Hydrogen In Deal with $2.1 Billion Stock Option). Along with fuel for forklifts, Amazon may also use hydrogen to power a range of vehicles used in delivery operations, including long-haul trucks, the article stated.

Whether in traditional vehicles, marine ships, long-haul trucks, trains, or leased by 2032, driving revenues upwardseven factory forklifts, it is clear that hydrogen has already made a significant mark on the mobility industry, and we only expect it to become more prolific as governments continue to support the development of $1.1 trillion. (https://www.researchandmarkets.com/reports/4200873/global-market-for-hydrogen-fuel-cell-vehicles).relevant infrastructure that the hydrogen future calls for.

Our Technology

Technology for Making Renewable Hydrogen from Sunlight and Water

Hydrogen (H₂)Powered by solar energy, billions of our microscopic nanoparticles split apart water at the molecular level, extracting hydrogen for use as a clean energy source and leaving behind only clean oxygen as a byproduct. This process is similar to what happens inside a plant cell during photosynthesis: Each Photoelectrosynthetically Active Heterostructures (or PAH) nanoparticle is a microscopic machine, composed of multiple layers enabling the third most abundant element on earth and the cleanest fuel in the universe, (Dresselhaus, Mildred et al. (May 15, 2003). “Basic Research Needs for the Hydrogen Economy”). Unlike hydrocarbon fuels such as oil, coal and natural gas where carbon dioxide and other contaminants are released into the atmosphere when used, hydrogen fuel usage produces only pure water (H₂O). Unfortunately, nearly no pure hydrogen exists naturally on earth and therefore must be extracted from hydrogen containing molecules like water. Historically, the cost of manufacturing hydrogen as an alternative fuel has been higher than the cost of the energy usedsolar electrolysis reaction to make it. This is the dilemma of the hydrogen economy, and one that we aim to address.

For over a century, water electrolysis, splitting water molecules into hydrogen and oxygen due to the passage of electric current, has been a well-established technology to produce hydrogen. The produced hydrogen combusts into water that can be recycled back into nature indefinitely. However, in practice, current commercial water electrolysis technologies require considerable energy from coal-powered electricity and also require ultra-pure water to prevent fouling of the system components. We believe these are the major barriers to affordable production of hydrogen.

The Perfect and Sustainable Energy Cycle

As it turns out, Mother Nature has been making hydrogen using sunlight since the beginning of time by splitting water molecules (H₂O) into its basic elements - hydrogen and oxygen. This is exactly what plant leaves do every day by way of photosynthesis. Since the produced hydrogen is immediately consumed inside the plant, we cannot simply grow trees to make hydrogen.

If technology can be developed to mimic photosynthesis to split water into hydrogen, we believe then a truly sustainable, low cost, and renewable energy cycle can be created to power the earth. However, cost has been the biggest barrier to realizing this vision.

take place.

Water Splitting

In the process of splitting a water molecule, input energy is transferred into the chemical bonds. So in essence,Essentially, manufactured hydrogen is simplyserves as a carrier or battery-like storage of the input energy. If the input energy is from fossil fuels, such as oil and gas, then carbon fossil fuel energy is simply transferred into hydrogen. If the input energy is renewable, such as solar andor wind, then new and clean energy is stored in hydrogen.

While the concept of water splitting is very appealing, the following industry-wide challenges must be addressed for renewable hydrogen to be commercially viable:

Technology

Water electrolysis in its simplest form is the transfer of “input electrons” in the following chemical reactions:

From these equations, one can deduce that if every input electron (e^-) is put to work and not lost, then a maximum amount of input electrons (i.e. energy) is transferred and stored in the hydrogen molecules (H₂). Additionally, if there were a very high number of cathode and anode reaction areas within a given volume of water, then a very high number of these reactions could happen simultaneously throughout the medium to split each water molecule into hydrogen wherever electrons are available.

SunHydrogen Panel™

Since our particles are intended to mimic the natural temperature conditionsprocess of photosynthesis, directly producing hydrogen and oxygen without the need for costly intermediate power conversions, they can be housed in very low-cost reactors. To facilitate the commercial use of our self-contained particle technology, we are developing a modular system that will enable the onsite daily production and storage of hydrogen for any timeany-time use in electricity generation.

We refer to our potential product as the SunHydrogen Panel which is comprised of the following components:

1. The Generator Housing - Our novel device design is the first of its kind to safely separate oxygen and hydrogen in the photoelectrochemical process, minimizing the sacrifice of solar-to-hydrogen efficiency. This device houses the water and the solar particles/cells and is designed with inlets and outlets for water and gasses. Utilizing a novel ion-exchange membrane integration strategy for separating the oxygen from the hydrogen products, efficient ion transport safely enables efficient solar hydrogen production.

2. The NanoParticle or Solar Cell - Powered by solar energy, billions of our microscopic nanoparticle solar cells split apart water at the molecular level, extracting hydrogen for use as a clean energy source and leaving behind only clean oxygen as a byproduct.

3. Oxygen Evolution Catalyst - Uniformly applied to the solar cell or nanoparticle, an oxygen evolution catalyst efficiently oxidizes water molecules to generate oxygen gas. The oxygen evolution catalyst must be robust to withstand long operating hours under acidic and alkaline conditions.

4. Hydrogen Evolution Catalyst - Necessary for collecting electrons to reduce protons for generating hydrogen gas, we have identified a strategy to minimize the use of precious metal-based catalysts and integrated the hydrogen catalyst into our generator system for efficient solar hydrogen production.

5. Coating Technologies - Two major coating technologies were developed to protect the nanoparticles and solar cells from photocorrosion under water: A transparent conductive coating to protect our nanoparticles and solar cells from photocorrosion during the water splitting process and efficiently transfer charges to catalysts for oxygen and hydrogen evolution reactions; and a polymer combination that protects the semiconductor solar cells that would otherwise fail in aquatic environments, instead ensuring a long lifetime for solar hydrogen production.

Our business and commercialization plan calls for two generations ofutilizes our panels or generators. The first generation being manufactured for demonstration utilizes readily available commercial solar cells, coated with a stabilizing polymer and catalysts, and inserted into our proprietary panels to efficiently and safely split water into hydrogen and oxygen to produce very pure and green hydrogen that can be piped off the panel, pressurized, and stored for use in a fuel cell to power anything electric.

The second generation of our panels will feature a nanoparticle-based technology, where billions of autonomous solar cells are electrodeposited onto protective porous alumina sheets and manufactured in a roll to roll process or wafer process and inserted into our proprietary panels. For this generation,our nanoparticle technology, we have received multiple patents and we estimate that it will produceour target cost of hydrogen for less than $4production is $2.50 per kilogram before pressurization.

Our team atIn addition to our sponsored research agreements with the University of Iowa led by our CTO Dr. Joun Lee, has reached a milestoneand University of well over 1000 consecutive hours of continuous hydrogen production utilizing completely immersed solar cells with no external biases achieving simulated production equal to one year. We believe this to be a record for completely immersed cells. Now ready to take our technology out of the lab,Michigan, we are working with several vendorsa growing group of specialized industrial partners to help commercialize and manufacturer our first generation of renewable hydrogen panels that use sunlight and water to generate hydrogen. Our current industrial partners include: COTEC Corp.; MSC Co. LTD; Chromis Technologies; the National Renewable Energy Laboratory (NREL); Geomatec; and InRedox. Our project partners through Project NanoPEC include: SCHMID Group; Fraunhofer; WAVELABS Solar Metrology Systems GmbH; ECH Elektrochemie Halle GmbH; Zahner-Elektrik; and Helmholtz-Zentrum Berlin.

We anticipate that the SunHydrogen Panel will be a self-contained renewable hydrogen production system that requires only sunlight and any source of water.  As a result, it can be installed almost anywhere to produce hydrogen fuel at or near the point of distribution, for local use. We believe this model of hydrogen production addresses one of the biggest challenges of using clean hydrogen fuel on a large scale which is the transportation of hydrogen.

Each stage of the SunHydrogen Panel can be scaled independently according to the hydrogen demands and length of storage required for a specific application. A small-scale system can be used to produce continuous renewable electricity for a small house, or a large scale system can be used to produce hydrogen to power a community.

SunHydrogen Panel Manufacturing

We are currently working towards producing 100 demonstration SunHydrogen Panels, that will be used to display our Gen 1 technology in a number of venues throughout the United States and internationally. We anticipate that these demonstration panels will broaden national and global awareness of our new, green hydrogen generating technology. With the resulting increased interest, potential customers of our technology will be able to observe the panels’ operation first hand, and determine potential uses in their business operations.

Intellectual Property

On November 14, 2011, we filed a provisional patent application with the U.S. Patent and Trademark Office to protect the intellectual property rights for “Photoelectrochemically“Photoelectrosynthetically Active Heterostructures, methods for their manufacture, and methods and systems for producing desired products.”Heterostructures” A year later on November 14, 2012, we filed a non-provisional application claiming priority to the provisional application. On March 14, 2017, the part of thea first patent covering the structural design of PhotoelectrochemicallyPhotoelectrosynthetically Active Heterostructures (PAH) was granted as the United States Patent No. 9,593,053B1. OnA divisional application claiming priority to the foregoing applications was filed, and on April 3, 2018, the part of thea second patent covering the method for manufacturing PAH was granted as United States Patent No. 9,593,053B2. The patent protectsThese patents protect the Company’s proprietary design and manufacturing method of a self-contained solar-to-hydrogen device made up of millionsbillions of solar-powered water-splitting nanoparticles, per square centimeter. These nanoparticles are coated withseparated by a separate patent-pending protective coating that prevents corrosion during extended periods of hydrogen production. The aim of producing these nanoparticles is to achieve high solar -to-hydrogen conversion efficiency andat low cost. These patents expire on November 14, 2032.

An important aspect of the patented technology referred to in the preceding paragraph is the integrated structures of high-density arrays of nano-sized solar cells as part of hydrogen production nanoparticles. The technology enables manufacturing of ultra-thin sheets for solar-to-hydrogensolar hydrogen production, requiring substantially less material as compared to conventional solar cells used in rooftop power applications. 

InOn March of 2015,21, 2014, we jointly filed a full utility patentprovisional application with UCSBthe University of California, Santa Barbara for the “Multi-junction artificial photosynthetic cell with enhanced photovoltages.” The patent coversThereafter, we filed a non-provisional application on March 16, 2015 and a corresponding PCT Application on March 17, 2015. These applications cover our semiconductor designs to enhance the photovoltages of the nano-sized solar cells in the PAH structures. The semiconductor designs stacking multiple junctions inside the PAH structures would be an efficient and economiceconomical solution for the photovoltaic and the photoelectrochemical industries. This patent wasPatents were granted in Australia in April of 2018, China and Europe in March of 2019, and in the U.S. as United States Patent No. 10,100,415 in October of 2018. The last patent from this international application was granted in India in October 2022. This patent expires on October 21, 2036.

On December 21,September 26, 2016, we filed jointly with the University of Iowa a patentprovisional application for “Integrated Membrane Solar Fuel Production Assembly” to protect the intellectual property for our generator housing system that safely separates oxygen and hydrogen in the water-splitting process without sacrificing efficiency. This device houses the water, the solar particles/cells and is designed with inlets and outlets for water and gases. Utilizing a special membranearchitecture that integrates membranes for separating the oxygen side from the hydrogen side, proton transport is increased which is the key to safely increasing solar-to-hydrogen efficiency. InOn September of26, 2017, we filed a PCT Application that was later nationalized in the utilityU.S. on March 26, 2019. The U.S. patent application for this important invention is pending and prosecution is ongoing.

Strategic Partners

Effective September 1, 2020, we entered intoWe are currently engaged in a sponsored research agreement with the University of Iowa. As consideration under the research agreement, the University of Iowa will receive a maximum of $299,966 from the Company. The research agreement may be terminated by either party upon 60 days prior written notice or by either party upon notice of a material breach or default which is not cured within 90 days of receipt of written notice of such breach. This term of the research agreement runs through August 31, 2021September 30, 2023 but may be extended upon mutual agreement of the parties.

We are currently engaged in a sponsored research agreement with the University of Michigan. This term of the research agreement runs through September 30, 2023 but may be extended upon mutual agreement of the parties.

We have also initiated a research agreement with the National Renewable Energy Laboratory (NREL). This research agreement runs through April 21, 2024, but may be extended upon mutual agreement of the parties.

Additionally, we are engaged in an ongoing consulting contract with Strategic Analysis, Inc. to aid in further reducing our system cost through techno-economic research and evaluation.

In February 2021, we entered into a cooperation agreement with SCHMID Group of Freudenstadt, Germany. Through the collaboration, we identified key manufacturing needs in the areas of electroplating chemistries, substrate processing and membrane and catalyst integration that require collaboration with specialized industry partners. To address these scale-up challenges, we have since adopted a more diversified scale-up strategy. Due to delays associated with supply chain challenges brought on by the Covid-19 pandemic, the cooperation agreement was extended to fully complete the work scope with no additional cost to the company. Our agreement with SCHMID Group remains open-ended, and we look forward to ongoing collaboration with SCHMID through Project NanoPEC on the design and engineering of our generator housing.

Competition

Currently, most hydrogen is produced by steam reforming of natural gas or methane. This production technology dominates due to easy availability and low prices of natural gas. Partial oxidation of petroleum oil is second in production capacity after steam reforming of natural gas. The third largest production technology in terms of production capacity is steam gasification of coal. The currentKey players in the traditional hydrogen production industry is heavily dominated by large players such asinclude Linde, Air Liquide, Air Products, Praxair, and Chemicals Inc. and Air Liquide.more.

At this time, however, we view our primary competition as companies that have developed or are currently developing renewable hydrogen production technology. Green or Renewablerenewable hydrogen can be produced through electrolyzers if theythe electrolyzers are powered by renewable energy sources, such as solar or wind. There has been an emergenceSome of these companies include:

Plug Power: Plug Power (Stock symbol: PLUG) is engaged in the past few years.development of hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity. The company is currently building green hydrogen plants to produce at least 70 tons of liquid green hydrogen daily by the end of 2022 and 500 tons daily by 2025.

NEL Hydrogen: NEL Hydrogen (Stock symbol: NLLSF) delivers solutions to produce, store, and distribute hydrogen from renewable energy. The company’s hydrogen solutions cover the entire value chain from hydrogen production technologies to hydrogen fueling stations, enabling industries to transition to green hydrogen.

Fusion Fuel: Fusion Fuel (Stock symbol: HTOO) has developed a modular solar to hydrogen solution, combining proven solar concentration technology with a proprietary micro-electrolyzer that allows it to produce zero-emissions green hydrogen at highly competitive costs. The company sells its HEVO-Solar technology to customers interested in producing their own green hydrogen. It also develops company-owned green hydrogen farms.

ITM Power: ITM Power (Stock symbol: ITMPF) designs, manufactures, and integrates electrolyzers based on proton exchange membrane technology to produce green hydrogen using renewable electricity and tap water. ITM Power works with strategic partners including Linde, Shell, Snam, Hyundai, and Honda to scale its impact and industrial reach.

McPhy: McPhy (Stock symbol: MCPHY) specializes in Englandthe design, production and Proton Onsiteintegration of high pressure alkaline electrolyzers and hydrogen stations. McPhy has five development, engineering and production sites in Norway are two of the largest companies in this industry. France, Italy, and Germany, and it is backed by solid and constantly-evolving European industrial foundations.

If not powered by solar panels or wind power, theyrenewable sources, electrolyzers require external electricity most likely created by coal, gas or oil. We believe that our process when fully developed willmay potentially offer a competitive advantage as we anticipate it is completely green andwill be fully renewable and utilizesutilize no external power other than the sun. However, it should be noted that the renewable hydrogen market is rich with competitors, like the companies mentioned above, who have already successfully commercialized green hydrogen production technologies. We anticipate that existing leaders will continue to hone the efficiency of their products and drive down cost of green hydrogen per kilogram, thus creating a more competitive, challenging environment for emerging, not-yet-commercialized technologies such as our own.

Corporate Information

We were incorporated in the State of Nevada on February 18, 2009. Our executive offices are located at 10 E. Yanonali St., Suite 36, Santa Barbara, CA 93101.2500 Crosspark Road, Coralville IA 52241.

Employees

As of September 18, 2020,27, 2023, we had one (1)have 8 full-time employeeemployees and several consultants. We have not experienced any work stoppages and we consider relations with our employees and consultants to be good. Our Chief Technology Officer hired on June 1, 2016 is on a fulltime consulting basis. Most of our research and development work is performed byat our Coralville, Iowa laboratory, as well as with the University of Iowa and the University of Michigan through a sponsored research agreement. 

agreements, and in collaboration with our industrial partners.

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 at this time we will ever operate profitably or that we will have adequate working capital to meet our obligations as they become due.

Investors must consider the risks and difficulties frequently encountered by early stage companies, particularly in rapidly evolving markets. Such risks include the following:

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, 2020,2023, we have an accumulated deficit of $75,550,515.$81,971,040. For the year ended June 30, 20202023 we incurredhad net income of $974,979 due to a net loss of $57,529,338.non-cash change in derivatives. We expect to continue 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, there can be no assurance of when, if ever, we will 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. During the year ended June 30, 2023, the Company received funds through an equity purchase agreement in the net amount of $2,733,494. 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 projected 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.

In May of 2012, we completed a labWe are currently working to scale prototypethe lab-scale prototypes of our technology. This prototype demonstrates hydrogen production from small scale solar devices coated with our unique, low-cost polymer coating, and submerged in waste water from a pulp and paper mill.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. Although the lab scale prototype demonstrates the viability of our technology, there can be no assurance that we will be able 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. Our technology and product, when fully developed, 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. In the event that we are not able to significantly increase the number of customers that purchase or license our products, or if we are unable to charge the necessary prices or license fees, our financial condition and results of operations will be materially and adversely affected.

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.

Our industry is highly competitive and fragmented, subject to rapid change and has low barriers to entry. We may, in the future, compete for potential customers with solar and heating companies and other providers of solar power equipment or electric power. Some of these competitors may have significantly greater financial, technical and marketing resources and greater name recognition than we have.

We believe that our ability to compete depends in part on a number of factors outside of our control, including:

Competition in the solar power services industry may increase in the future, partlyCurrently, competing methods of hydrogen production include steam reforming of natural gas or methane, which dominates due to its easy availability and low barriers to entry, as well as from other alternative energy resources now in existenceprice; partial oxidation of petroleum oil; steam gasification of coal; and electrolyzers powered by solar or developed in the future. Increased competition could result in price reductions, reduced margins or loss of market share and greater competition for qualified personnel.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.

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 Australia,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.

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 modest 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 cannot assure that we will not 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 CEO, Timothy Young, and our development team at the University of Iowa. The loss of this valuable resource could have a material adverse effect on our operations. Our only officer is employed on “at will” basis. Accordingly, thereThere 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 Mr. Young or the services of the development team at the university or 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. WeFor example, we have entered into thea sponsored research agreement with the University of IowaMichigan which is set to terminate August 31, 2021.September 30, 2023. If we are unable to extend the terms of thethis 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.

There is substantial doubt about our ability to continue as a going concern.

Our independent public accounting firm in their report dated September 23, 2020 included an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. Going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. Our ability to continue as a going concern ultimately is dependent on our ability to generate a profit which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. As a result, our financial statements do not reflect any adjustment which would result from our failure to continue to operate as a going concern. Any such adjustment, if necessary, would materially affect the value of our assets.

An occurrence of an uncontrollable event such as the covid-19The COVID-19 pandemic may negatively affect our operations.

The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. The COVID-19 pandemic has resulted in social distancing, travel banshad widespread, rapidly evolving, and quarantine,unpredictable impacts on global society, economies, financial markets, and this has limitedbusiness practices. The continuing impacts of COVID-19 are highly unpredictable and could be significant, and may continue to limit access tohave an adverse effect on our facilities bybusiness, operations and our management, support staff and professional advisors. These factors, in turn, may not only impact our operations,future financial condition and development of our products but our overall ability to react timely to mitigate theperformance.

The impact of this event. Also, it may hamperthe pandemic on our effortsbusiness, operations and future financial performance could include, but is not limited to, comply with our filing obligations with the Securities and Exchange Commission, and our ability to raise capital on favorable terms, or at all.that:

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 OTC Pink,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.

There is a large number of authorized but unissued shares of capital stock available forWe anticipate that our issuance which may result in substantial dilution to existing shareholders.

Our articles of Incorporation authorized the issuance of up to 5,000,000,000 shares of common stock par value $0.001 and 5,000,000upon conversion of Series C Preferred Shares will result in dilution to our stockholders.

As of June 30, 2023, we have outstanding shares of redeemable Series C Preferred Stock with an aggregate stated value of $1,095,100 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, par value $0.001,which may have a negative effect on the price of which 2,156,132,155our common stock. In addition, as of June 30, 2023, we have outstanding warrants to purchase 86,495,239 shares of common stock and no shares of preferred stock are outstanding as of September 18, 2020. Our Board of Directors has the abilityoptions to authorize the issuance of an additional 2,843,867,845purchase 163,894,499 shares of common stock, and 5,000,000our issuance of shares of preferredcommon stock without shareholder approval. Any such issuance willupon exercise of outstanding warrants or options may result in substantialadditional dilution to existing shareholders. In addition, the availability of such a large number of capital stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company.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 if any, in the market value of our shares of common stock. There can be no assurance that shares of our common stock, will appreciate in value or even maintain the price at which our stockholders have purchased their shares.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.

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, and personnel, 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. TheWe 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.

Not applicable.

Item 2. Properties.

Our principal office address is 10 E. Yanonali, Suite 36, Santa Barbara, CA, 93101. We believe that our current premisesand independent laboratories are sufficient to handle our administrative activities forlocated at the near future as adequate lab space and equipment is attained through our agreement with the University of Iowa.BioVentures Center at 2500 Crosspark Rd., Coralville, IA 52241.

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.

Not Applicable.

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 OTC PinkOTCQB under the symbol “HYSR”

SecuritiesCommon Stock

Our Articles of Incorporation, as amended, authorizes the issuance of 5,000,000,00010,000,000,000 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 18, 2020,22, 2023 our common stock was held by 178approximately 194 stockholders of record.

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.

Equity Compensation Plan Information

On January 23, 2019, our Board adopted the Company’s 2019 Equity Incentive Plan (the “Plan”). The stated 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 maximum number of shares of the Company’s common stock that can be issued under the Plan is 300,000,000.

The following table sets forth information about our equity compensation plans as of June 30, 2020.