UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March~~December 31, 2021

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM __________ TO __________

COMMISSION FILE NUMBER: 000-54437

SUNHYDROGEN, INC.

(Name of registrant in its charter)

Nevada

26-4298300

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

	10 E. Yanonali, Suite 36, Santa Barbara, CA 93101
	(Address of principal executive offices) (Zip Code)

~~10 E. Yanonali, Suite 36, Santa Barbara, CA 93101~~

~~(Address of principal executive offices) (Zip Code)~~

Issuer’s telephone Number: (805) 966-6566

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Ticker symbol(s)		Name of each exchange on which registered
N/A		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting ~~company”~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of registrant’s common stock ~~par value $0.001~~ outstanding, as of ~~May 17, 2021~~February 11, 2022 was ~~3,773,916,454.~~4,230,765,539.

SUNHYDROGEN, INC.

INDEX

				Page
PART I: FINANCIAL INFORMATION				1
~~ITEM~~Item 1:		~~FINANCIAL STATEMENTS~~Financial Statements		1
		Condensed Balance Sheets		1
		Condensed Statements of Operations		2
		Condensed Statements of Shareholders’ Deficit		3
		Condensed Statements of Cash Flows		4
		Notes to the Condensed Financial Statements		5
~~ITEM~~Item 2:		~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3:		Quantitative and Qualitative Disclosures About Market Risk		19
Item 4:		Controls and Procedures		19

PART II: OTHER INFORMATION				20
~~ITEM 3:~~Item 1	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~	24Legal Proceedings		20
~~ITEM 4:~~Item 1a:	~~CONTROLS AND PROCEDURES~~	24Risk Factors		20
~~PART II: OTHER INFORMATION~~Item 2:	25	Unregistered Sales of Equity Securities and Use of Proceeds		20
~~ITEM 1~~Item 3:	~~LEGAL PROCEEDINGS~~	25Defaults Upon Senior Securities		20
~~ITEM 1A:~~ Item 4:	~~RISK FACTORS~~	25Mine Safety Disclosures		20
~~ITEM 2:~~Item 5:	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~	25Other Information		20
~~ITEM 3:~~Item 6:	~~DEFAULTS UPON SENIOR SECURITIES~~	25Exhibits		20
~~ITEM 4:~~	~~MINE SAFETY DISCLOSURES~~	25
~~ITEM 5:~~Signatures			~~OTHER INFORMATION~~	25
~~ITEM 6:~~	~~EXHIBITS~~	25
~~SIGNATURES~~		2621

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

~~ITEM 1. FINANCIAL STATEMENTS~~

SUNHYDROGEN, INC.

CONDENSED BALANCE SHEETS

March 31,
2021 June 30,
2020
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 45,347,801 $ 195,010
Prepaid expenses 10,264 9,378

TOTAL CURRENT ASSETS 45,358,065 204,388

PROPERTY & EQUIPMENT
Computers and peripherals 11,529 2,663
Vehicle 205,000 -
216,529 2,663
Less: accumulated depreciation (9,361 ) (1,605 )

NET PROPERTY AND EQUIPMENT 207,168 1,058

OTHER ASSETS
Domain, net of amortization of $4,489 and $4,223, respectively 826 1,092
Trademark, net of amortization of $456 and $371, respectively 686 772
Patents, net of amortization of $21,574 and $16,250, respectively 79,569 84,492

TOTAL OTHER ASSETS 81,081 86,356

TOTAL ASSETS $ 45,646,314 $ 291,802

LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and other payable $ 249,909 $ 201,243
Accrued expenses 2,695 (253 )
Accrued expenses, related party 186,000 211,750
Accrued interest on convertible notes 347,023 432,866
Derivative liability 201,779,864 59,657,718
Convertible promissory notes, net of debt discount of $0 and $409,074, respectively 120,000 160,926

TOTAL CURRENT LIABILITIES 202,685,491 60,664,250

LONG TERM LIABILITIES
Convertible promissory notes, net of debt discount of $139 and $0, respectively 958,161 1,460,000

TOTAL LONG TERM LIABILITIES 958,161 1,460,000

TOTAL LIABILITIES 203,643,652 62,124,250

COMMITMENTS AND CONTINGENCIES (SEE NOTE 9) - -

SHAREHOLDERS' DEFICIT
Preferred Stock, $0.001 par value;
5,000,000 authorized preferred shares, no shares issued or outstanding - -
Common Stock, $0.001 par value;
5,000,000,000 authorized common shares
3,320,939,682 and 2,053,410,164 shares issued and outstanding, respectively 3,320,939 2,053,410
Additional Paid in Capital 77,942,807 11,899,871
Accumulated deficit (239,261,084 ) (75,785,729 )

TOTAL SHAREHOLDERS' DEFICIT (157,997,338 ) (61,832,448 )

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 45,646,314 $ 291,802

	December 31, 2021			June 30, 2021
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalent	$	44,601,694		$	56,006,555
Marketable securities		1,806,513			-
Prepaid expenses		3,580			-

TOTAL CURRENT ASSETS		46,411,787			56,006,555

LONG TERM INVESTMENTS
Marketable securities		6,846,879			-

PROPERTY & EQUIPMENT
Computers and peripherals		11,529			11,529
Vehicle		155,000			155,000
		166,529			166,529
Less: accumulated depreciation		(29,882	)		(11,072	)

NET PROPERTY AND EQUIPMENT		136,647			155,457

OTHER ASSETS
Domain, net of amortization of $4,754 and $4,223, respectively		561			738
Trademark, net of amortization of $543 and $371, respectively		600			657
Patents, net of amortization of $26,497 and $16,250, respectively		74,645			77,928

TOTAL OTHER ASSETS		75,806			79,323

TOTAL ASSETS	$	53,471,119		$	56,241,335

LIABILITIES AND SHAREHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable	$	203,637		$	223,520
Accrued expenses		3,070			11,912
Accrued expenses, related party		226,500			214,820
Accrued interest on convertible notes		210,383			282,505
Derivative liability		46,528,773			135,247,303
Convertible promissory notes, net of debt discount of $215,753 and $409,074, respectively		339,247			125,598

TOTAL CURRENT LIABILITIES		47,511,610			136,105,658

LONG TERM LIABILITIES
Convertible promissory notes, net of debt discount of $0 and $0, respectively		408,000			703,000

TOTAL LONG TERM LIABILITIES		408,000			703,000

TOTAL LIABILITIES		47,919,610			136,808,658

COMMIMENTS AND CONTINGENCIES (SEE NOTE 9)		-			-

SHAREHOLDERS’ EQUITY

Preferred Stock, $0.001 par value; 5,000,000 authorized preferred shares 2,700 Series C preferred shares issued and outstanding		3			-
Common Stock, $0.001 par value; 5,000,000,000 authorized common shares 4,029,789,187 and 3,849,308,495 shares issued and outstanding, respectively		4,029,789			3,849,308
Additional Paid in Capital		101,442,063			88,560,321
Accumulated deficit		(99,920,346	)		(172,976,952	)

TOTAL SHAREHOLDERS’ EQUITY (DEFICIT)		5,551,509			(80,567,323	)

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	53,471,119		$	56,241,335

The accompanying notes are an integral part of these condensed unaudited financial statements

SUNHYDROGEN, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND ~~NINE~~SIX MONTHS ENDED ~~MARCH 31,~~DECEMBER 30, 2021 AND 2020

(Unaudited)

Three Months Ended Nine Months Ended
March 31,
2021 March 31,
2020 March 31,
2021 March 31,
2020

REVENUE $ - $ - $ - $ -

OPERATING EXPENSES
General and administrative expenses 691,747 279,819 3,409,416 993,464
Research and development cost 1,126,422 145,031 1,712,169 393,265
Depreciation and amortization 6,312 2,093 13,030 6,340

TOTAL OPERATING EXPENSES 1,824,481 426,943 5,134,615 1,393,069

LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES) (1,824,481 ) (426,943 ) (5,134,615 ) (1,393,069 )

OTHER INCOME/(EXPENSES)
Other income 2,585 - 3,034 -
Gain (Loss) on change in derivative liability (18,603,307 ) 61,280 (142,122,146 ) (3,019,081 )
Interest expense (31,341 ) (209,777 ) (528,528 ) (696,311 )

TOTAL OTHER INCOME (EXPENSES) (18,632,063 ) (148,497 ) (142,647,640 ) (3,715,392 )

NET INCOME (LOSS) $ (20,456,544 ) $ (575,440 ) $ (147,782,255 ) $ (5,108,461 )

COMMON STOCK WARRANTS DEEMED DIVIDENDS - - (15,928,314 ) -

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (20,456,544 ) $ (575,440 ) $ (163,710,569 ) $ (5,108,461 )

BASIC AND DILUTED LOSS PER SHARE $ (0.01 ) $ (0.00 ) $ (0.07 ) $ (0.00 )

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED 2,987,975,171 1,662,190,201 2,477,795,662 1,425,819,359

	Three Months Ended						Six Months Ended
	December 31, 2021			December 31, 2020			December 31, 2021			December 31, 2020

REVENUE	$	-		$	-		$	-		$	-

OPERATING EXPENSES
Selling and Marketing		87,590			-			197,366			-
General and administrative expenses		353,885			2,286,980			680,470			2,725,170
Research and development cost		285,853			439,987			437,215			578,247
Depreciation and amortization		10,283			4,681			22,326			6,717

TOTAL OPERATING EXPENSES		737,611			2,731,648			1,337,377			3,310,134

LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES)		(737,611	)		(2,731,648	)		(1,337,377	)		(3,310,134	)

OTHER INCOME/(EXPENSES)
Other income		37,877			448			54,900			448
Loss on redemption of marketable securities		(20,693	)		-			(20,693	)		-
Loss on settlement of derivative liability		(841,596	)		-			(841,596	)		-
Gain (Loss) on change in derivative liability		26,135,397			(122,138,753	)		75,487,522			(123,518,838	)
Interest expense		(141,612	)		(250,428	)		(286,150	)		(497,187	)

TOTAL OTHER INCOME (EXPENSES)		25,169,373			(122,388,733	)		74,393,983			(124,015,577	)

NET INCOME (LOSS)	$	24,431,762		$	(125,120,381	)	$	73,056,606		$	(127,325,711	)

COMMON STOCK WARRANTS DEEMED DIVIDENDS		-			(15,928,314	)		-			(15,928,314	)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	24,431,762		$	(141,048,695	)	$	73,056,606		$	(143,254,025	)

BASIC EARNINGS (LOSS) PER SHARE	$	0.01		$	(0.05	)	$	0.02		$	(0.06	)

DILUTED EARNINGS (LOSS) PER SHARE	$	0.00		$	(0.05	)	$	0.01		$	(0.06	)

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC		4,029,789,187			2,317,322,842			4,015,076,087			2,228,251,336

DILUTED		5,304,670,650			2,317,322,842			5,289,957,550			2,228,251,336

The accompanying notes are an integral part of these condensed unaudited financial statements

SUNHYDROGEN, INC.

CONDENSED STATEMENTS OF ~~SHAREHOLDERS'~~SHAREHOLDERS’ DEFICIT

FOR THE ~~NINE~~SIX MONTHS ENDED ~~MARCH 31,~~DECEMBER 30, 2021 AND 2020

NINE MONTHS ENDED MARCH 31, 2020
Additional
Preferred stock Common stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
Balance at June 30, 2019 - $ - 1,077,319,339 $ 1,077,319 $ 10,432,575 $ (18,021,177 ) $ (6,511,283 )

Issuance of common stock for conversion of debt and accrued interest - - 390,468,995 390,469 285,606 - 676,075

Issuance of common stock for services - - 57,047,643 57,048 121,162 - 178,210

Stock based compensation expense - - - - 432,558 - 432,558

Net Loss - - - - - (4,533,022 ) (4,533,022 )

Balance at March 31, 2020 (unaudited) - $ - 1,524,835,977 $ 1,524,836 $ 11,271,901 $ (22,554,199 ) $ (9,757,462 )

	SIX MONTHS ENDED DECEMBER 31, 2020
									Additional
	Preferred stock				Common stock				Paid-in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at June 30, 2020		-	$	-		2,053,410,161	$	2,053,410	$	11,664,657	$	(75,550,515	)	$	(61,832,448	)

Issuance of common stock for cash		-		-		224,310,252		224,310		7,075,623		-			7,299,933

Purchase of common stock warrants for cash		-		-		120,000,000		120,000		8,880,000		-			9,000,000

Issuance of common stock for conversion of debt and accrued interest		-		-		275,532,749		275,533		482,783		-			758,316

Issuance of common stock for services		-		-		3,806,290		3,806		114,217		-			118,023

Common stock warrants issued with securities purchase agreement at fair value		-		-		-		-		3,900,067		-			3,900,067

Issuance of common stock warrants deemed dividends		-		-		-		-		15,928,314		(15,928,314	)		-

Common stock and warrants compensation expense		-		-		-		-		224,070		-			224,070

Net Loss		-		-		-		-		-		(127,325,711	)		(127,325,711	)

Balance at December 31, 2020 (unaudited)		-	$	-		2,677,059,452	$	2,677,059	$	48,269,731	$	(218,804,540	)	$	(167,857,750	)

NINE MONTHS ENDED MARCH 31, 2021
Additional
Preferred stock Common stock Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
Balance at June 30, 2020 - $ - 2,053,410,164 $ 2,053,410 $ 11,664,657 $ (75,550,515 ) $ (61,832,448 )

Issuance of common stock for purchase agreements and warrants - - 664,273,408 664,273 50,759,077 - 51,423,350

Issuance of common stock for conversion of debt and accrued interest - - 599,449,820 599,450 466,587 - 1,066,037

Issuance of common stock for services - - 3,806,290 3,806 114,217 - 118,023

Issuance of common stock warrants deemed dividends - - - - 15,928,314 (15,928,314 ) -

Stock based compensation expense - - - - 259,955 - 259,955

Buyback of options by Company - - - - (1,250,000 ) - (1,250,000 )

Net Loss - - - - - (147,782,255 ) (147,782,255 )

Balance at March 31, 2021 (unaudited) - $ - 3,320,939,682 $ 3,320,939 $ 77,942,807 $ (239,261,084 ) $ (157,997,338 )

	SIX MONTHS ENDED DECEMBER 31, 2021
									Additional
	Preferred stock				Common stock				Paid-in			Accumulated
	Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balance at June 30, 2021		-	$	-		3,849,308,495	$	3,849,308	$	88,560,321		$	(172,976,952	)	$	(80,567,323	)

Issuance of common stock for conversion of debt and accrued interest		-		-		180,480,692		180,481		(9,024	)		-			171,457

Issuance of Series C preferred stock in exchange for fair value of convertible note		2,700		3		-		-		14,340,766			-			14,340,769

Stock options redeemed by Company		-		-		-		-		(1,450,000	)		-			(1,450,000	)

Net Income		-		-		-		-		-			73,056,606			73,056,606

Balance at December 31, 2021 (unaudited)		2,700	$	3		4,029,789,187	$	4,029,789	$	101,442,063		$	(99,920,346	)	$	5,551,509

The accompanying notes are an integral part of these condensed unaudited financial statements

SUNHYDROGEN, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~SIX MONTHS ENDED ~~MARCH 31,~~DECEMBER 30, 2021 AND 2020

(Unaudited)

Nine Months Ended
March 31,
2021 March 31,
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (147,782,255 ) $ (5,108,461 )
Adjustment to reconcile net income (loss) to net cash (used in) provided by operating activities
Depreciation & amortization expense 13,030 6,340
Stock based compensation expense 259,955 571,594
Stock issued for services 118,023 267,789
Loss on change in derivative liability 142,122,146 3,019,081
Amortization of debt discount recorded as interest expense 408,935 529,097
Commission fees paid through offering - -
Change in assets and liabilities :
Prepaid expense (888 ) 5,986
Accounts payable 48,665 (30,800 )
Accrued expenses (22,800 ) -
Accrued interest on convertible notes 92,946 213,832

NET CASH USED IN OPERATING ACTIVITIES (4,742,243 ) (525,542 )

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of tangible assets (213,866 ) 780

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES: (213,866 ) 780

CASH FLOWS FROM FINANCING ACTIVITIES:
Buyback of stock options from related parties (1,250,000 ) -
Net proceeds from common stock purchase agreements 51,423,350 -
Payoff of convertible notes (64,450 ) -
Proceeds from convertible debt - 626,500

NET CASH PROVIDED BY FINANCING ACTIVITIES 50,108,900 626,500

NET INCREASE (DECREASE) IN CASH 45,152,791 101,738

CASH, BEGINNING OF YEAR 195,010 35,074

CASH, END OF YEAR $ 45,347,801 $ 136,812

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 26,843 $ 1,511
Taxes paid $ - $ -

SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS
Fair value of common stock upon conversion of convertible notes , accrued interest and other fees $ 1,066,037 $ 1,076,540
Fair value of common stock issued for services $ 118,023 $ 267,789
Issuance of common stock purchase warrants deemed dividends $ 15,928,314 $ -

	Six Months Ended
	December 31, 2021			December 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss)	$	73,056,606		$	(127,325,711	)
Adjustment to reconcile net income (loss) to net cash (used in) provided by operating activities
Depreciation & amortization expense		22,326			6,717
Stock based compensation expense		-			224,070
Stock issued for services		-			118,023
Loss on settlement of debt and derivative		841,596			-
Net (Gain) Loss on change in derivative liability		(75,487,522	)		123,518,838
Amortization of debt discount recorded as interest expense		226,849			408,098
Commissions fees paid through offerings		-			107,700
Change in assets and liabilities:
Prepaid expense		(3,580	)		2,838
Accounts payable		(19,883	)		(22,708	)
Accrued expenses		2,838			4,266
Accrued interest on convertible notes		59,301			90,088

NET CASH USED IN OPERATING ACTIVITIES		(1,301,469	)		(2,867,781	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of marketable securities		(8,653,392	)		-
Purchase of property and equipment		-			(53,961	)

NET CASH USED IN INVESTING ACTIVITIES:		(8,653,392	)		(53,961	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of common stock warrants		-			9,000,000
Redemption of related parties stock options		(1,450,000	)		-
Net proceeds from common stock purchase agreements		-			11,092,300

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(1,450,000	)		20,092,300

NET INCREASE (DECREASE) IN CASH		(11,404,861	)		17,170,558

CASH, BEGINNING OF PERIOD		56,006,555			195,010

CASH, END OF PERIOD	$	44,601,694		$	17,365,568

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	-		$	803
Taxes paid	$	-		$	-

SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS
Fair value of common stock upon conversion of convertible notes , and accrued interest	$	171,457		$	758,316
Fair value of common stock issued for services	$	-		$	118,023
Issuance of common stock purchase warrants deemed dividends	$	-		$	15,928,314
Fair value of preferred stock in exchanged for convertible note	$	14,340,769		$	-
Fair value of derivative liability removed	$	13,231,008		$	-

The accompanying notes are an integral part of these condensed unaudited financial statements

SUNHYDROGEN, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED

~~MARCH~~
DECEMBER 31, 2021 AND 2020

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the ~~nine~~six months ended ~~March~~December 31, 2021 are not necessarily indicative of the results that may be expected for the year ended June 30, ~~2021.~~2022. For further information refer to the financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended June 30, ~~2020.~~2021.

~~Going Concern~~

The accompanying condensed unaudited financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying condensed unaudited financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, raising additional capital. The Company has historically obtained funds through private placement and registered offerings of equity and debt. Management believes that it will be able to continue to raise funds by sale of its securities to its existing shareholders and prospective new investors to provide the additional cash needed to meet the Company’s obligations as they become due and will allow the development of its core business. There is no assurance that the Company will be able to continue raising the required capital.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of SunHydrogen, Inc. is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Cash and Cash Equivalent

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Marketable Securities

The Company considers corporate bonds (“bonds”) as investments due to their ratings. The bonds are rated based on their default probability, health of the corporation’s debt structure, as well as the overall health of the economy. The bonds fall into the category as investments if they have a rating of AAA and BBB.

The bonds have varied due dates and were classified as current and noncurrent, based on to their maturity dates. The bonds are generally valued using quoted prices and are classified in Level 2 of the fair value hierarchy as prices are not always from active markets. We consider our investments held to maturity and we believe there are no other than temporary declines in fair value. Our investments are recorded at historical cost.

Use of Estimates

In accordance with accounting principles generally accepted in the United States, management utilizes estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions relate to useful lives and impairment of tangible and intangible assets, accruals, income taxes, stock-based compensation expense, Binomial lattice valuation model inputs, derivative liabilities and other factors. Management believes it has exercised reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.

Property and Equipment

Property and equipment are stated at cost and are depreciated using straight line over its estimated useful lives.

~~During the nine months ended March 31, 2021, the Company purchased two (2) business vehicles for a total of $205,000, for transporting demonstration units and to serve as a mobile office.~~

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

Computers and peripheral equipment	2.5 Years
	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~
Vehicle	5 Years

~~Property and Equipment~~ ~~(Continued)~~

The Company recognized depreciation expense of ~~$7,755~~$18,809 and ~~$547~~$3,200 for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, respectively.

Intangible Assets

The Company has patent applications to protect the inventions and processes behind its proprietary solar-to-hydrogen based technology. Intangible assets that have finite useful lives continue to be amortized over their useful lives.

The Company recognized amortization expense of ~~$5,275~~$3,517 and ~~$5,793~~$3,517 for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, respectively.

SUNHYDROGEN, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2021 AND 2020

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Net Earnings (Loss) per Share Calculations

Net earnings (Loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the year. Diluted net earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the effect of stock options and stock-based awards (Note 4), plus the assumed conversion of convertible debt (Note 5).

December 31, 2021

For the ~~nine~~six months ended ~~March~~December 31, 2021, the Company calculated the dilutive impact of the outstanding stock options of ~~182,853,174,~~157,965,711, common stock purchase warrants of 94,895,239, and ~~the~~ convertible debt of ~~$1,078,300,~~$963,000 and interest of $210,384, which is convertible into shares of common stock. The stock options were not included in the earnings per share, because their impact was antidilutive, and the warrants and convertible debt were included in earnings per share, because their impact was dilutive.

December 31, 2020

For the six months ended December 31, 2020, the Company calculated the dilutive impact of the outstanding stock options of 196,000,000, common stock purchase warrants of 148,800,000, and convertible debt of $1,361,200 and interest of $433,436, which is convertible into shares of common stock. The stock options, warrants, and convertible debt were not included ~~because their impact was antidilutive.~~

For the nine months ended March 31, 2020, the Company calculated the dilutive impact of the outstanding stock options of 196,250,000, and the convertible debt of $2,029,545, which is convertible into shares of common stock. The stock options and convertible debt were not included in the calculation of net earnings per share, because their impact was antidilutive.

Equity Incentive Plan and Stock ~~Based Compensation~~Options

The Company periodically issues stock options to employees and non-employees in non-capital raising transactions for services. The Company accounts for stock option grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, the option grants immediately vest, and the total stock-based compensation charge is recorded in the period of the measurement date.Equity Incentive Plan

~~On October 2, 2017, the Company granted 10,000,000 stock options to a non-employee for services.~~

On December 17, 2018, the Board of Directors approved and adopted the 2019 Equity Incentive Plan (“the Plan”), with 300,000,000 shares ~~of common stock set aside and~~ reserved for issuance pursuant to the Plan. The purpose of the Plan is to promote the success of the ~~Company~~Corporation and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons. The awards are performance-based compensation that are granted under the Plan as incentive stock options (ISO) or nonqualified stock options. The per share exercise price for each option shall not be less than 100% of the fair market value of a share of common stock on the date of grant of the option. The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for ~~services.~~services and for financing cost. The Company accounts for stock option grants issued and vesting to employees and non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested, and the total stock-based compensation charge is recorded in the period of the measurement date. The options are exercisable into common stock.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

Stock Based Compensation ~~(Continued)~~

The Company accounts for stock option grants issued and vesting to employees and non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested, and the total stock-based compensation charge is recorded in the period of the measurement date.

Warrant Accounting

The Company accounts for the warrants to purchase shares of common stock using the estimated fair value on the date of issuance as calculated using the Black-Scholes valuation model.

SUNHYDROGEN, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED
DECEMBER 31, 2021 AND 2020

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments

Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized on the balance sheet, where it is practicable to estimate that value. As of ~~March~~December 31, 2021, the amounts reported for cash, accrued interest and other expenses, notes payables, convertible notes, and derivative liability approximate the fair value because of their short maturities.

We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

●

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets.

●

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active.

●

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows ~~at March~~on December 31, 2021 (See Note 6):

Total (Level 1) (Level 2) (Level 3)

Liabilities

Derivative liability measured at fair value at 3/31/2021 $ 201,779,864 - $ - $ 201,779,864

	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Marketable securities measured at fair value	$	8,480,269	$	-	$	8,480,269	$	-

Liabilities:
Derivative liabilities measured at fair value	$	46,528,773	$	-	$	-	$	46,528,773

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)~~

~~Fair Value of Financial Instruments~~ ~~(Continued)~~

The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value:

Balance as of June 30, 2020 59,657,718
Fair value of derivative liabilities issued -
Loss on change in derivative liability 142,122,146
Balance as of March 31, 2021 $ 201,779,864

Balance as of June 30, 2021		135,247,303
Fair value of derivative liability removed		(13,231,008	)
Gain on change in derivative liability		(75,487,522	)
Balance as of December 31, 2021	$	46,528,773

Research and Development

Research and development costs are expensed as incurred. Total research and development costs were ~~$1,712,169~~$437,215 and ~~$393,265~~$578,247 for the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, respectively.

Accounting for Derivatives

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average series Binomial lattice formula pricing models to value the derivative instruments at inception and on subsequent valuation dates.

SUNHYDROGEN, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED
DECEMBER 31, 2021 AND 2020

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Recently Issued Accounting Pronouncements

In June 2018, FASB issued accounting standards update ASU 2018-07, (Topic 505) – “Shared-Based Payment Arrangements with Nonemployees”, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees will be aligned with the requirements for share-based payments granted to employees. Under the ASU 2018-07, the measurement of equity-classified nonemployee share-based payments will be fixed on the grant date, as defined in ASC 718, and will use the term nonemployee vesting period, rather than requisite service period. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted if financial statements have not yet been issued. The Company has evaluated the impact of the adoption of ASU 2018-07 on the Company’s financial statements, and there was no impact.

In August 2018, the FASB issued accounting standards update ASU 2018-13, (Topic 820) - “Fair Value Measurement”, which changes the unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance. The Company has evaluated the impact of the adoption of ASU 2018-13, on the Company’s financial statements, and there was no impact.

Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial ~~statements.~~statements as of December 31, 2021.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

CAPITAL STOCK

~~Nine~~Preferred Stock

On December 15, 2021, the Company filed a certificate of designation of preferences, right and limitations of Series C Preferred Stock with the Secretary of State of Nevada, designating 17,000 shares of preferred stock, par value $0.001 of the Company, as Series C Preferred Stock. Each share of Series C Preferred Stock has a stated value of $100 and is convertible into shares of common stock of the Company at a conversion price equal to $0.00095.

The Company entered into a securities purchase agreement on December 15, 2021, with an accredited investor for an exchange of convertible debt to equity. The investor exchanged a convertible note in the amount of $187,800, plus accrued interest of $80,365 for an aggregate total of $268,165 for 2,700 shares of the Company’s Series C Preferred Stock. The extinguishment of the convertible debt was recognized in the Company’s financials as a loss on settlement of derivative liability. A valuation was prepared using the Monte Carlo Method, based on a stock price of $0.0469, with a volatility of 131.5% and risk-free rate of 0.84% based on an estimated term of five (5) years. The note was tendered to the Company for cancellation and foregoes all future accrued interest.

Per Valuation
Preferred shares issued	$	2,700
Stated value of debt and interest	$	268,165
Calculated fair value of preferred shares	$	14,340,769
Fair value of derivative liability removed	$	13,231,008
Loss on settlement	$	841,596

The Company recognized a loss on settlement of $841,596 for the extinguishment of convertible debt, plus derivative liability for the period ended December 31, 2021.

Common Stock

Six months ended ~~March~~December 31, 2021

During the ~~nine~~six months ended ~~March~~December 31, 2021, the Company issued ~~412,273,408~~180,480,692 shares of common stock ~~pursuant to purchase~~upon conversion of convertible notes in the amount of $120,400 of principal, plus accrued interest of $51,057 based upon a conversion price of $0.00095 per share. The notes were converted per the terms of their respective agreements and therefore no gain or loss on the conversion was recorded.

Six months ended December 31, 2020

During the six months ended December 31, 2020, the Company issued 219,210,319 shares of common stock for cash at prices ranging from $0.022 - ~~$.025 per share~~$0.025 for aggregate net proceeds of ~~$32,523,350.~~$2,2092,300 plus offering cost of $107,700 for a total of $2,200,000; and issued an additional 120,000,000 shares of common stock under a securities purchase agreement, whereby the funds were split between the fair value of the securities purchase agreement in the amount of $5,099,933 and the warrants issued with the securities purchase agreement in the amount of $3,900,067 for a total price of $9,000,000.

During the ~~nine~~six months ended ~~March~~December 31, ~~2021,~~2020, the Company issued ~~252,000,000~~120,000,000 shares of common stock upon exercise of warrants at an exercise price of $0.075 for gross proceeds of ~~$18,900,000.~~$9,000,000.

SUNHYDROGEN, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED
DECEMBER 31, 2021 AND 2020

3.	CAPITAL STOCK (Continued)

During the ~~nine~~six months ended ~~March~~December 31, ~~2021,~~2020, the Company issued ~~599,449,820~~275,532,747 shares of common stock upon conversion of convertible notes in the amount of ~~$887,250~~$668,800 of principal, plus accrued interest of ~~$176,987~~$87,716 and other fees of $1,800 based upon conversion prices ranging from $0.00095 - $0.017995 per share. All note conversions were performed per the terms of their respective agreements and therefore no gain or loss on the conversion was recorded.

During the ~~nine~~six months ended ~~March~~December 31, ~~2021,~~2020, the Company issued 3,806,290 shares of common stock for services rendered at fair value prices of $0.028 - $0.035 per share in the aggregate amount of $118,023.

~~Nine months ended March 31, 2020~~

During the nine months ended March 31, 2020, the Company issued 683,999,878 shares of common stock upon conversion of convertible notes in the amount of $917,441 in principal, plus accrued interest of $149,000 and other fees of $10,100 based upon conversion prices ranging from $0.00095 - $0.0041.

~~During the nine months ended March 31, 2020, the Company issued 74,787,283 shares of common stock for services rendered at fair value prices of $0.002 - $0.0072 per share in the amount of $267,789.~~

OPTIONS AND WARRANTS

~~Stock Options~~OPTIONS

~~On October 2, 2017, the Company granted~~As of September 30, 2020, 10,000,000 non-qualified common stock ~~options.~~options were outstanding. Each option expires on the date specified in the option agreement, which date is not later than the fifth (5^th) anniversary from the grant date of the options. Of the 10,000,000 non-qualified common stock options, one-third vest immediately, and one-third vest the second and third year, such that the options are fully vested with a maturity date of October 2, 2022 and are exercisable at an exercise price of $0.01 per share. ~~The Company bought back 2,631,579 shares of the Company’s stock options for $250,000. As of March 31, 2021, 7,368,421 common stock options were outstanding.~~

~~Stock Options~~

On January 23, 2019, the Company ~~granted~~issued 170,000,000 stock options. One-third of the options vested immediately, and the remainder ~~vested~~vest 1/24 per month over the first twenty-four months following the option grant. The ~~first block was exercisable immediately and is exercisable for a period of seven (7) years.~~options expire 10 years from the initial grant date. The options fully vest by January 23, ~~2022. The Company bought back 10,515,247 shares of the Company’s stock options for $1,000,000 in cash. As of March 31, 2021, there were 159,484,753 options outstanding.~~2022

On January 31, 2019, the Company ~~granted~~issued 6,000,000 stock options, of which two-third (2/3) vest immediately, and the remaining amount shall vest one-twelfth (1/12) per month from after the date of the option grant. The ~~first block is exercisable for a period of seven (7) years.~~options expire 10 years from the initial grant date. The options fully vested on January 31, 2020.

On July 22, 2019, the Company ~~granted~~issued 10,000,000 stock options, of which one-third (1/3) vest immediately, and the remaining shall vest one-twenty fourth (1/24) per month from after the date of the option grant. The ~~first block were exercisable immediately for a period of seven (7) years.~~options expire 10 years from the initial grant date. The options fully vested on July 22, ~~2021.~~

~~During the three months ended March 31, 2021, the Company bought back an aggregate total of 13,146,826 warrants.~~2020.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

4.	~~OPTIONS AND WARRANTS~~ ~~(Continued)~~

A summary of the Company’s stock option activity and related information follows:

3/31/21 3/31/20
Weighted Weighted
Number average Number average
Of exercise of exercise
Options price Options price
Outstanding, beginning of period 196,000,000 $ 0.01 186,250,000 $ 0.01
Granted - $ 0.01 10,000,000 $ 0.01
Exercised - - - -
Buyback of warrants (13,146,826 ) $ 0.0099 - -
Outstanding, end of period 182,853,174 $ 0.0089 196,250,000 $ 0.01
Exercisable at the end of period 182,853,174 $ 0.0089 179,117,579 $ 0.01

	12/31/21					12/31/2020
				Weighted					Weighted
	Number			average		Number			average
	Of			exercise		Of			exercise
	Options			price		Options			price
Outstanding, beginning of period		182,853,174		$	0.01		196,250,000		$	0.01
Granted		-		$	0.01		-		$	-
Exercised		-			-		-			-
Buyback of options		(24,887,463	)	$	0.0099		(250,000	)		0.01
Outstanding, end of period		157,965,711		$	0.0089		196,000,000		$	0.01
Exercisable at the end of period		157,965,711		$	0.0089		189,332,999		$	0.01

During the ~~nine~~six months ended ~~March~~December 31, 2021, the Company bought back a total of ~~13,146,826 shares~~24,887,463 of the Company’s stock options for a total of ~~$1,250,000.~~$1,450,000. The options were bought back for the market price at the date of the buy-back less the exercise price of the grant. All options that were bought back were fully vested and previously expensed accordingly.

SUNHYDROGEN, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED
DECEMBER 31, 2021 AND 2020

4.	OPTIONS AND WARRANTS (Continued)

The weighted average remaining contractual life of options outstanding as of ~~March~~December 31, 2021 and 2020 was as follows:

3/31/21 3/31/20
Exercise
Price Stock
Options
Outstanding Stock
Options
Exercisable Weighted
Average
Remaining
Contractual
Life (years) Exercise
Price Stock
Options
Outstanding Stock
Options
Exercisable Weighted
Average
Remaining
Contractual
Life (years)
$ 0.0100 7,368,421 7,368,421 1.51 $ 0.0100 10,000,000 10,000,000 2.76
$ - - - - $ 0.0200 250,000 250,000 0.25
$ 0.0097 6,000,000 6,000,000 4.84 0.0097 6,000,000 6,000,000 5.09
$ 0.0099 159,484,753 159,484,753 4.82 $ 0.0099 170,000,000 156,867,579 5.07
$ 0.0060 10,000,000 10,000,000 5.31 $ 0.0060 10,000,000 10,000,000 5.56
182,853,174 182,853,174 196,250,000 179,117,579

12/31/2021								12/31/2020
Exercise Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)		Exercise Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)
$	0.0100		3,071,212		3,071,212		0.76	$	0.0100		10,000,000		10,000,000		1.75
$	0.0097		6,000,000		6,000,000		4.09		0.0097		6,000,000		6,000,000		5.07
$	0.0099		138,894,499		138,894,499		4.07	$	0.0099		170,000,000		165,277,541		5.09
$	0.0060		10,000,000		10,000,000		4.56	$	0.0060		10,000,000		8,055,458		5.56
			157,965,711		157,965,711						196,250,000		189,332,999

The stock-based compensation expense recognized in the statement of operations during the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020, related to the granting of these options was ~~$259,955~~$0 and ~~$571,594,~~$224,070, respectively.

WARRANTS

On December 3, 2020, the Company issued 120.0 million common stock purchase warrants under a securities purchase agreement at an exercise price of $0.075 per share. The warrants were exercisable upon issuance. During the period ended March 31, 2021, the warrants were exercised for aggregate gross proceeds of $9,000,000. As of March 31, 2021, there were no December 3, 2020 warrants outstanding.

On December 29, 2020, the 120.0 million warrants issued on December 3, 2020, were exercised for aggregate gross proceeds of $9.0 million, and as consideration for the exercise, the investor was issued an additional 132.0 million common stock purchase warrants at an exercise price of $0.075. The 132.0 million warrants were deemed to be a dividend and were estimated at fair value of $15,928,314 using the Black-Scholes valuation model. During the period ended March 31, 2021, the warrants were exercised for gross proceeds of $9,900,000. As of March 31, 2021, all of the December 29, 2020 warrants were exercised.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

4.	~~OPTIONS AND WARRANTS (Continued)~~

~~WARRANTS~~ ~~(Continued)~~

As of ~~March~~December 31, 2021, the Company had ~~outstanding~~an aggregate of 94,895,239 common stock purchase warrants ~~from securities purchase agreements at~~outstanding, with exercise prices ranging from $0.0938 ~~-$0.13125~~- $0.13125 per share. The warrants were estimated at fair value on the date of issuance as calculated using the Black-Scholes valuation model. The ~~estimated fair value of the warrants was $5,222,495, which was recognized in the financial statements as of March 31, 2021. The~~ warrants can be exercised over aperiods of three (3) ~~year period.~~to five (5) years.

A summary of the Company’s warrant activity and related information follows for the ~~nine~~six months ended ~~March~~December 31, 2021.

3/31/21
Weighted
Number average
of exercise
Warrants price
Outstanding, beginning of period - $ -
Granted 346,895,239 $ 0.086
Exercised (252,000,000 ) $ (0.075 )
Forfeited/Expired - -
Outstanding, end of period 94,895,239 $ 0.11
Exercisable at the end of period 94,895,239 $ 0.11

	12/31/21
			Weighted
	Number		average
	Of		exercise
	Warrants		price
Outstanding, beginning of period		94,895,239	$	0.11
Granted		-		-
Exercised		-		-
Forfeited/Expired		-		-
Outstanding, end of period		94,895,239	$	0.11
Exercisable at the end of period		94,895,239	$	0.11

3/31/21 Weighted
Average
Remaining
Exercise
Price Warrants
Outstanding Warrants
Exercisable Contractual
Life (years)
$ 0.0938 16,800,000 16,800,000 2.18 - 2.75
$ 0.13125 6,666,667 6,666,667 4.94
$ 0.12 71,428,572 71,428,572 4.92
94,895,239 94,895,239

12/31/2021
Exercise Price		Warrants Outstanding		Warrants Exercisable		Weighted Average Remaining Contractual Life (years)
$	0.0938		16,800,000		16,800,000	1.42 - 2.0
$	0.13125		6,666,667		6,666,667	4.16
$	0.12		71,428,572		71,428,572	4.16
			94,895,239		94,895,239

At ~~March~~December 31, 2021, the aggregate intrinsic value of the warrants outstanding was ~~$9,924,436.~~$0.

SUNHYDROGEN, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2021 AND 2020

5.	CONVERTIBLE PROMISSORY NOTES

As of ~~March~~December 31, 2021, the outstanding convertible promissory notes net of debt discount are summarized as follows:

Convertible Promissory Notes, net of debt discount $ 1,078,161
Less current portion 120,000
Total long-term liabilities $ 958,161

Convertible Promissory Notes, net of debt discount	$	747,247
Less current portion		339,247
Total long-term liabilities	$	408,000

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

5.	~~CONVERTIBLE PROMISSORY NOTES (Continued)~~

Maturities of long-term debt for the next ~~four~~five years are as follows:

Period Ended March, Amount
2022 $ 120,000
2023 553,300
2024 395,000
2025 10,000
$ 1,078,300

Period Ended December 31,	Amount
2022	$	555,000
2023		398,000
2024		-
2025		10,000
	$	963,000

At ~~March~~December 31, 2021, the ~~$1,078,300~~$963,000 in convertible promissory notes had a remaining debt discount of ~~$139,~~$215,753, leaving a net balance of ~~$1,078,161.~~$747,247.

The Company issued a 10% convertible promissory note on ~~January 28, 2016~~February 3, 2017 (the ~~“Jan 2016~~“Feb 2017 Note”) in the aggregate principal amount of up to $500,000. ~~Upon execution of the convertible promissory note, the Company received a tranche of $10,000.~~ The Company received ~~additional~~ tranches ~~in the amount of $490,000~~ for an aggregate ~~sum~~principal total of $500,000. The ~~January 2016~~Feb 2017 Note had ~~an original~~a maturity date of ~~twelve (12) months from the effective date of the note. On January 19, 2017,~~February 3, 2018, which the investor extended the ~~Jan 2016~~Feb 2017 Note for an additional sixty (60) months from the effective date of the note, to ~~January 27,~~February 3, 2022. The ~~Jan 2016~~Feb 2017 Note was convertible into shares of common stock of the Company at ~~a price equal to~~ a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of the note or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company ~~fails~~failed to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, ~~may~~could rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event ~~shall~~was the lender be entitled to convert any portion of the ~~Jan 2016~~Feb 2017 Note to the extent such ~~that~~conversion would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares ~~are~~were not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day ~~shall~~would be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. During the ~~nine months~~period ended ~~March~~on December 31, 2021, the Company issued ~~367,702,192 common shares upon conversion of principal in the amount of $245,550, plus interest of $103,768. The balance of the Jan 2016 Note as of March 31, 2021 was $0.~~

The Company issued a 10% convertible promissory note on February 3, 2017 (the “Feb 2017 Note”) in the aggregate principal amount of up to $500,000. Upon execution of the convertible promissory note, the Company received a tranche of $60,000. The Company received additional tranches in the amount of $440,000 for an aggregate sum of $500,000. The Feb 2017 Note had a maturity date of February 3, 2018, with an automatic extension of sixty (60) months from the effective date of the note. The Feb 2017 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of the note or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Feb 2017 Note such that would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. During the nine months ended, the Company issued 157,622,696180,480,692 shares of common stock upon conversion of principal in the amount of ~~$106,700,~~$120,400, plus accrued interest of ~~$43,042.~~$51,057. Also, during the six months ended December 31, 2021, the Company exchanged the balance of the convertible note in the amount of $187,800, plus accrued interest of $80,365 for an aggregate total of $268,165, for 2,700 Series C preferred shares with a stated value of $100 per share and a 10% annual dividend. The preferred shares are convertible into common stock at a fixed conversion price of $0.00095. The balance of the Feb 2017 Note as of ~~March~~December 31, 2021 was ~~$393,300.~~$0.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

5.	~~CONVERTIBLE PROMISSORY NOTES (Continued)~~

The Company issued a 10% convertible promissory note on November 9, 2017 (the “Nov 2017 Note”) in the aggregate principal amount of up to $500,000. ~~Upon execution of the convertible promissory note, the Company received a tranche of $45,000.~~ The Company received ~~additional~~ tranches ~~in the amount of $455,000~~ for an aggregate ~~sum~~principal total of ~~$500,000.~~500,000. The Nov 2017 Note had a maturity date of November 9, 2018, with an automatic extension of sixty (60) months from the effective date of the note. The Nov 2017 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of the note or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Nov 2017 Note to the extent such ~~that~~conversion would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. ~~During the period ended March 31, 2021, the Company issued 20,332,512 shares of common stock upon conversion of $15,000 in principal, plus interest of $4,316.~~ The balance of the Nov 2017 Note as of ~~March~~December 31, 2021 was ~~$485,000.~~$313,000.

SUNHYDROGEN, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2021 AND 2020

5.	CONVERTIBLE PROMISSORY NOTES (Continued)

The Company issued a 10% convertible promissory note on June 27, 2018 (the “Jun 2018 Note”) in the aggregate principal amount of up to $500,000. ~~Upon execution of the convertible promissory note, the~~The Company received ~~a tranche~~tranches for an aggregate principal total of ~~$50,000. On October 9, 2018, the Company received another tranche of $40,000, for a total aggregate of $90,000 as of December 31, 2019.~~$500,000. The Jun 2018 Note matured on June 27, 2019, which was automatically extended for sixty (60) months from the effective date of the note. The Jun 2018 Note is convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price since the original effective date of the note or the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of three (3) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Jun 2018 Note to the extent such ~~that~~conversion would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event, that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $1,500 per day shall be assessed for each day after the third business day (inclusive of the day of the conversion) until the shares are delivered. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $206,685 during the six months ended December 31, 2021.The balance of the Jun 2018 Note as of ~~March~~December 31, 2021 was ~~$90,000.~~$500,000.

The Company issued a 10% convertible promissory note on August 10, 2018 (the “Aug 2018 Note”) in the aggregate principal amount of up to $100,000. The Aug 2018 Note had a maturity date of August 10, 2019, with an extension of sixty (60) months from the date of the note. The Aug 2018 Note matures on August 10, 2023. The Aug 2018 Note may be converted into shares of the Company’s common stock at a conversion price of the lesser of a) $0.005 per share or b) sixty-one (61%) percent of the lowest trading price per common stock recorded on any trade day after the effective date. The conversion feature of the Aug 2018 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Note. The balance of the Aug 2018 Note as of ~~March~~December 31, 2021 was $100,000.

On January 20, 2020, the Company issued a 10% convertible promissory note (the “Jan 2020 Note”) to an investor (the “Jan 2020 Note”) in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Jan 2020 Note had a maturity date of January 20, 2021. The Jan 2020 Note was convertible into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest two (2) trading prices of the common stock during the fifteen (15) trading day prior to the conversion date. The conversion feature of the Jan 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jan 2020 Note. During the nine months ended March 31, 2021, the Company issued 23,420,128 shares of common stock upon conversion of principal in the amount of $80,000, plus accrued interest of $3,989, and other fees of $300. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $42,404 during the nine months ended March 31, 2021. The Jan 2020 Note was fully converted as of March 31, 2021.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

5.	~~CONVERTIBLE PROMISSORY NOTES (Continued)~~

On February 11, 2020, the Company issued a convertible promissory note (the “Feb 2020 Note”) to an investor (the “Feb 2020 Note”) in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The Feb 2020 Note had a maturity date of February 11, 2021. The Feb 2020 Note was convertible into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest two (2) trading prices of the common stock during the fifteen (15) trading day prior to the conversion date. The conversion feature of the Feb 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Feb 2020 Note. During the six months ended December 31, 2020, the Company issued 5,294,205 shares of common stock upon conversion of principal in the amount of $80,000, plus accrued interest of $3,989, and other fees of $300. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $49,399 during the nine months ended March 31, 2021. The Feb 2020 Note was fully converted as of March 31, 2021.

On March 9, 2020, the Company issued a convertible promissory note (the “Mar 2020 Note”) to an investor, (the “Mar 2020 Note”) in the principal amount of $40,000. The Company received funds of $38,000, less other fees of $2,000. The Mar 2020 Note had a maturity date of March 9, 2021. The Mar 2020 Note was convertible into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest two (2) trading prices of the common stock during the fifteen (15) trading day prior to the conversion date. The conversion feature of the Mar 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Mar 2020 Note. During the six months ended December 31, 2020, the Company issued 2,390,871 shares of common stock upon conversion of principal in the amount of $40,000, plus accrued interest of $1,995, and other fees of $300. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $25,708 during the nine months ended March 31, 2021. The Mar 2020 Note was fully converted as of March 31, 2021.

On April 14, 2020, the Company issued a convertible promissory note (the “April 2020 Note”) to an investor in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The April 2020 Note matures on April 14, 2021. The April 2020 Note was convertible into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the average of the lowest two (2) trading prices of the common stock during the fifteen (15) trading day prior to the conversion date. The conversion feature of the April 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the April 2020 Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $63,342 during the nine months ended March 31, 2021. During the nine months ended March 31, 2021, the Company issued 5,315,949 shares of common stock upon conversion of principal in the amount of $80,000, plus accrued interest of $4,011, and other fees of $300. The April 2020 Note was fully converted as of March 31, 2021.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

~~CONVERTIBLE PROMISSORY NOTES (Continued)~~

On April 15, 2020, the Company issued a convertible promissory note (the “Apr 2020 Note”) to an investor in the aggregate principal amount of ~~$50,000, of which the~~$50,000. The Company received ~~$10,000 as~~tranches for an aggregate principal total of ~~June 30, 2020.~~$50,000. The Apr 2020 Note matures twelve (12) months from the effective dates of each respective tranche, such that the Apr 2020 Note matures on April 15, 2021, with an automatic extension of sixty (60) months from the effective date of each tranche. The Apr Note is convertible into shares of common stock of the Company at a variable conversion price of the lesser of $0.01 per share or fifty percent (50%) of the lowest trading price of the common stock recorded on any trade day after the effective date, or (c) the lowest effective price per share granted to any person or entity after the effective date to acquire common stock. If the Company fails to deliver shares in accordance with the timeframe of four (4) business days of the receipt of a notice of conversion, the lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the principal sum with the rescinded conversion shares returned to the Company. In no event shall the lender be entitled to convert any portion of the Apr 2020 Note to the extent such ~~that~~conversion would result in beneficial ownership by the lender and its affiliates of more than 4.99% of the outstanding shares of common stock of the Company. In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of $2,000 per day shall be assessed for each day after the fourth business day (inclusive of the day of the conversion) until the shares are delivered. The conversion feature of the April 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Apr 2020 Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of ~~$2,547~~$20,164 during the ~~nine~~six months ended ~~March~~December 31, 2021. The balance of the Apr 2020 Note as of ~~March~~December 31, 2021 was ~~$10,000.~~$50,000.

On May 19, 2020, the Company issued a convertible promissory note (the “May 2020 Note”) to an investor in the principal amount of $80,000. The Company received funds of $78,000, less other fees of $2,000. The May 2020 Note had a maturity date of May 19, 2021. The May 2020 Note was convertible into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the lowest two (2) trading prices of the common stock during the fifteen (15) trading day prior to the conversion date. The conversion feature of the May 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the May 2020 Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $70,795 during the year ended June 30, 2020. During the nine months ended March 31, 2021, the Company issued 5,933,503 shares of common stock upon conversion of principal in the amount of $80,000, plus accrued interest of $4,033, and other fees of $300. The May 2020 Note was fully converted as of March 31, 2021.

On June 18, 2020, the Company issued a convertible promissory note (the “June 2020 Note”) to an investor in the principal amount of $160,000. The Company received funds of $156,000, less other fees of $4,000. The Jun 2020 Note has a maturity date of June 19, 2021. The Jun 2020 Note was convertible into shares of the Company’s common stock at a conversion price of sixty-one (61%) percent of the average of the lowest two (2) trading prices of the common stock during the fifteen (15) trading day prior to the conversion date. The conversion feature of the Jun 2020 Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Jun 2020 Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $154,740. During the nine months ended March 31, 2021 the Company issued 11,437,764 shares of common stock upon conversion of principal in the amount of $160,000, plus accrued interest of $7,847, and other fees of $300. The Jun 2020 Note was fully converted as of March 31, 2021.

All note conversions were performed per the terms of their respective ~~agreements and therefore no gain or~~agreements. At December 31, 2021, the Company recognized a loss of $841,596 on ~~the~~ conversion ~~was recorded.~~of a convertible note in exchange for Series C preferred stock.

SUNHYDROGEN, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2021 AND 2020

DERIVATIVE LIABILITIES

ASC Topic 815 provides guidance applicable to convertible debt issued by the Company in instances where the number into which the debt can be converted is not fixed. For example, when a convertible debt converts at a discount to market based on the stock price on the date of conversion, ASC Topic 815 requires that the embedded conversion option of the convertible debt be bifurcated from the host contract and recorded at their fair value. In accounting for derivatives under accounting standards, the Company recorded a liability representing the estimated present value of the conversion feature considering the historic volatility of the Company’s stock, and a discount representing the imputed interest associated with the embedded derivative. The discount is amortized over the life of the convertible debt, and the derivative liability is adjusted periodically according to stock price fluctuations.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

~~DERIVATIVE LIABILITIES (Continued)~~

The convertible notes (the “Notes”) issued do not have fixed settlement provisions because their conversion prices are not fixed. The conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

During the ~~nine~~six months ended ~~March~~December 31, 2021, the Company recorded a net ~~loss~~gain in change in derivative of ~~$142,122,146~~$75,487,522 in the statement of operations due to the change in fair value of the remaining notes, for the ~~nine~~six months ended ~~March~~December 31, 2021.

At ~~March~~December 31, 2021, the fair value of the derivative liability was ~~$201,779,864.~~$46,528,773.

For purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used the Binomial lattice formula. The significant assumptions used in the Binomial lattice formula of the derivatives are as follows:

Risk free interest rate		~~0.09%~~0.29% - ~~0.35%~~1.26%
Stock volatility factor		~~153.0%~~98.0% - ~~243.0%~~200.0%
Weighted average expected option life		~~3 months~~1 year - 5 ~~year~~years
Expected dividend yield		None

7.	MARKETABLE SECURITIES

~~COMMON STOCK PURCHASE AGREEMENTS~~

On July 27, 2020, the Company entered into a common stock purchase agreement with an investor. Pursuant to the purchase agreement, subject to certain conditions set forth in the purchase agreement, the investor was obligated to purchase up to $2.1 million of the Company’s common stock from time to time through September 30, 2020. The purchase price per share under the purchase agreement was 85% of the lowest closing price during the five (5) business days prior to closing, not to exceed the valuation cap set forth in the purchase agreement. During the ~~nine months~~period ended ~~March~~December 31, 2021, the Company ~~issued 20,000,000 shares of common stock~~invested in corporate bonds, which have been recognized in the financial statements at ~~a purchase price of $0.025 per share under the purchase agreement.~~ fair value.

The Company ~~received net proceeds~~considers corporate bonds (“bonds”) as investments due to their ratings. The bonds are rated based on their default probability, health of ~~$460,300 after legal fees~~the corporation’s debt structure, as well as the overall health of the economy. The bonds fall into the category as investments if they have a rating between AAA and ~~commissions.~~BBB.

On September 21, 2020, the Company entered into a common stock purchase agreement with an investor. Under the purchase agreement, the Company had the right to sell, in its discretion (subject to the terms and conditionsAs of the purchase agreement) up to an aggregate of $4,000,000 of common stock to the investor. The Company had the right, in its sole discretion, subject to the conditions and limitations in the purchase agreement, to direct the investor, by delivery of a purchase notice from time to time to purchase over the 6-month term of the purchase agreement, a minimum of $10,000 and up to a maximum of $400,000 of shares of common stock for each purchase notice (provided that, the purchase amount for any purchase could not exceed two times the average of the daily trading dollar volume of the common stock during the 10 business days preceding the purchase date). The number of shares issuable under each purchase was equal to 112.5% of the purchase amount sold under such purchase, divided by the purchase price per share (as defined under the purchase agreement). The “purchase price” was defined as 90% of the lowest end-of-day volume weighted average price of the common stock for the five consecutive business days immediately preceding the purchase date, including the purchase date. The Company could not deliver more than one purchase notice to the investor every ten business days, except as the parties may otherwise agree.

~~During the nine months ended March~~December 31, 2021, the ~~Company received aggregate net proceeds of $1,632,000 for the purchase of 84,310,249 shares of common stock under the purchase agreement. The purchase agreement was terminated on December 1, 2020.~~

~~On February 4, 2021, the Company entered into a purchase agreement with an investor to purchase up twenty-five million dollars ($25,000,000)~~components of the Company’s ~~registered common stock.~~ short and long-term investments are summarized as follows:

Short term investments:
Bonds (held-to-maturity)		1,806,513

Long term investments:
Bonds (held-to-maturity)		6,846,879
Total short and long-term investments	$	8,653,392

The Company has invested in bonds maturing from June 24, 2022 through April 15, 2025 that are held to maturity. The current trading prices or fair market value of the ~~right,~~bonds vary, and we believe any decline in ~~its sole discretion, subject to the conditions~~fair value is temporary. All bonds are current and ~~limitations~~not in ~~the purchase agreement, to direct the investor, by~~default.

SUNHYDROGEN, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED

~~MARCH~~DECEMBER 31, 2021 AND 2020

~~COMMON STOCK PURCHASE AGREEMENTS~~MARKETABLE SECURITIES (Continued)

~~delivery of a purchase notice from time to time (a “Purchase Notice”) to purchase (each, a “Purchase”) over~~The following table summarizes the ~~12-month term~~amortized cost of the purchase agreement, a minimum of $100,000 and up to a maximum of $5,000,000 (the “Purchase Amount”) of shares of common stock (the “Purchase Shares”) for each Purchase Notice, provided that the parties may agree to waive such limitation, and provided further that, the initial Purchase Amount was $7,000,000. The number of Purchase Shares the Company will issue under each Purchase will be equal to 112.5% of the Purchase Amount sold under such Purchase, divided by the Purchase Price per share (as defined under the purchase agreement). The “Purchase Price” is defined as 90% of the lowest end-of-day volume weighted average price of the common stock for the five consecutive business days immediately preceding the purchase date, including the purchase date. As of Marchheld-to-maturity bonds at December 31, 2021, ~~the investor has purchased 92,725,060 shares of common stock for a purchase price of $12,750,000.~~aggregated by credit quality indicator.

~~SECURITIES PURCHASE AGREEMENT~~

Credit Quality Indicators for the Corporate Bonds
AA/A	$	2,629,275
BBB	$	6,024,117
Total	$	8,653,392

OnThe amortized cost of our corporate bonds and the related gross unrealized gains and losses, were as follows at December 1, 2020, the Company entered into a securities purchase agreement, under which, upon closing on December 3, 2020 the Company received $9.0 million from the sale of 120.0 million shares of common stock and warrants to purchase 120.0 million shares of common stock at an exercise price of $0.075 per share. The purchase agreement and warrants were accounted for at fair value using the Black-Scholes valuation model. The estimated fair value of the purchase agreement was $4,979,933 and $3,900,067 for the warrants, which was recognized in the financial statements as of March 31, ~~2021.~~2021:

				Gross Unrealized
	Level	Cost		Gains		Losses			Fair Value
Bonds	2		8,653,392		-		(173,123	)	$	8,480,269

On December 29, 2020, the Company received $9.0 million from exercise of warrants to purchase 120.0 million shares of common stock, at an exercise price of $0.075 per share. As consideration for the exercise, the holder was issued an additional 132.0 million common stock purchase warrants, at an exercise price of $0.075 per share and an exercise period of thirty months. The warrants were accounted for at fair value using the Black Scholes valuation model. The estimated value of $15,928,314 was deemed to be dividends, which was netted against the proceeds and recognized in the financial statements as of March 31, 2021.

During the period ended ~~March~~December 31, 2021, the ~~132.0 million warrants were exercised for gross proceeds~~Company recognized interest income of ~~$9,900,000.~~

On February 24, 2021, the Company entered into a securities purchase agreement, under which, upon closing on March 1, 2021, the Company issued 95,238,096 shares of the Company’s common stock, and warrants to purchase an aggregate of 71,428,572 shares of common stock, in a registered direct offering at a combined purchase price of $0.105 per share and 0.75 of one warrant, for aggregate gross proceeds to the Company of approximately $10,000,000. The warrants are exercisable for a period of five years commencing upon issuance, at an exercise price of $0.12 per share, subject to certain adjustments set forth therein. In addition, the Company issued to the designees of the placement agent warrants to purchase an aggregate of up to 6,666,667 shares, with an exercise price of $0.13125 per share and a term of five years from the commencement of the sales in connection with the offering.

The purchase agreement and warrants were accounted for at fair value using the Black-Scholes valuation model. The estimated fair value of the purchase agreement was $8,677,572 and $1,322,428 for the warrants, which was recognized$46,980 in the financial ~~statements as of March 31, 2021.~~statements.

~~SUNHYDROGEN, INC.~~

~~CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED~~

~~MARCH 31, 2021 AND 2020~~

9.8.

COMMITMENTS AND CONTINGENCIES

On September 15, 2020, the Company entered into a marketing agreement. The fees are to be paid in cash and registered unrestricted stock. As of ~~March~~December 31, 2021, the Company has paid a $34,250 deposit, with the balance of the payments and the stock issuances due upon completion of a deliverable.

OnEffective September 1, ~~2020,~~2021, the Company entered into a new research agreement with the University of Iowa. As consideration under the research agreement, the University of Iowa will receive a maximum of ~~$299,966~~$350,000 from the Company. The contract period is from September 1, 2021 through August 31, 2022. The research agreement may be terminated by either party upon sixty (60) day prior written notice or a material breach or default, which is not cured within 90 days of receipt of a written notice of such breach.

~~The term of~~ This agreement was signed by the ~~research agreement is from~~Company on September ~~1, 2020 through August 31,~~13, 2021. As of ~~March~~December 31, 2021, the Company has accrued the amount due of ~~$99,989.~~$116,666.

Effective October 1, 2021, the Company entered into a research agreement with the University of Michigan. As consideration under the research agreement, the University of Michigan will receive a maximum of $296,448, from the Company. The research agreement may be terminated by either party upon ninety (90) day prior written notice or a material breach or default, which is not cured within 90 days of receipt of a written notice of such breach. This agreement was signed by the Company on September 23, 2021.

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. ~~The Company is~~In the opinion of management, the ultimate disposition of these matters will not ~~currently party to any~~have a material ~~legal proceedings.~~adverse effect on the Company’s consolidated financial position or results of operation.

~~10.~~9.

RELATED PARTY

As of ~~March 31,~~June 30, 2021, the Company reported an accrual associated with the CEO’s prior ~~year~~years’ salary in the amount of ~~$186,000.~~$211,750, plus current accrual of $14,750 for a total of $226,500, which is recorded in related party accrued expenses. The Company began accruing the salary in 2011 and used the funds for operating expenses. The CEO will be paid during the fiscal year.

During the ~~nine~~six months ended ~~March~~December 31, 2021, the Company redeemed ~~options to purchase an aggregate of 13,146,826~~24,887,463 shares of the Company’s ~~common~~ stock options to related parties for ~~an aggregate redemption price~~a total of ~~$1,250,000.~~$1,450,000.

SUNHYDROGEN, INC.

CONDENSED NOTES TO FINANCIAL STATEMENTS – UNAUDITED

DECEMBER 31, 2021 AND 2020

10.

~~11.~~

SUBSEQUENT EVENTS

Management evaluated subsequent events as of the date of the financial statements pursuant to ASC TOPIC 855, and ~~reported~~there were the following ~~events:~~events to report.

On ~~April 1, 2021,~~January 7, 2022, the Company issued ~~13,763,764 shares of commons stock for a purchase price of $1,100,000, pursuant to the purchase agreement dated February 4, 2021.~~

~~On April 7, 2021, the Company issued 14,289,265 shares of commons stock for a purchase price of $1,150,000, pursuant to the purchase agreement dated February 4, 2021.~~

~~On April 21, 2021, the Company issued 22,032,903 shares of common stock for a purchase price of $1,500,000, pursuant to the purchase agreement dated February 4, 2021.~~

~~On May 4, 2021, the Company issued 20,996,641 shares of common stock for a purchase price of $1,500,000, pursuant to the purchase agreement dated February 4, 2021.~~

~~On May 13, 2021, the Company issued 126,188,003~~200,976,352 shares of common stock upon conversion of principal in the amount of ~~$85,100,~~$135,500, plus accrued interest of ~~$34,779 for~~$55,428 associated with the November 9, 2017 convertible ~~note dated February 3, 2017.~~note.

On ~~May 14, 2021,~~January 27, 2022, the Company filed a certificate of designation of Series A Preferred Stock with the Secretary of State of Nevada, and issued ~~17,806,268~~1,000 shares of Series A Preferred Stock to the Company’s chief executive officer, for services rendered.

Pursuant to the certificate of designation, the Company designated 1,000 shares of preferred stock as Series A Preferred Stock. The Series A Preferred Stock is not convertible into common stock, and does not have any dividend rights or any liquidation preference. The Series A Preferred Stock entitles the holder to 51% of the voting power of the Company’s stockholders. The Series A Preferred Stock will automatically be redeemed by the Company at the par value of $0.001 per share, on the first to occur of the following events: (i) a date sixty days after the effective date of the certificate of designation, (ii) the date that Timothy Young ceases to serve as officer, director or consultant of the Company, or (iii) on the date that the Company’s shares of common stock ~~for a purchase price~~first trade on any national securities exchange and such listing is conditioned upon the elimination of ~~$1,000,000, pursuant~~the preferential voting rights.

On January 27, 2022, the holder of the majority of the voting power of the shareholders of the Company, and the Company’s chief executive officer, approved by written consent (i) an amendment to the ~~purchase agreement dated February 4, 2021.~~

~~On May 14, 2021,~~Company’s articles of incorporation to increase the ~~Company issued 83,074,261~~Company’s authorized shares of ~~restricted~~ common stock ~~upon conversion~~from 5,000,000,000 to 10,000,000,000, (ii) an amendment to the Company’s articles of ~~principal in~~incorporation to effect a reverse stock split of the ~~amount of $60,000, plus accrued interest of 18,921.~~

~~On May 14, 2021, the Company issued 96,334,535 shares of restricted~~Company’s common stock ~~upon conversion~~by a ratio of ~~principal~~not less than 1-for-100 and not more than 1-for-500 at any time prior to the one year anniversary of filing the definitive information statement with respect to the reverse split, with the board of directors having the discretion as to whether or not the reverse split is to be effected, and with the exact ratio of any reverse split to be set at a whole number within the above range as determined by the board in its discretion, and (iii) the ~~amount~~adoption of ~~$70,000, plus accrued interest of 21,518.~~the Company’s 2022 Equity Incentive Plan. Such shareholder approval for such actions will be effective 20 days after the definitive information statement relating to such actions is mailed to shareholders.

~~On May 14, 2021, the Company issued 58,491,132 shares of restricted common stock upon conversion of principal in the amount of $42,000, plus accrued interest of 13,567.~~

~~ITEM~~Item 2. ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Regarding Forward-Looking Statements

The information in this ~~discussion~~report may contain forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements that are not of historical fact may be deemed to be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties. In some cases you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue”, the negative of the terms or other comparable terminology. Actual events or results may differ materially from the anticipated results or other expectations expressed in the forward-looking statements. In evaluating these statements, you should consider various factors, including the risks included from time to time in our reports filed with the Securities and Exchange ~~Commission.~~Commission, or the SEC. These factors may cause our actual results to differ materially from any forward-looking statements. We disclaim any obligation to publicly update these statements, or disclose any difference between actual results and those reflected in these statements, except as may be required under applicable law.

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

Overview

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

Hydrogen is the most abundant chemical element in the universe. When hydrogen fuel is used to power transportation and industry, the only byproduct left behind is pure water, unlike hydrocarbon fuels such as oil, coal and natural gas that release carbon dioxide and other contaminants into the atmosphere when used. However, naturally occurring elemental hydrogen is rare. As a result, nearly all the world’s hydrogen is procured through steam methane reforming (SMR), a capital-intensive process that emits carbon dioxide and other harmful pollutants. Hydrogen is green, but currently the most common process for producing it is brown.

We ~~refer to our technology as~~believe the SunHydrogen ~~panel which is comprised of the following components:~~

1. The Generator Housing - Novel device design is the first of its type to safely separate 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 gasses. Utilizing a novel ion-exchange membrane strategy for separating the oxygen side from the hydrogen side, ion transport is increased which is the key to safely increasing solar-to-hydrogen efficiency. Our design can be scaled up and manufactured for commercial use.

2. The NanoParticle or Solar Cell - Our patented nanoparticle consists of billions of tiny solar cells capped with catalysts that are electrodeposited into one tiny structure to provide the charge that splits the water molecule when the sun excites the electron.

3. Oxygen Evolution Catalyst - This proprietary catalyst developed at the University of Iowa lab is uniformly applied onto the solar cell or nanoparticle and efficiently oxidize water molecule to generate oxygen gas. The oxygen evolution catalyst must be robust to withstand the long operating hours of the hydrogen generation device to ensure long lifetime. It must be stable in alkaline, neutral and acidic environments.

4. Hydrogen Evolution Catalyst - Necessary for collecting electrons to reduce protons for generating hydrogen gas, we have successfully integrated a low-cost hydrogen catalyst into our generator system successfully coating a triple junction solar cell with a catalyst comprised primarily of ruthenium, carbon and nitrogen that can function as well as platinum, the current catalyst used for hydrogen production.

5. Coating Technologies - Two major coating technologies were developed to protect the nanoparticles and solar cells from photocorrosion under water. A transparent conducive coating to protect our nanoparticles and solar cells from photo corrosion and efficiently transfer charges to catalysts for oxygen and hydrogen evolution reactions. A polymer combination that protects the triple junction solar cells from any corrosive water environments for long lifetime of the hydrogen generation device.

~~In the process of optimizing our nanoparticles to be~~solution potentially offers an efficient and ~~only during experimentation with earth abundant materials (an ongoing process), we experimented with commercially available triple junction silicon solar cells~~cost-effective way to perform tests with our generator housing and other components. Through this experimentation, our discovery led us to believe that we could bring a system (Gen 1) to market utilizing these readily available cells while our nanoparticles are still being optimized. While these solar cells also absorb the sunlight and produce ~~the necessary charge for splitting the water molecules into~~truly green hydrogen and oxygen, their efficiency is low, thus we have made the strategic decision to focus on our NanoParticle strategy (Gen 2) and use these hydrogen generators for proof of concept and demonstration purposes only. We anticipate these hydrogen panels will be demonstrated in various parts of the world to as further proof of concept of our technology and to promote our nanoparticle technology that will be more efficient and economical.

Our business and commercialization plan utilizes our second generation of hydrogen panels featuring the nanoparticle based technology where billions of autonomous solar cells are electrodeposited onto porous alumina sheets and manufactured in a roll to roll process or wafer process and inserted into our proprietary panels. For this generation, we have received multiple patents and it is estimated that it will produce hydrogen for less than $4 per kilogram before pressurization.

Now ready to take our technology out of the lab, we are working with several vendors to help commercialize and manufacture our renewable hydrogen panels that use sunlight and water to generate hydrogen. In February 2021 we entered into a cooperation agreement with Schmid Group of Germany that commenced on March 1, 2021 to design and define a process platform that enables mass manufacturing of SunHydrogen’s Gen 2 NanoParticle hydrogen panels.

~~We anticipate that the SunHydrogenH2Generator will be a self-contained renewable hydrogen production system that requires only~~using sunlight and any source of water. AsOur core technology is a ~~result,~~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 is the fuel of the future, and we believe our technology potentially offers solutions to the challenges that the hydrogen future presents, including cost of production and transportation.

We believe our solution is unique because it directly uses the electrical charges created by sunlight to generate hydrogen, eliminating the need for the power electronics that traditional electrolyzers rely on altogether. SunHydrogen’s expected scalable system configuration of many individual hydrogen-generating panels provides a high degree of redundancy, security and stability. And while electrolyzers require high-purity water for operation, SunHydrogen’s technology can utilize water of varying purities.

Additionally, because our process only requires sunlight and water, our technology can be installed ~~almost anywhere to produce hydrogen fuel at or~~ near the point of ~~distribution,~~hydrogen use. This eliminates the need for ~~local use.~~pipelines and trucks that result in high carbon emissions and high capital investment. 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 ~~this model~~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 in Coralville, Iowa, where we have a sponsored research agreement with the University of ~~hydrogen production addresses one~~Iowa as well as a dedicated laboratory space at the BioVentures Center at the University of Iowa Research Park. Our Iowa team has worked diligently over the ~~biggest challenges~~past several years to lead and optimize the scale-up of ~~using clean hydrogen fuel on a large scale - the transportation of hydrogen.~~our nanoparticle technology.

Outside of our internal team, we’ve made strides toward commercialization by forming relationships with industrial partners who possess specialized expertise in individual components of our technology.

In our partnership with SCHMID Group of Freudenstadt, Germany, they lead the engineering of our panel housing, a crucial system element that ensures safe and efficient hydrogen collection. We also have ongoing partnerships with InRedox of Longmont, Colorado and MSC Co. LTD of Korea which are focused on substrate manufacturing and electroplating chemistries, respectively. We also have a sponsored research agreement with the University of Michigan focused on catalyst optimization and membrane integration.

Most recently, we have entered into a new partnership with Geomatec, a high-performance thin film manufacturer based in Japan who will work alongside InRedox to facilitate our transition to large-scale substrate manufacturing.

We will continue working diligently with our existing partners, and engaging new partners, to drive our technology to commercialization. As we prepare for mass production, we will also continue seeking out potential manufacturing partners for production facility, equipment design and engineering.

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

Fair Value of Financial Instruments

Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of ~~March~~December 31, 2021, the amounts reported for cash, accrued interest and other expenses, notes payables, and derivative liability approximate the fair value because of their short maturities.

Recently Issued Accounting Pronouncements

Management reviewed currently issued pronouncements during the ~~nine~~three months ended ~~March~~December 31, 2021, 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 ~~financials.~~financial statements.

Results of Operations for the Three ~~months ended March~~Months Ended December 31, 2021 compared to Three Months Ended ~~March~~December 31, ~~2020.~~2020

Operating Expenses

Operating expenses for the three months ended ~~March~~December 31, 2021 were ~~$1,824,481~~$737,611 compared to ~~$426,943~~$2,731,648 for the three months ended ~~March~~December 31, 2020. The net ~~increase~~decrease of ~~$1,397,538~~$1,994,037 in operating expenses consisted primarily of an increase in professional fees of $238,004, an increase in salary expense of $144,875, an increase in research and development of $981,391, and an overall increase in other expenses of $136,420, with a decrease in ~~non-cash stock compensation expense of $103,152.~~professional fees.

Other Income/(Expenses)

Other income and (expenses) for the three months ended ~~March~~December 31, 2021 were ~~$(18,632,063)~~$25,169,373 compared to ~~$(148,497)~~$(122,388,733) for the three months ended ~~March~~December 31, 2020. The ~~increase~~decrease in other expenses of ~~$18,483,566~~$147,558,106 was the result of ~~the~~a decrease in non-cash loss in net change in derivative of ~~$18,664,587, and other income of $2,585, with~~$147,432,554, a decrease in interest expense of ~~$178,436,~~$108,816, which includes the net change in amortization of debt discount of ~~$156,172.~~$85,599, with an increase in other income of $37,429, and an increase in loss on redemption of marketable securities of $20,693.

Net Income/(Loss)

For the three months ended ~~March~~December 31, 2021, our net ~~loss~~income was ~~$(20,456,544)~~$24,431,762, as compared to a net loss of ~~$(575,440)~~$(125,120,381) for the three months ended ~~March~~December 31, 2020. The majority of the ~~increase~~decrease in net loss of ~~$19,881,104,~~$149,552,143, was related primarily to the ~~increase~~decrease in net change of derivative instruments estimated each period. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price, volatility, variable conversion prices based on market prices defined in the respective agreements and probabilities of certain outcomes based on managements’ estimates. These inputs are subject to significant changes from period to period, therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material. The Company has not generated any revenues.

Results of Operations for the ~~Nine Months~~Six months ended ~~March~~December 31, 2021 compared to ~~Nine~~Six Months Ended ~~March~~December 31, ~~2020.~~2020

Operating Expenses

Operating expenses for the ~~nine~~six months ended ~~March~~December 31, 2021 were ~~$5,134,614~~$1,337,377 compared to ~~$1,393,069~~$3,310,134 for the ~~nine~~six months ended ~~March~~December 31, 2020. The net ~~increase~~decrease of ~~$3,741,545~~$1,972,757 in operating expenses consisted primarily of ~~an increase in research and development expense of $1,318,904, an increase~~a decrease in professional ~~fees of $2,218,020, an increase in salary of $329,875, with an overall decrease of $125,254 in other operating expenses.~~fees.

Other Income/(Expenses)

Other income and (expenses) for the ~~nine~~six months ended ~~March~~December 31, 2021 were ~~$(142,647,641)~~$74,393,983, compared to ~~$(3,715,392)~~$(124,015,577) for the ~~nine~~six months ended ~~March~~December 31, 2020. The ~~increase~~decrease in other expenses of ~~$138,932,249~~$198,409,560 was the result of ~~the~~a decrease in non-cash loss in net change in derivative of ~~$139,103,066, and~~$198,164,764, a decrease in interest expense of ~~$167,783,~~$211,037, which includes the net change in amortization of debt discount of ~~$120,162,~~$181,249, and an increase in other income of ~~$3,034.~~$54,452, and an increase in loss on redemption of marketable securities of $20,693.

Net Income/(Loss)

For the ~~nine~~six months ended ~~March~~December 31, 2021, our net ~~loss~~income was ~~$(147,782,255) as~~$73,056,606, compared to a net loss of ~~$(5,108,461)~~$(127,325,711) for the ~~nine~~six months ended ~~March~~December 31, 2020. The majority of the ~~increase~~decrease in net loss of ~~$142,673,794,~~$200,382,317, was related primarily to the ~~increase~~decrease in net change of derivative instruments estimated each period. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price, volatility, variable conversion prices based on market prices defined in the respective agreements and probabilities of certain outcomes based on managements’ estimates. These inputs are subject to significant changes from period to period, therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material. The Company has not generated any revenues.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

As of ~~March~~December 31, 2021, we had a working capital deficit of ~~$157,207,426 as~~$1,099,823, compared to ~~$60,459,862~~a working capital deficit of $80,099,103 as of June 30, ~~2020.~~2021. This ~~increase~~decrease in working capital deficit of ~~$96,747,564~~$78,999,280 was primarily due ~~primarily~~ to the decrease in derivative liability and an increase in cash ~~accounts payable, accrued expenses, derivative liability.~~and cash equivalents.

Cash used in operating activities was ~~$(4,742,243)~~$1,301,469, for the ~~nine~~six months ended ~~March~~December 31, 2021, compared to ~~$(525,542)~~$2,867,781 for the ~~nine~~six months ended ~~March~~December 31, 2020. The ~~increase~~decrease in cash used in operating activities was due to ~~an increase~~a decrease in ~~research and development cost and~~ professional fees. The Company has had no revenues.

Cash used in investing activities during the ~~nine~~six months ended ~~March~~December 31, 2021 and 2020 was ~~$(213,866)~~$8,653,932 and ~~$780,~~$53,961, respectively. The increase ~~in cash used~~ in investing activities was due to ~~the purchase~~an increase in investment of ~~tangible asset in the current period.~~markable securities.

Cash used in financing activities during the six months ended December 31, 2021 was $(1,450,000), compared to $20,092,300 provided by financing activities ~~during the nine months ended March 31, 2021 was $50,108,900~~ net of commission fees ~~and $626,500~~ for the ~~nine~~six months ended ~~March~~December 31, 2020. The ~~increase~~decrease in cash provided in financing activities was due to ~~selling equity securities~~a decrease in proceeds from the ~~current period.~~sale of common stock and warrants. Our ability to continue as a going concern is dependent upon raising capital through financing transactions and future revenue. Our capital needs have primarily been met from the proceeds of private placements and registered offerings of our securities, as we ~~currently~~ have not generated any ~~revenues.~~revenues to date.

The condensed financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying condensed financial statements do not reflect any adjustments that might result if we are unable to continue as a going concern. During the nine months ended March 31, 2021, we did not generate any revenues, and incurred a net loss of $147,782,255, which was primarily associated with the non-cash loss in change in derivative liability, and we had a working capital deficiency of $157,327,426 and a shareholders’ deficit of $157,997,338 as of March 31, 2021. These factors, among others raise substantial doubt about our ability to continue as a going concern. Our independent auditors, in their report on our audited financial statements for the year ended June 30, 2020, expressed substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern ultimately is dependent on our ability to generate revenue, which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies and, ultimately, achieve profitable operations. We have historically obtained ~~funds~~funding from investors, through ~~the sale~~private placements and registered offerings of ~~our~~equity and debt securities. Management believes that wethe Company will be able to continue to raise funds through the sale of ~~our~~its securities to its existing ~~and new investors. Management believes that funding from existing~~shareholders and prospective new investors, ~~and, subject to successfully developing and commercializing our potential products, future revenue~~which will provide the additional cash needed to meet ~~our~~the Company’s obligations as they become due and will allow the ~~development of our~~Company to continue to develop its core ~~business operations.~~

~~PLAN OF OPERATION AND FINANCING NEEDS~~

Our plan of operation within the next twelve months is to work with Schmid Group of Germany and other supporting vendors to scale our NanoParticle based technology to commercial size while further working on the housing design and balance of system for full scale hydrogen generation devices that can be deployed worldwide.

We believe that our current cash balances will be sufficient to support development activity, intellectual property protection, and all general and administrative expenses for at least the next two years. We are exploring investment and strategic partnerships in complimentary green hydrogen technologies and companies. These include hydrogen storage and compression technologies among others. We are investigating additional financing alternatives, including continued equity and/or debt financing.business. There can be no assurance that we will be able to continue raising the required capital ~~in any form would be available to us, and if available,~~for our operations on terms and conditions that are ~~acceptable.~~acceptable to us, or at all. If we are unable to obtain sufficient funds, we may be forced to ~~reduce the size of our operations, which could have a material adverse impact on, or cause us to~~ curtail and/or cease ~~the development of~~ our ~~products.~~operation.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, result of operations, liquidity or capital expenditures.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Not required for smaller reporting companies.

Item 4. Controls and Procedures.

~~ITEM 4. CONTROLS AND PROCEDURES~~

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There was no change to our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~ITEM 1. LEGAL PROCEEDINGS~~

We are not currently a party to, nor is any of our property currently the subject of, any material legal proceeding.

Item 1A. Risk Factors.

~~ITEM 1A. RISK FACTORS~~

~~Except as set forth below, there~~There are no material changes from the risk factors previously disclosed in our annual report on Form 10-K filed with the SEC on ~~September 23, 2020.~~October 8, 2021.

~~The COVID-19 pandemic may negatively affect our operations.~~

The COVID-19 pandemic is having widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. The continuing impacts of COVID-19 are highly unpredictable and could be significant, and may have an adverse effect on our business, operations and our future financial performance.

~~The impact of the pandemic on our business, operations and future financial performance could include, but is not limited to, that:~~

●

~~We may experience delays in our product development;~~

●

~~The rapid and broad-based shift to a remote working environment creates inherent productivity, connectivity, and oversight challenges.~~

●

~~Volatility in the equity markets could affect the value of our equity to shareholders and have an impact on our ability to raise capital.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~None.

~~During the three months ended March 31, 2021, the Company issued 323,917,073 shares of common stock upon conversion of principal in the amount of $218,450, plus accrued interest of $89,271.~~

In connection with the foregoing, the Company relied upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, in connection with the foregoing issuances.

Item 3. Defaults Upon Senior Securities.

~~ITEM 3. DEFAULTS UPON SENIOR SECURITIES~~None.

~~None.~~

Item 4. Mine Safety Disclosures.

~~ITEM 4. MINE SAFETY DISCLOSURES~~Not applicable.

~~No disclosure required.~~

Item 5. Other Information.

~~ITEM 5. OTHER INFORMATION~~None.

~~None.~~

Item 6. Exhibits.

~~ITEM 6. EXHIBITS~~

Exhibit No.		Description
31.1*
31.1*		Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to Sarbanes-Oxley Section 302*
32.1**		Certification by Chief Executive Officer and Acting Chief Financial Officer pursuant to 18 U.S.C. Section 1350**
EX-101.INS101		Inline XBRL ~~Instance~~ Document Set for the financial statements and accompanying notes in Part I, Item 1, of this Quarterly Report on Form 10-Q.
EX-101.SCH104		Inline XBRL ~~Taxonomy Extension Schema~~for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set.

*	Filed herewith
EX-101.CAL***		~~XBRL Taxonomy Extension Calculation Linkbase~~
EX-101.DEF*		~~XBRL Taxonomy Extension Definition Linkbase~~
EX-101.LAB*		~~XBRL Taxonomy Extension Labels Linkbase~~
EX-101.PRE*		~~XBRL Taxonomy Extension Presentation Linkbase~~

~~Filed herewith~~

Furnished herewith

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~May 18, 2021~~February 11, 2022	SUNHYDROGEN, INC.

	By:	/s/ Timothy Young
		Timothy Young Chief Executive Officer and Acting Chief Financial Officer (Principal Executive Officer, ~~and~~ ~~Acting~~ Principal Financial Officer and Principal Accounting Officer)

0001481028 srt:MaximumMember hysr:ExercisePriceOneMember us-gaap:WarrantMember 2021-07-01 2021-12-31 iso4217:USD xbrli:shares

	March 31, 2021			June 30, 2020
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	45,347,801		$	195,010
Prepaid expenses		10,264			9,378

TOTAL CURRENT ASSETS		45,358,065			204,388

PROPERTY & EQUIPMENT
Computers and peripherals		11,529			2,663
Vehicle		205,000			-
		216,529			2,663
Less: accumulated depreciation		(9,361	)		(1,605	)

NET PROPERTY AND EQUIPMENT		207,168			1,058

OTHER ASSETS
Domain, net of amortization of $4,489 and $4,223, respectively		826			1,092
Trademark, net of amortization of $456 and $371, respectively		686			772
Patents, net of amortization of $21,574 and $16,250, respectively		79,569			84,492

TOTAL OTHER ASSETS		81,081			86,356

TOTAL ASSETS	$	45,646,314		$	291,802

LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and other payable	$	249,909		$	201,243
Accrued expenses		2,695			(253	)
Accrued expenses, related party		186,000			211,750
Accrued interest on convertible notes		347,023			432,866
Derivative liability		201,779,864			59,657,718
Convertible promissory notes, net of debt discount of $0 and $409,074, respectively		120,000			160,926

TOTAL CURRENT LIABILITIES		202,685,491			60,664,250

LONG TERM LIABILITIES
Convertible promissory notes, net of debt discount of $139 and $0, respectively		958,161			1,460,000

TOTAL LONG TERM LIABILITIES		958,161			1,460,000

TOTAL LIABILITIES		203,643,652			62,124,250

COMMITMENTS AND CONTINGENCIES (SEE NOTE 9)		-			-

SHAREHOLDERS' DEFICIT
Preferred Stock, $0.001 par value;
5,000,000 authorized preferred shares, no shares issued or outstanding		-			-
Common Stock, $0.001 par value;
5,000,000,000 authorized common shares
3,320,939,682 and 2,053,410,164 shares issued and outstanding, respectively		3,320,939			2,053,410
Additional Paid in Capital		77,942,807			11,899,871
Accumulated deficit		(239,261,084	)		(75,785,729	)

TOTAL SHAREHOLDERS' DEFICIT		(157,997,338	)		(61,832,448	)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$	45,646,314		$	291,802

	Three Months Ended						Nine Months Ended
	March 31, 2021			March 31, 2020			March 31, 2021			March 31, 2020

REVENUE	$	-		$	-		$	-		$	-

OPERATING EXPENSES
General and administrative expenses		691,747			279,819			3,409,416			993,464
Research and development cost		1,126,422			145,031			1,712,169			393,265
Depreciation and amortization		6,312			2,093			13,030			6,340

TOTAL OPERATING EXPENSES		1,824,481			426,943			5,134,615			1,393,069

LOSS FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES)		(1,824,481	)		(426,943	)		(5,134,615	)		(1,393,069	)

OTHER INCOME/(EXPENSES)
Other income		2,585			-			3,034			-
Gain (Loss) on change in derivative liability		(18,603,307	)		61,280			(142,122,146	)		(3,019,081	)
Interest expense		(31,341	)		(209,777	)		(528,528	)		(696,311	)

TOTAL OTHER INCOME (EXPENSES)		(18,632,063	)		(148,497	)		(142,647,640	)		(3,715,392	)

NET INCOME (LOSS)	$	(20,456,544	)	$	(575,440	)	$	(147,782,255	)	$	(5,108,461	)

COMMON STOCK WARRANTS DEEMED DIVIDENDS		-			-			(15,928,314	)		-

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(20,456,544	)	$	(575,440	)	$	(163,710,569	)	$	(5,108,461	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.01	)	$	(0.00	)	$	(0.07	)	$	(0.00	)

WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC AND DILUTED		2,987,975,171			1,662,190,201			2,477,795,662			1,425,819,359

	NINE MONTHS ENDED MARCH 31, 2020
									Additional
	Preferred stock				Common stock				Paid-in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at June 30, 2019		-	$	-		1,077,319,339	$	1,077,319	$	10,432,575	$	(18,021,177	)	$	(6,511,283	)

Issuance of common stock for conversion of debt and accrued interest		-		-		390,468,995		390,469		285,606		-			676,075

Issuance of common stock for services		-		-		57,047,643		57,048		121,162		-			178,210

Stock based compensation expense		-		-		-		-		432,558		-			432,558

Net Loss		-		-		-		-		-		(4,533,022	)		(4,533,022	)

Balance at March 31, 2020 (unaudited)		-	$	-		1,524,835,977	$	1,524,836	$	11,271,901	$	(22,554,199	)	$	(9,757,462	)

	NINE MONTHS ENDED MARCH 31, 2021
									Additional
	Preferred stock				Common stock				Paid-in			Accumulated
	Shares		Amount		Shares		Amount		Capital			Deficit			Total
Balance at June 30, 2020		-	$	-		2,053,410,164	$	2,053,410	$	11,664,657		$	(75,550,515	)	$	(61,832,448	)

Issuance of common stock for purchase agreements and warrants		-		-		664,273,408		664,273		50,759,077			-			51,423,350

Issuance of common stock for conversion of debt and accrued interest		-		-		599,449,820		599,450		466,587			-			1,066,037

Issuance of common stock for services		-		-		3,806,290		3,806		114,217			-			118,023

Issuance of common stock warrants deemed dividends		-		-		-		-		15,928,314			(15,928,314	)		-

Stock based compensation expense		-		-		-		-		259,955			-			259,955

Buyback of options by Company		-		-		-		-		(1,250,000	)		-			(1,250,000	)

Net Loss		-		-		-		-		-			(147,782,255	)		(147,782,255	)

Balance at March 31, 2021 (unaudited)		-	$	-		3,320,939,682	$	3,320,939	$	77,942,807		$	(239,261,084	)	$	(157,997,338	)

Balance as of June 30, 2020		59,657,718
Fair value of derivative liabilities issued		-
Loss on change in derivative liability		142,122,146
Balance as of March 31, 2021	$	201,779,864

	3/31/21					3/31/20
				Weighted				Weighted
	Number			average		Number		average
	Of			exercise		of		exercise
	Options			price		Options		price
Outstanding, beginning of period		196,000,000		$	0.01		186,250,000	$	0.01
Granted		-		$	0.01		10,000,000	$	0.01
Exercised		-			-		-		-
Buyback of warrants		(13,146,826	)	$	0.0099		-		-
Outstanding, end of period		182,853,174		$	0.0089		196,250,000	$	0.01
Exercisable at the end of period		182,853,174		$	0.0089		179,117,579	$	0.01

3/31/21								3/31/20
Exercise Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)		Exercise Price		Stock Options Outstanding		Stock Options Exercisable		Weighted Average Remaining Contractual Life (years)
$	0.0100		7,368,421		7,368,421		1.51	$	0.0100		10,000,000		10,000,000		2.76
$	-		-		-		-	$	0.0200		250,000		250,000		0.25
$	0.0097		6,000,000		6,000,000		4.84		0.0097		6,000,000		6,000,000		5.09
$	0.0099		159,484,753		159,484,753		4.82	$	0.0099		170,000,000		156,867,579		5.07
$	0.0060		10,000,000		10,000,000		5.31	$	0.0060		10,000,000		10,000,000		5.56
			182,853,174		182,853,174						196,250,000		179,117,579

3/31/21						Weighted Average Remaining
Exercise Price		Warrants Outstanding		Warrants Exercisable		Contractual Life (years)
$	0.0938		16,800,000		16,800,000		2.18 - 2.75
$	0.13125		6,666,667		6,666,667		4.94
$	0.12		71,428,572		71,428,572		4.92
			94,895,239		94,895,239

Convertible Promissory Notes, net of debt discount	$	1,078,161
Less current portion		120,000
Total long-term liabilities	$	958,161

Period Ended March,	Amount
2022	$	120,000
2023		553,300
2024		395,000
2025		10,000
	$	1,078,300