UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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FOR THE FISCAL YEAR ENDED JUNE 30, 2014 |
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR
THE TRANSITION PERIOD FROM __________ TO __________
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COMMISSION FILE
NUMBER: 000-54437
HYPERSOLAR,
INC.
(Name of registrant
in its charter)
NEVADA |
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26-4298300 |
(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) |
32 East
Micheltorena, Suite A, Santa Barbara, CA 93101
(Address
of principal executive offices) (Zip Code)
Issuer’s
telephone Number: (805) 966-6566
Securities registered under Section
12(b) of the Exchange Act: None.
Securities registered under Section
12(g) of the Exchange Act: common stock, par value $0.001 per share
Indicate
by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yeso No x
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 x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter
period that the registrant was required to submit and post such files. Yes x No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the definitions of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated Filer |
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Non-accelerated filer |
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Smaller reporting company
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(Do not check if a smaller reporting company) |
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o No x
The aggregate market value of the
common stock held by non-affiliates of the registrant, based upon the last sale price of the common stock of the Company as of
the last business day of its most recently completed second quarter was approximately $1,345,794.
The number of shares of registrant’s
common stock outstanding, as of September 22, 2014 was 448,562,525.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
TABLE OF
CONTENTS
PART I
ITEM 1. BUSINESS.
Unless otherwise stated or the
context requires otherwise, references in this annual report on Form 10-K to “Hypersolar”, the
“Company”, “we”, “us”, or “our” refer to Hypersolar, Inc.
Overview
Inspired by
the photosynthetic process that plants use to harness the power of the sun to create energy molecules, we are developing a novel
solar-powered particle system that mimics photosynthesis to separate hydrogen from water. On November 15, 2011, we filed
a patent application to protect the intellectual property rights to the production of renewable hydrogen and natural gas using
sunlight, water, and carbon dioxide.
Hydrogen is
the lightest and abundant chemical element, constituting roughly 75% of the universe's chemical elemental mass (Palmer, D. (13
September 1997). "Hydrogen in the Universe".NASA). However, naturally occurring elemental hydrogen
is relatively rare on earth and hydrogen gas is most often produced using fossil fuels. Industrial production is mainly from the
steam reforming of natural gas and is usually employed near its production site, with the two largest uses being crude oil processing
(hydrocracking) and ammonia production, mostly for the fertilizer market. We are developing what we believe is a cleaner
and greener way to produce this high value product.
In addition
to the many industrial uses of hydrogen, one of the most intriguing uses, is for fuel cells for transportation. A fuel cell is
a device that converts the chemical energy from a fuel into electricity through a chemical reaction with oxygen or another oxidizing
agent, using hydrogen as the most common fuel. In 2013, many automotive manufacturers announced plans to develop hydrogen vehicles
including Toyota, Honda, Hyundai, and BMW. Source:
(http://www.driveclean.ca.gov/Search_and_Explore/Technologies_and_Fuel_Types/Hydrogen_Fuel_Cell.php)
On May 20,
2014 the first Hyundai fuel cell vehicles (FCEV’s) rolled onto U.S. soil marking the first delivery of mass-produced fuel
cell hydrogen vehicles in the U.S. market. (Source: http://www.hyundainews.com/us/en-us/Media/PressRelease.aspx?mediaid=40852&title=hyundais-first-mass-produced-tucson-fuel-cell-cuvs-arrive-in-southern-california)
Our research
is centered on developing a low-cost and submersible hydrogen production particle that can split water molecules under the sun,
emulating the core functions of photosynthesis. Each particle is a complete hydrogen generator that contains a novel high voltage
solar cell bonded to chemical catalysts by a proprietary encapsulation coating. We are striving to reach an open circuit
voltage (OCV) goal of 1.5 to effectively split the water molecules to produce hydrogen with our technology. On February 11, 2014,
we announced that we had reached open circuit voltage of 1.2. We are currently working on increasing the OCV to 1.5 and building
a larger proof of concept prototype of our technology.
Market Opportunity
Hydrogen
has a number of applications from chemical processing, petroleum recovery and refining, metal production and fabrication, aerospace,
and fuel cells. The sectors with the greatest demand for hydrogen are petroleum refineries for hydrocracking and ammonia production
for fertilizer. Transportation fuel is an emerging sector which we believe has an enormous potential in the future. We
believe fuel cell technology will be the major growth driver of hydrogen in the future as many major automobile manufacturers such
as Honda, Hyundai, BMW and Toyota bring hydrogen powered cars to market.
Hydrogen
production is a large and growing industry Market size of global hydrogen production was estimated to be 53 million metric tons
in 2010, of which 12% was shared by merchant hydrogen and rest with captive production (Markets and Markets Research; Hydrogen
Generation Market). With decreasing sulfur level in petroleum products, lowering crude oil quality and rising demand
of hydrogen operated fuel cell applications, global hydrogen production volume is forecasted to grow by compound annual growth
rate of 5.6% from 2011 to 2016. The hydrogen production market in terms of value was estimated to be approximately $82 billion
in 2011. (Markets and Markets Research; Hydrogen Generation Market)
Our Technology
Technology for Making Renewable
Hydrogen from Sunlight
Hydrogen (H2) is the third most
abundant element on earth and cleanest fuel in the universe, (Dresselhaus, Mildred et al.
(May 15, 2003). "Basic Research Needs for the Hydrogen Economy). Unlike hydrocarbon fuels, such as oil, coal and
natural gas, where carbon dioxide and other contaminants are released into the atmosphere when used, hydrogen fuel usage produces
only pure water (H2O) as the byproduct. Unfortunately, pure hydrogen does not exist naturally on earth and therefore must be manufactured.
Historically, the cost of manufacturing hydrogen as an alternative fuel has been higher than the cost of the energy used to make
it. This is the dilemma of the hydrogen Economy, and one that we aim to address.
For over a century, splitting water
molecules into hydrogen and oxygen using electrolysis has been well known. This technology can be used to produce an unlimited
amount of clean and renewable hydrogen fuel to power a carbon-free world. However, in practice, current commercial electrolysis
technologies require (a) expensive electricity, and (b) highly purified water to prevent fouling of system components. We believe
these are the major barriers to affordable production of renewable hydrogen.
The Perfect and Sustainable
Energy Cycle
As it turns out, Mother Nature has
been making hydrogen using sunlight since the beginning of time by splitting water molecules (H2O) into its basic elements - hydrogen
and oxygen. This is exactly what plant leaves do every day using photosynthesis. Since the produced hydrogen is immediately consumed
inside the plant, we cannot simply grow trees to make hydrogen.
If technology can be developed to
mimic photosynthesis to split water into hydrogen, then a truly sustainable, low cost, and renewable energy cycle can be created
to power the earth. However, cost has been the biggest barrier to realizing this vision.
Water Splitting
In the process of splitting a water
molecule, input energy is transferred into the chemical bonds of the resulting hydrogen molecule. So in essence, manufactured hydrogen
is simply a carrier or battery-like storage of the input energy. If the input energy is from fossil fuels, such as oil and gas,
then dirty carbon fossil fuel energy is simply transferred into hydrogen. If the input energy is renewable such as solar and wind,
then new and clean energy is stored in hydrogen.
While the concept of water splitting
is very appealing, the following challenges must be addressed for renewable hydrogen to be commercially viable:
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Energy
Inefficiency — Since hydrogen is an energy carrier, the most energy it can store is 100% of the input energy. However,
conventional systems approach to electrolysis lose so much of the input energy in system components, wires and electrodes
resulting in only a small portion of electricity making it into the hydrogen molecules. This translates to high production
cost and is the fundamental problem with water splitting for hydrogen production. We intend to address this problem with our
low cost and energy efficient particle technology. |
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Need
for Clean Water — Conventional electrolysis requires highly purified clean water to prevent fouling of
system components. This prevents current technology from using large quantities of available water from oceans, rivers, industrial
waste and municipal waste as feedstock. Our technology is being designed to use any natural water or waste water for the unlimited
production of renewable hydrogen. |
Technology
Electrolysis water-splitting in
its simplest form is the transfer of "input electrons" in the following chemical reactions:
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Cathode (reduction): 2 H2O + 2e- -> H2 + 2 OH- |
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Anode (oxidation): 4 OH- -> O2 + 2 H2O + 4 e- |
From these equations it can be deduced that
if every input electron (e-) is put to work and not lost, then a maximum amount of input electrons (i.e. energy) is transferred
and stored in the hydrogen molecules (H2). Additionally, if there were a very high number of cathode and anode reaction areas within
a given volume of water, then a very high number of these reactions could happen simultaneously throughout the medium to split
each water molecule into hydrogen wherever electrons are available.
To address this fundamental electron
transfer efficiency problem, we are developing a novel self-contained particle to maximally ensure that every single electron is
put to work in splitting a water molecule. Our self-contained particle has two very important features:
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Self-contained
Photoelectrochemical System — Our low cost self-contained particle is designed to mimic photosynthesis
and contains a solar absorber that generates electrons from sunlight, as well as integrated cathode and anode areas to readily
split water and transfer those electrons to the molecular bonds of hydrogen. Unlike solar panels or wind turbines that produce
lots of electrons that will be lost before reaching the hydrogen bonds, our particles are optimized to ensure maximal electron
generation and utilization efficiency. Consequently, our particles use much less photovoltaic elements, an expensive material,
than conventional solar panels to achieve the same system level efficiency. Thereby significantly lowering the system cost
of what is essentially an electrolysis process. |
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Protective
Coating — The biggest problem with submerging photovoltaic elements in water for direct electrolysis is
corrosion and short circuiting. To address this problem, we are developing a protective coating that encapsulates key elements
of the particle to allow it to function for a long period of time in a wide range of water conditions without corrosion. This
allows the particles to be submerged or dissolved into any water, such as sea water, runoff water, river water, or waste water,
instead of purified distilled water. |
In May of 2012, we completed a lab
scale prototype of our technology that can be seen on our website at www.hypersolar.com. This prototype
demonstrates hydrogen production from small scale solar devices coated with our unique, low-cost polymer coating, and submerged
in waste water from a pulp and paper mill. This prototype is used for demonstration purposes only and is not meant for commercial
deployment.
HyperSolar H2Generator™
Since our particles are intended
to mimic the natural room temperature conditions of photosynthesis, they can be housed in very low cost reactors such as glass
vessels or clear plastic bags. To facilitate the commercial use of our self-contained particle technology we are developing a modular
system that will enable the daily production and storage of hydrogen for any time use in electricity generation, oil and gas refining,
fertilizer manufacturing or any other current and future applications of hydrogen.
The HyperSolar H2Generator comprise
of the following primary stages:
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Reactor
Vessels — These reactors resemble transparent rectangular boxes containing water and tens of thousands
of self-contained particles suspended in solution. When exposed to sunlight, hydrogen gas will bubble up into an air gap on
top for separation and collection. |
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Hydrogen
Compressor — Produced hydrogen gas will be compressed for space efficient storage |
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Hydrogen
Storage — Hydrogen can be stored in compressed gas tanks or chemical canisters depending on the application. |
Distributed and Scalable
The HyperSolar H2Generator will
be a self-contained renewable hydrogen production system that requires only sunlight and any source of water. As a result, it can
be installed almost anywhere to produce hydrogen fuel for local use. This model of hydrogen production addresses one of the biggest
challenges of using clean hydrogen fuel on a large scale - transportation of hydrogen.
Each stage of the HyperSolar H2Generator
can be scaled independently according to the hydrogen demands and length of storage required for a specific application. A small
scale system can be used to produce continuous renewable electricity for a small house, or a large scale system can be used to
produce hydrogen to power a community.
In March of 2013, we announced plans
to build the H2Generator. We are still in development of this system that uses semiconductor devices immersed
in water to split water to form hydrogen without the aid of an external solar panel and electrolyzer. We are currently
working on a one square meter demonstration unit of this system.
Intellectual Property
On November 15, 2011 we filed a
provisional patent application with the U.S. Patent and Trademark Office to protect the intellectual property rights for ”Photoelectrochemically
Active Heterostructures, Methods For Their Manufacture, And Methods And Systems For Producing Desired Products.” Disclosed
in that patent application are methods for producing desired chemical products, including hydrocarbons such as methane and other
alkanes, synthesis gas (carbon monoxide and hydrogen), and methanol, from carbon dioxide and oxidizable reactant compounds in wastewater
as a feedstock using solar energy to drive at least a portion of the chemical reaction process (e.g., to produce hydrogen
gas). Photoelectrochemical processes employ photoelectrochemically active heterostructures (PAHs) to absorb sunlight
and transform the light energy into electrochemical potential energy, which converts reactants containing hydrogen atoms into products,
which react with carbon dioxide to form desired chemical products. On November 14, 2012, we filed the utility patent application
for the above and the examination and prosecution of this patent are ongoing.
In February of 2012, we entered
into a sponsorship research agreement with the University of California, Santa Barbara. As a result of that agreement,
in September of 2012, we jointly filed with the university an additional patent application to protect the intellectual property
rights of our proprietary coating for protecting our semiconductor devices from corrosion in various types of water. This
patent is titled: “Process And Systems For Stable Operation of Electroactive Devices” The present
invention is directed towards processes and systems for stable operation of electrical, electrochemical, photoelectrochemical and
photosynthetic devices with increased efficiency, stability, and low cost. In particular, what is disclosed are new functional
coating materials and applications of those coatings that are optically transparent, electronically conducting, electrocatalytically
active, thermally stable, and which can be applied conformally and easily on an electroactive unit for stable and efficient operation. We
believe this patent will be valuable beyond our specific utilization in developing hydrogen from water using the power of the sun.
In February of 2013, we filed the utility patent application for the above and the examination and prosecution of this patent are
ongoing.
In March of 2014, jointly with the
University of California, we filed an additional patent to further protect our technology for the “method and manufacture
of multi-junction solar cells.”
Strategic Partners
In February of 2012, we entered
into a one year sponsorship research agreement (“SRA”) with the University of California, Santa Barbara (“UCSB”)
to help achieve important milestones in the company’s development plan. The focus of the UCSB SRA is to accomplish
the following three specific aims:
1) |
Develop and demonstrate inorganic coating materials that will allow conventional photovoltaic device structures to be used as photoelectrochemical conversion devices immersed in electrolyte solution. |
2) |
Measure the electrochemical oxidation properties of several simulated and actual sampled wastewater solutions. |
3) |
Demonstrate hydrogen production in a device structure based on a porous alumina membrane with semiconducting materials deposited within the pores and capped with anode and cathode electrocatalysts. |
As consideration under the SRA,
UCSB will receive from the Company, $218,231. When expenditures reach that amount, we will no longer be obligated to
fund any additional research activities and UCSB will not be obligated to perform any additional research activities pursuant to
the SRA, unless mutually agreed upon. Either us or UCSB may terminate the agreement upon sixty days written notice.
U.S. Patent Law and University policy will govern any patentable developments or discoveries throughout the course of the SRA. If
such an invention is determined to be jointly owned by us and UCSB, we will prepare and file, at our cost, patent applications
for such invention and claim it as a joint invention in the name of both the Company and the University, and shall prosecute and
maintain such joint patent rights. Neither party may assign its joint ownership in such patents without the consent
of the other party. We have a time-limited first right to negotiate a license to UCSB’s interest in any joint
invention.
We believe the partnership with
UCSB will enable us to refine our solar-powered particle technology for generating zero carbon hydrogen and renewable natural gas
using sunlight, water and carbon dioxide (CO2). The research project will be led by Professor Eric McFarland in the Department
of Chemical Engineering at UCSB.
On January 11, 2013, we signed an
amendment to this agreement extending it to July 31 for no additional cost. On July 31, 2013, we signed an additional
amendment to this agreement extending it to December 31, 2013 for additional consideration of $54,045. On December 16,
2013 we signed an amendment to extend this agreement through June 30, 2014 for additional consideration of $43,459. On April 4,
2014, we signed an amendment to extend the current agreement through December 31, 2014 at no additional cost to the Company.
Competition
Hydrogen is a large and growing
industry. According to a report from Markets and Markets, the hydrogen production market in 2011 is $86 billion with
a compounded annual growth rate of 5.6%. Currently, most hydrogen is produced by steam reforming of natural gas or methane. This
production technology dominates due to easy availability and low prices of natural gas. Partial oxidation of petroleum oil is second
in production capacity after steam reforming of natural gas. The third largest production technology in terms of production capacity
is steam gasification of coal. The current industry is heavily dominated by large players such as Air Products and Chemicals Inc.
and Air Liquide.
The energy source and feedstock
used in these existing production technologies are fossil fuels. Therefore, the hydrogen produced is not considered
renewable. We are developing a new low cost technology to use sunlight as the energy source to split water into hydrogen
in a truly renewable fashion. To our knowledge, there are no commercially available technologies for producing large
quantities of renewable hydrogen that is cost competitive with fossil fuel based hydrogen. Niche market electrolysis systems that
split water for hydrogen production have existed for a long time but their capital and operating costs are much higher than conventional
hydrogen. Various academic and research institutions around the world are attempting to develop renewable hydrogen production
technologies as well. To our knowledge, none have reached commercial success.
If we are able to complete the commercial
development of our technology, we do not intend to manufacture hydrogen and compete with companies such as Air Liquide. We
intend to license our technology to companies like Air Products and Air Liquide for the production of renewable hydrogen used in
applications such as hydrogen vehicle fueling stations and hydrogen power plants.
Organizational History
We were incorporated in the State
of Nevada on February 18, 2009. Our authorized capital was increased from 505,000,000 to 1,005,000,000 on November 21, 2013.
Corporate Information
Our executive offices are located
at 32 East Micheltorena, Suite A, Santa Barbara, CA 93101. Our telephone number is (805) 966-6566.
EMPLOYEES
As of September 22, 2014 we had 1
full-time employee and several consultants. We have not experienced any work stoppages and we consider relations with
our employees and consultants to be good.
ITEM 1A. RISK
FACTORS
RISKS RELATED TO OUR BUSINESS
AND INDUSTRY
RISKS RELATED TO OUR BUSINESS
AND INDUSTRY
OUR LIMITED OPERATING HISTORY
DOES NOT AFFORD INVESTORS A SUFFICIENT HISTORY ON WHICH TO BASE AN INVESTMENT DECISION.
We were formed in February 2009
and are currently developing a new technology that has not yet gained market acceptance. There can be no assurance that at
this time we will operate profitably or that we will have adequate working capital to meet our obligations as they become due.
Investors must consider the risks
and difficulties frequently encountered by early stage companies, particularly in rapidly evolving markets. Such risks include
the following:
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competition; |
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need for acceptance of products; |
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ability to continue to develop and extend brand identity; |
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ability to anticipate and adapt to a competitive market; |
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ability to effectively manage rapidly expanding operations; |
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amount and timing of operating costs and capital expenditures relating to expansion of our business, operations, and infrastructure; and |
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dependence upon key personnel. |
We cannot be certain that our business
strategy will be successful or that we will successfully address these risks. In the event that we do not successfully address
these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected
and we may have to curtail our business.
WE HAVE A HISTORY OF LOSSES AND
HAVE NEVER REALIZED REVENUES TO DATE. WE EXPECT TO CONTINUE TO INCUR LOSSES AND NO ASSURANCE CAN BE GIVEN THAT WE WILL REALIZE
REVENUES. ACCORDINGLY, WE MAY NEVER ACHIEVE AND SUSTAIN PROFITABILITY.
As of June 30, 2014, we have incurred
an aggregate net loss, and had an accumulated deficit, of $(15,186,280). For the years ended June 30, 2014 and 2013, we incurred
net losses of $(11,543,012) and $(1,127,722), respectively. The net losses for the years ended June 30, 2014 and 2013,
include non cash expenses of $10,938,756 and $514,237, respectively, associated with the derivatives. We expect to continue to
incur net losses until we are able to realize revenues to fund our continuing operations. We may fail to achieve any or significant
revenues from sales or achieve or sustain profitability. Accordingly, there can be no assurance of when, if ever, we will be profitable
or be able to maintain profitability.
We have historically raised funds
through various capital raising transactions. We may require additional funds in the future to fund our business plans, either
through additional equity or debt financings or collaborative agreements or from other sources. We have no commitments to obtain
such additional financing, and we may not be able to obtain any such additional financing on terms favorable to us, or at all.
In the event we are unable to obtain additional financing, we may be unable to implement our business plan. Even with such financing,
we have a history of operating losses and there can be no assurance that we will ever become profitable.
WE MAY BE UNABLE TO MANAGE OUR
GROWTH OR IMPLEMENT OUR EXPANSION STRATEGY.
We may not be able to develop our
product and service offerings or implement the other features of our business strategy at the rate or to the extent presently planned.
Our projected growth will place a significant strain on our administrative, operational and financial resources. If we are unable
to successfully manage our future growth, establish and continue to upgrade our operating and financial control systems, recruit
and hire necessary personnel or effectively manage unexpected expansion difficulties, our financial condition and results of operations
could be materially and adversely affected.
WE MAY NOT BE ABLE TO SUCCESSFULLY
DEVELOP AND COMMERCIALIZE OUR TECHNOLOGIES WHICH WOULD RESULT IN CONTINUED LOSSES AND MAY REQUIRE US TO CURTAIL OR CEASE OPERATIONS.
In May of 2012, we completed a lab
scale prototype of our technology. This prototype demonstrates hydrogen production from small scale solar devices coated with our
unique, low-cost polymer coating, and submerged in waste water from a pulp and paper mill. However we have not completed
a large scale commercial prototype of our technology and are uncertain at this time when completion of a commercial scale prototype
will occur. Although, the lab scale prototype demonstrates the viability of our technology, there can be no assurance that we will
be able to commercialize our technology.
On November 15, 2011 we filed a
provisional patent application with the U.S. Patent and Trademark Office to protect the intellectual property rights for ”Photoelectrochemically
Active Heterostructures, Methods For Their Manufacture, And Methods And Systems For Producing Desired Products.” Disclosed
in that patent application are methods for producing desired chemical products, including hydrocarbons such as methane and other
alkanes, synthesis gas (carbon monoxide and hydrogen), and methanol, from carbon dioxide and oxidizable reactant compounds in wastewater
as a feedstock using solar energy to drive at least a portion of the chemical reaction process (e.g., to produce hydrogen
gas). Photoelectrochemical processes employ photoelectrochemically active heterostructures (PAHs) to absorb sunlight
and transform the light energy into electrochemical potential energy, which converts reactants containing hydrogen atoms into products,
which react with carbon dioxide to form desired chemical products. On November 14, 2012, we filed the utility patent application
for the above and the examination and prosecution of this patent are ongoing.
In February of 2012, we entered
into a sponsorship research agreement with the University of California, Santa Barbara. As a result of that agreement,
in September of 2012, we jointly filed with the university an additional patent application to protect the intellectual property
rights of our proprietary coating for protecting our semiconductor devices from corrosion in various types of water. This
patent is titled: “Process And Systems For Stable Operation of Electroactive Devices” The present
invention is directed towards processes and systems for stable operation of electrical, electrochemical, photoelectrochemical and
photosynthetic devices with increased efficiency, stability, and low cost. In particular, what is disclosed are new functional
coating materials and applications of those coatings that are optically transparent, electronically conducting, electrocatalytically
active, thermally stable, and which can be applied conformally and easily on an electroactive unit for stable and efficient operation. We
believe this patent will be valuable beyond our specific utilization in developing hydrogen from water using the power of the sun.
In February of 2013, we filed the utility patent application for the above and the examination and prosecution of this patent are
ongoing.
In March of 2014, jointly with the
University of California, we filed an additional patent to further protect our technology for the “method and manufacture
of multi-junction solar cells.”
OUR REVENUES ARE DEPENDENT UPON
ACCEPTANCE OF OUR PRODUCTS BY THE MARKET; THE FAILURE OF WHICH WOULD CAUSE US TO CURTAIL OR CEASE OPERATIONS.
We believe that virtually all of
our revenues will come from the sale or license of our products. As a result, we will continue to incur substantial operating losses
until such time as we are able to develop our product and generate revenues from the sale or license of our products. There can
be no assurance that businesses and customers will adopt our technology and products, or that businesses and prospective customers
will agree to pay for or license our products. Our technology and product, when fully developed, may not gain market acceptance
due to various factors such as not enough cost savings between our method of producing hydrogen and other more conventional methods.
In the event that we are not able to significantly increase the number of customers that purchase or license our products, or if
we are unable to charge the necessary prices or license fees, our financial condition and results of operations will be materially
and adversely affected.
WE FACE INTENSE COMPETITION,
AND MANY OF OUR COMPETITORS HAVE SUBSTANTIALLY GREATER RESOURCES THAN WE DO.
We operate in a competitive environment
that is characterized by price fluctuation and technological change. We will compete with major international and domestic companies.
Some of our current and future potential competitors may have greater market recognition and customer bases, longer operating histories
and substantially greater financial, technical, marketing, distribution, purchasing, manufacturing, personnel and other resources
than we do. In addition, competitors may be developing similar technologies with a cost similar to, or lower than, our projected
costs. As a result, they may be able to respond more quickly to changing customer demands or to devote greater resources to the
development, promotion and sales of solar and solar-related products than we can.
Our business plan relies on sales
of our products based on either a demand for truly renewable clean hydrogen or economically produced clean hydrogen. If
we fail to compete successfully, our business would suffer and we may lose or be unable to gain market share. Neither
the demand for our product nor our ability to manufacture have yet been proven.
BECAUSE OUR INDUSTRY IS HIGHLY
COMPETITIVE AND HAS LOW BARRIERS TO ENTRY, WE MAY LOSE MARKET SHARE TO LARGER COMPANIES THAT ARE BETTER EQUIPPED TO WEATHER A DETERIORATION
IN MARKET CONDITIONS DUE TO INCREASED COMPETITION.
Our industry is highly competitive
and fragmented, subject to rapid change and has low barriers to entry. We may in the future compete for potential customers with
solar and heating companies and other providers of solar power equipment or electric power. Some of these competitors may have
significantly greater financial, technical and marketing resources and greater name recognition than we have.
We believe that our ability to compete
depends in part on a number of factors outside of our control, including:
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the ability of our competitors to hire, retain and motivate qualified personnel; |
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the ownership by competitors of proprietary tools to customize systems to the needs of a particular customer; |
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the price at which others offer comparable services and equipment; |
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the extent of our competitors’ responsiveness to customer needs; and |
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installation technology. |
Competition in the solar power services
industry may increase in the future, partly due to low barriers to entry, as well as from other alternative energy resources now
in existence or developed in the future. Increased competition could result in price reductions, reduced margins or loss of market
share and greater competition for qualified personnel. There can be no assurance that we will be able to compete successfully against
current and future competitors. If we are unable to compete effectively, or if competition results in a deterioration of market
conditions, our business and results of operations would be adversely affected.
A DROP IN THE RETAIL PRICE OF
CONVENTIONAL ENERGY OR NON-SOLAR ALTERNATIVE ENERGY SOURCES MAY NEGATIVELY IMPACT OUR PROFITABILITY.
We believe that a customer’s
decision to purchase or install solar power capabilities is primarily driven by the cost of electricity from other sources and
their anticipated return on investment resulting from solar power systems. Fluctuations in economic and market conditions that
impact the prices of conventional and non-solar alternative energy sources, such as decreases in the prices of oil and other fossil
fuels, could cause the demand for solar power systems to decline, which would have a negative impact on our profitability. Changes
in utility electric rates or net metering policies could also have a negative effect on our business.
OUR BUSINESS DEPENDS ON PROPRIETARY
TECHNOLOGY THAT WE MAY NOT BE ABLE TO PROTECT AND MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
Our success will depend, in part,
on our technology’s commercial viability and on the strength of our intellectual property rights. The technology is not patented
and the only intellectual property rights that exist at present, if any, are trade secret rights. However, trade secrets are difficult
to protect and others could independently develop substantially equivalent technology, otherwise gain access to trade secrets relating
to the technology. Accordingly, we may not be able to protect the rights to our trade secrets. In addition, any agreements
we enter into with our employees, consultants, advisors, customers and strategic partners will contain restrictions on the disclosure
and use of trade secrets, inventions and confidential information relating to the technology may not provide meaningful protection
in the event of unauthorized use or disclosure.
On November 15, 2011 we filed a
provisional patent application with the U.S. Patent and Trademark Office to protect the intellectual property rights for ”Photoelectrochemically
Active Heterostructures, Methods For Their Manufacture, And Methods And Systems For Producing Desired Products.” Disclosed
in that patent application are methods for producing desired chemical products, including hydrocarbons such as methane and other
alkanes, synthesis gas (carbon monoxide and hydrogen), and methanol, from carbon dioxide and oxidizable reactant compounds in wastewater
as a feedstock using solar energy to drive at least a portion of the chemical reaction process (e.g., to produce hydrogen
gas). Photoelectrochemical processes employ photoelectrochemically active heterostructures (PAHs) to absorb sunlight
and transform the light energy into electrochemical potential energy, which converts reactants containing hydrogen atoms into products,
which react with carbon dioxide to form desired chemical products. On November 14, 2012, we filed the utility patent application
for the above and the examination and prosecution of this patent are ongoing.
In February of 2012, we entered
into a sponsorship research agreement with the University of California, Santa Barbara. As a result of that agreement,
in September of 2012, we jointly filed with the university an additional patent application to protect the intellectual property
rights of our proprietary coating for protecting our semiconductor devices from corrosion in various types of water. This
patent is titled: “Process And Systems For Stable Operation of Electroactive Devices” The present
invention is directed towards processes and systems for stable operation of electrical, electrochemical, photoelectrochemical and
photosynthetic devices with increased efficiency, stability, and low cost. In particular, what is disclosed are new functional
coating materials and applications of those coatings that are optically transparent, electronically conducting, electrocatalytically
active, thermally stable, and which can be applied conformally and easily on an electroactive unit for stable and efficient operation. We
believe this patent will be valuable beyond our specific utilization in developing hydrogen from water using the power of the sun.
In February of 2013, we filed the utility patent application for the above and the examination and prosecution of this patent are
ongoing.
In March of 2014, jointly with the
University of California, we filed an additional patent to further protect our technology for the “method and manufacture
of multi-junction solar cells.”
Third parties may assert that the
technology, or the products we or our customers or partners commercialize using the technology, infringes upon their proprietary
rights. We have yet to complete an infringement analysis and, even if such an analysis were available at the current time, it is
virtually impossible for us to be certain that no infringement exists, particularly in our case where our products have not yet
been fully developed.
We may need to acquire additional
licenses from third parties in order to avoid infringement. Any required license may not be available to us on acceptable terms,
or at all.
We could incur substantial costs
in defending ourselves in suits brought against us for alleged infringement of another party’s intellectual property rights
as well as in enforcing our rights against others, and if we are found to infringe, the manufacture, sale and use of our or our
customers’ or partners’ products could be enjoined. Any claims against us, with or without merit, would likely be time-consuming,
requiring our management team to dedicate substantial time to addressing the issues presented. Furthermore, the parties bringing
claims may have greater resources than we do.
WE DO NOT MAINTAIN THEFT OR CASUALTY
INSURANCE, AND ONLY MAINTAIN MODEST LIABILITY AND PROPERTY INSURANCE COVERAGE AND THEREFORE WE COULD INCUR LOSSES AS A RESULT OF
AN UNINSURED LOSS.
We do not maintain theft, casualty
insurance, or property insurance coverage. We cannot assure that we will not incur uninsured liabilities and losses as a result
of the conduct of our business. Any such uninsured or insured loss or liability could have a material adverse effect on our results
of operations.
IF WE LOSE KEY EMPLOYEES AND
CONSULTANTS OR ARE UNABLE TO ATTRACT OR RETAIN QUALIFIED PERSONNEL, OUR BUSINESS COULD SUFFER.
Our success is highly dependent
on our ability to attract and retain qualified scientific, engineering and management personnel. We are highly dependent on our
CEO, Timothy Young, and our development team at the University of California, Santa Barbara. The loss of these valuable
resources could have a material adverse effect on our operations. Our officers are employed on “at will” basis.
Accordingly, there can be no assurance that they will remain associated with us. Our management’s efforts will be critical
to us as we continue to develop our technology and as we attempt to transition from a development stage company to a company with
commercialized products and services. If we were to lose Mr. Young or the services of the development team at the university or
any other key employees or consultants, we may experience difficulties in competing effectively, developing our technology and
implementing our business strategies.
THE LOSS OF STRATEGIC RELATIONSHIPS
USED IN THE DEVELOPMENT OF OUR PRODUCTS AND TECHNOLOGY COULD IMPEDE OUR ABILITY TO COMPLETE OUR PRODUCT AND RESULT IN A MATERIAL
ADVERSE EFFECT CAUSING THE BUSINESS TO SUFFER.
In February of 2012, we entered
into a one year sponsorship research agreement (“SRA”) with the University of California, Santa Barbara (“UCSB”)
to help achieve important milestones in the company’s development plan. The focus of the UCSB SRA is to accomplish
the following three specific aims:
1) |
Develop and demonstrate inorganic coating materials that will allow conventional photovoltaic device structures to be used as photoelectrochemical conversion devices immersed in electrolyte solution. |
2) |
Measure the electrochemical oxidation properties of several simulated and actual sampled wastewater solutions. |
3) |
Demonstrate hydrogen production in a device structure based on a porous alumina membrane with semiconducting materials deposited within the pores and capped with anode and cathode electrocatalysts. |
As consideration under the SRA,
UCSB will receive from the Company, $218,231. When expenditures reach that amount, we will no longer be obligated to
fund any additional research activities and UCSB will not be obligated to perform any additional research activities pursuant to
the SRA, unless mutually agreed upon. Either us or UCSB may terminate the agreement upon sixty days written notice.
U.S. Patent Law and University policy will govern any patentable developments or discoveries throughout the course of the SRA. If
such an invention is determined to be jointly owned by us and UCSB, we will prepare and file, at our cost, patent applications
for such invention and claim it as a joint invention in the name of both the Company and the University, and shall prosecute and
maintain such joint patent rights. Neither party may assign its joint ownership in such patents without the consent
of the other party. We have a time-limited first right to negotiate a license to UCSB’s interest in any joint
invention.
We believe the partnership with
UCSB will enable us to refine our solar-powered self-contained particle technology for generating zero carbon hydrogen and renewable
natural gas using sunlight, water and carbon dioxide (CO2). The research project will be led by Professor Eric McFarland in the
Department of Chemical Engineering at UCSB.
On January 11, 2013, we signed an
amendment to this agreement extending it to July 31 for no additional cost. On July 31, 2013, we signed an additional
amendment to this agreement extending it to December 31, 2013 for additional consideration of $54,045. On December 16, 2013 we
signed an amendment to extend this agreement through June 30, 2014 for additional consideration of $43,459. On April 4, 2014, we
signed an amendment to extend the current agreement through December 31, 2014 at no additional cost to the Company.
THERE IS SUBSTANTIAL DOUBT ABOUT
OUR ABILITY TO CONTINUE AS A GOING CONCERN.
Our independent public accounting
firm in their report dated September 23, 2014, included an explanatory paragraph expressing substantial doubt in our ability to
continue as a going concern without additional capital becoming available. Going concern contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business over a reasonable length of time. Our ability to continue
as a going concern ultimately is dependent on our ability to generate a profit which is dependent upon our ability to obtain
additional equity or debt financing, attain further operating efficiencies and, ultimately, to achieve profitable operations. As
a result, our financial statements do not reflect any adjustment which would result from our failure to continue to operate as
a going concern. Any such adjustment, if necessary, would materially affect the value of our assets.
RISKS RELATING TO OUR COMMON
STOCK
BECAUSE THERE IS A LIMITED MARKET
IN OUR COMMON STOCK, STOCKHOLDERS MAY HAVE DIFFICULTY IN SELLING OUR COMMON STOCK AND OUR COMMON STOCK MAY BE SUBJECT TO SIGNIFICANT
PRICE SWINGS.
There is a very limited market for
our common stock. Since trading commenced in May 26, 2010, there has been little activity in our common stock and on some days
there is no trading in our common stock. Because of the limited market for our common stock, the purchase or sale of a relatively
small number of shares may have an exaggerated effect on the market price for our common stock. We cannot assure stockholders that
they will be able to sell common stock or, that if they are able to sell their shares, that they will be able to sell the shares
in any significant quantity at the quoted price.
IF WE FAIL TO REMAIN CURRENT
ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS
TO SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET.
Securities traded on the OTC Bulletin
Board must be registered with the Securities and Exchange Commission and the issuer must be current with its filings
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1933, as amended, in order to maintain price quotation privileges
on the OTC Bulletin Board. If we fail to remain current in our reporting requirements, we could be removed from the
OTC Bulletin Board. As a result, the market liquidity of our securities could be severely adversely affected by limiting the ability
of broker-dealers to trade our securities and the ability of stockholders to sell their securities in the secondary market. In
addition, we may be unable to get re-listed on the OTC Bulletin Board, which may have an adverse material effect on our Company.
WE DO NOT EXPECT TO PAY DIVIDENDS
IN THE FUTURE; ANY RETURN ON INVESTMENT MAY BE LIMITED TO THE VALUE OF OUR COMMON STOCK.
We do not currently anticipate paying
cash dividends in the foreseeable future. The payment of dividends on our Common Stock will depend on earnings, financial condition
and other business and economic factors affecting it at such time as the board of directors may consider relevant. Our current
intention is to apply net earnings, if any, in the foreseeable future to increasing our capital base and development and marketing
efforts. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends to the holders
of our Common Stock, and in any event, a decision to declare and pay dividends is at the sole discretion of the our Board of Directors.
If we do not pay dividends, our Common Stock may be less valuable because a return on your investment will only occur if its stock
price appreciates.
OUR COMMON STOCK COULD BE SUBJECT
TO EXTREME VOLATILITY.
The trading price of our common
stock may be affected by a number of factors, including events described in the risk factors set forth in this report, as well
as our operating results, financial condition and other events or factors. In addition to the uncertainties relating to future
operating performance and the profitability of operations, factors such as variations in interim financial results or various,
as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on the market price of our common
stock. In recent years, broad stock market indices, in general, and smaller capitalization companies, in particular, have experienced
substantial price fluctuations. In a volatile market, we may experience wide fluctuations in the market price of our common stock
and wide bid-ask spreads. These fluctuations may have a negative effect on the market price of our common stock. In
addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related
to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market
price of our stock.
THERE IS A LARGE NUMBER OF AUTHORIZED
BUT UNISSUED SHARES OF CAPITAL STOCK AVAILABLE FOR ISSUANCE, WHICH MAY RESULT IN SUBSTANTIAL DILUTION TO EXISTING SHAREHOLDERS.
Our Certificate of Incorporation
authorizes the issuance of up to 1,000,000,000 shares of common stock, par value $0.001 and 5,000,000 shares of preferred stock,
par value $0.001, of which 429,348,439 shares of common stock and no shares of preferred stock are currently outstanding. Our Board
of Directors has the ability to authorize the issuance of 1,000,000,000 shares of common stock and 5,000,000 shares of preferred
stock without shareholder approval. Any such issuance will result in substantial dilution to existing shareholders. In addition,
the availability of such a large number of capital stock could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company.
WE HAVE NEVER PAID COMMON STOCK DIVIDENDS
AND HAVE NO PLANS TO PAY DIVIDENDS IN THE FUTURE, AS A RESULT OUR COMMON STOCK MAY BE LESS VALUABLE BECAUSE A RETURN ON AN INVESTOR’S
INVESTMENT WILL ONLY OCCUR IF OUR STOCK PRICE APPRECIATES.
Holders of shares of our common
stock are entitled to receive such dividends as may be declared by our board of directors. To date, we have paid no cash dividends
on our shares of common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future. We intend
to retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our common
stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock. There can be no
assurance that shares of our common stock will appreciate in value or even maintain the price at which our stockholders have purchased
their shares.
IF OUR COMMON STOCK REMAINS SUBJECT
TO THE SEC’S PENNY STOCK RULES, BROKER-DEALERS MAY EXPERIENCE DIFFICULTY IN COMPLETING CUSTOMER TRANSACTIONS AND TRADING
ACTIVITY IN OUR SECURITIES MAY BE ADVERSELY AFFECTED.
Unless our common stock is listed
on a national securities exchange, including the Nasdaq Capital Market or we have stockholders’ equity of $5,000,000 or less
and our common stock has a market price per share of less than $4.00, transactions in our common stock will be subject to the SEC’s
“penny stock” rules. If our common stock remains subject to the “penny stock” rules promulgated under the
Securities Exchange Act of 1934, broker-dealers may find it difficult to effectuate customer transactions and trading activity
in our securities may be adversely affected.
In accordance with these rules,
broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document that describes
the risks associated with such stocks, the broker-dealer's duties in selling the stock, the customer's rights and remedies and
certain market and other information. Furthermore, the broker-dealer must make a suitability determination approving the customer
for low-priced stock transactions based on the customer's financial situation, investment experience and objectives. Broker-dealers
must also disclose these restrictions in writing to the customer, obtain specific written consent from the customer, and provide
monthly account statements to the customer. The effect of these restrictions will probably decrease the willingness of broker-dealers
to make a market in our common stock, decrease liquidity of our common stock and increase transaction costs for sales and purchases
of our common stock as compared to other securities. Our management is aware of the abuses that have occurred historically in the
penny stock market.
As a result, if our common stock
becomes subject to the penny stock rules, the market price of our securities may be depressed, and you may find it more difficult
to sell our securities.
WE MAY NEED ADDITIONAL CAPITAL,
AND THE SALE OF ADDITIONAL SHARES OR OTHER EQUITY SECURITIES COULD RESULT IN ADDITIONAL DILUTION TO OUR STOCKHOLDERS.
If our resources are insufficient
to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale
of additional equity securities could result in additional dilution to our stockholders. The incurrence of indebtedness would result
in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. Financing may
not be available in amounts and on terms acceptable to us, or at all. In addition, the successful execution of our business
plan requires significant cash resources, including cash for investments and acquisition. Changes in business conditions and
future developments could also increase our cash requirements. To the extent we are unable to obtain external financing, we will
not be able to execute our business plan effectively. To the extent that additional capital is raised through the sale of
equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
ITEM 1B. UNRESOLVED
STAFF COMMENTS
None
ITEM 2. PROPERTIES.
Our principal office is located
at 32 East Micheltorena, Suite A, Santa Barbara, CA, 93101. We lease approximately 1,200 square feet, with an annual cost of approximately
$17,400. The term of the lease is nine(9) months and a week, which expires on February 28, 2015. We believe that our
current premises are sufficient to handle our activities for the near future.
ITEM 3. LEGAL
PROCEEDINGS.
We are not currently a party to,
nor is any of our property currently the subject of, any pending legal proceeding that will have a material adverse effect on our
business.
ITEM 4. MINE
SAFETY DISCLOSURES
Not Applicable.
PART
II
ITEM 5. |
MARKET
FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
On
May 26, 2010, our common stock became eligible for quotation on the OTC Bulletin Board under the symbol "HYSR.OB."
For
the periods indicated, the following table sets forth the high and low bid prices per share of common stock. These high and low
bid prices represent prices quoted by broker-dealers on the OTC Bulletin Board. These prices represent inter-dealer quotations
without retail markup, markdown, or commission and may not necessarily represent actual transactions.
Period | |
High | |
Low |
First Quarter FY 2014 | |
$ | 0.02 | | |
$ | 0.004 | |
Second Quarter FY 2014 | |
$ | 0.015 | | |
$ | 0.0044 | |
Third Quarter FY 2014 | |
$ | 0.1345 | | |
$ | 0.0035 | |
Fourth Quarter FY 2014 | |
$ | 0.0569 | | |
$ | 0.025 | |
| |
| | | |
| | |
First Quarter FY 2013 | |
$ | .03 | | |
$ | 0.021 | |
Second Quarter FY 2013 | |
$ | 0.023 | | |
$ | 0.006 | |
Third Quarter FY 2013 | |
$ | 0.0195 | | |
$ | 0.0061 | |
Fourth Quarter FY 2013 | |
$ | 0.015 | | |
$ | 0.0063 | |
Securities
Our
Articles of Incorporation, as amended, authorize the issuance of 1,000,000,000 shares of common stock, $.001 par value per share
and 5,000,000 shares of preferred stock, par value $.001 per share.
All
outstanding shares of Common Stock are of the same class and have equal rights and attributes. The holders of our Common
Stock are entitled to one vote per share on all matters submitted to a vote of our stockholders. All stockholders are entitled
to share equally in dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available.
In the event of liquidation, the holders of our Common Stock are entitled to share ratably in all assets remaining after
payment of all liabilities. The stockholders do not have cumulative or preemptive rights.
As
of September 22, 2014, our common stock was held by 74 stockholders of record and we had 448,562,525 shares of common stock
issued and outstanding. We believe that the number of beneficial owners is substantially greater than the number of record holders
because a significant portion of our outstanding common stock is held of record in broker street names for the benefit of individual
investors. The transfer agent of our common stock is Computershare Trust Company N.A., 250 Royall Street Canton, MA 02021.
Dividend
Policy
We
have never declared or paid any cash dividends on our common stock. We do not anticipate paying any cash dividends to stockholders
in the foreseeable future. In addition, any future determination to pay cash dividends will be at the discretion of the board
of directors and will be dependent upon our financial condition, results of operations, capital requirements, and such other factors
as the Board of Directors deem relevant. There are no restrictions in our articles of incorporation or bylaws that restrict us
from declaring dividends.
Securities
Authorized For Issuance Under Equity Compensation Plans
We
do not have any compensation plans or arrangements under which equity securities are authorized for issuance.
Recent
Sales of Unregistered Securities
During
the three months ended June 30, 2014, the Company issued 44,356,816 shares of common stock upon conversion of $130,050 in principal,
plus accrued interest of $9,231.
The
Company relied on an exemption pursuant to Rule 506 of Regulation D and/or Section 4(a)(2) of the Securities Act of 1933, as amended
in connection with the sale and issuances of its shares of common stock described above.
Issuer
Purchases of Equity Securities
None.
ITEM 6. | SELECTED FINANCIAL DATA |
Not
applicable.
ITEM 7. | MANAGEMENT’S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION. |
Cautionary
Statement Regarding Forward-Looking Statements
The
information in this discussion may contain forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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. Unless the context otherwise requires, references in this Form 10-Q to
“we,” “us,” “our,” or the “Company” refer to Hypersolar, Inc. Forward-looking
statements in this Report may also include references to anticipated sales volume and product margins, efforts aimed at establishing
new or improving existing relationships with customers, other business development activities, anticipated financial performance,
business prospects and similar matters. 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 other reports or registration statements filed with the United States Securities
and Exchange Commission. 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.
Overview
Inspired
by the photosynthetic process that plants use to harness the power of the sun to create energy molecules, we are developing a
novel solar-powered particle system that mimics photosynthesis to separate hydrogen from water. On November 15, 2011,
we filed a patent application to protect the intellectual property rights to the production of renewable hydrogen and natural
gas using sunlight, water, and carbon dioxide.
Hydrogen
is the lightest and abundant chemical element, constituting roughly 75% of the universe's chemical elemental mass (Palmer, D.
(13 September 1997). "Hydrogen in the Universe".NASA). However, naturally occurring elemental hydrogen
is relatively rare on earth and hydrogen gas is most often produced using fossil fuels. Industrial production is mainly from the
steam reforming of natural gas and is usually employed near its production site, with the two largest uses being crude oil processing
(hydrocracking) and ammonia production, mostly for the fertilizer market. We are developing what we believe is a cleaner
and greener way to produce this high value product.
In
addition to the many industrial uses of hydrogen, one of the most intriguing uses, is for fuel cells for transportation. A fuel
cell is a device that converts the chemical energy from a fuel into electricity through a chemical reaction with oxygen or another
oxidizing agent, using hydrogen as the most common fuel. In 2013, many automotive manufacturers announced plans to develop hydrogen
vehicles including Toyota, Honda, Hyundai, and BMW. Source:
(http://www.driveclean.ca.gov/Search_and_Explore/Technologies_and_Fuel_Types/Hydrogen_Fuel_Cell.php)
On
May 20, 2014 the first Hyundai fuel cell vehicles (FCEV’s) rolled onto U.S. soil marking the first delivery of
mass-produced fuel cell hydrogen vehicles in the U.S. market. (Source:
http://www.hyundainews.com/us/en-us/Media/PressRelease.aspx?mediaid=40852&title=hyundais-first-mass-produced-tucson-fuel-cell-cuvs-arrive-in-southern-california)
Our
research is centered on developing a low-cost and submersible hydrogen production particle that can split water molecules under
the sun, emulating the core functions of photosynthesis. Each particle is a complete hydrogen generator that contains a novel
high voltage solar cell bonded to chemical catalysts by a proprietary encapsulation coating. We are striving to reach
an open circuit voltage (OCV) goal of 1.5 to effectively split the water molecules to produce hydrogen with our technology. On
February 11, 2014, we announced that we had reached open circuit voltage of 1.2. We are currently working on increasing the OCV
to 1.5 and building a larger proof of concept prototype of our technology.
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 Black Scholes 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.
Revenue
Recognition
Revenue on product sales is
recognized when persuasive evidence of an arrangement exists, such as when a purchase order or contract
is received from the customer, the selling price is fixed, title to the goods has changed and there is a reasonable assurance
of collection of the sales proceeds. We obtain written purchase authorizations from our customers for a specified
amount of product at a specified price and consider delivery to have occurred at the time of shipment.
Revenue is recognized at shipment and we record a reserve for estimated sales returns, which
is reflected as a reduction of revenue at the time of revenue recognition.
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 recording net revenue, collectibility of accounts receivable,
useful lives and impairment of tangible and intangible assets, accruals, income taxes, inventory realization, stock-based compensation
expense, Black Scholes valuation model inputs, and other factors. Management believes it has exercised reasonable judgment in
deriving these estimates. Consequently, a change in conditions could affect these estimates.
Fair
Value of Financial Instruments
The
Company's cash, accounts payable, accrued interest, and note payable are stated at cost which approximates fair value due to the
short-term nature of these instruments.
Recently
Adopted Accounting Pronouncements
Management
reviewed accounting pronouncements issued during the three months ended June 30, 2014, and adopted the pronouncements disclosed
in the notes.
Liquidity
and Capital Resources
As
of June 30, 2014, we had a working capital deficit of $9,262,871as compared to $938,380 as of June 30, 2013. This increase in
working capital deficit of $8,324,491 was due primarily to an increase in accrued expense, derivative liability, convertible notes
with a decrease in accounts payable.
Cash
flow used in operating activities was $503,729 for the year ended June 30, 2014 and $392,097 for the prior period June 30, 2013.
The increase in cash used by operating activities was primarily due to a decrease in prepaid expenses, deposits, accounts payable,
with an increase in accrued expenses, derivative liability, and amortization of debt discount. The Company has had no revenues
and has received funds through issuance of convertible notes.
Cash
used in investing activities for the year ended June 30, 2014 was $18,080, compared to $0 for the prior year ended June 30, 2013.
The increase was due to purchases of intangible and fixed assets for the current period.
Cash
provided by financing activities during the year ended June 30, 2014 was $567,500 and $393,480 for the prior period ending June
30, 2013. The increase of $174,020 in financing activities was due to equity financing and convertible debt during the current
period.
Our
financial statements as of June 30, 2014 have been prepared under the assumption that we will continue as a going concern for
the year ended June 30, 2014. Our independent registered public accounting firm have issued their report dated September 23, 2014
that included an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern without additional
capital becoming available. Our ability to continue as a going concern ultimately is dependent on our ability to generate a profit
which is dependent upon our ability to obtain additional equity or debt financing, attain further operating efficiencies
and, ultimately, to achieve profitable operations. The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
We believe our current
cash balance as of September 23, 2014, and commitments of future monies through investors, including additional equity financing
will fund our operations for the next twelve months as continue to progress our technology. However, there may be unforeseen
operational issues such as multiple rounds of design and redesign of the prototype that may exceed our current projected budget.
If any unforeseen circumstances should we may seek to sell additional equity or debt securities or obtain a credit facility. The
sale of additional equity securities could result in additional dilution to our stockholders. The incurrence of indebtedness would
result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. Financing may
not be available in amounts and on terms acceptable to us, or at all. To the extent that additional capital is raised through
the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
If we are unable to obtain additional financing, we may be forced to curtail our operations.
PLAN
OF OPERATION AND FINANCING NEEDS
Our
plan of operation within the next twelve months is to further research, develop, and protect our technology.
Working
with consultants and academic institutions, we are working towards our goal of open-circuit voltage of 1.5 volts in our self–contained
particles for splitting water molecules. We will be looking to add further expertise to our team in the near future.
In
tandem with work on our self-contained particles, we will be working on the system side of the H2 Generator and production unit
and larger prototype.
Our
financing needs consist of general operating expenses, sponsorship agreements with academic institutions, patent prosecution and
IP protection and paying consultants.
Operating
Expenses
Operating
expenses for the year ended June 30, 2014 were $558,669 and $604,121 for the prior period June 30, 2013. The net decrease in operating
expenses consisted primarily of the investor relations, and research and development cost.
Other
Income/(Expenses)
Other
income and (expenses) for the year ended June 30, 2014 were $10,984,343 and $523,601 for the prior period June 30, 2013. The increase
in income and (expenses) was the result of an increase in net loss on change in fair value of derivative instruments of $10,104,775,
amortization of debt discount of $280,705, net gain on settlement of debt of $39,039, and interest expense of $26,223, with a
decrease in gain on forgiveness of debt of $10,000. The overall increase is the result of debt financing.
Net
Loss
For
the year ended June 30, 2014, our net loss was $11,543,012 and $1,127,722 for the prior period June 30, 2013. The increase in
net loss was related primarily to operating expenses, and other income and (expenses). We recently began operating our business,
and no revenues were generated to cover our operating costs.
ITEM 7A. | QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK |
Not
applicable.
ITEM 8. | FINANCIAL STATEMENTS. |
All
financial information required by this Item is attached hereto at the end of this report beginning on page F-1 and is hereby incorporated
by reference.
ITEM 9. | CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
None
ITEM 9A. | CONTROLS AND PROCEDURES. |
(a) Evaluation
of Disclosure Controls and Procedures. Our management, with the participation of our CEO and our CFO, evaluated the effectiveness
of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our CEO
and our CFO concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective
such that information required to be disclosed is by the issuer in the reports that it files or submits under the 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 principal executive and principal financial officers, or persons performing
similar functions as appropriate to allow timely decisions regarding required disclosure. A controls system cannot provide absolute
assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, within a company have been detected.
(b) Changes
in Internal Controls. During the three months ended June 30, 2014, there were no changes in our internal control over
financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s
Report on Internal Control over Financial Reporting.
We
are responsible for establishing and maintaining adequate internal control over financial reporting in accordance with Exchange
Act Rule 13a-15. With the participation of our Chief Executive Officer and Acting Chief Financial Officer, our management conducted
an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2014 based on the criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, management concluded that our internal control over financial reporting was effective as of June 30,
2014, based on those criteria. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been
detected.
This
annual report does not include an attestation report of our registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant
to the rules of the Securities and Exchange Commission that permanently exempts smaller reporting companies.
ITEM 9B. | OTHER
INFORMATION. |
None.
PART
III
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CORPORATE GOVERNANCE |
The
following table sets forth information about our executive officers, key employees and directors:
Name |
|
Age |
|
Position |
Timothy Young |
|
49 |
|
President, CEO and Chairman |
Timothy
Young – President, CEO and Director
Tim
Young is an accomplished executive with over 15 years of management experience in media and Internet technology companies. Mr.
Young was appointed, President, CEO and Chairman of the Company in August 2009. From September 2007 through August 2009, Mr. Young
was the President of Rovion, Inc., an internet media startup company, where he increased revenues through a channel sales strategy
that included companies such as Clear Channel, Disney, CBS, and Fox Television and bolstered the company's technical capabilities
through strategic acquisitions.
Prior
to Rovion, Mr. Young was employed by Time Warner Inc. from October 1998 through July 2007, where he served as Vice President and
Regional Vice President of various divisions including America Online and Time Warner Cable. During his tenure, Mr. Young built
some of the highest performing sales organizations at Time Warner with responsibilities ranging from product development, marketing,
staff training to leadership development. After Time Warner's acquisition of Adelphia Media Services and Comcast in 2004, Mr.
Young served as Regional Vice President of Western Region, and was responsible for successfully integrating the California sales
teams which accounted for over $200 million in revenues with 250 sales and marketing personnel, and launched several new product
offerings. Mr. Young also serves on the board of Calypso Media Group, a full service discount advertising agency specializing
in COOP advertising. Mr. Young's track record of success and over fifteen plus years of management and leadership experience
bringing new products to the market, qualifies him to be a board member of HyperSolar, Inc.
Board
Leadership Structure and Role in Risk Oversight
Although
we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined,
we have traditionally determined that it is in the best interests of the Company and its shareholders to combine these roles.
Due to the small size and early stage of the Company, we believe it is currently most effective to have the Chairman and
Chief Executive Officer positions combined.
Our
Board of Directors focuses on the most significant risks facing our company and our company’s general risk management strategy,
and also ensure that risks undertaken by our Company are consistent with the Board’s appetite for risk. While the Board
oversees our company’s risk management, management is responsible for day-to-day risk management processes. We believe this
division of responsibilities is the most effective approach for addressing the risks facing our company and that our Board leadership
structure supports this approach.
INVOLVEMENT
IN CERTAIN LEGAL PROCEEDINGS
During
the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has been:
|
● |
the subject of any bankruptcy
petition filed by or against any business of which such person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time; |
|
|
|
|
● |
convicted in a criminal proceeding
or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
|
|
|
|
● |
subject to any order, judgment,
or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any Federal or State
authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; |
|
|
|
|
● |
found by a court of competent
jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or
state securities or commodities law. |
|
|
|
|
● |
the subject of, or a party
to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended
or vacated, relating to an alleged violation of (a) any Federal or State securities or commodities law or regulation; (b)
any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary
or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist
order, or removal or prohibition order; or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection
with any business entity; or |
|
|
|
|
● |
the subject of, or a party
to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined
in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of
the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a member. |
COMMITTEES
OF THE BOARD
We
currently have no audit committee, compensation committee, nominations and governance committee of our board of directors. We
do not have an audit committee financial expert.
INDEBTEDNESS
OF EXECUTIVE OFFICERS AND DIRECTORS
No
executive officer, director or any member of these individuals' immediate families or any corporation or organization with whom
any of these individuals is an affiliate is or has been indebted to us since the beginning of our last fiscal year.
FAMILY
RELATIONSHIPS
There
are no family relationships among our executive officers and directors.
CODE
OF ETHICS
We
have adopted a Code of Ethics that applies to all of our directors, officers and employees. A copy of the Code of Ethics can be
obtained without charge upon request to Timothy Young, CEO and President, 32 East Micheltorena, Suite A, Santa Barbara, CA 93101
is also been filed as an exhibit to this Annual Report. Any waiver of the provisions of the Code of Ethics for executive officers
and directors may be made only by the Board of Directors. Any such waivers will be promptly disclosed to our shareholders.
COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires that our officers and directors, and persons who own more than
ten percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the Securities
and Exchange Commission and with any exchange on which the Company's securities are traded. Officers, directors and persons owning
more than ten percent of such securities are required by Commission regulation to file with the Commission and furnish the Company
with copies of all reports required under Section 16(a) of the Exchange Act. To our knowledge, based solely upon our review of
the copies of such reports furnished to us, during the fiscal year ended June 30, 2014, all Section 16(a) filing requirements
applicable to our officers, directors and greater than 10% beneficial owners were complied with.
CHANGES
IN NOMINATING PROCEDURES
None
ITEM 11. | EXECUTIVE COMPENSATION. |
The
following the table below sets forth the compensation earned by each person acting as our Principal Executive Officer and our
other most highly compensated executive officers whose total annual compensation exceeded $100,000.
Name
& Principal Position |
|
Year |
|
|
Salary
($) |
|
|
Bonus
($) |
|
|
Stock
Awards
($) |
|
|
Option
Awards
($) |
|
|
Non-Equity
Incentive Plan Compensation ($) |
|
|
Non-Qualified
Deferred Compensation Earnings
($) |
|
|
All
Other Compensation ($) |
|
|
Total
($) |
|
Timothy Young, CEO and Acting
CFO |
|
|
2014 |
|
|
$ |
255,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
255,000 |
|
|
|
|
2013 |
|
|
$ |
255,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
255,000 |
|
Outstanding
Equity Awards at Fiscal Year-End
There
were no grants of options to purchase our common stock to the named executive officers at June 30, 2014.
EMPLOYMENT
AGREEMENTS
Our
CEO, Timothy Young is employed as an “at- will” employee whose employment with the Company may be terminated at any
time by either party. We have agreed to pay Mr. Young an annual salary of $255,000, subject to modification in accordance with
the Company’s policies, practices and procedures. In addition, we have agreed to pay Mr. Young three months base
salary, in the event his employment is terminated by the Company. Mr. Young is eligible to receive a quarterly bonus as determined
by the Company’s Board of Directors and to participate in any benefit plan implemented by the Company.
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The following tables
sets forth, as of September 22, 2014, the number of and percent of our common stock beneficially owned by:
● |
all directors and nominees,
naming them, |
● |
our executive officers, |
● |
our directors and executive officers
as a group, without naming them, and |
We
believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially
owned by them.
A person is deemed
to be the beneficial owner of securities that can be acquired by him within 60 days from September 22, 2014 upon the exercise
of options, warrants or convertible securities. Each beneficial owner's percentage ownership is determined by assuming that options,
warrants or convertible securities that are held by him, but not those held by any other person, and which are exercisable within
60 days of September 22, 2014 have been exercised and converted.
Title of Class | |
Name of Beneficial Owner | |
Number of Shares
Beneficially Owned | | |
Percentage of Common
Stock(1) | |
Common Stock | |
Timothy A. Young | |
| 10,000,000 | | |
| 2.22 | % |
Common Stock | |
Cumorah Capital, Inc. | |
| 32,363,300 | | |
| 7.19 | % |
Common Stock | |
All Executive Officers and Directors as a Group (1 person) | |
| 10,000,000 | | |
| 2.22 | % |
(1) |
Based upon 429,348,439 shares
issued and outstanding as of September 22, 2014. |
|
|
(2) |
William E. Beifuss holds
voting and dispositive power over the shares held by Cumorah Capital, Inc. |
ITEM 13. | CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
Certain
Relationships and Related Transactions
Since
the beginning of our last fiscal year, there have been and there are no currently proposed transaction, in which we are or was
to be a participant and the amount involved exceeds $120,000, and in which any related person had or will have a direct or indirect
material interest.
Director
Independence
We
do not currently have any directors who are independent as that term is defined under the Nasdaq Marketplace Rules.
ITEM 14. | PRINCIPAL ACCOUNTANT FEES
AND SERVICES. |
Audit
Fees
The aggregate fees
billable to us by HJ Associates & Consultants, LLP during 2014 and 2013 for the audits and quarterly reviews of our financial
statements for the fiscal year totaled approximately $24,000 and $25,500, respectively.
Audit-Related
Fees
We incurred assurance
and audit-related fees during 2014 and 2013 of $0 and $0 respectively, to HJ Associates & Consultants, LLP in connection
with the audit of the financial statements of the Company for the years ended June 30, 2014 and June 30, 2013, for the reviews
of registration statements and issuance of related consents and assistance with SEC comment letters.
Tax
Fees
We
incurred fees of $0 and $0 billed to us by HJ Associates & Consultants, LLP for services rendered to us for tax compliance,
tax advice, or tax planning for the fiscal year ended June 30, 2014 and June 30, 2013, respectively.
All
Other Fees
There
were no fees billed to us by HJ Associates & Consultants, LLP for services rendered to us during the last two fiscal years,
other than the services described above under “Audit Fees” and “Audit-Related Fees.”
As
of the date of this filing, our current policy is to not engage HJ Associates & Consultants, LLP to provide, among other things,
bookkeeping services, appraisal or valuation services, or international audit services. The policy provides that we engage HJ
Associates & Consultants, LLP to provide audit, tax, and other assurance services, such as review of SEC reports or filings.
Exhibit
No. |
|
Description |
|
|
|
3.1 |
|
Articles of Incorporation
of HyperSolar, Inc. filed with the Nevada Secretary of State on February 18, 2009. (incorporated by reference to the
Company’s registration on Form S-1 filed with the Securities and Exchange Commission on February 5, 2010) |
|
|
|
3.2 |
|
Articles of Amendment
of Articles of Incorporation of HyperSolar, Inc. filed with the Nevada Secretary of State on September 11, 2009. (incorporated
by reference to the Company’s registration on Form S-1 filed with the Securities and Exchange Commission on February
5, 2010) |
|
|
|
3.3 |
|
Articles of Amendment
of Articles of Incorporation of HyperSolar, Inc. filed with the Nevada Secretary of State on November 21, 2013. (incorporated
by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November
21, 2013) |
|
|
|
3.4 |
|
Bylaws of HyperSolar,
Inc. (incorporated by reference to the Company’s registration on Form S-1 filed with the Securities and Exchange Commission
on February 5, 2010) |
|
|
|
10.1 |
|
Form of Subscription
Agreement dated as of September 21, 2010. (incorporated by reference to the Company’s registration on Form
S-1 filed with the Securities and Exchange Commission on February 5, 2010) |
|
|
|
10.2 |
|
Form of Subscription
Agreement dated as of April 10, 2009 (Incorporated by reference to the Company’s registration on Form S-1 filed with
the Securities and Exchange Commission on March 25, 2010) |
|
|
|
10.3 |
|
Form of Subscription
Agreement dated as of April 17, 2009 (Incorporated by reference to the Company’s registration on Form S-1 filed with
the Securities and Exchange Commission on March 25, 2010) |
|
|
|
10.4 |
|
Offer of Employment
to Timothy Young dated August 13, 2009 (Incorporated by reference to the Company’s registration on Form S-1 filed with
the Securities and Exchange Commission on March 25, 2010) |
|
|
|
10.5 |
|
Consulting Agreement
between Hypersolar, Inc. and Nadir Dagli dated as of March 1, 2009(Incorporated by reference to the Company’s registration
on Form S-1 filed with the Securities and Exchange Commission on March 25, 2010) |
|
|
|
10.6 |
|
Invention Transfer
dated as of June 10, 2009(Incorporated by reference to the Company’s registration on Form S-1 filed with the Securities
and Exchange Commission on March 25, 2010) |
|
|
|
10.7 |
|
Lease Agreement
dated as of July 26, 2011(Incorporated by reference to the Company’s annual report on Form 10-K filed with the Securities
and Exchange Commission on September 28, 2011). |
|
|
|
10.8 |
|
Securities Purchase
Agreement between Hypersolar, Inc. and Asher Enterprises, Inc. dated as of September 19, 2012 (Incorporated by reference to
the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2012). |
|
|
|
10.9 |
|
Form of Note
issued pursuant to Securities Purchase Agreement between Hypersolar, Inc. and Asher Enterprises, Inc. dated as of September
19, 2012 (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on November 9, 2012). |
|
|
|
14 |
|
Code
of Ethics (Incorporated by reference to the Company’s annual report on Form 10-K filed with the Securities and Exchange
Commission on September 28, 2012). |
|
|
|
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.INS * |
|
XBRL INSTANCE DOCUMENT |
|
|
|
EX-101.SCH * |
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT |
|
|
|
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
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
|
HYPERSOLAR,
INC. |
|
|
|
Date: September 23, 2014 |
By: |
/s/ Timothy Young |
|
|
CHIEF
EXECUTIVE OFFICER PRESIDENT (PRINCIPAL EXECUTIVE OFFICER),
ACTING CHIEF FINANCIAL OFFICER
(PRINCIPAL ACCOUNTING
AND FINANCIAL OFFICER) AND CHAIRMAN |
INDEX
TO FINANCIAL STATEMENTS
|
ASSOCIATES & CONSULTANTS,
L.L.P. |
50 West Broadway, Suite 600
Salt Late City, Utah 84101
(801) 328-4408
Fax (801) 328-4461
www.hjcpafirm.com |
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS |
|
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors
HyperSolar, Inc.
Santa Barbara, California
We have audited the accompanying
balance sheets of HyperSolar, Inc. as of June 30, 2014 and 2013, and the related statements of operations, stockholders' deficit,
and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits
included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of HyperSolar, Inc. as of June 30, 2014 and
2013, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted
accounting principles.
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in the Note 1 to the financial
statements, the Company does not generate revenue and has negative cash flows from operations. This raises substantial
doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are
also described in Note 1 to the financial statements. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/HJ Associates & Consultants, LLP
HJ Associates & Consultants, LLP
Salt Lake City, Utah
September 23, 2014
HYPERSOLAR, INC.
BALANCE SHEETS
| |
June 30,
2014 | |
June 30,
2013 |
| |
| |
|
ASSETS | |
| |
|
| |
| |
|
CURRENT ASSETS | |
| |
|
Cash | |
$ | 61,628 | | |
$ | 15,937 | |
Prepaid expenses and other current assets | |
| - | | |
| 11,855 | |
| |
| | | |
| | |
TOTAL CURRENT ASSETS | |
| 61,628 | | |
| 27,792 | |
| |
| | | |
| | |
PROPERTY & EQUIPMENT | |
| | | |
| | |
Computers and peripherals | |
| 6,218 | | |
| 4,198 | |
Less: accumulated depreciation | |
| (4,479 | ) | |
| (3,965 | ) |
| |
| | | |
| | |
NET PROPERTY AND EQUIPMENT | |
| 1,739 | | |
| 233 | |
| |
| | | |
| | |
OTHER ASSETS | |
| | | |
| | |
Deposits | |
| 925 | | |
| 925 | |
Domain, net of amortization $2,097 and $1,742, respectively | |
| 3,218 | | |
| 3,573 | |
Patents | |
| 32,736 | | |
| 16,676 | |
| |
| | | |
| | |
TOTAL OTHER ASSETS | |
| 36,879 | | |
| 21,174 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 100,246 | | |
$ | 49,199 | |
| |
| | | |
| | |
LIABILITIES AND SHAREHOLDERS' DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Accounts payable | |
$ | 92,801 | | |
$ | 121,240 | |
Accrued expenses | |
| 218,478 | | |
| 130,205 | |
Derivative liability | |
| 8,667,274 | | |
| 536,640 | |
Convertible promissory notes, net of debt discount of $176,395 and $192,254, respectively | |
| 345,946 | | |
| 178,087 | |
| |
| | | |
| | |
TOTAL CURRENT LIABILITIES | |
| 9,324,499 | | |
| 966,172 | |
| |
| | | |
| | |
SHAREHOLDERS' DEFICIT | |
| | | |
| | |
Preferred Stock, $0.001 par value; 5,000,000 authorized preferred shares | |
| - | | |
| - | |
Common Stock, $0.001 par value; 1,500,000,000 authorized common shares 429,348,439 and 194,263,571 shares issued and outstanding, respectively | |
| 429,348 | | |
| 194,263 | |
Additional Paid in Capital | |
| 5,532,679 | | |
| 2,532,032 | |
Deficit Accumulated during the Development Stage | |
| (15,186,280 | ) | |
| (3,643,268 | ) |
| |
| | | |
| | |
TOTAL SHAREHOLDERS' DEFICIT | |
| (9,224,253 | ) | |
| (916,973 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | |
$ | 100,246 | | |
$ | 49,199 | |
The
accompanying notes are an integral part of these financial statements
HYPERSOLAR, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2014 AND
2013
| |
For the Years Ended |
| |
June 30,
2014 | |
June 30,
2013 |
| |
| |
|
REVENUE | |
$ |
- | |
$ |
- |
| |
| |
|
OPERATING EXPENSES | |
| |
|
General and administrative expenses | |
| 460,871 | | |
| 505,367 | |
Research and development cost | |
| 96,929 | | |
| 97,809 | |
Depreciation and amortization | |
| 869 | | |
| 945 | |
| |
| | | |
| | |
TOTAL OPERATING EXPENSES | |
| 558,669 | | |
| 604,121 | |
| |
| | | |
| | |
LOSS FROM OPERATIONS BEFORE OTHER EXPENSES | |
| (558,669 | ) | |
| (604,121 | ) |
| |
| | | |
| | |
OTHER INCOME/(EXPENSES) | |
| | | |
| | |
Gain on forgiveness of debt | |
| - | | |
| 10,000 | |
Gain/(Loss) on settlement of debt | |
| 58,065 | | |
| 97,104 | |
Gain/(Loss) on change in derivative liability | |
| (10,455,459 | ) | |
| (350,684 | ) |
Interest expense | |
| (586,949 | ) | |
| (280,021 | ) |
| |
| | | |
| | |
TOTAL OTHER INCOME/(EXPENSES) | |
| (10,984,343 | ) | |
| (523,601 | ) |
| |
| | | |
| | |
NET INCOME/ (LOSS) | |
$ | (11,543,012 | ) | |
$ | (1,127,722 | ) |
| |
| | | |
| | |
BASIC AND DILUTED LOSS PER SHARE | |
$ | (0.04 | ) | |
$ | (0.01 | ) |
| |
| | | |
| | |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED | |
| 296,013,816 | | |
| 170,442,787 | |
The
accompanying notes are an integral part of these financial statements
HYPERSOLAR, INC.
STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 2014 AND
2013
| |
Preferred
stock | |
Common
stock | |
Additional
Paid-in | |
Accumulated | |
|
| |
Shares | |
Amount | |
Shares | |
Amount | |
Capital | |
Deficit | |
Total |
| |
| |
| |
| |
| |
| |
| |
|
Balance at June 30, 2012 | |
| - | | |
$ | - | | |
| 163,328,376 | | |
$ | 163,328 | | |
$ | 2,269,056 | | |
$ | (2,515,546 | ) | |
$ | (83,162 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock for
cash at prices ranging from $0.015 to $0.0175 per share | |
| - | | |
| - | | |
| 2,951,239 | | |
| 2,951 | | |
| 42,029 | | |
| - | | |
| 44,980 | |
Issuance of common stock for
services at fair value price per share ranging from $0.03 and $0.036 | |
| - | | |
| - | | |
| 305,555 | | |
| 306 | | |
| 9,694 | | |
| - | | |
| 10,000 | |
Issuance of common stock for
cashless exercise of warrants at fair value price per share at $0.015 | |
| - | | |
| - | | |
| 2,000,000 | | |
| 2,000 | | |
| (2,000 | ) | |
| - | | |
| - | |
Issuance of common stock for
conversion of debt price per share at $0.015 | |
| - | | |
| - | | |
| 25,678,401 | | |
| 25,678 | | |
| 203,862 | | |
| - | | |
| 229,540 | |
Beneficial conversion feature | |
| - | | |
| - | | |
| - | | |
| - | | |
| 9,391 | | |
| - | | |
| 9,391 | |
Net loss for the year ended
June 30, 2013 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,127,722 | ) | |
| (1,127,722 | ) |
Balance at June 30, 2013 | |
| - | | |
| - | | |
| 194,263,571 | | |
| 194,263 | | |
| 2,532,032 | | |
| (3,643,268 | ) | |
| (916,973 | ) |
Issuance of common stock for
cashless exercise of warrants at fair value | |
| - | | |
| - | | |
| 54,846,527 | | |
| 54,847 | | |
| (54,847 | ) | |
| - | | |
| - | |
Issuance of common stock for
conversion of debt price per share at fair value ranging from $0.005 to $0.01 | |
| - | | |
| - | | |
| 180,238,341 | | |
| 180,238 | | |
| 3,055,494 | | |
| - | | |
| 3,235,732 | |
Net loss for the year ended
June 30, 2014 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (11,543,012 | ) | |
| (11,543,012 | ) |
Balance at June 30, 2014 | |
| - | | |
$ | - | | |
| 429,348,439 | | |
$ | 429,348 | | |
$ | 5,532,679 | | |
$ | (15,186,280 | ) | |
$ | (9,224,253 | ) |
The accompanying notes are an integral part of these financial statements
HYPERSOLAR,
INC.
STATEMENTS
OF CASH FLOWS
FOR
THE YEARS ENDED JUNE 30, 2014 AND 2013
| |
For the Years Ended |
| |
June 30,
2014 | |
June 30,
2013 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| |
|
Net loss | |
$ | (11,543,012 | ) | |
$ | (1,127,722 | ) |
Adjustment to reconcile net loss to net cash used in operating activities | |
| | | |
| | |
Depreciation & amortization expense | |
| 869 | | |
| 945 | |
Common stock issued for services and accounts payable | |
| - | | |
| 10,000 | |
Forgiveness of debt | |
| - | | |
| (10,000 | ) |
Loss on change in derivative liability | |
| 10,455,459 | | |
| 350,684 | |
Amortization of debt discount and beneficial conversion feature recorded as interest expense | |
| 541,362 | | |
| 260,657 | |
Gain on settlement and exchange of debt | |
| (58,065 | ) | |
| (97,104 | ) |
Change in Assets and Liabilities: | |
| | | |
| | |
(Increase) Decrease in: | |
| | | |
| | |
Prepaid expenses and other current assets | |
| 11,855 | | |
| (59 | ) |
Deposits | |
| - | | |
| 545 | |
Increase (Decrease) in: | |
| | | |
| | |
Accounts payable | |
| (28,440 | ) | |
| 114,148 | |
Accrued expenses | |
| 116,243 | | |
| 105,809 | |
| |
| | | |
| | |
NET CASH USED IN OPERATING ACTIVITIES | |
| (503,729 | ) | |
| (392,097 | ) |
| |
| | | |
| | |
NET CASH FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
Purchase of fixed assets | |
| (2,020 | ) | |
| - | |
Purchase of intangible assets | |
| (16,060 | ) | |
| - | |
| |
| | | |
| | |
NET CASH USED IN INVESTING ACTIVITIES | |
| (18,080 | ) | |
| - | |
| |
| | | |
| | |
NET CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Proceeds from notes payable, other | |
| - | | |
| 93,500 | |
Proceeds from convertible notes payable | |
| 567,500 | | |
| 287,500 | |
Payment of notes payable, other | |
| - | | |
| (32,500 | ) |
Proceeds from issuance of common stock | |
| - | | |
| 44,980 | |
| |
| | | |
| | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | |
| 567,500 | | |
| 393,480 | |
| |
| | | |
| | |
NET INCREASE IN CASH | |
| 45,691 | | |
| 1,383 | |
| |
| | | |
| | |
CASH, BEGINNING OF YEAR | |
| 15,937 | | |
| 14,554 | |
| |
| | | |
| | |
CASH, END OF YEAR | |
$ | 61,628 | | |
$ | 15,937 | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |
| | | |
| | |
Interest paid | |
$ | 1,077 | | |
$ | - | |
Taxes paid | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS | |
| | | |
| | |
Issuance of common stock upon conversion of debt at fair value | |
$ | 3,237,087 | | |
$ | 229,540 | |
Issuance of common stock upon cashless covnersion of warrants | |
$ | 54,847 | | |
$ | 2,000 | |
The
accompanying notes are an integral part of these financial statements
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2014
1. | ORGANIZATION
AND LINE OF BUSINESS |
Organization
HyperSolar,
Inc. (the "Company") was incorporated in the state of Nevada on February 18, 2009. The Company, based in Santa Barbara,
California, began operations on February 19, 2009 to develop and market a solar concentrator technology.
Line
of Business
The
company is currently developing a novel solar-powered nanoparticle system that mimics photosynthesis to separate hydrogen from
water. We intend for technology of this system to be licensed for the production of renewable hydrogen to produce renewable electricity
and hydrogen for fuel cells.
Going
Concern
The accompanying 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 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, additional cash infusion. The Company obtained funds from its existing shareholders and new investors during the
year ended June 30, 2013. Management believes that it will be able to obtain additional capital from its existing shareholders
and prospective new investors to meet the Company’s obligations as they become due, and allow the development of its core
business. However, there is no assurance that the Company will be able to continue raising additional capital.
2. | SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES |
This
summary of significant accounting policies of HyperSolar, 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.
Revenue
Recognition
The
Company recognizes revenue when services are performed, and at the time of shipment of products, provided that evidence of an
arrangement exists, title and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the
related receivable is reasonably assured. To date, the Company has had no revenues.
Cash
and Cash Equivalent
The
Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the accompanying financial statements. Significant estimates made in preparing
these financial statements include the estimate of useful lives of intangible assets, and the deferred tax valuation allowance.
Actual results could differ from those estimates.
Fair
Value of Financial Instruments
Disclosures
about fair value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the
balance sheet, where it is practicable to estimate that value. As of June 30, 2014, the amounts reported for cash, accrued interest
and other expenses, notes payables, and derivative liability approximate the fair value because of their short maturities.
We
adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) as of January 1, 2008 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.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2014
2. | SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
| |
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 1measurements) 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;
and |
| ● | 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 June 30, 2014:
| |
Total | | |
(Level 1) | | |
(Level 2) | | |
(Level 3) | |
| |
| | |
| | |
| | |
| |
Assets | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Total assets measured at fair value | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Derivative liability | |
| 8,667,274 | | |
| - | | |
| - | | |
| 8,667,274 | |
Convertible notes, net of discount | |
| 345,946 | | |
| - | | |
| - | | |
| 345,946 | |
Total liabilities measured at fair value | |
$ | 9,013,220 | | |
$ | - | | |
$ | - | | |
$ | 9,013,220 | |
The
following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair
value:
Beginning balance as of July 1, 2014 | |
$ | 536,640 | |
Fair value of derivative liabilities issued | |
| 2,335,339 | |
Conversion of notes payable | |
| (2,850,329 | ) |
Loss on change in derivative liability | |
| 8,645,624 | |
Ending balance as of June 30, 2014 | |
$ | 8,667,274 | |
Loss
per Share Calculations
Loss
per Share dictates the calculation of basic earnings per share and diluted earnings per share. Basic earnings per share are computed
by dividing income available to common shareholders by the weighted-average number of common shares available. Diluted earnings
per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares
were dilutive. No shares for employee options or warrants were used in the calculation of the loss per share as they were all
anti-dilutive. The Company’s diluted loss per share is the same as the basic loss per share for the period ended June 30,
2014, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss. The
Company has excluded 0 and 69,838,762 warrants for the years ended June 30, 2014 and 2013, respectively.
Income
Taxes
The
Company uses the liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to financial statements carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carry-forwards. The measurement of deferred tax assets and liabilities is based on
provisions of applicable tax law. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance based
on the amount of tax benefits that, based on available evidence, is not expected to be realized.
Stock
based Compensation
Share-based
Payment applies to transactions in which an entity exchanges its equity instruments for goods or services and also applies to
liabilities an entity may incur for goods or services that are to follow a fair value of those equity instruments. The Company
will be required to follow a fair value approach using an option-pricing model, such as the Black Scholes option valuation model,
at the date of a stock option grant. The deferred compensation calculated under the fair value method would then be amortized
over the respective vesting period of the stock option.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2014
2. | SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Recently
issued pronouncements
Management
reviewed accounting pronouncements issued during the year ended June 30, 2014, and adopted the following pronouncements:
On
June 10, 2014, the Company adopted the amendment to (Topic 915) Development Stage Entities, for the elimination of certain
disclosures currently required under U.S. generally accepted accounting principles (GAAP) in the financial statements for development
stage entities. The amendment removes the definition of a development stage entity, thereby removing the financial reporting distinction
between development stage entities and other reporting entities from U.S. GAAP. The Company has eliminated the inception-to-date
information in the statements of income, cash flows, and shareholder equity. The financial statements are no longer labeled as
a development stage entity, and no disclosure is required for a description of the development stage activities the entity is
engaged or when they are no longer a development stage entity. The Company does not believe the accounting standards currently
adopted will have a material effect on the accompanying condensed financial statements.
On
June 19, 2014, the Company adopted the amendment to (Topic 718) Stock Compensation: Accounting for Share-Based Payments
when the terms of an award provide that a performance target could be achieved after the requisite service period. The amendment
for accounting for share based payments, when an award provides that a performance target that affects vesting could be achieved
after an employee completes the requisite service period shall be accounted for as a performance condition. The performance target
shall not be reflected in estimating the fair value of the award at the grant date, and compensation cost shall be recognized
in the period in which it becomes probable that the performance target will be achieved and will represent the compensation cost
attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable
of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost shall be recognized
prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the
requisite service period shall reflect the number of awards that are expected to vest and shall be adjusted to reflect the awards
that ultimately vest. The Company does not believe the accounting standards currently adopted will have a material effect on the
accompanying condensed financial statements.
During
the year ended June 30, 2014, the Company issued 54,846,527 shares of common stock through a cashless exercise of 69,838,762 purchase
warrants at fair value; issued 180,238,341 shares of common stock for $415,500 in principal for conversion of various convertible
notes, plus $27,969 in accrued interest and a loss of $2,792,263 on conversion of the notes.
During
the year ended June 30, 2013, the Company issued 2,666,668 shares of common stock at a price of $0.015 per share for cash of $40,000,
with warrants attached to purchase 4,666,668 shares of common stock; issued 284,571 shares of common stock at a price of $0.0175
per share for cash of $4,980; issued 305,555 shares of common stock for services at fair value of $10,000; issued 25,678,401 shares
of common stock for $100,000 in principal for convertible notes, plus $4,293 in accrued interest and a loss of $125,247 on conversion
of the notes. Also, the Company issued 2,000,000 shares of common stock through a cashless exercise of 3,333,333 purchase warrants.
| 4. | STOCK
OPTIONS AND WARRANTS |
Options
As of June 30, 2014, 250,000 non-qualified
stock options common stock issued to a contractor were outstanding. The options are exercisable to the nearest whole share, in
installments or otherwise, as the option agreement provides. Notwithstanding any other provisions of the option agreement, the
options expire on the date specified in the option agreement, which date is the fifth (5th) anniversary from the grant
date of the options. The stock options are fully vested and are exercisable at an exercise price $0.04 per share.
|
| |
6/30/2014 | |
|
Risk free interest rate | |
| 0.12 | % |
|
Stock volatility factor | |
| 132 | % |
|
Weighted average expected option life | |
| 5
years | |
|
Expected dividend yield | |
| None | |
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2014
| 4. | STOCK
OPTIONS AND WARRANTS (Continued) |
A
summary of the Company’s stock option activity and related information follows:
| |
6/30/2014 | | |
6/30/2013 | |
| |
| | |
Weighted | | |
| | |
Weighted | |
| |
Number | | |
average | | |
Number | | |
average | |
| |
of | | |
exercise | | |
of | | |
exercise | |
| |
Options | | |
price | | |
Options | | |
price | |
Outstanding, beginning of year | |
| 250,000 | | |
$ | 0.04 | | |
| 250,000 | | |
$ | 0.04 | |
Granted | |
| - | | |
| - | | |
| - | | |
| - | |
Exercised | |
| - | | |
| - | | |
| - | | |
| - | |
Forfeited/Expired | |
| - | | |
| - | | |
| - | | |
| - | |
Outstanding, end of year | |
| 250,000 | | |
$ | 0.04 | | |
| 250,000 | | |
$ | 0.04 | |
Exercisable at the end of year | |
| 250,000 | | |
$ | 0.04 | | |
| 250,000 | | |
$ | 0.04 | |
Weighted average fair value of | |
| | | |
| | | |
| | | |
| | |
options granted during the year | |
| | | |
$ | - | | |
| | | |
$ | - | |
Warrants
During
the year ended June 30, 2014, the Company issued 54,846,527 shares of common stock through a cashless exercise of 69,838,762 purchase
warrants. There were no outstanding purchase warrants as of June 30, 2014.
Intangible
assets that have finite useful lives continue to be amortized over their useful lives, and are reviewed for impairment when warranted
by economic condition. Any impairment is included in the income statement.
|
| |
Useful
Lives | |
6/30/2013 | | |
6/30/2013 | |
|
Domain-gross | |
15 years | |
$ | 5,315 | | |
$ | 5,315 | |
|
Less amortization | |
| |
| (2,097 | ) | |
| (1,742 | ) |
|
Domain-net | |
| |
$ | 3,218 | | |
$ | 3,573 | |
|
| |
| |
| | | |
| | |
|
Patents-gross | |
| |
$ | 34,156 | | |
$ | 16,676 | |
The
Company files income tax returns in the U.S. Federal jurisdiction, and the state of California. With few exceptions, the Company
is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for fiscal years
before 2010.
Deferred
income taxes have been provided by temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for tax purposes. To the extent allowed by GAAP, we provide valuation allowances against
the deferred tax assets for amounts when the realization is uncertain. Included in the balances at June 30, 2014 and 2013, are
no tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of
such deductibility. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the
shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing
authority to an earlier period.
The
Company's policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating
expenses. During the period ended June 30, 2014 and 2013, the Company did not recognize interest and penalties.
At
June 30, 2014, the Company had net operating loss carry-forwards of approximately $3,523,500 that may be offset against future
taxable income from 2013 through 2033. No tax benefit has been reported in the financial statements since the potential tax benefit
is offset by a valuation allowance of the same amount.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2014
| 7. | DEFERRED
TAX BENEFIT (Continued) |
The
income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate of 40% to pretax
income from continuing operations for the period ended June 30, 2014 and 2013 due to the following:
|
| |
6/30/2014 | | |
6/30/2013 | |
|
Book income | |
$ | (4,617,210 | ) | |
$ | (451,090 | ) |
|
Non deductible expenses | |
| 4,375,970 | | |
| 210,010 | |
|
Loss on abandoned intangible assets | |
| - | | |
| - | |
|
Depreciation and amortization | |
| (590 | ) | |
| (290 | ) |
|
Related party accrual | |
| 29,750 | | |
| 34,000 | |
|
Research and development | |
| - | | |
| 3,980 | |
|
| |
| | | |
| | |
|
Valuation Allowance | |
| 212,080 | | |
| 203,390 | |
|
| |
| | | |
| | |
|
Income tax expense | |
$ | - | | |
$ | - | |
| | Deferred
taxes are provided on a liability method whereby deferred tax assets are recognized for
deductible differences and operating loss and tax credit carry-forwards and deferred
tax liabilities are recognized for taxable temporary differences. Temporary differences
are the difference between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment. |
| | Net
deferred tax liabilities consist of the following components as of June 30, 2014 and
2013: |
|
| |
6/30/2014 | | |
6/30/2013 | |
|
Deferred tax assets: | |
| | |
| |
|
NOL carryover | |
$ | 1,409,400 | | |
$ | 1,212,160 | |
|
Research & development | |
| 36,360 | | |
| 41,700 | |
|
Related party accrual | |
| 76,500 | | |
| 46,750 | |
|
| |
| | | |
| | |
|
Deferred tax liabilites: | |
| | | |
| | |
|
Depreciation and amortization | |
| (1,220 | ) | |
| (430 | ) |
|
| |
| | | |
| | |
|
Less Valuation
Allowance | |
| (1,521,040 | ) | |
| (1,300,180 | ) |
|
| |
| | | |
| | |
|
Net deferred tax
asset | |
$ | - | | |
$ | - | |
| | Due
to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss
carry-forwards for Federal income tax reporting purposes are subject to annual limitations.
Should a change in ownership occur, net operating loss carry-forwards may be limited
as to use in future years. |
8. | CONVERTIBLE
PROMISSORY NOTES |
On October 19, 2012, the Company
received $12,500 in consideration for the sale and issuance of a 10% convertible promissory note pursuant to the terms of a securities
purchase agreement entered into for the sale of an aggregate principal amount of up to $75,000 of convertible promissory notes.
The Company received an additional advance on March 7, 2013 in the amount of $10,000 for an aggregate total of $22,500. During
the year ended June 30, 2014, principal of $22,500, including interest of $2,188 was fully converted into 13,129,894 shares of
common stock of the Company. The Company recorded amortization of debt discount, which was recognized as interest expense in the
amount of $10,651 for the year ended June 30, 2014.
On October 29, 2012, the Company received $40,000 in consideration for the
sale and issuance of a 10% convertible promissory note pursuant to the terms of a securities purchase agreement entered into for
the sale of an aggregate principal amount of up to $100,000 of convertible promissory notes. The Company received additional advances
in the amount of $50,000 on various dates in 2013 for a total aggregate principal sum of $90,000. During the year ended June 30,
2014, the note was fully converted for principal in the amount of $90,000, plus interest of $9,259 into 54,754,562 shares of common
stock of the Company. The note was convertible into shares of common stock of the Company at a price equal to a variable conversion
price of the lesser of a)$0.01 per share b)fifty percent (50%) of the lowest trading price of the previous 25 trading days or
c)lowest price offered. The note matured one (1) year from the effective dates of each respective advance. The Company recorded
amortization of debt discount, which was recognized as interest expense in the amount of $55,932 for the year ended June 30, 2014.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2014
8. | CONVERTIBLE
PROMISSORY NOTES (Continued) |
On March 7, 2013, the Company received
$10,000 in consideration for the sale and issuance of a 10% convertible promissory note pursuant to the terms of a securities purchase
agreement entered into for the sale of an aggregate principal amount of up to $100,000 of convertible promissory notes. On October
1, 2013, the Company received an additional advance of $10,000 for an aggregate principal amount of $20,000, of which $20,000 in
principal and $979 in interest was converted into 10,914,723 shares of common stock of the Company .
The note was convertible into shares of common stock of the Company at a price equal to a variable conversion price of the lesser
of $0.0035 per share or fifty percent (50%) of the lowest trade price recorded on any trade day after
the effective date. The note matured one (1) year from the effective date of each respective advance. The Company recorded
amortization of debt discount, which was recognized as interest expense of $16,849 during the year ended June 30, 2014.
On
April 23, 2013, the Company entered into a securities purchase agreement for the sale of an 8% convertible promissory note in
the aggregate principal amount of up to $32,500, for consideration of $32,500. During the month of October and November 2013,
the principal amount of the note of $32,500, plus interest of $1,300 was fully converted into 8,022,257 shares of common stock
of the Company. The Company recorded amortization of debt discount, which was recognized as interest expense of $24,289 during
the year ended June 30, 2014.
On
May 9, 2013, the Company entered into a securities purchase agreement for the sale of a 10% convertible promissory note entered
into for the extinguishment of a previous note in the aggregate principal amount of $127,841. During the period ended June 30,
2014, principal in the amount of $55,500, plus accrued interest of $5,894 was converted into 35,082,113 shares of common stock.
As of June 30, 2014, there remains a balance of $72,341. The note is convertible into shares of common stock of the Company at
a price equal to the lesser of $0.009 or 50% of the lowest trade price after the effective date. The note matured on November
5, 2013, and was extended for six months to May 5, 2014. On May 9, 2014, the note was extended to May 9, 2015. The Company recorded
amortization of debt discount, which was recognized as interest expense in the amount of $15,755 during the year ended June 30,
2014.
On
May 21, 2013, the Company entered into a securities purchase agreement for the sale of an 8% convertible promissory note in the
aggregate principal amount of $32,500, for consideration of $32,500. During the month of November 2013, the principal amount of
the note in the amount of $32,500, plus interest of $1,300 was fully converted into 10,286,765 shares of the Company’s common
stock of the Company. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount
of $27,701 during the year ended June 30, 2014.
On
June 3, 2013, the Company issued a 10% convertible promissory note in the aggregate principal amount of $55,000, for payment of
a accounts payable. On June 4, 2013, the note was assigned to another lender. The note, plus interest of $2,750 was fully converted
during the months of December 2013 and January 2014 into 28,875,000 shares of common stock of the Company. The Company recorded
amortization of debt discount, which was recognized as interest expense in the amount of $51,082 during the year ended June 30,
2014.
On July 29, 2013, the Company received $42,500 in consideration for the sale and issuance of an 8% convertible promissory
note pursuant to the terms od a securities purchase agreement providing for the sale of an aggregate principal amount of up to
$42,500 of convertible promissory notes. The note was fully converted on various dates in January and February of 2014, into 15,776,581
shares of common stock of the Company for principal in the amount of $42,500, plus accrued interest of $1,700. The Company recorded
amortization of debt discount, which was recognized as interest expense in the amount of $42,500 during the year ended June 30,
2014.
On
August 9, 2013, the Company received funds of $15,000 in consideration for issuance of a securities purchase agreement entered
into for the sale of a 10% convertible promissory note in the aggregate principal amount of up to $100,000. The Company received
additional advances in the aggregate amount of $85,000 during the year ended June 30, 2014 for a total aggregate principal sum
of $100,000. The notes are convertible into shares of common stock of the Company at a price equal to a variable conversion price
of the lesser of a) $0.0048 per share; b) fifty percent (50%) of the lowest trading price after the effective date of each respective
advance or c) the lowest conversion price offered by the Company with respect to any financing occurring before or after the date
of each respective advance. The note matured six (6) months from the effective dates of each respective advance, and each advance
was extended for another six (6) months. On January 9, 2014, the note was extended to January 9, 2015. The Company recorded amortization
of debt discount, which was recognized as interest expense in the amount of $100,000 during the year ended June 30, 2014.
On
October 2, 2013, the Company received funds of $32,500 in consideration for issuance of a securities purchase agreement providing
for the sale of an 8% convertible promissory note in the aggregate principal amount of up to $32,500. The note was converted on
April 3, 2014, for full amount of the principal, plus accrued interest of $1,300. The note was convertible into shares of common
stock of the Company at a price equal to 58% times the average of the lowest three trading prices for the common stock during
the ten days prior to the conversion. The note matures on June 17, 2014. The Company recorded amortization of debt discount, which
was recognized as interest expense in the amount of $25,085 during the year ended June 30, 2014.
On
December 5, 2013, the Company received funds of $32,500 in consideration for issuance of a securities purchase agreement providing
for the sale of an 8% convertible promissory note in the aggregate principal amount of up to $32,500. The note was converted,
plus interest in the amount of $1,300 during the period ended June 30, 2014. The note was convertible into shares of common stock
of the Company at a price equal to 58% times the average of the lowest three trading prices for the common stock during the ten
days prior to the conversion. The note matured on August 22, 2014. The Company recorded amortization of debt discount, which was
recognized as interest expense in the amount of $32,496 during the year ended June 30, 2014.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2014
8. | CONVERTIBLE
PROMISSORY NOTES (Continued) |
On
December 16, 2013, the Company received funds of $26,000 in consideration for issuance of a securities purchase agreement entered
into for the sale of a 10% convertible promissory note in the aggregate principal amount of up to $100,000. The Company received
additional advances in the amount of $74,000 for an aggregate sum of $100,000.The note is convertible into shares of common stock
of the Company at a price equal to a variable conversion price of the lesser of $0.0048 per share or fifty percent (50%) of the
lowest trading price after the effective date of each respective advance. The notes mature six (6) months from the effective dates
of each respective advance. On May 16, 2014, the note was extended to May 16, 2015. The Company recorded amortization of debt
discount, which was recognized as interest expense in the amount of $58,985 during the year ended June 30, 2014.
On
March 5, 2014, the Company received funds of $30,000 in consideration for issuance of a securities purchase agreement entered
into for the sale of a 10% convertible promissory note in the aggregate principal amount of up to $100,000. On April 15, 2014,
the lender and borrower agreed to amend the note to increase the principle sum to $150,000. The Company received additional advances
in the amount of $120,000 for an aggregate sum of $150,000. The note is convertible into shares of common stock of the Company
at a price equal to a variable conversion price of the lesser of $0.0048 per share or fifty percent (50%) of the lowest trading
price after the effective date of each respective advance. The notes mature six (6) months from the effective dates of each respective
advance. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $74,167
during the year ended June 30, 2014.
On
May 23, 2014, the Company received funds of $50,000 in consideration for issuance of a securities purchase agreement entered into
for the sale of a 10% convertible promissory note in the aggregate principal amount of up to $100,000. The Company received an
additional advance in the amount of $50,000 for an aggregate sum of $100,000. The note is convertible into shares of common stock
of the Company at a price equal to a variable conversion price of the lesser of $0.0048 per share or fifty percent (50%) of the
lowest trading price after the effective date of each respective advance. The notes mature six (6) months from the effective dates
of each respective advance. The Company recorded amortization of debt discount, which was recognized as interest expense in the
amount of $5,890 during the year ended June 30, 2014.
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.
At
the time of conversion, the Company recognized losses on extinguishment of debt at fair value of $2,792,264, and recorded a gain
as the extinguishment of the associated derivative liability of $2,850,329, which resulted in a net gain on extinguishment of
debt of $58,065 for the year ended June 30, 2014.
For
purpose of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model.
The significant assumptions used in the Black Scholes valuation of the derivative are as follows:
Stock price on the valuation dates | |
| $0.0048 - $0.05 | |
Conversion price for the debt | |
| $0.002 - $0.0116 | |
Dividend yield | |
| 0.00 | % |
Years to Maturity | |
| 6 months -1 year | |
Risk free rate | |
| .03% - .18 | % |
Expected volatility | |
| 51.13% - 523.07 | % |
The
value of the derivative liability at June 30, 2014 was $8,667,274.
The
Company entered into a rental lease agreement for office space on May 24, 2014. The term of the lease is nine months and a
week from May 24, 2014 until February 28, 2015. The monthly rent is $1,450 and is due the first of each month.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2014
Management
evaluated subsequent events as of the date of the financial statements pursuant to ASC Topic 855.
On
July 22, 2014, the Company received an additional advance of $50,000 pursuant to a = note
dated May 23, 2014.
On
July 24, 2014, the Company issued 19,214,090 shares of common stock upon conversion of $30,000 in principal, plus $3,625 in accrued
interest on Note dated May 9, 2013.
On
September 4, 2014, the maturity date of a Note issued by the Company on March 5, 2014 was extended to September 5, 2015.
On
September 8, 2014, the Company received an additional advance of $50,000 pursuant to a note
dated May 23, 2014.
F-14
EXHIBIT
31.1
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I,
Timothy Young, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Hypersolar, Inc. for the year
ending June 30, 2014;
2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
3. |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
4. |
The
registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
b) |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
|
c) |
Evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and |
|
|
|
|
d) |
Disclosed
in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. |
The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors
(or persons performing the equivalent function): |
|
a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
and |
|
|
|
|
b) |
Any fraud,
whether or not material, that involves management or other employees who have a significant role in the registrant's internal
control over financial reporting. |
Date:
September 23, 2014
By: |
/s/
Timothy Young |
|
|
|
|
Chief
Executive Officer and Acting Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer) |
Exhibit
32.1
Certification
Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In
connection with the Annual Report of Hypersolar, Inc. (the “Company”) on Form 10-K for the fiscal year ended June
30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy Young,
Chief Executive Officer and Acting Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted
pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) |
The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
(2) |
The information
contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company. |
Date: September
23, 2014
By: |
/s/ Timothy
Young |
|
|
|
|
Chief
Executive Officer and Acting Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer) |
This
certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed to be filed
by the Company for purposes of Section 18 of the Securities Exchange Act of 1934. A signed original of this written
statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities
and Exchange Commission or its staff upon request.
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