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, 2015 |
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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FOR
THE TRANSITION PERIOD FROM __________ TO __________ |
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 ☐
No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically 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 for such
shorter period that the registrant was required to submit and post such files). Yes ☒ No
☐
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. ☒
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” 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) |
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
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 fiscal quarter was
approximately $9,119,391.
The
number of shares of registrant’s common stock outstanding, as of September 25, 2015 was 476,848,072.
DOCUMENTS
INCORPORATED BY REFERENCE
TABLE
OF CONTENTS
PART
I
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.
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. On September 15, 2015, we announced
that we had surpassed the critical voltage (1.5 Volts) threshold to split water molecules for renewable hydrogen fuel production.
We believe this is an extremely important step towards commercialization, as 1.5 V is the minimum voltage needed to produce hydrogen
in real world systems.
Market
Opportunity
Hydrogen
production is a large and growing industry. The 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 the 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 generation market will grow from an estimated $103.5 billion in 2014 to $138.2 billion
by 2019, with a CAGR of 5.9%. (Source: Markets and Markets Research; Hydrogen Generation Market - http://www.marketsandmarkets.com/PressReleases/hydrogen.asp)
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. On
May 20, 2014 the first Hyundai fuel cell vehicles (FCV’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) Furthermore,
the Toyota Mirai is expected to debut in California in 2016 (Source:
https://www.yahoo.com/autos/s/decades-promises-dude-wheres-hydrogen-fuel-cell-car-130000421.html)
Recently,
big box retailers including WalMart, Ace Hardware, and others have adopted hydrogen fuel technologies to serve their warehouse
transportation needs, such as forklifts.
Hydrogen
has a number of additional applications including, but not limited to, 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.
A
key aspect of our technology is that it has the potential to produce completely renewable hydrogen fuel, known as green hydrogen.
Most hydrogen fuel currently in the market is produced from natural gas, known as brown hydrogen. The market for renewable hydrogen
has begun to take shape, as California regulations maintain that at least 33% of the hydrogen provided at a company’s California
filling stations must come from renewable sources to meet the standard. (Source: http://www.einow.org/resources/leg-tracker/28-sb-1505-environmental-performance-standards-for-hydrogen-fuel.html)
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. |
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.
We
refer to our technology as the HyperSolar H2Generator which is comprised 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. |
We
anticipate that 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 at or near the point of distribution,
for local use. This model of hydrogen production addresses one of the biggest challenges of using clean hydrogen fuel on a large
scale which is the transportation of hydrogen.
Each
stage of the 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 the last eight months
we have shown how energy from sunlight can be converted to high voltages that can be contained in a simple and inexpensive structure
and how we can use the voltages to split inexpensive feedstocks like water and organic waste to produce hydrogen. Specifically,
we demonstrated a novel multi-junction semiconducting device architecture, synthesized entirely by inexpensive wet chemical techniques,
that can produce photovoltages exceeding 1.5 V. We also demonstrated stable activity for solar photosynthesis using these structures
to make chemicals and fuels.
To
compete with other fossil fuel driven hydrogen production techniques such as steam reforming, renewable hydrogen production systems
need to be be cheap and highly efficient. It is estimated based largely on theoretical calculations that an autonomous solar H2
production system should be able to generate photovoltages exceeding 1.5 V, produce photocurrents reaching 10 mA/cm2 (~10%
efficient) and the overall system cost should be ~$50/m2. Although our H2Generator achieved photovoltages greater than 1.5V and
our system production cost is considerably lower than $50/m2, our focus for the next six months is to improve photocurrents that
one could generate from our 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
September of 2012, we jointly filed with the University of California, Santa Barbara ("UCSB") 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 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 2015, we jointly filed a full utility patent application with UCSB for the "method of manufacture of multi-junction
artificial photosynthetic cells." The patent’s full coverage excludes others from making, using, or selling the technology
process, and creates licensing opportunities. We believe licensing opportunities can be created through various industry applications,
such as for car charging stations, retail distribution centers, and facilities that would benefit from cost-efficient hydrogen
developed at or near the point of distribution. Examination and prosecution of this patent are ongoing.
Strategic
Partners
In
November of 2014, we entered into a one-year agreement with the University of Iowa to help accelerate our research and development
efforts to reach our goal of producing commercially viable renewable hydrogen.
We
have entered into a sponsorship research agreement (“SRA”) with the University of California, Santa Barbara (“UCSB”)
intended to help achieve important milestones in the company’s development plan.
As
consideration under the SRA, UCSB will receive $218,231 from the Company. 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 UCSB, 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 is led by Professor Eric McFarland
in the Department of Chemical Engineering at UCSB.
On
January 11, 2013, the SRA was amended to extend the term for no additional consideration to July 31, 2013. On July 31, 2013, we
signed an additional amendment extending the term to December 31, 2013 for additional consideration of $54,045. On December 16,
2013 we signed an amendment to extend the SRA through June 30, 2014 for additional consideration of $43,459. In December of 2014,
the agreement was extended through December 31, 2015 for no additional consideration,
Competition
Currently,
most hydrogen is produced by steam reforming of natural gas or methane. This production technology dominates due to easy availability
and low prices of natural gas. Partial oxidation of petroleum oil is second in production capacity after steam reforming of natural
gas. The third largest production technology in terms of production capacity is steam gasification of coal. The 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 are 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.
Corporate
Information
We
were incorporated in the State of Nevada on February 18, 2009. 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 25, 2015 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.
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, 2015, we have incurred an aggregate net loss, and had an accumulated deficit, of $(20,079,841). For the years ended
June 30, 2015 and 2014, we incurred net losses of $(4,893,561) and $(11,543,012), respectively. The net losses for the years ended
June 30, 2015 and 2014, include non-cash expenses of $4,279,298 and $10,938,756, 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.
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 our
technology may not provide meaningful protection in the event of unauthorized use or disclosure.
Third
parties may assert that the technology, or the products we, 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 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 and at
the University of Iowa. 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 ALLIANCES USED IN THE DEVELOPMENT OF OUR PRODUCTS AND TECHNOLOGY COULD IMPEDE OUR ABILITY TO COMPLETE OUR PRODUCT
AND RESULT IN A MATERIAL ADVERSE EFFECT CAUSING THE BUSINESS TO SUFFER.
We
pursue strategic alliances with other companies in areas where collaboration can produce technological and industry advancement.
We have entered into a sponsorship research agreement (“SRA”)
with the University of California, Santa Barbara. The SRA will terminate on or prior to December 31, 2015. Also, we have entered
into a research agreement with the University of Iowa which is set to terminate October 31t, 2015. If we are unable
to extend the terms of the agreements , we could suffer delays in product development or other operational difficulties which
could have a material adverse effect on our results of operations.
THERE
IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
Our
independent public accounting firm in their report dated September 28, 2015 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 OTCQB 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 OTCQB 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 OTCQB. If we fail to remain current in our reporting requirements, we could be removed from the OTCQB. 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 OTCQB 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 our 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 Common 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 1,500,000,000 shares of common stock, par value $0.001 and 5,000,000
shares of preferred stock, par value $0.001, of which 476,848,072 shares of common
stock and no shares of preferred stock are currently outstanding as of September 25, 2015. Our Board of Directors has the ability
to authorize the issuance of an additional 1,023,151,928 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 will be in the form of appreciation, if any, in the market value of our shares of Common
Stock. There can be no assurance that shares of our Common Stock will appreciate in value or even maintain the price at which
our stockholders have purchased their shares.
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 OR CONVERTIBLE DEBT 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, if 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.
Our
principal office is located at 32 East Micheltorena, Suite A, Santa Barbara, CA, 93101. We lease approximately 650 square feet,
with an annual cost of approximately $17,940. The term of the lease is nine (9) months and a week, and expires on February 28,
2016. 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 OTCQB under the symbol "HYSR.QB."
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 OTCQB. 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 2015 | |
$ | 0.0449 | | |
$ | 0.0169 | |
Second Quarter FY 2015 | |
$ | 0.0348 | | |
$ | 0.0111 | |
Third Quarter FY 2015 | |
$ | 0.0425 | | |
$ | 0.0187 | |
Fourth Quarter FY 2015 | |
$ | 0.0345 | | |
$ | 0.0171 | |
| |
| | | |
| | |
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 | |
Securities
Our Articles
of Incorporation, as amended, authorizes the issuance of 1,500,000,000 shares of common stock, $0.001 par value per share and 5,000,000
shares of preferred stock, par value $0.001 per share.
All outstanding
shares of Common Stock are of the same class and have equal rights and attributes. The holders of our Common Stock are entitled
to one vote per share on all matters submitted to a vote of our stockholders. All stockholders are entitled to share equally in
dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available. In the event
of liquidation, the holders of our Common Stock are entitled to share ratably in all assets remaining after payment of all
liabilities. The stockholders do not have cumulative or preemptive rights.
As of September
25, 2015, our common stock was held by 74 stockholders of record and we had 476,848,072 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
There were no sales of unregistered
securities during the fiscal year ended June 30, 2015 other than those transactions previously reported to the SEC on our quarterly
reports on Form 10Q and current reports on Form 8-K.
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.
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. On September 15, 2015, we announced that we had surpassed the critical
voltage (1.5 Volts) threshold to split water molecules for renewable hydrogen fuel production. We believe this is an extremely
important step towards commercialization, as 1.5 V is the minimum voltage needed to produce hydrogen in real world systems.
Currently, the strategy of partnering
with both the University of Iowa and University of California, Santa Barbara, has advanced our technology significantly. In November
of 2014, the University of Iowa was added to the research and development team, giving us the support of two leading universities
as it continues its pursuit of commercially viable renewable hydrogen. As the technology progresses, the University of Iowa team
will continue to focus on increasing the voltage of the technology, while the UCSB team will focus more on the technology’s
production aspects and cost models for scaled up systems. We anticipate continuing this strategy of leveraging our existing
relationship, as well as potentially exploring others with leading universities, to continue developing our technology.
Now that we
have surpassed the 1.5 V threshold required for hydrogen fuel production in real world systems, we will identify next steps in
terms of scaling up the technology. Following this breakthrough, we will focus our efforts on increasing the hydrogen production
efficiencies of these particles by bonding the ideal fuel production catalyst to the low-cost high-voltage solar cell. In order
to achieve this, the company is currently exploring two parallel approaches. The first is to identify materials that interface
with well-known hydrogen production catalysts, such as the platinum on solar particles, to improve sunlight-to-hydrogen conversion
efficiency. The second is to pursue methods that further increase photo voltages of solar particles to greater than 1.7 V that
allow integration of cheaper earth abundant catalysts without significant loss in hydrogen production efficiency. We believe this
will bring us closer to developing a prototype or pilot.
Results of Operations for the Year Ended
June 30, 2015 compared to the Year Ended June 30, 2014.
Operating Expenses
Operating expenses consists
primarily of research and development expenses and general and administrative expenses incurred in connection with the operation
our business. For the year ended June 30, 2015 operating expenses were $542,404 and $558,669 for the prior period ended June 30,
2014. The net decrease of $16,265 in operating expenses consisted primarily of research and development costs in the amount of
$15,628 together with professional fees in the amount of $34,524, offset against an increase in marketing expenses of $13,687,
and an overall increase in other general and administrative expenses of $20,200. Marketing expenses consist of expenses incurred
in connection with our public responses. Other general administrative expenses consist of health insurance expenses, rental expense
and other office expenses.
Other Income/(Expenses)
Other income and (expenses)
for the year ended June 30, 2015 were $(4,351,157) and $(10,984,343) for the prior period ended June 30, 2014. The decrease in
other income and (expenses) was the result of a decrease in net loss on change in fair value of the derivative instruments of $6,545,294,
amortization of debt discount of $114,164, with an increase in interest expense of $26,272. The net increase in other income and
(expenses) was due to the loss in change in derivative liability.
Net Loss
For the year ended June
30, 2015, our net loss was $(4,893,561) as compared to $(11,543,012) for the prior period June 30, 2014. The decrease in net loss
was related primarily to other income and (expenses) due to a decrease in non-cash cost associated with the derivative liability
created by the Company’s outstanding convertible notes. The Company has not generated any revenues.
Liquidity and Capital
Resources
Liquidity is the ability
of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on
an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable
and accounts payable and capital expenditures.
As of June 30, 2015,
we had a working capital deficit of $14,072,573 as compared to $9,262,871 as of June 30, 2014. This increase in working capital
deficit of $4,809,702 was due primarily to an increase in accounts payable, accrued expenses, the issuance of additional convertible
notes, and non-cash derivative liability, offset by a decrease in cash.
During the year ended
June 30, 2015, we raised an aggregate of $515,000 in an offering of unsecured convertible notes. During the prior period ended
June 30, 2014, we raised an aggregate of $567,500 through the sale of unsecured convertible notes. Our ability to continue as
a going concern is dependent upon ability to raise capital from financing transactions and future revenue.
Cash flow used in operating
activities was $537,137 for the year ended June 30, 2015 and $503,729 for the prior period ended June 30, 2014. The increase in
cash used by operating activities was primarily due to a decrease in prepaid expenses, accrued expenses, amortization of debt
discount and loss on change in derivative liability, with an increase in rental deposits and accounts payable. The Company has
had no revenues.
Cash used in investing
activities for the year ended June 30, 2015 was $0, compared to $18,080 for the prior period ended June 30, 2014. During the current
period no purchases of tangible or intangible assets were made.
Cash provided by financing
activities during the year ended June 30, 2015 was $515,000 and $567,500 for the prior period ended June 30, 2014. The increase
in financing activities was due to with the issuance of convertible notes through private placement offerings during the current
period.
During the year ended
June 30, 2015, we did not generate any revenue, incurred a net loss of $4,893,561 and used cash in the amount of $537,137 in our
operations of. As of June 30, 2015, we had a working capital deficiency of $14,072,573 and a shareholders’ deficit of $14,034,690.
These factors, among others raise substantial doubt about our ability to continue as a going concern. Our independent auditors,
Liggett, Vogt, & Webb P.A , in their report dated September 28, 2015, on our audited financial statements for the year ended
June 30, 2015 expressed substantial doubt about our ability to continue as a going concern. The ability of us to continue as a
going concern and appropriateness of using the going concern basis 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.
We have historically
obtained funding from our shareholders. Management has historically obtained funds through private placement offerings of equity
and debt. Management believes that it will be able to continue to raise funds by sale of its securities to its existing shareholders
and prospective new investors to provide the additional cash needed to meet the Company’s obligations as they become due,
and will allow the development of its core of business. There is no assurance that we will be able to continue raising the required
capital for its operations.
Off-Balance Sheet
Arrangements
We do not
have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition,
revenues or expenses, result of operations, liquidity or capital expenditures.
Critical Accounting Policies
Our discussion
and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses,
and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related
to impairment of property, plant and equipment, intangible assets, deferred tax assets and fair value computation using the 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.
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, collectability 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, derivative liabilities and other factors. Management believes it has exercised
reasonable judgment in deriving these estimates. Consequently, a change in conditions could affect these estimates.
Fair Value of Financial Instruments
Fair value of financial instruments, requires
disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that
value. As of June 30, 2015, 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 for financial instruments
measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value
in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.
Recently Adopted Accounting Pronouncements
Management adopted recently issued accounting
pronouncements during the year ended June 30, 2015, as disclosed in the Notes to the financial statements included in this report.
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.
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 defined
in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation,
our CEO and our CFO concluded that our disclosure controls and procedures as of the end of the period covered by this report were
effective to ensure that information required to be disclosed is made known to management and others, as appropriate,
to allow timely decision regarding required disclosure and that the information required to be disclosed by us in reports that
we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms and (ii) accumulated and communicated to our management, including
our CEO and CFO, 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.
Changes
in Internal Controls.
We have also
evaluated our internal control over financial reporting, and there has been no change in our internal control over financial reporting
that occurred during the last fiscal quarter of fiscal year ended June 30, 2015 that has materially affected, or is reasonably
likely to materially affect our internal control over financial reporting.
Management’s Annual Report
on Internal Control over Financial Reporting.
We are responsible
for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance
to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial
statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Our internal
control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a
material effect on the financial statements.
Our management
conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2015 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, 2015, 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 |
|
50 |
|
President, CEO and Chairman |
Timothy Young – President,
CEO and Director
Tim Young is
an accomplished executive with over fifteen years of management experience in media and Internet technology companies. Mr. Young
was appointed President, CEO and Chairman of the Company in August 2009.
Mr. Young oversees
the Company’s research and development initiatives and fundraising efforts.
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. 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.
FAMILY RELATIONSHIPS
There are no
family relationships among our executive officers and directors.
Board Leadership
Structure and Role in Risk Oversight
Although we
have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined,
we have traditionally determined that it is in the best interests of the Company and its shareholders to combine these roles.
Currently, we have only one executive officer, who is our Chief Executive Officer, who also serves as our sole director. Due to
the small size and early stage of the Company, we believe it is currently most effective to have the Chairman and Chief Executive
Officer positions combined.
INVOLVEMENT IN CERTAIN LEGAL
PROCEEDINGS
During the
past ten years, none of our directors, executive officers, promoters, control persons, or nominees has been:
● |
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 or nominations and governance committee of our board of directors. We do not
have an audit committee financial expert.
CODE OF
ETHICS
We have adopted
a Code of Ethics that applies to all of our directors, officers and employees. A copy of the Code of Ethics can be obtained without
charge upon request to Timothy Young, CEO and President, 32 East Micheltorena, Suite A, Santa Barbara, CA 93101 and is also being
incorporated by reference herein. Any waiver of the provisions of the Code of Ethics for executive officers and directors may be
made only by the Board of Directors. Any such waivers will be promptly disclosed to our shareholders.
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 beneficially 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. 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, 2015, 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 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 $100,000 during the last two fiscal years.
Name & Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($) | | |
Option Awards ($) | | |
Non-Equity Incentive Plan Compensation ($) | |
Non-Qualified Deferred Compensation Earnings ($) | | |
All Other Compensation ($) | |
Total ($) | |
Timothy Young, | |
| 2015 | | |
$ | 255,000 | | |
| 0 | | |
| 0 | | |
| 0 | | |
0 | |
| 0 | | |
0 | |
$ | 255,000 | |
CEO and Acting CFO | |
| 2014 | | |
$ | 255,000 | | |
| 0 | | |
| 0 | | |
| 0 | | |
0 | |
| 0 | | |
0 | |
$ | 255,000 | |
General
At no time during the last fiscal year
with respect to any person listed in the table above was there:
● |
any
outstanding option or other equity-based award re-priced or otherwise materially modified (such as by extension of exercise
periods, the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or
the change of the bases upon which returns are determined; |
|
|
● |
any
waiver or modification of any specified performance target, goal or condition to payout with respect to any amount included
in non-stock incentive plan compensation or payouts; |
|
|
● |
any
option or equity grant; |
|
|
● |
any
non-equity incentive plan award made to a named executive officer |
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, 2015.
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 OWN ERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The following
table sets forth certain information concerning the number of shares of our common stock owned beneficially based on 476,848,072
issued and outstanding shares of common stock as of the date of this Annual Report by: (i) each of our directors; (ii) each
of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding
shares of common stock.
We believe
that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially
owned by them.
A person is
deemed to be the beneficial owner of securities that can be acquired by him within 60 days from September 25, 2015 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 25, 2015 have been exercised and converted.
Name and address | |
Shares of Common Stock | | |
Percentage of Common Stock (1) | |
| |
| | |
| |
Directors and Officers (2) | |
| | |
| |
Timothy A. Young | |
| 10,000,000 | | |
| 2.1 | % |
| |
| | | |
| | |
All Officers and Directors as a Group (1 person) | |
| 10,000,000 | | |
| 2.1 | % |
| (1) | Based upon 476,848,072 shares issued and
outstanding as of September 25, 2015. |
| (2) | The address for each of the officers and directors is c/o HyperSolar, Inc. 32 East Micheltorena,
Suite A, Santa Barbara, CA 93101 |
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 were
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 Liggett, Vogt & Webb P.A. during
2015 for the audit of our annual financial statements and quarterly reviews of our financial statements for the fiscal year totaled
approximately $23,000.
The
aggregate fees billable to us by HJ Associates & Consultants, LLP during 2015 and 2014 for the audits of our annual financial
statements and quarterly reviews of our financial statements for the fiscal year totaled approximately
$0 and $24,000. respectively.
Audit-Related Fees
We
incurred assurance and audit-related fees during 2015 of $0 to Liggett, Vogt & Webb P.A. in
connection with the audit of the financial statements of the Company for the year ended June 30, 2015.
We incurred
assurance and audit-related fees during 2015 and 2014 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, for the reviews of registration statements
and issuance of related consents and assistance with SEC comment letters.
Tax Fees
We incurred
fees of $0 billed to us by Liggett, Vogt & Webb P.A. for services rendered to us for tax compliance, tax advice, or tax planning
for the fiscal year ended June 30, 2015.
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 the beginning of fiscal year 2015, respectively.
All Other
Fees
There were
no fees billed to us by HJ Associates & Consultants, LLP for services rendered to us for the fiscal years ended June 30, 2015
and 2014, 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 Liggett, Vogt & Webb P.A to provide, among other things, bookkeeping services,
appraisal or valuation services, or international audit services. The policy provides that we engage Liggett, Vogt & Webb P.A
to provide audit, 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* |
|
Research Agreement between Hypersolar, Inc. and the Regents of the University of California, University of Californa, Santa Barbara dated February 16, 2015. |
|
|
|
10.2* |
|
Contract between Hypersolar, Inc. and the University of Iowa dated as of November 1, 2014. |
|
|
|
10.3 |
|
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) |
|
|
|
10.4 |
|
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) |
|
|
|
10.5 |
|
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). |
|
|
|
10.6 |
|
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 28, 2015 |
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
|
Page |
|
|
Report of Liggett, Vogt & Webb,
P.A |
F-1 |
|
|
Report of HJ Associates & Consultants,
LLP |
F-2 |
|
|
Balance Sheets |
F-3 |
|
|
Statements of Operations |
F-4 |
|
|
Statement of Shareholders’
Deficit |
F-5 |
|
|
Statements of Cash Flows |
F-6 |
|
|
Notes to Financial Statements |
F-7 |
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, 2015, and the related statements of operations, stockholders' deficit, and cash
flows for the year 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 audit.
We conducted our audit 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 audit 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 audit 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, 2015, and
the results of its operations and its cash flows for the year 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/ Liggett, Vogt & Webb, P.A.
New York, New York
September 28, 2015
Report
of Independent Registered Public Accounting Firm
To
the Board of Directors
HyperSolar, Inc.
Santa Barbara, CA
We have audited the accompanying balance sheet of HyperSolar, Inc. as of
June 30, 2014, and the related statements of operations, stockholders' equity (deficit), and cash flows for the year 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 audit.
We conducted our audit 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 audit 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 audit provides 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 the results of its operations and
its cash flows for the year 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 disclosed in Note 1 to
the financial statements, the Company has suffered recurring losses from operations and has a working capital deficit. 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. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
/s/ HJ Associates & Consultants, LLP
Salt Lake
City, Utah
September
23, 2014
HYPERSOLAR,
INC.
BALANCE
SHEETS
| |
June 30,
2015 | | |
June 30,
2014 | |
| |
| | |
| |
ASSETS | |
| | |
| |
| |
| | |
| |
CURRENT ASSETS | |
| | |
| |
Cash | |
$ | 39,491 | | |
$ | 61,628 | |
| |
| | | |
| | |
TOTAL
CURRENT ASSETS | |
| 39,491 | | |
| 61,628 | |
| |
| | | |
| | |
PROPERTY & EQUIPMENT | |
| | | |
| | |
Computers and peripherals | |
| 6,218 | | |
| 6,218 | |
Less:
accumulated depreciation | |
| (5,385 | ) | |
| (4,479 | ) |
| |
| | | |
| | |
NET
PROPERTY AND EQUIPMENT | |
| 833 | | |
| 1,739 | |
| |
| | | |
| | |
OTHER ASSETS | |
| | | |
| | |
Deposits | |
| 1,450 | | |
| 925 | |
Domain, net of amortization
$2,451 and $2,097, respectively | |
| 2,864 | | |
| 3,218 | |
Patents | |
| 32,736 | | |
| 32,736 | |
| |
| | | |
| | |
TOTAL
OTHER ASSETS | |
| 37,050 | | |
| 36,879 | |
| |
| | | |
| | |
TOTAL
ASSETS | |
$ | 77,374 | | |
$ | 100,246 | |
| |
| | | |
| | |
LIABILITIES AND SHAREHOLDERS' DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Accounts payable | |
$ | 97,467 | | |
$ | 92,801 | |
Accrued expenses | |
| 279,419 | | |
| 218,478 | |
Derivative liability | |
| 13,034,374 | | |
| 8,667,274 | |
Convertible
promissory notes, net of debt discount of $264,196 and $176,395, respectively | |
| 700,804 | | |
| 345,946 | |
| |
| | | |
| | |
TOTAL
CURRENT LIABILITIES | |
| 14,112,064 | | |
| 9,324,499 | |
| |
| | | |
| | |
SHAREHOLDERS' DEFICIT | |
| | | |
| | |
Preferred Stock, $0.001 par value; | |
| | | |
| | |
5,000,000 authorized preferred
shares, no shares issued or outstanding | |
| - | | |
| - | |
Common Stock, $0.001 par value; | |
| | | |
| | |
1,500,000,000 authorized
common shares 476,848,072 and 429,348,439 shares issued and outstanding, respectively | |
| 476,848 | | |
| 429,348 | |
Additional Paid in Capital | |
| 5,568,303 | | |
| 5,532,679 | |
Accumulated
deficit | |
| (20,079,841 | ) | |
| (15,186,280 | ) |
| |
| | | |
| | |
TOTAL
SHAREHOLDERS' DEFICIT | |
| (14,034,690 | ) | |
| (9,224,253 | ) |
| |
| | | |
| | |
TOTAL
LIABILITIES AND SHAREHOLDERS' DEFICIT | |
$ | 77,374 | | |
$ | 100,246 | |
The
accompanying notes are an integral part of these audited financial statements
HYPERSOLAR,
INC.
STATEMENTS
OF OPERATIONS
| |
For the Years Ended | |
| |
June 30, 2015 | | |
June 30, 2014 | |
| |
| | | |
| | |
REVENUE | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
OPERATING EXPENSES | |
| | | |
| | |
General and administrative
expenses | |
| 459,842 | | |
| 460,871 | |
Research and development
cost | |
| 81,302 | | |
| 96,929 | |
Depreciation
and amortization | |
| 1,260 | | |
| 869 | |
| |
| | | |
| | |
TOTAL
OPERATING EXPENSES | |
| 542,404 | | |
| 558,669 | |
| |
| | | |
| | |
LOSS
FROM OPERATIONS BEFORE OTHER INCOME (EXPENSES) | |
| (542,404 | ) | |
| (558,669 | ) |
| |
| | | |
| | |
OTHER INCOME/(EXPENSES) | |
| | | |
| | |
Gain on forgiveness of debt | |
| - | | |
| 58,065 | |
Gain/(Loss) on change in
derivative liability | |
| (3,852,100 | ) | |
| (10,455,459 | ) |
Interest
expense | |
| (499,057 | ) | |
| (586,949 | ) |
| |
| | | |
| | |
TOTAL
OTHER INCOME/(EXPENSES) | |
| (4,351,157 | ) | |
| (10,984,343 | ) |
| |
| | | |
| | |
NET
LOSS | |
$ | (4,893,561 | ) | |
$ | (11,543,012 | ) |
| |
| | | |
| | |
BASIC
AND DILUTED LOSS PER SHARE | |
$ | (0.01 | ) | |
$ | (0.04 | ) |
| |
| | | |
| | |
WEIGHTED-AVERAGE
COMMON SHARES OUTSTANDING BASIC AND DILUTED | |
| 460,075,738 | | |
| 296,013,816 | |
The
accompanying notes are an integral part of these audited financial statements
HYPERSOLAR,
INC.
STATEMENTS
OF SHAREHOLDERS' DEFICIT
FOR
THE YEARS ENDED JUNE 30, 2015 AND 2014
| |
| | |
| | |
| | |
| | |
Additional | | |
| | |
| |
| |
Preferred stock | | |
Common stock | | |
Paid-in | | |
Accumulated | | |
| |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Total | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at June 30, 2013 | |
| - | | |
$ | - | | |
| 194,263,571 | | |
$ | 194,263 | | |
$ | 2,532,032 | | |
$ | (3,643,268 | ) | |
$ | (916,973 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for conversion of debt | |
| - | | |
| - | | |
| 180,238,341 | | |
| 180,238 | | |
| 3,055,494 | | |
| - | | |
| 3,235,732 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for cashless exercise of warrants at fair value | |
| - | | |
| - | | |
| 54,846,527 | | |
| 54,847 | | |
| (54,847 | ) | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
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 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of common stock
for conversion of debt | |
| - | | |
| - | | |
| 47,499,633 | | |
| 47,500 | | |
| 35,624 | | |
| - | | |
| 83,124 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net
loss for the year ended June 30, 2015 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (4,893,561 | ) | |
| (4,893,561 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at June 30,
2015 | |
| - | | |
$ | - | | |
| 476,848,072 | | |
$ | 476,848 | | |
$ | 5,568,303 | | |
$ | (20,079,841 | ) | |
$ | (14,034,690 | ) |
The
accompanying notes are an integral part of these audited financial statements
HYPERSOLAR,
INC.
STATEMENTS
OF CASH FLOWS
| |
Years Ended | |
| |
June 30, 2015 | | |
June 30, 2014 | |
CASH FLOWS FROM OPERATING
ACTIVITIES: | |
| | | |
| | |
Net income/(loss) | |
$ | (4,893,561 | ) | |
$ | (11,543,012 | ) |
Adjustment to reconcile net
income/(loss) to net cash used in operating activities | |
| | | |
| | |
Depreciation & amortization
expense | |
| 1,260 | | |
| 869 | |
Loss on change in derivative
liability | |
| 3,852,100 | | |
| 10,455,459 | |
Amortization of debt discount
and beneficial conversion feature recorded as interest expense | |
| 427,198 | | |
| 541,362 | |
Gain on settlement and exchange
of debt | |
| - | | |
| (58,065 | ) |
Change in Assets and Liabilities: | |
| | | |
| | |
(Increase) Decrease in: | |
| | | |
| | |
Prepaid expenses and other
current assets | |
| - | | |
| 11,855 | |
Deposits | |
| (525 | ) | |
| - | |
Increase (Decrease) in: | |
| | | |
| | |
Accounts payable | |
| 4,666 | | |
| (28,440 | ) |
Accrued
expenses | |
| 71,725 | | |
| 116,243 | |
| |
| | | |
| | |
NET
CASH USED IN OPERATING ACTIVITIES | |
| (537,137 | ) | |
| (503,729 | ) |
| |
| | | |
| | |
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 convertible notes payable | |
| 515,000 | | |
| 567,500 | |
| |
| | | |
| | |
NET
CASH PROVIDED BY FINANCING ACTIVITIES | |
| 515,000 | | |
| 567,500 | |
| |
| | | |
| | |
NET (DECREASE)/INCREASE IN
CASH | |
| (22,137 | ) | |
| 45,691 | |
| |
| | | |
| | |
CASH, BEGINNING OF PERIOD | |
| 61,628 | | |
| 15,937 | |
| |
| | | |
| | |
CASH, END OF PERIOD | |
$ | 39,491 | | |
$ | 61,628 | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION | |
| | | |
| | |
Interest
paid | |
$ | 134 | | |
$ | 1,077 | |
Taxes
paid | |
$ | - | | |
$ | - | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURES OF
NON CASH TRANSACTIONS | |
| | | |
| | |
Issuance
of common stock upon conversion of convertible notes | |
$ | 83,124 | | |
$ | 3,237,087 | |
Issuance
of common stock upon cashless conversion of warrants | |
$ | - | | |
$ | 54,847 | |
The
accompanying notes are an integral part of these audited financial statements
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2015
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 has historically obtained
funds through private placement offerings of equity and debt. Management believes that it will be able to continue to raise funds
by sale of its securities to its existing shareholders and prospective new investors to provide the additional cash needed to
meet the Company’s obligations as they become due, and will allow the development of its core business. There is no assurance
that the Company will be able to continue raising the required capital.
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.
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, the deferred tax valuation allowance, and derivative liabilities.
Actual results could differ from those estimates.
Property
and Equipment
Property
and equipment are stated at cost, and are depreciated using straight line over its estimated useful lives:
Computer equipment | |
| 5
Years | |
Fair
Value of Financial Instruments
Fair
value of financial instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet,
where it is practicable to estimate that value. As of June 30, 2015, 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 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value,
established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States
and expands disclosures about fair value measurements.
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes
the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).
These tiers include:
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2015
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Fair
Value of Financial Instruments (Continued)
| ● | 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, 2015 and 2014:
|
| |
Total | | |
(Level
1) | | |
(Level
2) | | |
(Level
3) | |
|
| |
| | |
| | |
| | |
| |
|
Liabilities | |
| | | |
| | | |
| | | |
| | |
|
Derivative
liability, June 30, 2015 | |
$ | 13,034,374 | | |
$ | - | | |
$ | - | | |
$ | 13,034,374 | |
|
Derivative
liability, June 30, 2014 | |
$ | 8,667,274 | | |
$ | - | | |
$ | - | | |
$ | 8,667,274 | |
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, 2013 | |
$ | 536,640 | |
|
Fair value of derivative
liabilities issued | |
| 2,335,339 | |
|
Loss on change in
derivative liability | |
| 5,795,295 | |
|
Ending balance as of June 30,
2014 | |
| 8,667,274 | |
|
Fair value of derivative
liabilities issued | |
| 2,006,614 | |
|
Loss on change in
derivative liability | |
| 2,360,486 | |
|
Ending balance as of June 30, 2015 | |
$ | 13,034,374 | |
We
evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion
features within certain convertible promissory notes was not afforded the exemption for conventional convertible instruments due
to its variable conversion rate. The note has no explicit limit on the number of shares issuable so they did not meet the conditions
set forth in current accounting standards for equity classification. The Company elected to recognize the note under paragraph
815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially
and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The derivative
liability is adjusted periodically according to the stock price fluctuations. At the time of conversion, any remaining derivative
liability will be charged to additional paid-in-capital.
For
purpose of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model.
During the fiscal years ended June 30, 2015 and 2014, the significant assumptions used in the Black Scholes valuation of the derivative
are as follows:
|
| |
6/30/2015 | | |
6/30/2014 | |
|
| |
| | |
| |
|
Stock price on the
valuation dates | |
| $0.02
-$0.0265 | | |
| $0.0048
-$0.05 | |
|
Conversion price
for the debt | |
| $0.0018
-$0.0048 | | |
| $0.002
- $0.0116 | |
|
Dividend yield | |
| 0.00 | % | |
| 0.00 | % |
|
Years to Maturity | |
| 3
months - 1 year | | |
| 6
months - 1 year | |
|
Risk free interest
rate | |
| 0.02%
- 0.28% | | |
| 0.03%
- 0.18% | |
|
Expected volatility | |
| 15.55%
- 289.81% | | |
| 51.13%
- 523.07% | |
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 the convertible notes 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 year ended June 30, 2015, as the inclusion
of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.
For
the years ended June 30, 2015 and 2014, the dilutive impact of outstanding stock options of 500,000 and
250,000, and notes convertible into 531,109,481 and 312,455,051 shares
of common stock respectively, have been excluded, because their impact on the loss per share is anti-dilutive.
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
The
Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for
services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based
on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured
on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and
vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the
value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance
commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee
stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances
where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based
compensation charge is recorded in the period of the measurement date.
Research
and Development
Research
and development costs are expensed as incurred. Total research and development costs were $81,302 and $96,929 for the years ended
June 30, 2015 and 2014, respectively.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2015
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) |
Accounting
for Derivatives
The
Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported
in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average
series Black-Scholes-Merton option pricing models to value the derivative instruments at inception and on subsequent valuation
dates.
The
classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is
evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current
or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of
the balance sheet date.
Recently
issued pronouncements
In
April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” this Update as part
of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The Board received feedback that
having different balance sheet presentation requirements for debt issuance costs and debt discount and premium creates unnecessary
complexity. Recognizing debt issuance costs as a deferred charge (that is, an asset) also is different from the guidance in International
Financial Reporting Standards (IFRS), which requires that transaction costs be deducted from the carrying value of the financial
liability and not recorded as separate assets. Additionally, the requirement to recognize debt issuance costs as deferred charges
conflicts with the guidance in FASB Concepts Statement No. 6, Elements of Financial Statements, which states that debt issuance
costs are similar to debt discounts and in effect reduce the proceeds of borrowing, thereby increasing the effective interest
rate. Concepts Statement 6 further states that debt issuance costs cannot be an asset because they provide no future economic
benefit. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related
to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability,
consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments
in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for
fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments
in this Update are effective for financial statements s issued for fiscal years beginning after December 15, 2015, and interim
periods within fiscal years beginning after December 15, 2016. The Company is currently evaluating the effects of adopting this
ASU, if it is deemed to be applicable.
On
August 27, 2014, the Company adopted the amendment to ASU 2014-15 on Presentation of Financial Statements Going Concern (Subtopic
205-40). The amendment provides for guidance to reduce diversity in the timing and content of footnote disclosures. The
amendment requires management to assess the Company’s ability to continue as a going concern by incorporating and expanding
upon certain principles that are currently in U.S. auditing standards. The Company has to define the term of substantial doubt,
which has to be evaluated every reporting period including interim periods. Management has to provide principles for considering
the mitigating effect of its plan, and disclose when substantial doubt is alleviated as well as when it is not alleviated. The
Company is required to assess managements plan for a period of one year after the financial statements are issued (or available
to be issued). The amendment is effective for annual periods ending after December 15, 2016. Early adoption is permitted. The
Company does not believe the accounting standards currently adopted will have a material effect on the accompanying condensed
financial statements.
Management
does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a
material effect on the accompanying condensed financial statements.
During
the year ended June 30, 2015, the Company issued 47,499,633 shares of common stock upon conversion of $72,341 in principal, plus
$10,783 in accrued interest on an outstanding convertible note.
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.
Options
On
March 31, 2015, the Company granted 250,000 non-qualified stock options to a consultant. As of March 31, 2015, 500,000 non-qualified
common stock options were outstanding. Each option shall be exercisable to the nearest whole share, in installments or otherwise,
as the respective agreements may provide. Each Option expires on the date specified in the Option agreement, which date is not
later than the fifth (5th) anniversary from the grant date of the options. As of June 30, 2015, 250,000 options are
fully vested and are exercisable at an exercise price $0.04 per share. The 250,000 stock options granted on March 31, 2015 are
not currently exercisable and are subject to vesting conditions which provide that fifty (50%) percent of the options vest on
March 31, 2016 and the remaining fifty (50%) on March 31, 2017. These stock options are exercisable for a period of five years
from the date of grant at an exercise price of $0.02245 per share.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2015
4. |
STOCK OPTIONS (Continued) |
A
summary of the Company’s stock option activity and related information follows:
|
| |
6/30/2015 | | |
6/30/2014 | |
|
| |
| | |
Weighted | | |
| | |
Weighted | |
|
| |
Number | | |
average | | |
Number | | |
average | |
|
| |
of | | |
exercise | | |
of | | |
exercise | |
|
| |
Options | | |
price | | |
Options | | |
price | |
|
Outstanding, beginning
of period | |
| 250,000 | | |
$ | 0.04 | | |
| 250,000 | | |
$ | 0.04 | |
|
Granted | |
| 250,000 | | |
| 0.02 | | |
| - | | |
| - | |
|
Exercised | |
| - | | |
| - | | |
| - | | |
| - | |
|
Forfeited/Expired | |
| - | | |
| - | | |
| - | | |
| - | |
|
Outstanding,
end of period | |
| 500,000 | | |
$ | 0.03 | | |
| 250,000 | | |
$ | 0.04 | |
|
Exercisable
at the end of period | |
| 250,000 | | |
$ | 0.04 | | |
| 250,000 | | |
$ | 0.04 | |
|
Weighted
average fair value of options granted during the period | |
| | | |
$ | 0.02 | | |
| | | |
$ | - | |
Warrants
There were no outstanding
purchase warrants as of June 30, 2015.
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.
5. |
CONVERTIBLE PROMISSORY NOTES |
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. The lender converted $55,500 of
the note leaving a remaining balance of $72,341 as of June 30, 2014. During the year ended June 30, 2015, the Company issued 47,499,633
shares of common stock upon conversion of the remaining principal balance of $72,341, plus accrued interest of $10,783.
On
August 9, 2013, the Company entered into a securities purchase agreement for the sale of a 10% convertible promissory note in
the aggregate principal amount of up to $100,000. Upon execution of the securities purchase agreement, the Company received an
advance of $15,000. The Company received additional advances in the aggregate amount of $85,000 for a total aggregate principal
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 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, as amended, matures on April 9, 2016.
On
December 16, 2013, the Company entered into a securities purchase agreement entered for the sale of a 10% convertible promissory
note in the aggregate principal amount of up to $100,000. Upon execution of the securities purchase agreement, the Company received
an advance of $26,000. 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
note, as amended, matures on February 16, 2016. The Company recorded amortization of debt discount, which was recognized as interest
expense in the amount of $6,437 during the year ended June 30, 2015.
On
March 5, 2014, the Company entered into a securities purchase agreement for the sale of a 10% convertible promissory note in the
aggregate principal amount of up to $100,000. Upon execution of the securities purchase agreement, the Company received an advance
of $30,000. 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 note, evidencing an advance,
matures six (6) months from the effective dates of each respective advance. The Notes, as amended, mature on June 5, 2016. The
Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $75,833 during the year
ended June 30, 2015.
On
May 23, 2014, the Company entered into a securities purchase agreement for the sale of a 10% convertible promissory note in the
aggregate principal amount of up to $500,000. Upon execution of the securities purchase agreement, the Company received an advance
of $50,000. The Company received additional advances in the amount of $415,000 for an aggregate sum of $465,000. 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 note matured six (6)
months from the effective dates of each respective advance. The note matured on May 23, 2015 and was extended to February 23,
2016. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $317,151 during
the year ended June 30, 2015.
On
April 9, 2015, the Company entered into a securities purchase agreement for the sale of a 10% convertible promissory note in the
aggregate principal amount of up to $500,000. Upon execution of the securities purchase agreement, the Company received an advance
of $50,000. The Company received additional advances in the amount of $100,000 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 $0.01 per share or
fifty percent (50%) of the lowest trading price since the original effective date of each respective advance or the lowest effective
price per share granted to any person or entity after the effective date to acquire common stock. The note matures nine (9) 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 $27,778 during the year ended June 30, 2015.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2015
5. |
CONVERTIBLE PROMISSORY NOTES (Continued) |
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.
6. |
DERIVATIVE LIABILITIES |
The
convertible notes (the “Notes”) issued and described in Note 5 do not have fixed settlement provisions because their
conversion prices are not fixed. The conversion features have been characterized as derivative liabilities to be re-measured at
the end of every reporting period with the change in value reported in the statement of operations.
During
the year ended June 30, 2015, as a result of the Notes issued that were accounted for as derivative liabilities, we determined
that the fair value of the conversion feature of the convertible notes at issuance was $2,006,614, based upon a Black-Sholes-Model
calculation. We recorded the full value of the derivative as a liability at issuance with an offset to valuation discount, which
will be amortized over the life of the Notes.
During
the year ended June 30, 2015, approximately $72,341 in principal of the Notes were converted. As a result of the conversion of
these Notes, and the change in fair value of the remaining Notes, the Company recorded a loss in change in derivative of $2,360,486
in the statement of operations for the year ended June 30, 2015. At June 30, 2015, the fair value of the derivative liability
was $13,034,374.
For
purpose of determining the fair market value of the derivative liability for the embedded conversion, the Company used Black
Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative are as follows:
|
Risk free interest rate | |
| 0.01%
- 0.28 | % |
|
Stock volatility factor | |
| 15.55%
- 318.08 | % |
|
Weighted average expected option life | |
| 1
month - 1 year | |
|
Expected dividend yield | |
| None
| |
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 | |
6/30/2015 | | |
6/30/2014 | |
|
Domain-gross | |
15 years | |
$ | 5,315 | | |
$ | 5,315 | |
|
Less amortization | |
| |
| (2,451 | ) | |
| (2,097 | ) |
|
Domain-net | |
| |
$ | 2,864 | | |
$ | 3,218 | |
|
| |
| |
| | | |
| | |
|
Patents-gross | |
| |
$ | 32,736 | | |
$ | 32,736 | |
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 2012.
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, 2015 and 2014, 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, 2015 and 2014, the Company did not recognize interest and penalties.
HYPERSOLAR,
INC.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2015
At
June 30, 2015, the Company had net operating loss carry-forwards of approximately $3,783,500 that may be offset against future
taxable income from 2014 through 2034. 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.
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, 2015 and 2014 due to the following:
|
| |
6/30/2015 | | |
6/30/2014 | |
|
Book income | |
$ | (1,953,400 | ) | |
$ | (4,617,210 | ) |
|
Non deductible expenses | |
| 1,712,200 | | |
| 4,375,970 | |
|
Loss on abandoned intangible assets | |
| - | | |
| - | |
|
Depreciation and amortization | |
| (500 | ) | |
| (590 | ) |
|
Related party accrual | |
| - | | |
| 29,750 | |
|
Research and development | |
| - | | |
| - | |
|
| |
| | | |
| | |
|
Valuation Allowance | |
| 241,700 | | |
| 212,080 | |
|
| |
| | | |
| | |
|
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, 2015 and 2014:
|
| |
6/30/2015 | | |
6/30/2014 | |
|
Deferred tax assets: | |
| | | |
| | |
|
NOL carryover | |
$ | 1,513,300 | | |
$ | 1,409,400 | |
|
Research & development | |
| 36,400 | | |
| 36,360 | |
|
Related party accrual | |
| 76,500 | | |
| 76,500 | |
|
| |
| | | |
| | |
|
Deferred tax liabilities: | |
| | | |
| | |
|
Depreciation and amortization | |
| (2,500 | ) | |
| (1,220 | ) |
|
| |
| | | |
| | |
|
Less Valuation Allowance | |
| (1,623,700 | ) | |
| (1,521,040 | ) |
|
| |
| | | |
| | |
|
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.
The
Company entered into a rental sublease for office space on February 28, 2015. The term of the sublease is on a month-to-month
rental. The monthly rent is $1,495 and is due the first of each month.
Management
evaluated subsequent events as of the date of the financial statements pursuant to ASC TOPIC 855, and reported the following events:
On
July 21, 2015, the Company received an additional $50,000 advance on the securities purchase agreement entered into on April 9,
2015.
On
August 20, 2015, the Company received an additional $50,000 advance on the securities purchase agreement entered into on April
9, 2015.
On
September 15, 2015, the Company received an additional $50,000 advance on the securities purchase agreement entered into on April
9, 2015.
F-12
Exhibit 10.1
RESEARCH
AGREEMENT
Between
THE
REGENTS OF THE UNIVERSITY OF CALIFORNIA
UNIVERSITY
OF CALIFORNIA, SANTA BARBARA
And
HyperSolar,
Inc.
This Research
Agreement (“Agreement”) is entered into on this 16th day of February, 2012 by and between THE REGENTS OF
THE UNIVERSITY OF CALIFORNIA, a California Constitutional corporation, on behalf of its Santa Barbara campus, hereinafter called
“University,” and, HyperSolar, Inc., a Nevada corporation, having a principal place of business at 629 State St. Santa
Barbara, CA 93101, hereinafter called “Sponsor.”
WHEREAS,
University is a non-profit organization dedicated, in part, to engaging in high quality research activities for the advancement
of knowledge and benefit of the public; and
WHEREAS,
the research project contemplated by this Agreement is of mutual interest and benefit to both the University and Sponsor, and
is consistent with the research and educational objectives of the University.
NOW THEREFORE,
in consideration of the premises and mutual covenants herein contained, the parties agree as follows:
1. Statement
of Work
| | University,
through its Principal Investigator(s), shall use reasonable efforts to perform the research
activities set forth in the Statement of Work attached hereto as Exhibit A, which is
hereby incorporated in full by reference. Sponsor acknowledges and agrees that University
cannot guarantee the results of any of its research activities, and that minor deviations
from the Statement of Work may occur to further the scientific goals of the Statement
of Work. |
2. Deliverables
| | Deliverables
under this Agreement are described in and will be submitted to Sponsor in accordance
with Exhibit A hereof, which is hereby incorporated in full by reference. |
3. Period
of Performance and Term of the Agreement
| | The
Period of Performance and the Term of this Agreement shall be from 2/01/2012 through 01/31/2013. |
4. Cost
to Sponsor
| | The
cost to Sponsor for University’s performance hereunder shall not exceed $124,727.
This Agreement shall be performed on a “cost reimbursement” basis. When expenditures
reach the above amount, Sponsor will not be required to fund, and University will not
be required to perform, additional work hereunder unless by mutual agreement of the parties. |
5. Payment
| | Quarterly
advance payment will be made to University by Sponsor in accordance with Exhibit B hereof,
which is hereby incorporated in full by reference. To ease administrative burden, please
note that no invoice will be sent by University to prompt the payments due under this
Agreement, unless Sponsor so requests in a separate letter addressed to the Manager,
Accounting and Financial Services. Checks shall be made payable to The Regents of the
University of California and shall be sent to: |
Cashier’s
Office
SAASB Building, Room 1212
Santa Barbara, California
93106-2003
| | Payments
should refer to both the Principal Investigator’s last name and Sponsor’s
name. |
6. Principal
Investigator
| | University’s
performance hereunder will be under the direction of Professor Eric McFarland who will
serve as Principal Investigator(s) (“Principal Investigator”). In the event
that the Principal Investigator becomes unable or unwilling to continue work under this
Agreement and an alternate Principal Investigator is not agreeable to Sponsor, Sponsor
will have the option to terminate this Agreement in accordance with Article 16 hereof.
Sponsor understands and agrees that Principal Investigator and/or Project Director is
the scientific contact for University but is not authorized to amend, modify or terminate
the terms and conditions of this Agreement. Requests to amend, modify or terminate the
terms of this Agreement must be directed to University’s Office of Technology &
Industry Alliances and must comply with the notice requirements of this Agreement. |
7. Rights
in Data
| | University
will have the unrestricted right to publish, disclose, disseminate and use, in whole
and in part, any data or information developed by University under this Agreement or
received in the performance of this Agreement except as set forth in Article 11 (“Confidentiality”)
hereof. Except as set forth in Section 9 (“Patents and Inventions”) and Section
10 (“Copyright”), Sponsor will have the right to publish and use any technical
reports and information specified to be delivered hereunder. It is agreed, however, that
under no circumstances will Sponsor state or imply in any publication, other published
announcement, or otherwise, that University has tested, endorsed or approved any product,
service or company. SPONSOR UNDERSTANDS AND AGREES THAT SUCH DATA IS PROVIDED “AS
IS” AND THUS, SPONSOR USES SUCH DATA AT ITS OWN RISK. UNIVERSITY EXTENDS NO WARRANTIES
OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. |
8. Supplies
and Equipment
| | In
the event that University purchases supplies or equipment hereunder, title to such supplies
and equipment will vest in University. |
9. Patents
and Inventions
9.1
Inventorship and ownership of patentable developments or discoveries first conceived and actually reduced to practice in the performance
of this Agreement (“Subject Inventions”) will be determined in accordance with applicable U.S. Patent Law and University
policy.
If
Subject Inventions are jointly owned, then Sponsor will have the option to use its own choice of attorneys for patent protection
activities. Within sixty (60) days after disclosure by University to Sponsor of a Joint Invention, Sponsor will prepare and file
patent applications(s) disclosing and claiming Joint Inventions, and shall prosecute and maintain such joint patent rights in
the US and other countries at Sponsor’s discretion and sole cost, either by Sponsor’s in-house counsel or by using
a law firm mutually agreed upon by the Parties. Sponsor will ensure that “The Regents of the University of California”
are co-assignees of any patents issued in any country disclosing and claiming patent rights to any Joint Inventions and University
employees shall assign their rights to University.
Sponsor
shall provide University with drafts of all relevant patent documents sufficiently in advance of any deadline to allow a meaningful
opportunity to review and provide comments. Sponsor shall use reasonable efforts to amend any patent application to include claims
or other modification reasonably requested by University. Neither party will assign its undivided interest in patent rights to
Joint Inventions, or abandon prosecution of any patent application (except for purposes of filing continuing applications) or
maintenance of any issued patent to Joint Inventions without prior written notice to the other party at least ninety (90) days
in advance of the applicable deadline. University may assume, at its own cost, to continue prosecution or maintenance of any patent
or patent application in the Joint Inventions, if Sponsor elects to abandon prosecution of such patent rights in Joint Invention(s).
9.2 To
the extent that University will have the legal right to do so, and provided Sponsor pays all direct and indirect costs of the
Statement of Work including a proportionate share of all researcher salaries and benefits, Sponsor will have a time-limited first
right to negotiate a license to the University’s interest in any Subject Invention.
9.3 University
shall promptly disclose to Sponsor any Subject Inventions. Sponsor shall hold this disclosure on a confidential basis and will
not disclose the information to any third party without the prior written consent of University. Sponsor will notify University
in writing within thirty (30) days of notice of such disclosure to Sponsor whether or not it wishes to secure an option or license
to University’s interest in the disclosed Subject Invention (“Election Period”). Sponsor will have ninety (90)
days from the date of election to conclude such option or license agreement with University (“Negotiation Period”).
Said option or license will contain reasonable terms, will require diligent performance by Sponsor for the timely commercial development
and early marketing of all Subject Inventions subject to the license, and will include Sponsor's obligation to reimburse University's
patent costs for all Subject Inventions subject to the option or license. In the event it is necessary in the opinion of University
to file any patent applications to protect a Subject Invention during the Election or Negotiation Periods, Sponsor will reimburse
patent costs incurred by University during such period(s). If such option or license negotiation is not concluded within the Negotiation
Period or if Sponsor does not notify University of its wish to secure an option or license within the Election Period, neither
party will have any further obligation to the other with respect to University’s interest in the Subject Invention and the
rights to such Subject Invention will be disposed of in accordance with University’s policies.
9.4 Nothing
in this Agreement is or shall be construed as conferring by implication, estoppel, or otherwise any license or rights under any
patents or other rights of The Regents.
10. Copyright
| | Copyright
in original works of authorship, including computer software, first created and fixed
in a tangible medium of expression by University in the performance of this Agreement
will vest in University. At Sponsor’s request and to the extent that University
has the legal right to do so, University will grant to Sponsor a license to University’s
interest in such works on reasonable terms and conditions, including reasonable royalties,
as the parties mutually agree in a separate writing. |
11. Confidentiality
During
the course of this Agreement, Sponsor may provide University with certain proprietary business or technical information or materials
(“Confidential Information”). Except as required by law, and as long as all written disclosures of Confidential Information
are clearly marked “Confidential” and all oral disclosures of Confidential Information are both identified as confidential
at the time of disclosure and are thereafter reduced to a writing that is clearly marked “Confidential” within fourteen
(14) days of such oral disclosure, University will hold Confidential Information in confidence and agrees to prevent its disclosure
to third parties using the same degree of care that the University uses with its own information of like kind. Confidential Information
shall be provided only to University’s Principal Investigator and only on a “need to know” basis. This obligation
shall continue in effect for three (3) years after expiration or termination of this Agreement.
Information
and materials disclosed by Sponsor shall not be considered confidential which: (1) is now public knowledge or subsequently becomes
such through no breach of this Agreement; (2) is rightfully in University’s possession prior to Sponsor’s disclosure
as shown by written records; (3) is rightfully disclosed to University by a third party; or, (4) is independently developed by
or for University without reliance upon confidential information received by Sponsor.
Because
University is a public, non-profit educational institution and does not have identified resources to sustain liability for disclosure
of information, Sponsor agrees that no financial liability shall attach to University in the event such disclosure occurs.
12. Publication
| | University
shall have the right, at its discretion, to release any information or to publish any
material resulting from its performance hereunder. University will furnish Sponsor with
a copy of any proposed written or oral publication (including manuscripts, abstracts,
and oral presentations) at least thirty (30) days prior to submission for publication
(“Review Period”). Upon written notification by Sponsor within the Review
Period, University agrees to delete any of Sponsor’s Confidential Information that
appears in the publication. If it is determined that a patent application should be filed,
University will delay publishing such proposed publication for a maximum of an additional
thirty (30) days in order to protect the potential patentability of any invention described
therein. |
13. Export
Control
| | The
parties acknowledge that, because University is an institution of higher education and
has many foreign persons who are students, employees and visitors, University conducts
its research activities as “fundamental research” under export control regulations
(as set forth in ITAR 120.10(5) and 120.11, and EAR 15 C.F.R. 734(b)(3) and 734.7 through
734.11). Accordingly, the parties agree that Sponsor shall not provide University with
any export-controlled proprietary data or technology. |
14. Applicable
Law
| | This
Agreement will be governed by the laws of the State of California, United States of America,
without regard to the conflict of law’s provisions thereof. |
15. Notice
| | Whenever
any notice is to be given hereunder, it will be in writing and sent to the Authorized
Representative for the receiving party indicated below by certified mail or overnight
courier, at following address: |
|
University: |
University
of California, Santa Barbara |
|
|
Office
of Technology & Industry Alliances |
|
|
342
Lagoon Road, Mail Code 2055 |
|
|
Santa
Barbara, California 93106-2055 |
|
|
Attn:
Industry Contract Officer |
|
|
|
|
Sponsor: |
HyperSolar,
Inc. |
|
|
629
State Street |
|
|
Santa
Barbara, CA 93101 |
|
|
Attn:
Tim Young, CEO |
16. Termination
| | Either
University or Sponsor may terminate this Agreement by giving sixty (60) days written
notice to the other. Sponsor will pay University actual direct and indirect costs and
noncancellable commitments incurred prior to the date of termination and fair close-out
related costs. If the total of such costs is less than the total funds advanced, the
balance will be returned to Sponsor. |
17. Publicity
Neither
party will use the name, trade name, trademark or other designation of the other party in connection with any products, promotion,
or advertising, without the prior written permission of the other party. However, nothing in this Article is intended to restrict
either party from disclosing the existence of and nature of this Agreement (including the name of the other party) or from including
the existence of and nature of this Agreement in the routine reporting of its activities.
18. Indemnification
| | Sponsor
shall defend, indemnify, and hold University, its officers, employees, and agents harmless
from and against any and all liability, loss, expense (including reasonable attorney's
fees), or claims for injury or damages arising out of its performance of this Agreement
but only in proportion to and to the extent such liability, loss, expense, attorney's
fees, or claims for injury or damages are caused by or result from the negligent or intentional
acts or omissions of Sponsor, its officers, agents, or employees. |
| | University
shall defend, indemnify, and hold Sponsor, its officers, employees, and agents harmless
from and against any and all liability, loss, expense (including reasonable attorney's
fees), or claims for injury or damages arising out of its performance of this Agreement
but only in proportion to and to the extent such liability, loss, expense, attorney's
fees, or claims for injury or damages are caused by or result from the negligent or intentional
acts or omissions of University, its officers, agents, or employees. |
| | This
Article shall survive the termination or expiration of this Agreement. |
19. Excusable
Delays
| | University
will be excused from performance hereunder if a delay is caused by inclement weather,
fire, flood, strike, or other labor dispute, acts of God, acts of governmental officials
or agencies, terrorism, or any other cause beyond the control of University. The excusable
delay is allowed for the period of time affected by the delay. If a delay occurs, the
parties will revise the performance period or other provisions hereunder as appropriate. |
20. Assignment
| | Neither
party will assign its rights or duties under this Agreement to another without the prior
express written consent of the other party; provided, however, that Sponsor may assign
this Agreement to a successor in ownership of all or substantially all its business assets
in the field to which this Agreement relates if such successor will expressly assume
in writing the obligation to perform in accordance with the terms and conditions of this
Agreement. Any other purported assignment will be void. |
21. Amendments
| | No
agreements, modifications, or waivers to this Agreement shall be valid unless in writing
and signed by the Authorized Representatives of the parties. |
22. Miscellaneous
22.1 Not
a Partnership or Joint Venture. It is understood and agreed by the parties that the University is performing this contract
as an independent contractor. The parties, by this Agreement, do not intend to create a partnership, principal/agent, master/servant,
or joint venture relationship and nothing in this Agreement shall be construed as creating such a relationship between the parties.
22.2 Severability.
If any term or provision of this Agreement shall be held to be invalid or illegal, such term or provision shall not affect the
validity or enforceability of the remaining terms and provisions of this Agreement.
22.3 Recitals
& Headings. The recitals herein constitute an integral part of the Agreement reached and are to be considered as such.
However, the captions and headings contained in this Agreement have been inserted for reference and convenience only and in no
way define, limit, or describe the text of this Agreement or the intent of any provision.
22.4 No
Waiver. The wavier by either party of a breach or default of any provision of this Agreement shall not constitute a waiver
of any succeeding breach, nor shall any delay or omission on the part of either party to exercise any right that it has under
this Agreement operate as a waiver of such right, unless the terms of this Agreement sets forth a specific time limit for the
exercise thereof.
23. Entire
Agreement
| | This
Agreement, and Exhibits A through B, constitute the entire agreement and understanding
between the parties and supersedes all previous agreements and understandings on the
subject matter of this Agreement, if any. |
HYPERSOLAR
IN. |
|
THE
REGENTS OF THE UNIVERSITY OF CALIFORNIA |
|
|
|
|
|
By: |
/s/
Tim Young |
|
By: |
/s/
Sherylle Mills Englander |
Name: |
Tim Young |
|
Name: |
Sherylle Mills
Englander |
Title: |
CEO |
|
Title: |
Director, Sponsored
Projects |
Date: |
2/23/12 |
|
Date: |
2/23/12 |
EXHIBIT
B
Quarterly
Payment Schedule
Date | |
Amount | |
02/28/2012 | |
$ | 30,000.00 | |
| |
| | |
06/28/2012 | |
$ | 31,
576.00 | |
| |
| | |
09/28/2012 | |
$ | 31,576.00 | |
| |
| | |
12/28/2012 | |
$ | 31,575.00 | |
Exhibit
10.2
Contract
THIS AGREEMENT
effective this 1st of November, 2014, by and between HyperSolar, Inc (hereafter referred to as "Sponsor")
and The University of Iowa, Iowa City, Iowa, a non-profit educational institution (hereinafter referred to as "University").
WITNESSETH:
WHEREAS,
the research program contemplated by this Agreement is of mutual interest and benefit to University and to Sponsor, will further
the instructional and research objectives of University in a manner consistent with its status as a non-profit, tax-exempt, educational
institution, and may derive benefits for both Sponsor and University through inventions, improvements, and/or discoveries;
NOW, THEREFORE,
in consideration of the premises and mutual covenants herein contained, the parties hereto agree to the following:
ARTICLE
1 - Definitions
As used
herein, the following terms shall have the following meanings:
| 1.1 | "Project"
shall mean the description of the project as described in Exhibit A hereof, under the
direction of Syed Mubeen as Principal Investigator. |
| 1.2 | "Contract
Period" is November 1, 2014, through October 30, 2015. |
| 1.3 | "University
Intellectual Property" shall mean individually and collectively all inventions,
improvements and/or discoveries which are conceived and/or made (i) by one or more employees
of University, or (ii) jointly by one or more employees of University and by one or more
employees/consultants of Sponsor, in performance of the Project. |
ARTICLE
2 - Research Work
| 2.1 | University
shall commence performance of the Project promptly after the effective date of this Agreement,
and shall use all reasonable efforts, care, and diligence to perform such Project
in accordance with the terms and conditions of this Agreement. Anything in this Agreement
to the contrary notwithstanding, Sponsor and University may at any time amend the Project
by mutual written agreement. |
| 2.2 | In
the event that the Principal Investigator becomes unable or unwilling to continue the
Project, and a mutually acceptable substitute is not available, University and/or Sponsor
shall have the option to terminate said Project pursuant to Article 10.1. |
| 2.3 | The
University does not comply with Good Laboratory Practices (GLPs) as defined by the U.S.
Food and Drug Administration in 21 C.F.R. 58. |
ARTICLE
3 - Reports and Conferences
| 3.1 | Written
program reports shall be provided by University to Sponsor every six (6) months, and
a final report shall be submitted by University within forty-five (45) days of the conclusion
of the Contract Period, or the earlier termination of this Agreement. |
| 3.2 | During
the term of this Agreement, representatives of University will meet with representatives
of Sponsor at times and places mutually agreed upon to discuss the progress and results,
as well as ongoing plans, or changes therein, of the Project to be performed hereunder. |
ARTICLE
4 - Costs, Billings, and Other Support
| 4.1 | It
is agreed to and understood by the parties hereto that, subject to Article 2, total costs
to Sponsor hereunder shall not exceed the sum of Eighty Six Thousand Nine Hundred and
Forty Dollars (86,940). Payment shall be made by Sponsor according to the following schedule: |
| 4.2 | Invoices
shall be submitted to the Sponsor representative listed in Article 17 for submission
of invoices. Payments to University shall include Sponsor name, Principal Investigator
name, project title and shall be submitted to the University representative listed in
Article 17 for payment remittance. |
| 4.3 | [Sponsor
shall loan/donate the following equipment to University under the following conditions:
______Not Applicable____________________________.] University shall retain title to any
equipment purchased with funds provided by Sponsor under this Agreement. |
| 4.4 | Anything
herein to the contrary notwithstanding, in the event of early termination of this Agreement
by Sponsor pursuant to Article 10.1 hereof, Sponsor shall pay all costs accrued by University
as of the date of termination, including non-cancelable obligations, which shall include
all non-cancelable contracts and fellowships or postdoctoral associate appointments called
for in Appendix A, incurred prior to the effective date of termination. After termination,
any obligation of Sponsor for fellowships or postdoctoral associates shall end no later
than the end of University's academic year following termination. |
ARTICLE
5 - Publicity
| 5.1 | Sponsor
shall not use the name of University, nor of any member of University's Project staff,
in any publicity, advertising, or news release or in any way imply endorsement of the
University without the prior written approval of an authorized representative of University.
University shall not use the name of Sponsor, nor any employee of Sponsor, in any publicity
without the prior written approval of Sponsor. University may disclose, without Sponsor’s
approval, the terms of this Agreement that are a matter of public record under the Iowa
Open Records Law, Iowa Code Chapter 22. |
ARTICLE
6 - Publications
| 6.1 | Sponsor
recognizes that under University policy, the results of University research must be publishable
and agrees that researchers engaged in the Project shall be permitted to present research
results at symposia, national or regional professional meetings, and to publish in journals,
theses or dissertations, or otherwise of their own choosing, methods and results of the
Project, provided, however, that Sponsor shall have been furnished copies of any proposed
publication or presentation at least one (1) month in advance of the submission of such
proposed publication or presentation to a journal, editor, or other third party. Sponsor
shall have thirty (30) days, after receipt of said copies, to object to such proposed
presentation or proposed publication because there is patentable subject matter or proprietary
information of Sponsor that needs protection. In the event that Sponsor makes such objection,
said researcher(s) shall refrain from making such publication or presentation for a maximum
of six (6) months from date of receipt of such objection in order for University to file
patent application(s) with the United States Patent and Trademark Office and/or foreign
patent office(s) directed to the patentable subject matter contained in the proposed
publication or presentation. Sponsor does not possess a right to delay publication if
the publication or presentation contains only findings and conclusions of basic science
or results that would not affect the ability of Sponsor to obtain a patent. |
ARTICLE
7 - Proprietary Information
| 7.1 | It
is the responsibility of Sponsor to mark or otherwise identify in writing prior to submission
any information considered confidential that it deems necessary to share with
University (“Confidential Information”). Oral disclosures of Confidential
Information shall be identified as confidential at the time of disclosure and confirmed
in writing within ten (10) business days of the disclosure. University shall have the
right to accept or reject Sponsor’s Confidential Information. If such information
is accepted it will be withheld by University from publication, and in all other respects
shall be maintained by University as confidential and proprietary to Sponsor for a period
of five (5) years after termination of this Agreement. University shall have no such
obligation with respect to any portion of such Confidential Information which: |
| a) | is
or later becomes generally available to the public by use, publication or the like, through
no fault of University; |
| b) | is
obtained on a non-confidential basis from a third party who disclosed the same to University; |
| c) | University
already possesses, as evidenced by its written records, predating receipt thereof from
Sponsor; or |
| d) | is
required to be disclosed by law, regulation or court order. |
| 7.2 | All
documentation concerning University Intellectual Property submitted to Sponsor in accordance
with Article 8.4 shall be treated as confidential in order to preserve any patent rights. |
ARTICLE
8 - Intellectual Property
| 8.1 | All
rights, title and interest to University Intellectual Property under the Project, except
as provided in Article 8.3, shall belong to University and shall be subject to the terms
and conditions of this Agreement. |
| 8.2 | Rights
to inventions, improvements, and/or discoveries, whether patentable or copyrightable
or not, relating to the Project made solely by employees /consultants of Sponsor shall
belong to Sponsor. Such inventions, improvements, and/or discoveries shall not be subject
to the terms and conditions of this Agreement. |
| 8.3 | Rights
to inventions, improvements, and/or discoveries conceived and/or made during the Contract
Period, whether patentable or copyrightable or not, relating to the Project, which are
made jointly by employees of University and employees/consultants of Sponsor, shall be
the joint property of University and Sponsor and shall be subject to the terms and conditions
of this Agreement. |
| 8.4 | University
will promptly notify Sponsor of any University Intellectual Property conceived and/or
made during the Contract Period under the Project. If Sponsor directs that a patent application
or application for other intellectual property protection be filed, University shall
promptly prepare, file, and prosecute such U.S. and foreign application in University's
name, and Sponsor’s name if jointly invented. Sponsor shall bear all costs incurred
in connection with such preparation, filing, prosecution, and maintenance of U.S. and
foreign application(s) directed to said University Intellectual Property. Sponsor shall
cooperate with University to assure that such application(s) will cover, to the best
of Sponsor's knowledge, all items of commercial interest and importance. While University
shall be responsible for making decisions regarding scope and content of application(s)
to be filed and prosecution thereof, Sponsor shall be given an opportunity to review
and provide input thereto. University shall keep Sponsor advised as to all developments
with respect to such application(s) and shall promptly supply to Sponsor copies of all
papers received and filed in connection with the prosecution thereof in sufficient time
for Sponsor to comment thereon. |
| 8.5 | If
Sponsor elects not to exercise its option granted in Article 9.1 or decides to discontinue
the financial support of the prosecution and maintenance of the patent protection, all
right, title and interest in such patent, patent application, and University Intellectual
Property shall automatically revert to University. University shall then be free to file
or continue prosecution or maintain any such application(s), and to maintain any protection
issuing thereon in the U.S. and in any foreign country at University's sole expense. |
ARTICLE
9 - Grant of Rights
| 9.1 | Subject
to Article 8.3, University grants Sponsor the first option to elect an exclusive license
to University Intellectual Property developed under this Agreement, and a right to sub-license
any and all University Intellectual Property developed under this Agreement on terms
and conditions to be mutually agreed upon. If Sponsor elects to exercise this option,
Sponsor shall notify University in writing of its decision within one (1) year from the
date of termination of this Agreement. |
| 9.2 | No
grant described in this Article shall be construed to limit University’s right
to utilize University Intellectual Property for research, instruction or academic publication
purposes. |
ARTICLE
10 - Term and Termination
| 10.1 | This
Agreement shall become effective upon the date first hereinabove written and shall continue
in effect for the full duration of the Contract Period unless sooner terminated in accordance
with the provisions of this Article. The parties hereto may, however, extend the term
of this Agreement for additional periods as desired under mutually agreeable terms and
conditions which the parties reduce to writing and sign. Either party may terminate this
Agreement upon sixty (60) days prior written notice to the other. |
| 10.2 | In
the event that either party hereto shall commit any material breach or default in any
of the terms or conditions of this Agreement, and also shall fail to remedy such default
or breach within ninety (90) days after receipt of written notice thereof from the other
party hereto, the party giving notice may, at its option and in addition to any other
remedies which it may have at law or in equity, terminate this Agreement by sending notice
of termination in writing to the other party to such effect, and such termination shall
be effective as of the date of the receipt of such notice. |
| 10.3 | Termination
of this Agreement by either party for any reason shall not affect the rights and obligations
of the parties accrued prior to the effective date of termination of this Agreement.
No termination of this Agreement, however effectuated, shall release the parties hereto
from their rights and obligations under Articles 3.1, 4, 5, 6, 7, 8, 9 and 11. |
ARTICLE
11 - Independent Contractor
| 11.1 | In
the performance of all services hereunder University shall be deemed to be and shall
be an independent contractor and, as such, University shall not be entitled to any benefits
applicable to employees of Sponsor. |
| 11.2 | Neither
party is authorized or empowered to act as agent for the other for any purpose and shall
not on behalf of the other enter into any contract, warranty, or representation as to
any matter. Neither shall be bound to the acts or conduct of the other. |
ARTICLE
12 – Insurance
| 12.1 | Each
party shall be liable for any and all claims for wrongful death, personal injury or property
damage attributable to the negligent acts or omissions of that party and the officers,
employees, and agents thereof. |
| 12.2 | University
shall be responsible and agrees to pay for any and all claims for wrongful death, personal
injury or property damage directly resulting from the negligence of University, its officers,
employees and agents, and arising from activities under this Agreement to the full extent
permitted by Chapter 669, Code of Iowa, which is the exclusive remedy for processing
tort claims against the State of Iowa. |
ARTICLE
13 - Governing Law
| 13.1 | This
Agreement shall be governed and construed in accordance with the substantive laws of
the State of Iowa, excluding its conflict of laws provisions. |
ARTICLE
14 - Assignment
| 14.1 | This
Agreement shall not be assigned by either party without the prior written consent of
the parties hereto. |
| 14.2 | This
Agreement is assignable to any division of Sponsor, any majority stockholder of Sponsor,
and/or any subsidiary of Sponsor, provided that such assignee assumes all of the rights,
obligations and liabilities of Sponsor hereunder. |
ARTICLE
15 - Agreement Modification
| 15.1 | Any
agreement to change the terms of this Agreement in any way shall be valid only if the
change is made in writing and approved by mutual agreement of authorized representatives
of the parties hereto. |
ARTICLE
16 - Warranties
| 16.1 | NO
WARRANTIES, EITHER EXPRESSED OR IMPLIED, ARE MADE PART OF THIS AGREEMENT. |
ARTICLE
17 – Export Control
| 17.1 | The
disclosing party agrees to share any export control determinations when products, services,
and/or technical data under this Agreement are subject to export controls under U.S.
Government export laws and regulations; however, each party will be solely responsible
for compliance with U.S. Government export laws and regulations. |
ARTICLE
18 - Notices
| 18.1 | Notices,
invoices, and communications, hereunder shall be given by registered or certified mail,
or express delivery service, postage or delivery charge prepaid, and addressed to the
party to receive such notice, invoice, or communication at the address given below, or
such other address as may hereafter be designated by notice in writing. Notice shall
be deemed made on the date of receipt. |
If
to Sponsor: Tim Young, CEO
HyperSoalr,
Inc
Phone: (310)486-0740
E-mail:
tyoung@hypersoalr.com
For Submission of Invoices:
Phone:
Fax:
E-mail:
If to University: The
University of Iowa
Division
of Sponsored Programs
Attention: __________________
2 Gilmore Hall
Iowa City, Iowa 52242
Phone: 319-335-2123
Fax: 319-335-2130
E-mail:
For Payment Remittance:
The University of Iowa
Grant Accounting
Office
B5 Jessup Hall
Iowa City, Iowa 52242-1316
Phone: 319-335-3801
Fax: 319-335-0674
IN WITNESS
WHEREOF, the parties, duly authorized, have executed this Agreement in duplicate as of the day and year first written above.
SPONSOR |
|
THE UNIVERSITY OF IOWA |
|
|
|
|
|
|
|
|
/s/ Jennifer Lassner |
|
/s/Timothy Young |
By: Timothy Young |
|
By: |
Jennifer Lassner |
Title: President and
CEO |
|
Title: |
Executive Director of Sponsored Programs |
|
|
|
|
Date: 10-22-2014 |
|
Date: |
10-27-14 |
-7-
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, 2015; |
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 28, 2015 |
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, 2015, 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 28, 2015 |
By: |
/s/ Timothy Young |
|
|
|
Chief Executive Officer and Acting Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer) |
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