v3.26.3
Summary of Significant Accounting Policies (Policies)
 12 Months Ended
Jun. 30, 2026
Summary of Significant Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

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

 

The accompanying consolidated financial statements include the accounts of its 100% owned subsidiaries, SunHydrogen GmbH and SunHydrogen Japan GK. All significant intercompany transactions and balances have been eliminated upon consolidation.

Foreign Currency Translation and Transaction

Foreign Currency Translation and Transaction

 

The Company’s functional currency was the United States dollar. SunHydrogen GmbH maintains its accounting records in its local currency, the Euro and SunHydrogen Japan GK maintains its accounting records in its local currency, the Yen.

 

Foreign exchange gains and losses on the settlement of foreign currency transactions are included in general and administration expenses. Except for translations of intercompany balances, all translations of monetary balances to the functional currency at the year-end exchange rate are included in the foreign exchange expense. The translations of intercompany balances to the functional currency at the year-end exchange rate are included in accumulated other comprehensive income or loss.

 

The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Cash and Cash Equivalent

Cash and Cash Equivalent

 

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

 

The following table provides detail of our cash and cash equivalents.

 

    June 30,
2026		    

June 30,
2025

  
Cash   $ 3,695,876     $ 27,993,513  
U.S. Treasury bills     8,435,028       6,635,112  
Total cash and cash equivalents   $ 12,130,904     $ 34,628,625  

 

The U.S. Treasury bills have a credit quality indicator of AA/A.
Short Term Investments

Short Term Investments

 

The Company’s short-term investments are carried at fair value with changes in fair value recognized in net income.

 

As of June 30, 2026, our short-term investments consisted of various investments held at a brokerage firm.

 

During the year ended June 30, 2026, the Company recognized a loss on change in fair value of short-term investments of $301,350.

Concentration risk

Concentration risk

 

Cash includes amounts deposited in financial institutions in excess of insurable Federal Deposit Insurance Company (FDIC) limits. At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of the FDIC limits. As of June 30, 2026, the cash balance in excess of the FDIC limits was $10,297,841. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk in these accounts.

Use of Estimates

Use of Estimates

 

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

Property and Equipment

 

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

 

Computers and peripheral equipment   5 Years
Vehicle   5 Years

 

The Company recognized depreciation expense of $34,455 and $31,641 for the year ended June 30, 2026 and 2025, respectively. 

Intangible Assets

Intangible Assets

 

The Company has patent applications to protect the inventions and processes behind its proprietary bio-based back-sheet, a protective covering for the back of photovoltaic solar modules traditionally made from petroleum-based film. Intangible assets that have finite useful lives continue to be amortized over their useful lives.

 

    Useful Lives   June 30,
2026		     June 30,
2025		  
                 
Trademark-gross   10 years   $ 1,142     $ 1,142  
Less accumulated amortization         (1,056 )     (942 )
Trademark-net       $ 86     $ 200  
                     
Patents-gross   15 years   $ 101,143     $ 101,143  
Less accumulated amortization         (56,038 )     (49,474 )
Patents-net       $ 45,105     $ 51,669  
                     
Total intangible assets       $ 45,191     $ 51,869  

 

The Company recognized amortization expense of $6,678 and $6,679 for the year ended June 30, 2026 and 2025, respectively.

 

Future Amortization Expense

 

Year   Amount  
2027   $ 6,650  
2028     6,565  
2029     6,565  
2030     6,565  
2031     6,564  
Thereafter     12,282  
    $ 45,191  
Impairment of Long-lived Assets

Impairment of Long-lived Assets

 

The Company applies the provisions of ASC 360, Property, Plant and Equipment, where applicable to all long-lived assets. ASC 360 addresses accounting and reporting for impairment and disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC 360. ASC 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

 

When long-lived assets are sold or retired, the related cost and accumulated depreciation or amortization are removed from the accounts and any gain or loss is included in the results of operations. During the years ended June 30, 2026 and 2025, the Company determined no impairment was required.

Revenue Recognition

Revenue Recognition

 

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers”. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

 

An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract with the customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4. Allocate the transaction price. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

 

The Company generates revenue primarily from providing technical and strategic consultancy services in support of ongoing projects. The Company’s consulting services are invoiced monthly based on actual hours for the services at a standard rate per hour plus any reimbursements for travel expenses. Consulting services may be terminated by either party with 30 days written notice.

 

During the years ended June 30, 2026 and 2025, we generated revenue from consulting services of $1,250 and $0.

Accounts Receivable

Accounts Receivable

 

We record accounts receivable at the invoiced amount and we do not charge interest. We determine the allowance for doubtful accounts by regularly evaluating individual receivables, and receivables are written off when deemed uncollectible. There were no provisions for doubtful accounts recorded as of June 30, 2026 and June 30, 2025. The Company recorded $0 in bad debt expense for the year ended June 30, 2026.

Net Earnings (Loss) per Share Calculations

Net Earnings (Loss) per Share Calculations

 

Net earnings (Loss) per share dictates the calculation of basic earnings (loss) per share and diluted earnings per share. Basic earnings (loss) per share are computed by dividing by the weighted average number of common shares outstanding during the year ended June 30, 2026 and 2025. Diluted net earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the effect of stock options and stock-based awards, if dilutive. 

 

Year Ended June 30, 2026

 

The total potential common shares as of June 30, 2026, include 470,965,911 stock options and 291,052,632 common shares issuable upon conversion of the outstanding 2,765 Series C Preferred shares. Stock options and common shares issuable upon conversion of Series C Preferred shares were not included in the calculation of net earnings per share because their impact on income per share is antidilutive. 

 

Year Ended June 30, 2025

 

The total potential common shares as of June 30, 2025, include 428,965,911 stock options, 78,095,239 common stock purchase warrants, and 700,105,263 common shares issuable upon conversion of the outstanding 6,651 Series C Preferred shares. Stock options, common stock purchase warrants, and common shares issuable upon conversion of Series C Preferred shares were not included in the calculation of net earnings per share because their impact on income per share is antidilutive.

Stock Based Compensation

Stock Based Compensation

 

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

Warrant Accounting 

 

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

Fair Value of Financial Instruments

 

Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized on the balance sheet, where it is practicable to estimate that value. As of June 30, 2026, the amounts reported for cash, accounts payable and other payables, and accrued expenses approximate the fair value because of their short maturities.

 

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

 

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

 

These tiers include:

  

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

 

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

 

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

 

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows:

 

June 30, 2026

 

    Total     (Level 1)     (Level 2)     (Level 3)  
Assets:                        
Short-term investments   $ 19,929,164     $ 19,929,164     $   -     $   -  
    $ 19,929,164     $ 19,929,164     $ -     $ -  

 

June 30, 2025

 

    Total     (Level 1)     (Level 2)     (Level 3)  
Assets:                        
Equity securities, related party (see Note 7)   $ 2,997,460     $ 2,997,460     $   -     $   -  
    $ 2,997,460     $ 2,997,460     $ -     $ -  

 

As of June 30, 2026, the Equity securities, related party had a fair value of $0 which was measured using a level 3 input due to the underlying securities no longer trading on an active stock exchange (See Note 7).

Research and Development

Research and Development

 

Research and development costs are expensed as incurred.  Total research and development costs were $4,333,474 and $3,440,296 for the year ended June 30, 2026 and 2025, respectively.

Advertising and Marketing

Advertising and Marketing

 

Advertising and marketing cost are expensed as incurred. Total advertising and marketing costs were $93,865 and $1,313 for the years ended June 30, 2026 and 2025, respectively.

Accounting for Derivatives

Accounting for Derivatives

 

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

 

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.
Lease Obligation

Lease Obligation

 

We determine if an arrangement is a lease at inception. Operating leases are included in the operating lease right-of-use asset account, the operating lease liability, current account, and the operating lease liability, long-term account in our balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

 

Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. For leases in which the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We have elected to not apply the recognition requirements of ASC Topic 842, Leases, to short-term leases (leases with terms of twelve months or less). Lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease arrangements is recognized on a straight-line basis over the lease term. We have elected the practical expedient and will not separate non-lease components from lease components and will instead account for each separate lease component and non-lease component associated with the lease components as a single lease component.
Segment Reporting

Segment Reporting

 

The Company operates as a single operating segment, focusing on the development of an efficient and cost-effective way to produce renewable hydrogen using sunlight and water.

 

The accounting policies of the operating segment are the same as those described in the summary of significant accounting policies. The Company’s chief operating decision maker (“CODM”) in the Chief Executive Officer. The CODM assesses performance for the segment and decides how to allocate resources based on net income (loss) that is reported on the income statement. The measure of segment assets is reported on the balance sheet as total assets.

 

As the Company did not generate revenues in the current fiscal year, the CODM assessed Company performance through the achievement of target identification goals. In addition to the Company’s Statement of Operations, the CODM regularly works to develop budgeted and forecasted expense information which is used to determine the Company’s liquidity needs and cash allocation.
Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

  

Management believes that no recently issued accounting standards, which are not yet effective, would have a material impact on the accompanying unaudited financial statements as of June 30, 2026, if adopted at this time.
Reclassification

Reclassification

 

Certain accounts from prior periods have been reclassified to conform to the current period presentation.