Company: HYSR
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001213900-25-108125
Chunk: 12

Company: SUNHYDROGEN, INC.
Filing Date: 2025-11-10
Form: 10-Q
Item: Part I, Item 8
Chunk 12
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 2025 and June 30, 2025, 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).

9

Research and Development

Research and development costs are expensed as
incurred.  Total research and development costs were $1,198,719 and $608,005 for the three months ended September 30, 2025 and 2024,
respectively.

Advertising and Marketing

Advertising and marketing cost are expensed as
incurred. Total advertising and marketing costs were $9,496 and $324 for the three months ended September 30, 2025 and 2024, respectively.

Accounting for Derivatives

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

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.

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 any source of 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 generated minimal 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