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

Company: SUNHYDROGEN, INC.
Filing Date: 2025-11-10
Form: 10-Q
Item: Part I, Item 8
Chunk 10
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The total potential common shares as of September
30, 2025, include 428,965,911 stock options, 78,095,239 common stock purchase warrants, and 543,684,211 common shares issuable upon conversion
of the 5,165 outstanding 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.

The total potential common shares as of September
30, 2024, include 259,965,911 stock options, 78,095,239 common stock purchase warrants, and 931,684,211 common shares issuable upon conversion
of the 8,851 outstanding 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

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.

8

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 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 September
30, 2025, the amounts reported for cash, accrued interest and other expenses, notes payables, convertible notes, and derivative liability
approximate the fair value because of their short maturities.

We adopted ASC Topic 820 for financial instruments
measured as fair value on a recurring basis. ASC Topic