Risk Factors Dashboard

An investment in our common stock involves a high degree of risk. You should carefully consider the following risks, together with the other information in this report, before deciding to invest. Our business, financial condition, and results of operations could be materially and adversely affected as a result of these risks, and you could lose all or part of your investment. The risks described below are not the only ones we face, and additional risks not presently known to us, or that we currently consider immaterial, may also impair our business.

Risks related to our financial condition and need for capital

We have generated no revenue from the sale of our products, we have incurred losses since inception, and we may never become profitable.

We were formed in February 2009 and have not generated any revenue from the sale of our products. We recognized $1,250 of revenue during the fiscal year ended June 30, 2026 from consulting services provided to a related party, and no revenue in the prior fiscal year. As of June 30, 2026 we had an accumulated deficit of $106,633,674, and we incurred a net loss of $6,555,124 for the fiscal year then ended. Our accumulated deficit includes significant non-cash charges, including charges related to convertible notes issued in prior years and stock-based compensation, and is therefore substantially greater than the amount of cash we have used in operations since inception. We expect to continue to incur losses until we are able to generate revenue sufficient to fund our operations, and we may never do so. We expect to continue to incur losses and no assurance can be given that we will realize revenues. We have no products available for sale, no customers, and no agreements that would generate revenue. Even if we complete development of our technology, we may never achieve or sustain profitability.

We will require substantial additional capital, and the equity purchase agreement that had been our principal source of funding expired during the fiscal year.

We have funded our operations primarily through sales of equity securities, principally under an equity purchase agreement with GHS Investments, LLC, , that expired on June 3, 2026 in accordance with its terms. We do not currently have a committed source of additional capital. We will require additional capital to continue developing our technology, to complete our pilot program, and to reach commercial production. Additional capital may not be available on acceptable terms or at all, particularly given our stage of development, the absence of revenue, and conditions in the hydrogen sector. If we cannot raise capital when needed, we may be required to delay, reduce, or eliminate development programs, and we may be unable to continue operating. Any financing we do obtain is likely to dilute existing stockholders, and debt financing, if available, may impose covenants restricting our operations.

We depend on a small management team and limited administrative resources, and our internal resources may be insufficient as our operations become more complex.

We had 12 full-time employees as of September 18, 2026, operating across facilities in Iowa, Austria, and Japan, and we rely on consultants and contract personnel for functions many companies perform internally. Our Chief Executive Officer also serves as our Acting Chief Financial Officer. As we advance our pilot program, add foreign subsidiaries, and expand our partner relationships, the demands on our administrative, operational, and financial reporting functions will increase. If we are unable to recruit and retain necessary personnel or to establish and maintain adequate operating and financial controls, our development timeline, our financial reporting, and our results of operations could be materially and adversely affected.

Risks related to our technology and product development

We have not produced hydrogen at commercial scale, and we may never do so.

We are developing two pathways to photoelectrochemical hydrogen production. Our thin film pathway has produced hydrogen reactors measuring 1.92 square meters, and our nanoparticle pathway remains at laboratory scale. Neither pathway has produced hydrogen at commercial scale or over a commercially relevant operating lifetime. Scaling a photoelectrochemical device involves engineering challenges that do not arise at laboratory scale, including uniformity of coatings over large areas, separation and collection of hydrogen and oxygen, corrosion of active surfaces in contact with water over extended periods, and maintenance of efficiency as area increases. We may be unable to solve these problems, and we cannot predict when, or whether, we will complete a commercial scale system.

We may never achieve our cost goal, and the improvements required to do so depend substantially on factors outside our control.

Our goal is to produce renewable hydrogen at a cost of $2.50 per kilogram. Techno-economic modeling prepared with Strategic Analysis, Inc. currently projects a production cost of approximately $4 to $5 per kilogram at commercial scale, before the benefit of any tax credits. Closing that difference will require improvements in the solar-to-hydrogen conversion efficiency of our devices, in the operating lifetime of our panels, in our manufacturing yield and scale, in the substitution of catalysts based on earth-abundant materials for those incorporating precious metals, in the cost of substrates, semiconductor materials, coatings, and balance of system components, and in the cost and energy consumption of hydrogen compression equipment. Many of these depend on the continued advancement of the solar photovoltaic industry and of hydrogen handling technology rather than on our own development work, and we cannot influence the pace of that advancement.

In addition, the prices of glass, tellurium, and precious metals have historically been volatile, tariffs and other trade measures have affected the cost and availability of photovoltaic modules and components, and the operating lifetime of our panels under field conditions has not been established. Our projected cost also depends on assumptions regarding production volume, capital cost, insolation, and panel lifetime that may prove incorrect. We have not demonstrated any of these improvements at commercial scale. If they are not achieved, or if costs move adversely, we may never produce hydrogen at a cost competitive with hydrogen produced from fossil fuels, and we may be unable to sell our potential products profitably or at all.

Our pilot program may not be completed on schedule, and its results may not predict commercial performance.

We are developing a pilot hydrogen production system at the University of Texas at Austin’s Center for Electromechanics, a facility we do not own or control. We intend to have sixteen hydrogen reactors operating at that site by December 31, 2026, and we may not achieve that schedule. The system may not achieve the conversion efficiency, operating availability, or hydrogen purity we expect, and gas separation and hydrogen purity have been identified in our own engineering analysis as significant technical risks. Because we depend on a third party’s facility, we are also exposed to changes in that institution’s priorities, personnel, and site access. Results obtained at pilot scale may not be indicative of performance at commercial scale, and unfavorable results could delay our development program, impair our ability to raise capital, and adversely affect our relationships with partners and potential customers.

We have not determined how we will generate revenue, and the model we ultimately adopt may prove unprofitable.

We have not determined whether we will sell hydrogen panels, sell hydrogen produced by systems we own or operate, license our technology, or pursue some combination of these approaches. Each model carries different capital requirements, operating risks, and time to revenue. Selling hydrogen would require substantially more capital than selling panels, because we would need to fund the construction, ownership, and operation of production facilities, and would expose us to permitting requirements, site development risk, and the need to secure offtake contracts on acceptable terms. Licensing would reduce our capital requirements but would also reduce the revenue we retain and would make us dependent on the performance of licensees. We may adopt a model that proves unprofitable, or we may change models after committing capital, and either outcome could materially and adversely affect our business.

Demand for our potential products will depend on the adoption of renewable hydrogen, which has been slower than anticipated.

Our potential products will have value only if buyers are willing to pay for renewable hydrogen or for equipment that produces it. According to the International Energy Agency, low emissions hydrogen accounted for slightly more than one percent of global hydrogen production in 2026, announced government production targets for 2030 substantially exceed the capacity of projects that have secured investment decisions, and production from unabated fossil fuels is expected to remain less costly than renewable hydrogen in most regions in the near term. Adoption depends on government policy, natural gas prices, the cost of competing technologies, and the willingness of industrial buyers to pay a premium for lower emissions hydrogen, none of which we control. If renewable hydrogen is adopted more slowly than we expect, or if buyers will not pay a premium, demand for our potential products may not develop.

We may not be able to have our products manufactured at commercial volumes, cost, or quality.

Our thin film pathway is designed to be manufactured on existing solar production lines, and we rely on third parties for module fabrication and for coating and catalyst processes. We have not manufactured at commercial volume, and we have not established that our processes can be operated at commercial yield. Manufacturing photoelectrochemical devices requires process control beyond that required for conventional photovoltaic modules, including repeatability of catalyst and protective coatings across large areas, which our own engineering analysis has identified as a significant risk. If we cannot achieve acceptable yields, or if our manufacturing partners are unable or unwilling to produce our products at the volumes, cost, or quality we require, our commercialization would be delayed and our costs would increase.

Risks related to our partners, suppliers, and operations

Our joint development agreement with Honda R&D Co., Ltd. has expired and may not be extended.

Our joint development agreement with Honda R&D Co., Ltd. expires on March 31, 2028. Honda has served as our housing unit and balance of system partner and has performed third-party validation testing of our hydrogen modules. If the relationship is not continued, we may lose access to that expertise and testing capability and may be required to identify alternative partners or perform the work ourselves, either of which could delay our development program and increase our costs. 11 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. In addition, intellectual property developed in collaboration with Honda is subject to allocation provisions, and any dispute regarding ownership of jointly developed intellectual property could be costly and could adversely affect our rights.

We depend on a small number of third parties for essential development, manufacturing, and testing functions, and the loss of any of them could delay our program.

We conduct much of our development through relationships with third parties, including CTF Solar GmbH for thin film module fabrication, the University of Iowa and the University of Michigan under sponsored research agreements, the University of Texas at Austin’s Center for Electromechanics for our pilot facility, Sparc Hydrogen Pty Ltd for testing and evaluation, and other partners and consultants described in Item 1. Our sponsored research agreement with the University of Michigan expires on September 30, 2026. We are reviewing a possible extension and may be unable to agree on one. These arrangements are generally terminable or of limited duration, most of these parties are not obligated to work exclusively with us, and we have limited ability to control their priorities, resources, or timing. The loss of any of these relationships, or a failure to renew them on acceptable terms, could delay our development program, increase our costs, and require us to develop internal capabilities we do not currently possess.

Our operations in Austria and Japan expose us to risks we have not previously faced.

In April 2026 we formed SunHydrogen Austria GmbH and SunHydrogen Japan GK, which together had four employees as of June 30, 2026. Operating through foreign subsidiaries subjects us to risks including fluctuations in the euro and the Japanese yen against the U.S. dollar, compliance with foreign employment, tax, and corporate laws, the cost and difficulty of supervising operations across multiple time zones, and potential adverse tax consequences of operating controlled foreign corporations. Our Austrian subsidiary was formed in part to allow us to apply for European funding programs, and we may not qualify for or receive any such funding. We have limited experience operating outside the United States, and our internal control over financial reporting must now encompass these subsidiaries, which increases the risk of a control deficiency.

Our supply chain depends on materials that are geographically concentrated and produced in limited quantities.

Our thin film pathway uses cadmium telluride photovoltaic modules. Tellurium is among the least abundant elements in the earth’s crust, is produced principally as a by-product of copper refining rather than in response to demand, and is geographically concentrated. Our catalysts incorporate precious metals. Although thin film modules are available to us from more than one supplier, alternative suppliers would not address a constraint in the underlying materials. Our nanoparticle pathway may also have tellurium exposure where a cadmium telluride based absorber is incorporated. We do not have long-term supply agreements that guarantee volumes, pricing, or availability for modules, catalysts, or precious metals. Increases in the price of these materials, or restrictions on their availability, including as a result of trade measures or export controls, could increase our costs, delay our development, or make our products uneconomic.

Our insurance coverage is limited, and an uninsured loss or liability could be material to us.

Our insurance consists of workers’ compensation coverage and property coverage required under our facility lease. We do not maintain commercial general liability, theft, or casualty insurance covering our equipment or our operations. Our hydrogen reactors and related equipment are located at our laboratory in Iowa and at a third-party facility in Texas. Damage to, destruction of, or theft of that equipment would not be covered, and replacing it would require capital and time that would delay our development program. We would also bear the cost of defending and resolving any claim arising from injury or property damage caused by our research and development activities, including at facilities we do not own or control. Any such uninsured loss or liability could have a material adverse effect on our financial condition and results of operations. Any such uninsured or insured loss or liability could have a material adverse effect on our results of operations.

Our business could be harmed by a cybersecurity incident.

Our technology, manufacturing processes, and test data represent a substantial portion of our value, and much of it is not protected by patents. We depend on information systems, including systems operated by third parties, to conduct our development work and communicate with partners in multiple countries. A cybersecurity incident could result in the loss or theft of trade secrets, unpublished test results, or unfiled invention disclosures, in disclosure that destroys the novelty of inventions we have not yet filed on, or in disruption of our operations. We have limited internal information technology resources, and our measures may be insufficient to prevent or detect an incident. See Item 1C, Cybersecurity.

Risks related to our intellectual property

Our patents may not protect our technology, and much of what we rely on is not patented.

Our issued patents are described in Item 1. Our nanoparticle patents originated in applications filed in 2011 and 2012, and our multi-junction patents originated in applications filed in 2014 and 2015. Patents have finite terms, and the terms of these patents will expire before we expect to reach commercial scale production. Our current thin film architecture and our reactor design are the subject of pending applications that have not been examined, and we cannot assure you that any of them will issue or that any patent that issues will be sufficiently broad to prevent competitors from developing comparable technology. Our patents may be challenged, narrowed, or invalidated. We also rely on trade secrets and unpatented know-how, particularly in our coating and catalyst processes, and confidentiality agreements with employees, consultants, and partners may not prevent unauthorized use or disclosure and may be difficult to enforce, particularly outside the United States.

Certain of our patents are jointly owned, which limits our ability to enforce them.

Our patents titled “Multi-Junction Artificial Photosynthetic Cell with Enhanced Photovoltages” are held jointly with the Regents of the University of California. Under United States law, all co-owners of a patent must voluntarily join an action for infringement and cannot be compelled to do so, and any co-owner may grant a license that provides a defendant with a complete defense. Accordingly, we may be unable to enforce these patents without the participation of our co-owner, and our co-owner may take actions with respect to these patents that we would not choose. We conduct significant development work in collaboration with partners, and intellectual property arising from those collaborations may also be jointly owned or subject to allocation provisions that limit our rights.

We may infringe the intellectual property rights of others, and we have not completed an infringement analysis.

Photoelectrochemical hydrogen production, thin film photovoltaics, and electrocatalysis are all areas of active patenting by companies and institutions with resources far greater than ours. We have not completed a freedom to operate analysis, and because our products are not fully developed, we could not be certain of our position even if we had. Third parties may assert that our technology, or products made using it by us or by our partners or customers, infringes their rights. We may be required to obtain licenses, which may not be available on acceptable terms or at all, to redesign our products, or to cease certain activities. Defending an infringement claim, or enforcing our own rights, would be expensive and would divert management attention regardless of the outcome, and an adverse determination could prevent us from commercializing our technology.

Risks related to regulation, incentives, and safety

The principal federal incentive for clean hydrogen production may not be available for our technology, which could make our products less attractive to customers and impair our ability to compete on cost.

The Section 45V Clean Hydrogen Production Tax Credit provides a credit of up to $3.00 per kilogram of qualified clean hydrogen, subject to satisfaction of prevailing wage and apprenticeship requirements, for facilities that begin construction before January 1, 2028. Eligibility depends on calculating the lifecycle greenhouse gas emissions of the hydrogen produced, using an emissions model prescribed by the applicable regulations. That model and the regulations address production pathways based on electricity or on the chemical transformation of feedstocks such as natural gas and renewable natural gas. They do not contemplate integrated photoelectrochemical water splitting, in which sunlight drives the reaction directly and no electricity is consumed. As a result, we may be unable to establish eligibility for the credit even though we expect the lifecycle emissions of hydrogen produced using our technology to be among the lowest of any production pathway. Although the regulations provide a process for petitioning for a provisional emissions rate for pathways not represented in the model, we have not obtained a provisional emissions rate and we cannot assure you that we would be able to do so, or that we could do so within the time remaining before the construction deadline.

In addition, the credit is available to the owner of the facility that produces the hydrogen. If we sell hydrogen panels rather than producing and selling hydrogen ourselves, any credit would be claimed by our customers rather than by us. If our customers are unable to claim the credit for hydrogen produced using our panels, demand for our products may be lower than it would otherwise be, and we may be required to reduce our prices. We have not commenced construction on any facility that would qualify for the credit, and we may not do so before the statutory deadline. Our cost projections do not assume the benefit of the credit.

Reductions in government support for renewable hydrogen may slow industry growth and adversely affect our opportunities.

In 2025 the U.S. Department of Energy reduced certain funding allocations for renewable hydrogen development, and government support for hydrogen has been subject to revision in the United States and elsewhere. Because renewable hydrogen currently costs more to produce than hydrogen made from fossil fuels, the International Energy Agency expects government support to remain necessary for the sector in the near term. Reduced or withdrawn support could slow project development and infrastructure buildout, reduce the number of potential customers for our products, and diminish investor and customer interest in renewable hydrogen. We formed our Austrian subsidiary in part to pursue European funding programs, and those programs are also subject to change in scope, criteria, and availability.

Our products will require permits and approvals we have not obtained, and our operations are subject to environmental and safety regulation.

Hydrogen production, storage, and handling are subject to permitting requirements and to fire, building, electrical, mechanical, and pressure equipment codes that vary by jurisdiction. Our pilot system operates under the site control and internal approval processes of the institution that owns the property, which are institutional approvals rather than governmental permits. Commercial deployment of our potential products will require permits and approvals that we have not obtained and that may be costly, time consuming, or unavailable at particular sites. Cadmium telluride modules give rise to handling, worker safety, transportation, and waste obligations, and responsibility follows the activity, so we bear those obligations for materials we receive, handle, process, test, transport, and dispose of. Our operations in Austria and Japan subject us to additional regulatory regimes, and the international movement of our technology and equipment may be subject to export control requirements. Changes in any of these requirements could increase our costs or restrict where our potential products may be deployed.

Hydrogen is flammable, and an incident during our development activities could expose us to liability and delay our program.

Our devices produce hydrogen and oxygen from water in the same enclosure, and separating those gases is a central engineering requirement of our design. Hydrogen is flammable across a wide range of concentrations in air, requires little energy to ignite, and burns with a flame that is difficult to see. Our own engineering analysis has identified gas separation and hydrogen purity as significant technical risks. A leak, fire, explosion, or similar incident at our laboratory or at a host facility could result in injury, property damage, litigation, regulatory action, loss of access to that facility, and destruction of equipment and test data, and could occur notwithstanding that our technology performed as designed. Because our insurance coverage is limited as described above, we may bear these costs directly. An incident involving hydrogen anywhere in our industry could also increase regulatory scrutiny and reduce acceptance of hydrogen technologies generally.

Risks related to our common stock

There is a limited trading market for our common stock.

Our common stock is quoted on the OTCQB and is not listed on any national securities exchange. The OTCQB is an unorganized inter-dealer over-the-counter market that provides significantly less liquidity than the Nasdaq Stock Market or other national securities exchanges, and trading in our common stock is limited. Although our common stock is quoted on the OTCQB, it is an unorganized, inter-dealer, over-the-counter market which provides significantly less liquidity than the Nasdaq Capital Market or other national securities exchange. Investors may find it more difficult to buy and sell our shares, and may face wider spreads between bid and asked prices, than would be the case for a listed security. These factors may adversely affect the price of our common stock and your ability to sell it when you wish.

Our common stock is subject to the SEC’s penny stock rules.

Our common stock is subject to the Securities and Exchange Commission’s penny stock rules, which apply to equity securities that are not listed on a national securities exchange and that do not satisfy specified price or financial thresholds. Under these rules, a broker-dealer must deliver a standardized risk disclosure document before effecting a transaction, make a suitability determination for the customer, obtain the customer’s written consent, and provide monthly account statements. These requirements reduce the willingness of broker-dealers to make a market in our common stock, decrease its liquidity, and increase transaction costs for purchases and sales. In addition, because our common stock is subject to these rules, the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995 is not available to us.

The market price of our common stock may be volatile and may decline regardless of our operating performance.

The trading price of our common stock has been and may continue to be volatile. Factors that may affect it include the results of our pilot program and other development milestones, announcements by us or by others regarding hydrogen technology, changes in government policy or incentives, our need to raise capital and the terms on which we do so, the trading price of other hydrogen companies’ securities, and general market conditions affecting small capitalization and development stage companies. Many of these factors are outside our control and unrelated to our operating performance.

Conversion of our outstanding preferred stock and exercise of outstanding warrants and options will dilute holders of our common stock.

As of June 30, 2026 we had outstanding shares of Series C Preferred Stock with an aggregate stated value of $276,500 convertible into common stock at a fixed conversion price of $0.00095 per share, as described in Note 3 to the financial statements included in this report. Because that conversion price is fixed and substantially below recent trading prices, conversion would result in the issuance of a significant number of shares. As of the same date we had outstanding warrants to purchase 78,095,239 shares and options to purchase 470,965,911 shares of common stock. Issuances upon conversion or exercise will dilute holders of our common stock and may adversely affect the market price of our common stock, and the availability of those shares for resale may create selling pressure.

We expect to issue additional securities to fund our operations, which will further dilute our stockholders.

We will require additional capital and expect to raise it primarily through sales of common stock or securities convertible into or exercisable for common stock. Any such issuance will dilute the percentage ownership of our existing stockholders, and the dilution may be substantial, in particular if we issue securities at prices below the prices paid by existing stockholders, or with warrants or other rights attached. We may also issue securities with rights senior to those of our common stock. We cannot predict the size, timing, or terms of future issuances, and the anticipation of future issuances may itself depress the market price of our common stock.

Our board may issue preferred stock without stockholder approval, which could adversely affect holders of our common stock.

Our articles of incorporation authorize our board of directors to issue up to 5,000,000 shares of preferred stock and to fix the rights and preferences of each series without further stockholder approval. Our board could authorize a series of preferred stock with a liquidation preference senior to our common stock, with rights to dividends payable before dividends on our common stock, with voting power greater than that of our common stock, or convertible into common stock on terms that dilute existing holders. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders. Any of these actions could adversely affect the rights of holders of our common stock and could be used to discourage a change in control that holders of our common stock might otherwise favor.

We have never paid dividends and do not intend to, so any return on your investment depends on appreciation in our stock price.

We have never declared or paid cash dividends on our common stock and do not expect to do so in the foreseeable future. We intend to retain any future earnings to fund the development of our business. We intend to retain future earnings, if any, to provide funds for operations of our business. Accordingly, any return on an investment in our common stock will depend on appreciation in its market price, which may not occur.

We are a smaller reporting company and provide reduced disclosure, which may make our common stock less attractive to some investors.

We are a smaller reporting company under the rules of the Securities and Exchange Commission and take advantage of reduced disclosure requirements available to us, including presenting two years rather than three years of audited financial statements, providing reduced executive compensation disclosure, and omitting quantitative and qualitative disclosures about market risk. Our management assesses the effectiveness of our internal control over financial reporting, but our independent registered public accounting firm is not required to attest to that assessment. As a result, investors have less information about us than they would about a larger reporting company, and some investors may find our common stock less attractive.

Item 1B. Unresolved Staff Comments.

None.

Item 1C. Cybersecurity.

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