NewHydrogen, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Special Note on Forward-Looking Statements. Certain statements in “Management’s Discussion and Analysis or Plan of Operation” below, and elsewhere in this annual report, are not related to historical results, and are forward-looking statements. Forward-looking statements present our expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements frequently are accompanied by such words such as “may,” “will,” “should,” “could,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms or other words and terms of similar meaning. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or timeliness of such results. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this annual report. Subsequent written and oral forward looking statements attributable to us or to persons acting in our behalf are expressly qualified in their entirety by the cautionary statements and risk factors set forth below and elsewhere in this annual report, and in other reports filed by us with the SEC. You should read the following description of our financial condition and results of operations in conjunction with the financial statements and accompanying notes included in this Annual Report beginning on page F-1. Overview We are a developer of clean energy technologies. Our current focus is on developing a thermochemical green hydrogen production technology to lower the cost of Green Hydrogen production. Hydrogen is the cleanest and most abundant element in the universe, and we can’t live without it. Hydrogen is the key ingredient in making fertilizers needed to grow food for the world. It is also used for transportation, refining oil and making steel, glass, pharmaceuticals and more. Nearly all the hydrogen today is made from hydrocarbons like coal, oil, and natural gas, which are dirty and limited resources. Water, on the other hand, is an infinite and renewable worldwide resource. Currently, the most common method of making green hydrogen is to split water into oxygen and hydrogen with an electrolyzer using green electricity produced from solar or wind. However, green electricity is and always will be very expensive. It currently accounts for 73% of the cost of green hydrogen. By using heat directly, we can skip the expensive process of making electricity, and fundamentally lower the cost of green hydrogen. Inexpensive heat can be obtained from concentrated solar, geothermal, nuclear reactors and industrial waste heat for use in our novel low-cost thermochemical water splitting process. Working with a world class research team at UC Santa Barbara, our goal is to help usher in the green hydrogen economy that Goldman Sachs estimated to have a future market value of $12 trillion. We have previously developed an innovative material technology to reduce the cost per watt of electricity produced by Photovoltaic, or PV, solar modules. 13 RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 2023 COMPARED TO THE YEAR ENDED DECEMBER 31, 2022 General and Administrative Expenses General and administrative (“G&A”) expenses decreased by $(8,016,619) to $2,972,266 for the year ended December 31, 2023, compared to $10,988,885 for the prior period December 31, 2022. This decrease in G&A expenses was the result of a decrease in non-cash stock compensation of $(8,262,368), with an increase in salaries of $72,115, an increase in professional fees of $31,054, an increase in investor relations of $56,610, an increase in insurance of $33,155, with an overall decrease of $52,815 in other G&A expenses. Research and Development Research and Development (“R&D”) expenses decreased by $(892,605) to $202,878 for the year ended December 31, 2023, compared to $1,095,483 for the prior period ended December 31, 2022. This overall decrease in R&D expenses was the result of a decrease in corporate outside services. Depreciation and amortization Expense Depreciation and amortization expense for the years ended December 31, 2023 and 2022 was $4,106 and $4,214, respectively. Other Income/(Expenses) Other income and (expenses) decreased by $(1,336) to $1,718 of other expense for the year ended December 31, 2023, compared to $3,054 of other income for the prior period ended December 31, 2022. The decrease of $1,336 consisted of interest income and cash discounts combined. Net Loss Our net loss was $3,177,532 for the year ended December 31, 2023, compared to a net loss of $12,085,528 for the prior period ended December 31, 2022. The decrease of $8,907,996 in net loss was due to a decrease in non-cash change in stock compensation expense. The Company has not generated any revenues. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2023, we had $3,678,942 in working capital as compared to $6,655,953 for the prior year ended December 31, 2022. The decrease in working capital was due primarily to a decrease in cash, prepaid expenses, and accounts payable. During the year ended December 31, 2023, the Company used $1,156,256 of cash for operating activities, as compared to $1,812,013 for the prior year ended December 31, 2022. The decrease in the use of cash for operating activities was a result of a decrease in research and development and professional fees in the year ended December 31, 2023 compared to December 31, 2022. The Company is focused on development of silicon anode additive technology for next generation lithium-ion batteries. Cash used in investing activities for the years ended December 31, 2023 and 2022 was $0, respectively. Cash provided from financing activities during the year ended December 31, 2023 was $0 as compared to $1,000 for the prior year ended December 31, 2022. Our capital needs have primarily been met from the proceeds of convertible debt offerings and equity financing. We are currently in the development stage of our business and have no revenues. 14 Our financial statements as of December 31, 2023 and 2022 have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm has issued their report dated March 20, 2024 that included an explanatory paragraph expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. 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, achieve profitable operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. PLAN OF OPERATION AND FINANCING NEEDS We are engaged in the development of clean energy technologies to lower the cost of producing green hydrogen. The Company’s current focus is on developing ThermoLoop™, a breakthrough technology that uses water and heat rather than electricity to potentially produce the world’s lowest cost green hydrogen. Our plan of operation within the next twelve months is to utilize our cash balances to maintain the existing ThermoLoop TM technology development program at UCSB. We believe that our current cash and investment balances will be sufficient to support development activity and general and administrative expenses for the next twenty-four months. Management estimates that it will require additional cash resources during second half of 2025, based upon its current operating plan and condition. We do not expect increased expenses until early 2026 when we ramp up prototyping efforts related to our thermochemical water splitting technology. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLSOURES ABOUT MARKET RISK. As a “Smaller Reporting Company”, this Item and the related disclosure is not required. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 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.