Item 7. Management’s Discussion and Analysis
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.
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RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31,
2024 COMPARED TO THE YEAR ENDED DECEMBER 31, 2023
Selling and Marketing Expenses
Selling and marketing (“S&M”) expenses
increased by $207,573 to $316,624 for the year ended December 31, 2024, compared to $109,051 for the prior year ended December 31, 2023.The
increase in S&M expenses was the result of an increase in service providers of $112,749, an increase in website development and maintenance
of $52,922, and an increase in ad campaigns and post-production services of 41,902.
General and Administrative Expenses
General and administrative (“G&A”)
expenses decreased by $(1,731,903) to $1,131,312 for the year ended December 31, 2024, compared to $2,863,215 for the prior period December
31, 2023. This decrease in G&A expenses was the result of a decrease in non-cash stock compensation of $(1,777,959), a decrease in
professional fees of $(51,751), and a decrease of $(52,815) in other G&A expenses, with an increase in salaries of $86,218, and an
increase in Other G&A expenses of $64,404.
Research and Development
Research and Development (“R&D”)
expenses increased by $159,660 to $362,538 for the year ended December 31, 2024, compared to $202,878 for the prior period ended December
31, 2023. This overall increase in R&D expenses was the result of an increase in corporate outside services.
Depreciation and amortization Expense
Depreciation and amortization
expense for the years ended December 31, 2024 and 2023 was $4,106 and $4,106, respectively.
Other Income/(Expenses)
Other income and (expenses) decreased
by $(1,336) to $1,718 of other expense for the year ended December 31, 2024, compared to $3,054 of other income for the prior period
ended December 31, 2023. 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, 2024, compared to a net loss of $12,085,528 for the prior period ended December 31, 2023. 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, 2024, we had
$2,118,257 in working capital as compared to $3,678,942 for the prior year ended December 31, 2023. The decrease in working capital was
due primarily to a decrease in cash, prepaid expenses, and accounts payable.
During the year ended December
31, 2024, the Company used $1,573,920 of cash for operating activities, as compared to $1,156,256 for the prior year ended December 31,
2023. The increase in the use of cash for operating activities was a result of an increase in professional fees of $51,751, advertising
and marketing of $207,573, research and development of $156,660, with an overall increase of $1,320. 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, 2024 and 2023 was $0, respectively.
Cash provided from financing
activities during the year ended December 31, 2024 and 2023 was $0, respectively. 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.
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Our financial statements as of
December 31, 2024 and 2023 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 25, 2025 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 twelve
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.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.