Notes to Condensed Financial Statements
For the Three Months Ended June 30, 2020
and 2019
NOTE 1 – NATURE OF BUSINESS
Thunder Energies Corporation (“we”,
“us”, “our”, “TEC” or the “Company”) was incorporated in the State of Florida on
April 21, 2011.
On July 29, 2013, the Company filed with the
Florida Secretary of State, Articles of Amendment to its Articles of Incorporation (the “Amendment”) which changed
the name of the Company from CCJ Acquisition Corp. to Thunder Fusion Corporation. The Amendment also changed the principal office
address of the Company to 150 Rainville Road, Tarpon Springs, Florida 34689. On May 1, 2014, the Company filed with the Florida
Secretary of State, Articles of Amendment to its Articles of Incorporation (the “Amendment”) which changed the name
of the Company from Thunder Fusion Corporation to Thunder Energies Corporation. The Company subsequently changed its principal
office address to 111 Moorings Dr., Lantana, Florida 33462.
The Company is primarily involved in offering
yachts and jets to the end-user and the general public for sale and or charter.
Description of Business, Principal Products,
Services
Thunder Energies is doing business as NACAELI.
A luxurious new brand of fractional luxury yachts, and private jets. Nacaeli, meaning Air and Water, is derived from the merger
of the Latin word Na and Caeli from the South Pacific (Hawaiian) dialect to create and formulate our Air+Water Nacaeli unique Corporate
identity name and brand
On March 24, 2020, Thunder Energies, Inc. announced
its operational affiliate plans with Saveene.Com Inc. (“Saveene”) the preferred shareholder. Under the agreement, Saveene
will grant Thunder Energies access to several yachts and jets for the purpose of offering these vessels to the end-user and the
general public for sale and or charter. Additionally, Thunder Energies will gain access to several patent-pending technologies
and the entire Saveene back office that focuses on the yacht and jet industry sector. This operational affiliate plan with Saveene.Com
will allow Thunder Energies to offer a white-label type solution and OEM or original equipment manufacturer under Thunder Energies,
Inc. own brand name Nacaeli, dispensing the need to acquire and carry any inventory. All future Thunder Energies, Inc. and or Nacaeli
brand fulfillment orders for general maintenance, and any upkeep matters such as mechanical repair, buffering, and similar will
be outsourced, other than administrative operational and corporate governance tasks.
NOTE 2 – Basis of Presentation
The included (a) condensed balance sheet as
of December 31, 2019, which has been derived from audited financial statements, and (b) the unaudited condensed financial statements
as of June 30, 2020 and 2019, have been prepared in accordance with accounting principles generally accepted in the United States
of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with
the audited financial statements and notes thereto contained in the Company’s December 31, 2019 and 2018 audited financial
statements filed on Form 10-K on May 15, 2020. In the opinion of management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been
reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for
future quarters or for the full year. Notes to the condensed financial statements which substantially duplicate the disclosure
contained in the financial statements as reported in the Annual Report on Form 10-K for the year ended December 31, 2019 as filed
on May 15, 2020, have been omitted.
The Company currently operates in one business
segment. The Company is not organized by market and is managed and operated as one business. A single management team reports to
the chief operating decision maker, the Chief Executive Officer, who comprehensively manages the entire business. The Company does
not currently operate any separate lines of businesses or separate business entities.
Going Concern
For the six months ended June 30, 2020 and
2019, the Company had net losses of $603,251 and $1,088,341, respectively. As of June 30, 2020, the Company had a working capital
deficit of $282,518. The Company has generated $0 and $0 in revenues for the six months ended June 30, 2020 and 2019, respectively.
The Company’s financial statements are
prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established
an ongoing source of revenues sufficient to cover its operating cost and allow it to continue as a going concern. The ability of
the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until
it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the
Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company
include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However,
management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.
There is no assurance that the Company will
be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory
to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations.
However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern.
The condensed financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
This summary of significant accounting policies
of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes
are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting
policies conform to GAAP and have been consistently applied in the preparation of the financial statements.
USE OF ESTIMATES
The preparation of these financial statements
in accordance with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the dates of the financial statements and the reported amounts of net sales and expenses during the reported periods. Actual
results may differ from those estimates and such differences may be material to the financial statements.
The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised
if the revision affects only that period, or in the period of the revision and future periods.
The areas involving higher degree of judgment
and complexity, or areas where assumptions and estimates made by the management are significant to the financial statements are
as follows:
i)
|
Useful life of intangible assets
|
ii)
|
Impairment of non-financial assets
|
iii)
|
Provision for impairment of trade receivables
|
iv)
|
Research and development expense
|
v)
|
Determination of the fair value
|
REVERSE STOCK SPLIT
On May 14, 2019, the Board of Directors of
the Company approved Articles of Amendment to the Company’s Articles of Incorporation that provided for a 1 for 20 reverse
stock split of the Company’s Common Stock. The Company’s Articles of Amendment were filed with the Secretary of State
of the State of Florida on May 17, 2019. The effective date of the reverse stock split was subject to approval by FINRA, and the
reverse stock split was published to the market and effective on June 24, 2019. At the effective time of the reverse stock split,
every 20 issued and outstanding shares of the Company’s Common Stock were automatically combined into one issued and outstanding
share of common stock, without any change in the par value per share or number of authorized shares of Common Stock. All share
and per share amounts contained in this Quarterly Report on Form 10-Q and the accompanying Financial Statements have been adjusted
to reflect the Reverse Stock Split for all prior periods presented.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments
with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash totaled $1,655 and $3,111
at June 30, 2020 and December 31, 2019, respectively. The Company had no cash equivalents as of June 30, 2020 and December 31,
2019, respectively.
ACCOUNTS RECEIVABLE
Accounts receivable are non-interest-bearing
obligations due under normal course of business. Management reviews accounts receivable on a monthly basis to determine if any
receivables will be potentially uncollectible. Historical bad debts and current economic trends are used in evaluating the allowance
for doubtful accounts. The Company includes any accounts receivable balances that are determined to be uncollectible in its overall
allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against
the allowance. Based on the information available, the Company believes its allowance for doubtful accounts as of June 30, 2020
and December 31, 2019 is adequate.
CASH FLOWS REPORTING
The Company follows ASC 230, Statement of Cash
Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing,
or financing activities and provides definitions of each category, and uses the indirect or reconciliation method (“Indirect
method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net
income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating
cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are
included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent
of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes
on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash
and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts
or payments in the period.
RELATED PARTIES
The Company follows ASC 850, “Related
Party Disclosures,” for the identification of related parties and disclosure of related party transactions.
REVENUE RECOGNITION
On January 1, 2018, the Company adopted Accounting
Standards Codification ASC 606 (“ASC 606”), Revenue from Contracts with Customers, using the modified retrospective
approach for all contracts not completed as of the date of adoption. As a result of adopting ASC 606, amounts reported under ASC
606 were not materially different from amounts that would have been reported under the previous revenue guidance of ASC 605, as
such, no cumulative adjustment to retained earnings.
The Company sells a wide portfolio of products
to its customers. The Company’s agreements have varying requirements depending on the goods and services being sold, the
rights and obligations conveyed, and the legal jurisdiction of the arrangement. The Company recognizes revenue when we satisfy
a performance obligation by transferring control of the promised services to a customer in an amount that reflects the consideration
that we expect to receive in exchange for those services. The Company determines revenue recognition through the following steps:
1. Identification of the contract, or contracts, with a customer.
2. Identification of the performance obligations in the contract.
3. Determination of the transaction price.
4. Allocation of the transaction price to the performance obligations
in the contract
5. Recognition of revenue when, or as, we satisfy a performance
obligation.
At contract inception, the Company assesses
the services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the
customer a service (or bundle of services) that is distinct. To identify the performance obligations, the Company considers all
of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business
practices. The Company allocates the entire transaction price to a single performance obligation.
No allowance has been provided for uncollectible
accounts. Management has evaluated the receivables and believes they are collectable based on the nature of the receivables, historical
experience of credit losses, and all other currently available evidence. Discounts are recorded as a reduction of the transaction
price. Revenue excludes any amounts collected on behalf of third parties, including sales taxes.
The Company evaluates whether it is appropriate
to record the gross amount of product sales and related costs or the net amount earned as commissions. Generally, when the Company
is primarily obligated in a transaction, are subject to inventory risk, have latitude in establishing prices and selecting suppliers,
or have several but not all of these indicators, revenue is recorded at the gross sale price. The Company generally records the
net amounts as commissions earned if we are not primarily obligated and do not have latitude in establishing prices. The Company
records all revenue transactions at the gross sale price.
There is a no return policy. The return policy
is currently being evaluated to be more in line with industry standards.
DEFERRED REVENUE
Deferred revenue is recorded when the Company
has a right to invoice or payments have been received for undelivered products or services, or in situations where revenue recognition
criteria have not been met. Deferred revenue also represents amounts received in advance for extended warranty services and software
maintenance. Revenue is recognized on these items when the revenue recognition criteria are met, generally resulting in ratable
recognition over the contract term. The Company also has deferred revenue related to undelivered hardware and professional services,
consisting of installations and consulting engagements, which are recognized when the Company’s performance obligations under
the contract are completed.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost
and are depreciated on a straight-line basis over the estimated useful lives of the assets, generally five years. The cost of repairs
and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed
of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income
in the year of disposition. Fixed assets are examined for the possibility of decreases in value when events or changes in circumstances
reflect the fact that their recorded value may not be recoverable.
ADVERTISING AND MARKETING COSTS
Advertising and marketing costs are recorded
as general and administrative expenses when they are incurred. The Company had no advertising and marketing expenses for the three
and six months ended June 30, 2020 and 2019, respectively.
FINANCIAL INSTRUMENTS
The Company’s balance sheet includes
financial instruments, including cash, accounts payable, accrued expenses and notes payable. The carrying amounts of current assets
and current liabilities approximate their fair value because of the relatively short period of time between the origination of
these instruments and their expected realization.
ASC 820, Fair Value Measurements and Disclosures,
defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in
the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions
developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions
about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs).
The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels
of the fair value hierarchy are described below:
Level 1
|
Unadjusted quoted prices in active
markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
|
Level 2
|
Inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar
assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not
active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that
are derived principally from or corroborated by observable market data by correlation or other means.
|
|
|
Level 3
|
Inputs that are both significant to the fair value measurement and unobservable.
|
The carrying value of financial assets and
liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured
on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. There were no financial assets
or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured
on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. The warrant and the
embedded derivative liabilities are recognized at fair value on a recurring basis at June 30, 2020 and December 31, 2019 and are
Level 3 measurements (see Note 8). There have been no transfers between levels.
The derivatives are evaluated under the hierarchy
of ASC 480-10, ASC Paragraph 815-25-1 and ASC Subparagraph 815-10-15-74 addressing embedded derivatives. The fair value of the
Level 3 financial instruments was performed internally by the Company using Monte Carlo valuation method.
The following table summarize the Company’s
fair value measurements by level at June 30, 2020 for the assets measured at fair value on a recurring basis:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Derivative liability
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
216,443
|
|
The following table summarize the Company’s
fair value measurements by level at December 31, 2019 for the assets measured at fair value on a recurring basis:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Derivative liability
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
60,909
|
|
The carrying values of the Company’s
financial instruments, including cash, other current assets, accounts payable, accruals, and other current liabilities approximate
their fair values due to the short period of time to maturity or repayment.
DEBT
The Company issues debt that may have separate
warrants, conversion features, or no equity-linked attributes.
Debt with warrants – When the
Company issues debt with warrants, the Company treats the warrants as a debt discount, record as a contra-liability against the
debt, and amortize the balance over the life of the underlying debt as amortization of debt discount expense in the statements
of operations. When the warrants require equity treatment under ASC 815, the offset to the contra-liability is recorded as
additional paid in capital in our balance sheet. When the Company issues debt with warrants that require liability treatment
under ASC 815, such as a clause requiring repricing, the warrants are considered to be a derivative that is recorded as a liability
at fair value. If the initial value of the warrant derivative liability is higher than the fair value of the associated debt,
the excess is recognized immediately as interest expense. The warrant derivative liability is adjusted to its fair value
at the end of each reporting period, with the change being recorded as expense or gain to Other (income) expense in the Statements
of Operations. If the debt is retired early, the associated debt discount is then recognized immediately as amortization
of debt discount expense in the statement of operations. The debt is treated as conventional debt.
Convertible debt – derivative treatment
– When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements
to be treated as a derivative, as follows: a) one or more underlyings, typically the price of our common stock; b) one or more
notional amounts or payment provisions or both, generally the number of shares upon conversion; c) no initial net investment, which
typically excludes the amount borrowed; and d) net settlement provisions, which in the case of convertible debt generally means
the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition
of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain
contracts involving an issuer’s own equity. The scope exception applies if the contract is both a) indexed to its own stock;
and b) classified in shareholders’ equity in its statement of financial position.
If the conversion feature within convertible
debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using
Monte Carlo Method upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value
of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible
debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount
of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded
as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the
debt.
Convertible debt – beneficial conversion
feature – If the conversion feature is not treated as a derivative, we assess whether it is a beneficial conversion feature
(“BCF”). A BCF exists if the conversion price of the convertible debt instrument is less than the stock price on the
commitment date. This typically occurs when the conversion price is less than the fair value of the stock on the date the instrument
was issued. The value of a BCF is equal to the intrinsic value of the feature, the difference between the conversion price and
the common stock into which it is convertible, and is recorded as additional paid in capital and as a debt discount in the balance
sheet. The Company amortizes the balance over the life of the underlying debt as amortization of debt discount expense in the statement
of operations. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt
discount expense in the Statement of Operations.
If the conversion feature does not qualify
for either the derivative treatment or as a BCF, the convertible debt is treated as traditional debt.
INTANGIBLE ASSETS
The Company has applied the provisions of ASC
topic 350 – Intangible – goodwill and other, in accounting for its intangible assets. Intangible assets are being amortized
on a straight-line method on the basis of a useful life of 5 to 17 years. On January 9, 2020, in conjunction with the Mina Mar
Group (“Mina Mar”) acquisition of the Company’s 50,000,000 shares of Series A Convertible Preferred Stock from
Hadronic Technologies, Inc, (“Hadronic”) the ex-management of the Company has removed all the equipment previously
used by the Company in its operations. The entire enterprise (telescope business) was written off and removed by former management
(see Note 7) as full and final settlement for any future claims the ex-management may have against the Company. The balance at
June 30, 2020 and December 31, 2019 was $0 and $0, respectively.
June 30, 2020 and December 31, 2019
|
|
Gross
Carrying
Value
|
|
|
Accumulated Amortization
and
Impairment
|
|
Intellectual property
|
|
$
|
–
|
|
|
$
|
1,000
|
|
Patents
|
|
|
–
|
|
|
|
14,320
|
|
IMPAIRMENT OF LONG- LIVED ASSETS
We periodically evaluate whether the carrying
value of property, equipment and intangible assets has been impaired when circumstances indicate the carrying value of those assets
may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17 if events or circumstances
indicate that their carrying amount might not be recoverable. The carrying amount is not recoverable if it exceeds the sum of the
undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying value is not recoverable,
the impairment loss is measured as the excess of the asset’s carrying value over its fair value. There was no impairment
charge for the periods ended June 30, 2020 and December 31, 2019, respectively.
Our impairment analyses require management
to apply judgment in estimating future cash flows as well as asset fair values, including forecasting useful lives of the assets,
assessing the probability of different outcomes, and selecting the discount rate that reflects the risk inherent in future cash
flows. If the carrying value is not recoverable, we assess the fair value of long-lived assets using commonly accepted techniques,
and may use more than one method, including, but not limited to, recent third-party comparable sales and discounted cash flow models.
If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new information,
we may be exposed to an impairment charge in the future.
DERIVATIVE LIABILITIES
Derivative liabilities include the fair value
of instruments such as common stock warrants, preferred stock warrants and convertible features of notes, that are initially recorded
at fair value and are required to be re-measured to fair value at each reporting period under provisions of ASC 480, Distinguishing
Liabilities from Equity, or ASC 815, Derivatives and Hedging. The change in fair value of the instruments
is recognized as a component of other income (expense) in the Company’s statements of operations until the instruments settle,
expire or are no longer classified as derivative liabilities. The Company estimates the fair value of these instruments using the
Black-Scholes pricing model. The significant assumptions used in estimating the fair value include the exercise price, volatility
of the stock underlying the instrument, risk-free interest rate, estimated fair value of the stock underlying the instrument and
the estimated life of the instrument.
NON-MONETARY TRANSACTION
According to ASC 845-10-S99, transfers of non-monetary
assets to a company by its promoters or shareholders in exchange for stock prior to or at the time of the entity’s initial
public offering should be recorded at the transferors’ historical cost basis determined under GAAP. As such, the cost basis
carried on Hyfuel’s books and records was nominal. Therefore, the accounting principles in ASC 845-10-S99 were followed and
the Company recorded the intellectual and physical properties at its historical cost basis, which was at the historical cost basis
of a nominal amount. In the transfer agreement 1,000,000 shares of common stock was transferred in exchange for the properties.
The transfer was valued at $1,000 (the par value of the shares issued in exchange for the intellectual property); this amount was
determined by the Company to be the value received in the exchange and approximates the basis of those assets.
EXPENSES
Operating expenses encompass research and development,
professional fees, selling general and administrative expenses and impairment expense. Total operating expenses were $60,309 and
$112,506 and $856,846 and $1,055,448 for the three and six months ended June 30, 2020 and 2019, respectively.
RESEARCH AND DEVELOPMENT
The Company expenses research and development
costs when incurred. Research and development costs include engineering and testing of product and outputs. Indirect costs related
to research and developments are allocated based on percentage usage to the research and development. We spent $0 and $2,741 and
$27,053 and $41,310 for the three and six months ended June 30, 2020 and 2019, respectively.
PROFESSIONAL FEES
Professional services are principally comprised
of outside legal, audit and consulting services as well as the costs related to being a publicly traded company. Total professional
fees were $29,300 and $78,260 and $38,718 and $83,166 for the three and six months ended June 30, 2020 and 2019, respectively.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses
consist primarily of management fees, technology services, public relations and travel expenses. Total selling, general and administrative
expenses were $31,009 and $31,505 and $53,025 and $113,897 for the three and six months ended June 30, 2020 and 2019, respectively.
DEFERRED INCOME TAXES AND VALUATION ALLOWANCE
Income taxes are accounted for under an asset
and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts
of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences
result in deferred tax assets and liabilities, which would be recorded on the Balance Sheets in accordance with ASC 740, which
established financial accounting and reporting standards for the effect of income taxes. The likelihood that its deferred tax assets
will be recovered from future taxable income must be assessed and, to the extent that recovery is not likely, a valuation allowance
is established. Changes in the valuation allowance in a period are recorded through the income tax provision in the Statements
of Operations.
ASC 740-10-30 was adopted from the date of
its inception. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements
and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or
expected to be taken on a tax return. Under ASC 740-10, the impact of an uncertain income tax position on the income tax return
must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.
An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally,
ASC 740-10 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure
and transition. As a result of the implementation of ASC 740-10, the Company does not have a liability for unrecognized income
tax benefits.
NET LOSS PER COMMON SHARE
Net loss per share is calculated in accordance
with ASC 260, “Earnings Per Share.” The weighted-average number of common shares outstanding during each period is
used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number
of shares and diluted potential common shares outstanding. Dilutive potential common shares are additional common shares assumed
to be exercised.
Basic net loss per common share is based on
the weighted average number of shares of common stock outstanding at June 30, 2020 and December 31, 2019, respectively. As of June
30, 2020 and December 31, 2019, the common stock equivalents have not been included as they are anti-dilutive.
The following potentially dilutive securities
were excluded from the calculation of diluted net loss per share because the effects were anti-dilutive based on the application
of the treasury stock method and because the Company incurred net losses during the period:
|
|
June 30, 2020
|
|
|
December 31, 2019
|
|
Options to purchase shares of common stock
|
|
|
–
|
|
|
|
–
|
|
Series A convertible preferred stock
|
|
|
50,000,000
|
|
|
|
50,000,000
|
|
Series B convertible preferred stock
|
|
|
5,000,000
|
|
|
|
–
|
|
Series C convertible preferred stock
|
|
|
10,000,000
|
|
|
|
–
|
|
Total potentially dilutive shares
|
|
|
65,000,000
|
|
|
|
50,000,000
|
|
SHARE-BASED EXPENSE
ASC 718, Compensation – Stock
Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee
services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other
equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees,
including grants of employee stock options, are recognized as compensation expense in the financial statements based on their
fair values. That expense is recognized over the period during which an employee is required to provide services in exchange
for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based
compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – Based
Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair
value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued.
Shares of equity instruments issued for non-cash
consideration are recorded at the fair value of the consideration received based on the market value of services to be rendered,
or at the value of the stock given, considered in reference to contemporaneous cash sale of stock.
Share-based expense for the three and six months
ended June 30, 2020 and 2019 was $0 and $0 and $738,050 and $817,075, respectively.
COMMITMENTS AND CONTINGENCIES
The Company follows ASC 450-20, Loss Contingencies,
to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines
and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment
can be reasonably estimated. There were no known commitments or contingencies as of June 30, 2020 and December 31, 2019.
CONCENTRATIONS OF CREDIT RISK AND SIGNIFICANT
CUSTOMERS
Financial instruments which potentially subject
the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, accounts receivable
and restricted cash. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit-quality
financial institutions in bank deposits, money market funds, U.S. government securities and other investment grade debt securities
that have strong credit ratings. The Company has established guidelines relative to diversification of its cash and marketable
securities and their maturities that are intended to secure safety and liquidity. These guidelines are periodically reviewed and
modified to take advantage of trends in yields and interest rates and changes in the Company’s operations and financial position.
Although the Company may deposit its cash and cash equivalents with multiple financial institutions, its deposits, at times, may
exceed federally insured limits.
The Company did not have any revenues for the
three and six months ended June 30, 2020 and 2019.
The Company had no customers that accounted
for 10% of total revenue for the three and six months ended June 30, 2020 and 2019. The Company had no customers that accounted
for 10% or more of total accounts receivable at June 30, 2020 and December 31, 2019.
RECENT ACCOUNTING PRONOUNCEMENTS
Recently Issued Accounting Pronouncements Not Yet Adopted
Fair Value Measurements
In August 2018, the FASB amended "Fair
Value Measurements" to modify the disclosure requirements related to fair value. The amendment removes requirements to
disclose (1) the amount of and reasons for transfers between levels 1 and 2 of the fair value hierarchy, (2) our policy related
to the timing of transfers between levels, and (3) the valuation processes used in level 3 measurements. It clarifies that, for
investments measured at net asset value, disclosure of liquidation timing is only required if the investee has communicated the
timing either to us or publicly. It also clarifies that the narrative disclosure of the effect of changes in level 3 inputs should
be based on changes that could occur at the reporting date. The amendment adds a requirement to disclose the range and weighted
average of significant unobservable inputs used in level 3 measurements. The guidance is effective for the Company with the Company’s
quarterly filing for the period ended June 30, 2020 and the Company will make the required disclosure changes in that filing. Adoption
will not have an impact on the Company’s results of operations, financial position, and cash flows.
Retirement Plans
In August 2018, the FASB amended "Retirement
Plans" to modify the disclosure requirements for defined benefit plans. For the Company, the amendment requires the disclosure
of the weighted average interest crediting rate used for cash balance plans and an explanation of the reasons for significant gains
and losses related to changes in the benefit obligation for the period. It removes the requirement to disclose the approximate
amount of future benefits covered by insurance contracts. The guidance is effective for the Company with the Company’s annual
filing for the year ended December 31, 2020 and the Company will make the required disclosure changes in that filing. Adoption
will not have an impact on the Company’s results of operations, financial position, and cash flows.
Intangibles
– Goodwill and other – Internal-Use Software
In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill
and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud
Computing Arrangement That Is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred
in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop
or obtain internal-use software (and hosting arrangements that include an internal-use software license). The Company’s accounting
for the service element of a hosting arrangement that is a service contract is not affected by the proposed amendments and will
continue to be expensed as incurred in accordance with existing guidance. This standard does not expand on existing disclosure
requirements except to require a description of the nature of hosting arrangements that are service contracts. This standard is
effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. Early adoption
is permitted, including adoption in any interim period for which financial statements have not been issued. Entities can choose
to adopt the new guidance prospectively or retrospectively. The Company plans to adopt the updated disclosure requirements of ASU
No. 2018-15 prospectively in the first quarter of fiscal 2020, coinciding with the standard’s effective date, and expects
the impact from this standard to be immaterial.
Improvements
to Nonemployee Share-based Payment Accounting
In June 2018, the FASB issued ASU No. 2018-07
“Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”). ASU 2018-07 aligns the accounting
for share-based payment awards to employees and non-employees. Under ASU 2018-07 the existing employee guidance will
apply to nonemployee share-based transactions, except for specific guidance related to the attribution of compensation cost. ASU
2018-07 should be applied to all new awards granted after the date of adoption. ASU 2018-07 is effective for annual and interim
periods beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-07 effective
January 1, 2019; such adoption had no material impact on the Company’s financial statements.
Income Statement
– Reporting Comprehensive Income
In February 2018, the FASB issued Accounting
Standards Update No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) (ASU 2018-02), which amends existing
standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive
income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information
reported to financial statements users. ASU 2018-02 will be effective for beginning after December 15, 2018, and early adoption
is permitted. The Company adopted ASU 2018-02 effective January 1, 2019; such adoption had no material impact on the Company’s
financial statements.
Goodwill
In January 2017, the FASB amended "Goodwill"
to simplify the subsequent measurement of goodwill. The amended guidance eliminates Step 2 from the goodwill impairment test. Instead,
impairment is defined as the amount by which the carrying value of the reporting unit exceeds its fair value, up to the total amount
of goodwill of the reporting unit. The new guidance is effective for the Company on January 1, 2020 and is not expected to have
an impact on our results of operations, financial position, and cash flows.
Financial Instruments
In June 2016, the FASB amended "Financial
Instruments" to provide financial statement users with more decision-useful information about the expected credit losses on
debt instruments and other commitments to extend credit held by a reporting entity at each reporting date. During November 2018
and April 2019, the FASB made amendments to the new standard that clarified guidance on several matters, including accrued interest,
recoveries, and various codification improvements. The new standard, as amended, replaces the incurred loss impairment methodology
in the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of
reasonable and supportable information to support credit loss estimates. The new guidance is effective for us on January
1, 2020, and in the first half of 2019, we established an implementation team and began analyzing the impact on our current policies
and procedures to identify potential differences that would result from applying the requirements of the new standard. The implementation
team reports findings and progress of the project to management on a frequent basis. Through this process, we have identified appropriate
changes to our processes, systems, and controls to support recognition and disclosure under the new standard. The Company
is still evaluating the impact of the new standard on the Company’s results of operations, financial position, and cash flows.
Other recently issued
accounting updates are not expected to have a material impact on the Company’s Interim Financial Statements.
Recently Adopted Accounting Pronouncements
Statement of
Cash Flows: Classification of Certain Cash Receipts and Cash Payments
In August 2016, the FASB issued ASU No. 2016-15, Statement
of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), to address
diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows.
For public entities, the standard is effective for annual periods beginning after December 15, 2017, including interim periods
within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15,
2018, and interim periods within fiscal years beginning after December 15, 2019. The Company adopted ASU 2016-15 effective
January 1, 2018; such adoption had no material impact on the Company’s financial statements.
Leases (ASU
2019-01)
In March 2019, the FASB issued ASU 2019-01,
Leases (Topic 842) Codification Improvements, which removed the requirement for an entity to disclose in the interim periods after
adoption, the effect of the change on income from continuing operations, net income, any other affected financial statement line
item, and any affected per share amount. For lessors, the new leasing standard requires leases to be classified as a sales-type,
direct financing or operating leases. These criteria focus on the transfer of control of the underlying lease asset. This standard
and related update was effective for fiscal years beginning after December 15, 2018, and interim periods within those
fiscal years. Early adoption is permitted. The Company adopted ASU 2016-02 effective January 1, 2019; such adoption had no material
impact on the Company’s financial statements, given that the noncancelable term of the Company’s current lease is less
than 12 months.
Leases (ASU
2016-02)
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842), which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those
leases currently classified as operating leases under ASC 840 “Leases.” These amendments also require qualitative disclosures
along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15,
2018, including interim periods within those fiscal years. Early application is permitted. The Company can elect to record a cumulative-effect
adjustment as of the beginning of the year of adoption or apply a modified retrospective transition approach. The Company expects
that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating
lease liabilities and right-of-use assets upon adoption. The Company adopted ASU 2016-02 effective January 1, 2019; such adoption
had no material impact on the Company’s financial statements, given that the noncancelable term of the Company’s current
lease is less than 12 months.
NOTE 4 – INTANGIBLE PROPERTY
Intangible assets consisted of the following
as of:
|
|
June 30, 2020
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
Intellectual property
|
|
$
|
–
|
|
|
$
|
1,000
|
|
Patents
|
|
|
–
|
|
|
|
14,320
|
|
Accumulated amortization
|
|
|
–
|
|
|
|
(15,320
|
)
|
|
|
$
|
–
|
|
|
$
|
–
|
|
On August 10, 2013, the Company entered into
an Asset Assignment Agreement (the “IBR Assignment Agreement”) with Institute For Basic Research, Inc., a Florida corporation
(“IBR”) that also is beneficially controlled by our previous Chief Executive Officer, Dr. Ruggero M. Santilli. Pursuant
to the IBR Assignment Agreement, IBR irrevocably assigned to the Company all rights, title, ownership and interests in all of IBR’s
internet website domain name assets, owned and hereinafter acquired by IBR including, but not limited to, all physical and intangible
assets and intellectual property related to the assets.
On August 11, 2013, Thunder Energies Corporation
(f/k/a Thunder Fusion Corporation) entered into an Asset Assignment Agreement (the “Assignment Agreement”) with HyFuels,
Inc., a Florida corporation (“HyFuels”) beneficially controlled by our previous Chief Executive Officer, Dr. Ruggero
M. Santilli. Pursuant to the Assignment Agreement, HyFuels irrevocably assigned to the Company all physical assets, intangible
assets, accounts receivable, intellectual property, accounting software, billing software, client lists, client prospects, trade
secrets, proprietary property, the intellectual and physical property known as intermediate nuclear fusion without radiation, the
physical property consisting of seven (7) Hadronic reactors, all copyrights, patents, patent applications, patent assignments,
trademarks and anything having commercial or exchange value and the like.
Consideration for the assignment agreements
consisted of one million (1,000,000) shares of our common stock that were issued to Dr. Ruggero M. Santilli, as designee for IBR
and HyFuels. Company management determined the amount of consideration based upon ASC 845-10-S99 pertaining to transfer of non-monetary
assets. According to ASC 845-10-S99, transfers of non-monetary assets to a company by its promoters or shareholders in exchange
for stock prior to or at the time of the entity’s initial public offering should be recorded at the transferors’ historical
cost basis determined under Generally Accepted Accounting Principles. As such, the cost basis carried on the books and records
of HyFuels and IBR was minimal or essentially zero. Therefore, the accounting principles in ASC 845-10-S99 were followed and the
Company recorded the intellectual and physical properties at its historical cost basis, which was at the historical cost basis
of a nominal amount. In connection with the aforementioned assignment agreements, 1,000,000 shares of our common stock were transferred
in exchange for the assets. The transfer was valued at one thousand dollars ($1,000), the value of the shares issued at par ($0.001)
in exchange for the assets. This amount was determined by the Company to approximate the basis of those assets.
The Company recorded the property and intangibles
(7 reactors, intellectual property rights to develop the technology, and website) as an intangible asset. The valuation of the
properties was the par value of the stock received in exchange for the rights and assets.
The Company has capitalized the legal expenses
associated with filing applications with the United States Patent and Trademark Office. At December 31, 2019, the Company has capitalized
$14,320. The Company has recorded $14,320 of impairment loss for the patent application process as of December 31, 2019.
On January 9, 2020, in conjunction with the
Mina Mar Group acquisition of the Company’s 50,000,000 shares of Series A Convertible Preferred Stock from Hadronic, the
ex-management of the Company has removed all the equipment previously used by the Company in its operations. The entire enterprise
(telescope business) was written off and removed by former management as full and final settlement for any future claims the ex-management
may have against the Company (see Note 7).
NOTE 5 – NOTE PAYABLE
On November 26, 2018, Pubrelco Inc., a non-related
party, executed the purchase of a $60,000 note from our previous CEO, Dr. Ruggero. The demand note carries a 2.15% annual percentage
rate and has no maturity date. In 2019, the loan amount and unpaid interest was forgiven.
On March
24 2020, the Company secured a revolving line of credit of up to $2,000,000 at prime plus 5%. The Company intends to use these
funds for future expansions, growth and other acquisitions in the same leisure/entertainment/sports entertainment or similar industry
space. The Company drew down one tranche totaling $96,000 which remains outstanding at June 30, 2020 (see Note 6). The balance
of line of credit was cancelled on July 1, 2020 in connection with the change of control of the Company.
NOTE 6 – CONVERTIBLE NOTE PAYABLE
Convertible Note Payable
On April 22, 2019; The Company executed a convertible
promissory note with GHS Investments, LLC (“GHS Note”). The GHS Note carries a principal balance of $57,000 together
with an interest rate of eight (8%) per annum and a maturity date of February 21, 2020. All payments due hereunder (to the extent
not converted into common stock, $0.001 par value per share in accordance with the terms of the note agreement shall be made in
lawful money of the United States of America. Any amount of principal or interest on this GHS Note which is not paid when due shall
bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid. As of December
31, 2019, the principal balance outstanding was $57,000.
The holder shall have the right from time to
time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this
note, to convert all or any part of the outstanding and unpaid principal amount into Common Stock. The conversion shall equal sixty-five
percent (65%) of the lowest trading prices for the Common Stock during the twenty (20) day trading period ending on the latest
complete trading day prior to the conversion date, representing a discount rate of thirty-five percent (35%).
On January 9, 2020, Mina Mar (the “Purchaser”)
acquired 50,000,000 shares of Series A Convertible Preferred Stock of the Company from Hadronic. Each share of Preferred Stock
is entitled to fifteen (15) votes per share and at the election of the holder converts into ten (10) shares of Company common stock,
so at completion of the stock purchase the Purchaser owns approximately 98.6% of the fully diluted outstanding equity securities
of the Company and approximately 99% of the voting rights for the outstanding equity securities. The purchase price of $94,766
for the Preferred Stock was paid by the assumption of a Company note obligation of $85,766 by Emry Capital Inc. (“Emry”),
with the balance paid in cash. The consideration for the purchase was provided to the Purchaser from the private funds of the principal
of the Purchaser. The purchase of the Preferred Stock was the result of a privately negotiated transaction and consummation of
the purchase resulted in a change of control of the Company.
On March
24, 2020, regarding a Company note obligation of $85,766 now due/new balance of $120,766 held by Emry was partially sold $35,000
of the face amount to the preferred shareholder Saveene. On March 24, 2020, Saveene converted the $35,000 purchase into 5,000 shares
into series B and 10,000 shares of series C shares. The face amount of the Company note obligation post the aforementioned conversions
and purchases is $85,766 (see Note 7).
Promissory Debenture
On February 15, 2020 and on May 14, 2020, the
Company entered into Promissory Agreement and Convertible Debentures (“Promissory Debentures”) with Emry for a principal
sum of $70,000 (which was paid in two tranches: $50,000, paid on February 15, 2020, and $20,000, paid in April 2020) and $48,000
(which was paid in three tranches: $23,000, paid on May 14, 2020, $15,000, paid on May 22, 2020, and $10,000, paid on June 8, 2020),
respectively. The Promissory Debenture bears interest, both before and after default, at 15% per month, calculated and compounded
monthly. At the election of the holder, at any time during the period between the date of issuance and the one year anniversary
of the Promissory Debentures, the Promissory Debentures are convertible into shares of the Company’s common stock at any
time at a conversion price of $0.0001 per share. In addition, the Promissory Debentures provide for an interest equal to 15% of
the Company’s annual sales, payable on the 2nd day following the date of issuance of the Company’s audited
financial statements.
On June
24, 2020, Emry, holder of Promissory Debentures in principal amount of $70,000, and (ii) that certain convertible promissory note
in principal amount of $57,000, sold 50% of each (Promissory Debentures and convertible promissory note), including accrued and
unpaid interest, fees and penalties, in separate transactions to third party companies, SP11 Capital Investments and E.L.S.R. CORP,
Florida companies, such that SP11 Capital Investments and E.L.S.R. CORP each hold 50% of each respective debt instrument. The
Promissory Debenture bears interest, both before and after default, at 10% per annum.
The Company accounts for this embedded conversion
feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The embedded conversion feature
of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or
loss in those periods. The Company recorded derivative liability of $190,335 and $63,107 during the six months ended June 30, 2020
and 2019, respectively, recorded a change in derivative liability of $2,487 and $34,801, and $681 and $681 during the three and
six months ended June 30, 2020 and 2019, respectively and has $216,443 of unamortized debt discount remaining as of June 30, 2020.
NOTE 7 – SHAREHOLDERS’ EQUITY
COMMON STOCK
The Company has been authorized to issue 900,000,000
shares of common stock, $0.001 par value. Each share of issued and outstanding common stock shall entitle the holder thereof to
fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right
to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well
as in the net assets of the corporation upon liquidation or dissolution.
On May 14, 2019, the Board of Directors of
the Company approved Articles of Amendment to the Company’s Articles of Incorporation that provided for a 1 for 20 reverse
stock split of the Company’s Common Stock. The Company’s Articles of Amendment were filed with the Secretary of State
of the State of Florida on May 17, 2019. All share and per share amounts contained in this Annual Report on Form 10-K and
the accompanying Financial Statements have been adjusted to reflect the Reverse Stock Split for all prior periods presented.
During the six months ended June 30, 2020,
the Company cancelled 299,668 shares to related parties at par value of $300. Shares of our common stock were issued at fair market
value of the share price as set forth in the table below unless otherwise stated.
Date
|
|
Shares
|
|
|
Issuance Description
|
|
Relationship
|
|
Share Price
|
|
|
Amount
|
|
1/7/19
|
|
|
90,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.100
|
|
|
|
9,000
|
|
1/25/19
|
|
|
100,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.088
|
|
|
|
8,800
|
|
2/6/19
|
|
|
226,715
|
|
|
Cash
|
|
Non-related party
|
|
|
0.061
|
|
|
|
13,784
|
|
2/14/19
|
|
|
12,500
|
|
|
Services
|
|
Non-related party
|
|
|
0.306
|
|
|
|
3,825
|
|
2/19/19
|
|
|
166,667
|
|
|
Services
|
|
Non-related party
|
|
|
0.240
|
|
|
|
40,000
|
|
3/5/19
|
|
|
289,500
|
|
|
Cash
|
|
Non-related party
|
|
|
0.120
|
|
|
|
34,740
|
|
3/7/19
|
|
|
50,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.192
|
|
|
|
9,600
|
|
3/13/19
|
|
|
50,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.156
|
|
|
|
7,800
|
|
3/19/19
|
|
|
61,043
|
|
|
Cash
|
|
Non-related party
|
|
|
0.085
|
|
|
|
5,176
|
|
4/1/19
|
|
|
12,500
|
|
|
Services
|
|
Non-related party
|
|
|
0.100
|
|
|
|
1,250
|
|
4/22/19
|
|
|
100,000
|
|
|
Execution of new convertible note payable
|
|
Non-related party
|
|
|
3.160
|
|
|
|
316,000
|
|
4/24/19
|
|
|
50,000
|
|
|
Services
|
|
Non-related party
|
|
|
3.160
|
|
|
|
158,000
|
|
4/30/19
|
|
|
50,000
|
|
|
Services
|
|
Non-related party
|
|
|
2.960
|
|
|
|
148,000
|
|
5/11/19
|
|
|
25,000
|
|
|
Services
|
|
Non-related party
|
|
|
2.800
|
|
|
|
70,000
|
|
5/15/19
|
|
|
250,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.116
|
|
|
|
29,000
|
|
5/12/19
|
|
|
100,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.158
|
|
|
|
15,800
|
|
Date
|
|
Shares
|
|
|
Issuance Description
|
|
Relationship
|
|
Share Price
|
|
|
Amount
|
|
7/11/19
|
|
|
50,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.050
|
|
|
|
2,500
|
|
7/11/19
|
|
|
150,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.050
|
|
|
|
7,500
|
|
8/20/19
|
|
|
250,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.034
|
|
|
|
8,375
|
|
8/20/19
|
|
|
50,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.034
|
|
|
|
1,675
|
|
8/23/19
|
|
|
746,520
|
|
|
Stock issued for Principal reduction of note payable-related party and accrued interest related party. Shares issued at FMV
|
|
Related party
|
|
|
0.037
|
|
|
|
27,621
|
|
8/23/19
|
|
|
746,520
|
|
|
Stock issued for Principal reduction of note payable-related party and accrued interest related party. Shares issued at FMV
|
|
Related party
|
|
|
0.037
|
|
|
|
27,621
|
|
8/29/19
|
|
|
350,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.039
|
|
|
|
13,755
|
|
9/6/19
|
|
|
200,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.049
|
|
|
|
9,800
|
|
10/1/2019
|
|
|
63,136
|
|
|
Services
|
|
Non-related party
|
|
|
0.024
|
|
|
|
1,515
|
|
10/23/2019
|
|
|
200,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.036
|
|
|
|
7,200
|
|
10/23/2019
|
|
|
200,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.036
|
|
|
|
7,200
|
|
11/7/2019
|
|
|
300,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.0235
|
|
|
|
7,050
|
|
11/7/2019
|
|
|
250,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.0235
|
|
|
|
5,875
|
|
11/11/2019
|
|
|
97,459
|
|
|
Stock issued to GHS Investments for Services. Issued at a discount to the FMV
|
|
Non-related party
|
|
|
0.018
|
|
|
|
1,754
|
|
11/22/2019
|
|
|
100,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.021
|
|
|
|
2,100
|
|
12/2/2019
|
|
|
150,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.021
|
|
|
|
3,150
|
|
12/2/2019
|
|
|
300,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.021
|
|
|
|
6,300
|
|
12/5/2019
|
|
|
300,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.021
|
|
|
|
6,300
|
|
12/6/2019
|
|
|
200,000
|
|
|
Services
|
|
Non-related party
|
|
|
0.021
|
|
|
|
4,200
|
|
2/27/2020
|
|
|
(299,668)
|
|
|
Cancellation of director shares
|
|
Related party
|
|
|
0.001
|
|
|
|
–
|
|
5/27/2020
|
|
|
1,400,000
|
|
|
Cash
|
|
Non-related party
|
|
|
0.0343
|
|
|
|
48,000
|
|
PREFERRED STOCK
The Company has been authorized to issue 50,000,000
shares of $0.001 par value Preferred Stock. The Board of Directors is expressly vested with the authority to divide any or all
of the Preferred Stock into series and to fix and determine the relative rights and preferences of the shares of each series so
established, within certain guidelines established in the Articles of Incorporation.
Series A: The certificate of designation for
the Preferred A Stock provides that as a class it possesses a number of votes equal to fifteen (15) votes per share and may be
converted into ten (10) $0.001 par value common shares.
On October 10, 2013, the Company issued fifty
million (50,000,000) shares of our Series “A” Convertible Preferred Stock to Hadronic, a Florida corporation maintaining
its principal place of business at 35246 US Highway 19 North, Suite #215, Palm Harbor, Florida 34684. Our previous Directors, Dr.
Ruggero M. Santilli and Mrs. Carla Santilli each own fifty percent of the equity in Hadronic. The Series “A” Convertible
Preferred Stock has 15 votes per share and is convertible into 10 shares of our common stock at the election of the shareholder.
Shares were valued at the par value of the common stock equivalents, $500,000.
On January 9, 2020, Mina Mar (the “Purchaser”)
acquired 50,000,000 shares of Series A Convertible Preferred Stock of the Company from Hadronic. Each share of Preferred Stock
is entitled to fifteen (15) votes per share and at the election of the holder converts into ten (10) shares of Company common stock,
so at completion of the stock purchase the Purchaser owns approximately 98.6% of the fully diluted outstanding equity securities
of the Company and approximately 99% of the voting rights for the outstanding equity securities. The purchase price of $94,766
for the Preferred Stock was paid by the assumption of a Company note obligation of $85,766 by Emry, with the balance paid in cash.
The consideration for the purchase was provided to the Purchaser from the private funds of the principal of the Purchaser. The
purchase of the Preferred Stock was the result of a privately negotiated transaction and consummation of the purchase resulted
in a change of control of the Company.
Regarding
a Company note obligation of $85,766 now due/new balance of $120,766 held by Emry was partially sold $35,000 of the face amount
to the preferred shareholder Saveene. On March 24, 2020, Saveene converted the $35,000 purchase into 5,000 shares of series B and
10,000 shares of series C shares. The face amount of the Company note obligation post the aforementioned conversions and purchases
is $85,766 (see Note 6).
On March 24, 2020, Saveene (“Purchaser”)
acquired 50,000,000 shares of Series A Convertible Preferred Stock of Company, from Mina Mar. Each
share of Preferred Stock is entitled to fifteen (15) votes per share and at the election of the holder converts into ten (10) shares
of Company common stock, so at the completion of the stock purchase, the Purchaser owns approximately 98.6% of the fully diluted
outstanding equity securities of the Company and approximately 99% of the voting rights for the outstanding equity securities.
The purchase price of $500,000 for the Preferred Stock was paid in cash. The consideration for the purchase was provided to the
Purchaser from the private funds of the principal of the Purchaser. The purchase of the Preferred Stock was the result of a privately
negotiated transaction and consummation of the purchase resulted in a change of control of the Company.
On March 24, 2020,
Thunder Energies, Inc. held a meeting and voted to create two separate classes of preferred shares. Class “B” and class
“C’ preferred shares. One class of shares B would be used to offer securitization for the watercraft while class C
preferred shares would be used in conjunction with the securitization of air crafts.
Series B Convertible Preferred Stock was authorized
for 10,000,000 shares of the “Company. Each share of Preferred Stock is entitled
to one thousand (1,000) votes per share and at the election of the holder converts into one thousand (1,000) shares of Company
common stock, so at the completion of the stock purchase, the Purchaser owns approximately 100% of the fully diluted outstanding
equity securities of the Company and approximately 100% of the voting rights for the outstanding equity securities. The consideration
for the purchase was provided to the Purchaser from the private funds of the principal of the Purchaser.
Series C Non-Convertible
Preferred Stock was authorized for 10,000,000 shares of the Company. Each share of Preferred
Stock is entitled to one thousand (1,000) votes per share and at the election of the holder. The series C is Non-Convertible
Preferred Stock. The Purchaser owns approximately 100% of the fully diluted outstanding
equity securities of the Company and approximately 100% of the voting rights for the outstanding equity securities. The consideration
for the purchase was provided to the Purchaser from the private funds of the principal of the Purchaser.
OPTIONS AND WARRANTS
In accordance with employment agreements, common
stock options are issued annually to the officers of the Company. The number of shares is determined by the number of shares outstanding
at the end of the year at a percentage per the employment agreements, as described below. The strike price is the fair value trading
price as of the anniversary date of the employment agreements. The options are based on the number of shares outstanding of the
Company at the year end, at an exercise price at market price at the employment agreements annual anniversary, July 25th.
As of June 30, 2019, the officers are entitled to 29,887 options, at an average exercise price of $0.2818. There is no expiration
date to these options and only vest upon a change in control. The options were valued at $4,695, however no expense has been recognized
with the associated options, as no options have vested or are considered by management to probable vest. The options were valued
using the Black Scholes Method, using the following assumptions:
Weighted Average:
|
|
June 30, 2020
|
|
|
December 31, 2019
|
|
Risk-free interest rate
|
|
|
2.42%
|
|
|
|
1.24%
|
|
Expected lives (years)
|
|
|
10.0
|
|
|
|
10.0
|
|
Expected price volatility
|
|
|
188.46%
|
|
|
|
188.46%
|
|
Dividend rate
|
|
|
0.0%
|
|
|
|
0.0%
|
|
Forfeiture Rate
|
|
|
0.0%
|
|
|
|
0.0%
|
|
There are no other warrants or options outstanding
to acquire any additional shares of common stock of the Company as of June 30, 2020.
CHANGE IN CONTROL
On March
24, 2020, Saveene converted the $35,000 purchase into 5,000 shares of series B and 10,000 shares of series C shares. As a result,
the Series B and C voting ownership approximates 57% and therefore, the Company has a change in ownership resulting in the
recognition of a gain or loss on the sale of the interest sold and on the revaluation of any retained noncontrolling investment
in accordance with ASC 810-10-40-5.
The Company’s stock price on March 24,
2020 was $0.03, giving the Company a value of $0.03 per share times 11,244,923 shares outstanding or $337,348. The transaction
was booked to loss on extinguishment of change in control and with the off-setting entry to additional paid-in capital due to it
being a related party transaction.
NOTE 8 – RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH SAVEENE.COM, INC.
On March 24, 2020, Saveene acquired 50,000,000
shares of Series A Convertible Preferred Stock of the Company, from Mina Mar. Each share
of Preferred Stock is entitled to fifteen (15) votes per share and at the election of the holder converts into ten (10) shares
of Company common stock, so at the completion of the stock purchase, the Purchaser owns approximately 98.6% of the fully diluted
outstanding equity securities of the Company and approximately 99% of the voting rights for the outstanding equity securities.
The purchase price of $500,000 for the Preferred Stock was paid in cash. The consideration for the purchase was provided to the
Purchaser from the private funds of the principal of the Purchaser. The purchase of the Preferred Stock was the result of a privately
negotiated transaction and consummation of the purchase resulted in a change of control of the Company.
In connection with the sale of the Preferred
Stock, all existing officers, directors and board members with the Company remained undisturbed.
Except as described herein, there are no arrangements
or understandings among members of both the former and new control persons and their associates with respect to the election of
directors of the Company or other matters.
On March 24, 2020,
Thunder Energies, Inc. announced its operational affiliate plans with Saveene. Under the agreement, Saveene will grant Thunder
Energies access to several yachts and jets for the purpose of offering these vessels to the end-user and the general public for
sale and or charter. Additionally, Thunder Energies will gain access to several patent-pending technologies the entire Saveene
back office that focuses on the yacht and jet industry sector. This operational affiliate plan with Saveene.Com will allow Thunder
Energies to offer a white-label type solution and OEM or original equipment manufacturer under Thunder Energies, Inc. own brand
name being Nacaeli brand dispensing the need to acquire and carry any inventory. All future Thunder Energies, Inc. and or Nacaeli
brand fulfillment orders general maintenance, and upkeep matters such as mechanical repair, buffering, and similar will be outsourced
other than administrative operational and corporate governance tasks.
On March 24, 2020,
Thunder Energies, Inc. held a meeting and voted to create two separate classes of preferred shares. Class “B” and class
“C’ preferred shares. One class of shares B would be used to offer securitization for the watercraft while class C
preferred shares would be used in conjunction with the securitization of air crafts.
Series B Convertible Preferred Stock was authorized
for 10,000,000 shares of the Company. Each share of Preferred Stock is entitled to one
thousand (1,000) votes per share and at the election of the holder converts into one thousand (1,000) shares of Company common
stock, so at the completion of the stock purchase, the Purchaser owns approximately 100% of the fully diluted outstanding equity
securities of the Company and approximately 100% of the voting rights for the outstanding equity securities. The consideration
for the purchase was provided to the Purchaser from the private funds of the principal of the Purchaser.
Series C Non-Convertible
Preferred Stock was authorized for 10,000,000 shares of the Company. Each share of Preferred
Stock is entitled to one thousand (1,000) votes per share and at the election of the holder. The series C is Non-Convertible
Preferred Stock. The Purchaser owns approximately 100% of the fully diluted outstanding
equity securities of the Company and approximately 100% of the voting rights for the outstanding equity securities. The consideration
for the purchase was provided to the Purchaser from the private funds of the principal of the Purchaser.
Regarding
a Company note obligation of $85,766 now due/new balance of $120,766 held by Emry was partially sold $35,000 of the face amount
to the preferred shareholder Saveene. On March 24, 2020, Saveene converted the $35,000 purchase into 5,000 shares of series B and
10,000 shares of series C shares. The face amount of the Company note obligation post the aforementioned conversions and purchases
is $85,766.
On March
24, 2020, Saveene converted the $35,000 purchase into 5,000 shares of series B and 10,000 shares of series C shares. As a result,
the Series B and C voting ownership approximates 57% and therefore, the Company has a change in ownership resulting in the
recognition of a gain or loss on the sale of the interest sold and on the revaluation of any retained noncontrolling investment
in accordance with ASC 810-10-40-5.
The Company’s stock price on March 24,
2020 was $0.03, giving the Company a value of $0.03 per share times 11,244,923 shares outstanding or $337,348. The transaction
was booked to loss on extinguishment of change in control and with the off-setting entry to additional paid-in capital due to it
being a related party transaction.
TRANSACTIONS WITH MINA MAR GROUP
On January 9, 2020, Mina Mar (the “Purchaser”)
acquired 50,000,000 shares of Series A Convertible Preferred Stock of the Company from Hadronic. Each share of Preferred Stock
is entitled to fifteen (15) votes per share and at the election of the holder converts into ten (10) shares of Company common stock,
so at completion of the stock purchase the Purchaser owns approximately 98.6% of the fully diluted outstanding equity securities
of the Company and approximately 99% of the voting rights for the outstanding equity securities. The purchase price of $94,766
for the Preferred Stock was paid by the assumption of a Company note obligation of $85,766 by Emry, with the balance paid in cash.
The consideration for the purchase was provided to the Purchaser from the private funds of the principal of the Purchaser. The
purchase of the Preferred Stock was the result of a privately negotiated transaction and consummation of the purchase resulted
in a change of control of the Company.
In connection with the sale of the Preferred
Stock:
|
·
|
Dr. Ruggero Santilli and Carla Santilli, former board members and the chief executive officer and secretary and treasurer, respectively, of the Company, resigned as board members and officers;
|
|
·
|
The Company’s relationship with the law firm of Clifford J. Hunt, P.A. has been terminated and Clifford J. Hunt, P.A. is no longer serving as legal counsel of record to the Company;
|
|
·
|
The Company’s relationship with E&E Communications has been terminated and E&E
Communications is no longer providing investor relations services to the Company; and
|
|
·
|
The Company’s relationship with GHS Investments, LLC has been terminated and GHS Investments, LLC is no longer providing underwriting, investment banking or brokerage services to the Company.
|
Also in connection with the sale of the Preferred
Stock, Irina Veselinovic has been appointed to the Board of Directors of the Company and has been appointed as Secretary of the
Company; Aleksandar Sentic has been appointed to the Board of Directors of the Company; and Andrea Zecevic has been appointed
to the Board of Directors and to the position of Company President and Chief Executive Officer. None of Ms. Veselinovic, Mr. Sentic
or Ms. Zecevic is a party to an employment agreement with the Company. The Company has made the appropriate filings with the Division
of Corporations for the Florida Secretary of State to memorialize the appointment of these officers in the Division of Corporations’
records.
Except as described herein, there are no arrangements
or understandings among members of both the former and new control persons and their associates with respect to the election of
directors of the Company or other matters.
ADVANCES, PAYABLES AND ACCRUALS
Amounts included in accruals represent amounts
previously due to the officers and directors for corporate obligations under the employment agreements. Payments on behalf of the
Company and accruals made under contractual obligation are accrued (see below). As of June 30, 2020 and December 31, 2019, accrued
expenses were $0 and $0, respectively. On December 31, 2019, the accrued compensation – related party was forgiven and booked
the offsetting entry to Additional paid-in Capital due to it being a related party transaction.
NOTE PAYABLE
In support of the Company’s efforts and
cash requirements, it has relied on advances from the majority shareholders until such time that the Company can support its operations
or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment
for continued support by shareholders. All advances made in support of the Company are formalized by demand notes, at a 2.15% interest
rate.
During the six months ended June 30, 2020 and
2019, our previous Chief Executive Officer, Dr. Ruggero M. Santilli loaned the Company $0 and $5,000 for operations. During the
six months ended June 30, 2020 and 2019 the Company repaid the principal amounts by $0 and $5,000, respectively.
At June 30, 2020 and December 31, 2019, the
demand notes accumulative balances were $0 and $0, respectively. Accrued interest at June 30, 2020 and December 31, 2019 was $0
and $0, respectively. On December 31, 2019, the demand notes plus accrued interest totaling $376,276 were forgiven and booked the
offsetting entry to Additional paid-in Capital due to it being a related party transaction.
EQUITY TRANSACTIONS
On December 31, 2019, our previous Chief Executive
Officer, Dr. Ruggero M. Santilli requested the extinguishment of $376,276 of notes payable due. The Company extinguished $376,276
of notes payable due Dr. Rugger M. Santilli on December 31, 2019 and booked the off-setting entry to additional paid-in capital
due to it being a related party transaction.
On December 31, 2019, the Company's previous
Chief Executive Officer, Dr. Ruggero M. Santilli and previous Director, Carla Santilli requested the extinguishment of $315,000
and $126,000, respectively, of accrued compensation due. The Company extinguished $315,000 and $126,000 of accrued compensation
due to Dr. Rugger M. Santilli and Carla Santilli, respectively, on December 31, 2019 and booked the off-setting entry to additional
paid-in capital due to it being a related party transaction.
EMPLOYMENT CONTRACTS
The Company has no employment contracts with
its key employees.
OTHER
The Company does not own or lease property
or lease office space. At the current time, the office space used by the Company was arranged by the majority shareholders of the
Company to use at no charge. It is anticipated that the Company will enter into formal lease arrangements in the near future.
The amounts and terms of the above transactions
may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered
into with independent third parties.
NOTE 9 – COMMITMENTS AND
CONTINGENCIES
From time to time the Company may be a party
to litigation matters involving claims against the Company. Management believes that there are no current matters that would have
a material effect on the Company’s financial position or results of operations.
NOTE 10 – SUBSEQUENT EVENTS
On July 1, 2020, Yogev Shvo, a third party
individual and principal shareholder of Nature Consulting, LLC., a Florida limited liability company, (“Purchaser”)
personally acquired 100% of the issued and outstanding shares of preferred stock (“Preferred Stock”) of the Company
from Saveene (“Seller”) for total cash consideration of $250,000.
The Preferred Stock acquired by the Purchaser
consisted of:
|
1.
|
50,000,000 shares of Series A Convertible
Preferred Stock wherein each share is entitled to fifteen (15) votes and converts into
ten (10) shares of the Company’s common stock.
|
|
|
|
|
2.
|
5,000 shares of Series B Convertible
Preferred Stock wherein each share is entitled to one thousand (1,000) votes and converts into one thousand (1,000) shares of
the Company’s common stock.
|
|
|
|
|
3.
|
10,000 shares of Series C Non-Convertible
Preferred Stock wherein each share is entitled to one thousand (1,000) votes and is non-convertible into shares of the
Company’s common stock.
|
As a result of the purchase and change of control
of the Company, the existing officers and directors of the Company, Andrea Zecevic, CEO and President, Irina Veselinovic, Secretary
and Alexander Sentic, Treasurer have resigned.
Under the terms of the stock purchase agreement
the new controlling shareholder was permitted to elect representatives to serve on the Board of Directors to fill the seat(s) vacated
by prior directors. Mr. Yogev Shvo became the sole Director and Chairman of the Board of the Company, and the acting sole officer
of the Company (“Chairman”). The salary of the Chairman is fixed at $1 per annum effective July 23, 2020 with any future
payments due to the Chairman via preferred convertible shares at the sole discretion of the Chairman.
There were no other events subsequent to June
30, 2020, and up to the date of this filing that would require disclosure.