Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
☐ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________to _____________
Commission file number 000-54464
|
THUNDER ENERGIES
CORPORATION |
| (Exact Name of Registrant as specified in its
charter) |
|
Florida |
|
45-1967797 |
|
(State or jurisdiction of
Incorporation or organization
|
|
(I.R.S Employer
Identification No.)
|
|
111 Moorings Dr Lantana,
FL |
|
33462 |
|
(Address of principal executive
offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code:
561 570 4301
Securities registered under Section 12(b) of the Exchange Act:
|
Title of each
class |
|
Name of each exchange on which
registered |
| None |
|
N/A |
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each
class |
|
Trading Symbol(s) |
|
Name of each exchange on which
registered |
| None |
|
|
|
|
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. ☒ Yes ☐ No
Indicate by checkmark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required
to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
emerging growth company or a smaller reporting company. See the
definitions of “large accelerated filer”, “accelerated filer”,
“emerging growth company” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.
| Large accelerated filer |
☐ |
|
Accelerated filer |
☐ |
| Non-accelerated filer |
☐ |
(Do
not check if a smaller company) |
Smaller reporting company |
☒ |
| Emerging growth company |
☒ |
|
|
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Act). ☐ Yes ☒ No
The number of shares outstanding of the issuer’s Common Stock,
$0.001 par value, as of August 12, 2020 was 12,645,255 shares.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This quarterly report on Form 10-Q contains certain forward-looking
statements. Forward-looking statements may include our statements
regarding our goals, beliefs, strategies, objectives, plans,
including product and service developments, future financial
conditions, results or projections or current expectations. In some
cases, you can identify forward-looking statements by terminology
such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,”
“believe,” “estimate,” “predict,” “potential” or “continue,” the
negative of such terms, or other comparable terminology. For
example, when we discuss our pursuit of strategic transactions
including acquisitions, dispositions, capital raising and debt
restructuring, that our revenues will increase in 2020, and that we
intend to invest in sales, marketing, product development and
innovation, we are using forward-looking statements. These
statements are subject to known and unknown risks, uncertainties,
assumptions and other factors that may cause actual results to be
materially different from those contemplated by the forward-looking
statements. These factors include, but are not limited to, our
ability to implement our strategic initiatives, economic, political
and market conditions and fluctuations, government and industry
regulation, interest rate risk, U.S. and global competition, and
other factors. Most of these factors are difficult to predict
accurately and are generally beyond our control. You should
consider the areas of risk described in connection with any
forward-looking statements that may be made herein. The business
and operations of Thunder Energies Corporation are subject to
substantial risks, which increase the uncertainty inherent in the
forward-looking statements contained in this report. Except as
required by law, we undertake no obligation to release publicly the
result of any revision to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events. Further
information on potential factors that could affect our business is
described under “Item 1A. Risk Factors” in our restated annual
report on Form 10-K as filed with the Securities and Exchange
Commission, or the SEC, on May 15, 2020 and in this quarterly
report on Form 10-Q. Readers are also urged to carefully review and
consider the various disclosures we have made in this report and in
our restated annual report on Form 10-K.”
THUNDER ENERGIES CORPORATION
Quarterly Period Ended June 30, 2020
TABLE OF CONTENTS
PART I – FINANCIAL
INFORMATION
Item 1. Condensed Financial
Statements.
THUNDER ENERGIES CORPORATION
Condensed Balance Sheets
| |
|
June
30, |
|
|
December 31, |
|
| |
|
2020 |
|
|
2019 |
|
| ASSETS |
|
|
|
|
|
|
|
|
| Current Assets |
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
1,655 |
|
|
$ |
3,111 |
|
|
Prepaid expenses |
|
|
56,500 |
|
|
|
– |
|
| Total current assets |
|
|
58,155 |
|
|
|
3,111 |
|
| |
|
|
|
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
|
|
|
|
Intangible assets, net of accumulated amortization and impairment
of $15,320 and $15,320, respectively |
|
|
– |
|
|
|
– |
|
| Total
non-current assets |
|
|
– |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
58,155 |
|
|
$ |
3,111 |
|
| |
|
|
|
|
|
|
|
|
| LIABILITIES AND
STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
| Current Liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,550 |
|
|
$ |
– |
|
|
Accrued interest |
|
|
23,204 |
|
|
|
5,365 |
|
|
Derivative liability |
|
|
216,443 |
|
|
|
60,909 |
|
|
Convertible note payable, net of discount of $46,308 and $0,
respectively |
|
|
107,458 |
|
|
|
57,000 |
|
| Total current
liabilities |
|
|
348,655 |
|
|
|
123,274 |
|
| |
|
|
|
|
|
|
|
|
| Long-term liabilities: |
|
|
|
|
|
|
|
|
|
Convertible note payable, net of discount of $12,222 and $0,
respectively |
|
|
37,778 |
|
|
|
– |
|
|
Total long-term liabilities |
|
|
37,778 |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES |
|
|
386,433 |
|
|
|
123,274 |
|
| |
|
|
|
|
|
|
|
|
| COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Stockholders’ deficit |
|
|
|
|
|
|
|
|
|
Preferred stock - Series A: $0.001 par value, 50,000,000
authorized; 50,000,000 and 50,000,000 shares issued and
outstanding, respectively |
|
|
50,000 |
|
|
|
50,000 |
|
|
Preferred stock - Series B: $0.001 par value, 10,000,000
authorized; 5,000 and 0 shares issued and outstanding,
respectively |
|
|
5 |
|
|
|
– |
|
|
Preferred stock - Series C: $0.001 par value, 10,000,000
authorized; 10,000 and 0 shares issued and outstanding,
respectively |
|
|
10 |
|
|
|
– |
|
|
Common stock: $0.001 par value 900,000,000 authorized; 12,645,255
and 11,544,923 shares issued and outstanding, respectively* |
|
|
12,645 |
|
|
|
11,545 |
|
| Additional paid in capital |
|
|
5,383,426 |
|
|
|
4,989,405 |
|
| Accumulated
deficit |
|
|
(5,774,364 |
) |
|
|
(5,171,113 |
) |
| Total
stockholders’ deficit |
|
|
(328,278 |
) |
|
|
(120,163 |
) |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
$ |
58,155 |
|
|
$ |
3,111 |
|
* Reflects the 1-for-20 reverse stock split that became
effective on June 7, 2019. Refer to Note 3 – Summary of Significant
Accounting Policies for further information.
See notes to financial statements
THUNDER ENERGIES CORPORATION
Condensed Statements of
Operations
| |
|
For the Six Months
Ended |
|
|
For the Three Months
Ended |
|
| |
|
June
30, |
|
|
June
30, |
|
| |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Research
and development |
|
|
2,741 |
|
|
|
41,310 |
|
|
|
– |
|
|
|
27,053 |
|
| Stock in
exchange for services |
|
|
– |
|
|
|
817,075 |
|
|
|
– |
|
|
|
738,050 |
|
|
Professional fees |
|
|
78,260 |
|
|
|
83,166 |
|
|
|
29,300 |
|
|
|
38,718 |
|
| Selling,
general and administrative expenses |
|
|
31,505 |
|
|
|
113,897 |
|
|
|
31,009 |
|
|
|
53,025 |
|
| Total operating
expenses |
|
|
112,506 |
|
|
|
1,055,448 |
|
|
|
60,309 |
|
|
|
856,846 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss from
operations |
|
|
(112,506 |
) |
|
|
(1,055,448 |
) |
|
|
(60,309 |
) |
|
|
(856,846 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other expense (income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest
expense in conjunction with debt issuance |
|
|
81,605 |
|
|
|
11,724 |
|
|
|
12,835 |
|
|
|
9,908 |
|
|
Accretion of debt discount |
|
|
106,522 |
|
|
|
21,850 |
|
|
|
55,018 |
|
|
|
21,850 |
|
| Change
in fair value of derivative liability |
|
|
(9,044 |
) |
|
|
(681 |
) |
|
|
(2,416 |
) |
|
|
(681 |
) |
|
Extinguishment of derivative liability related to debt
conversion |
|
|
(25,686 |
) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Loss on
extinguishment of change in control |
|
|
337,348 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Total other
expense |
|
|
490,745 |
|
|
|
32,893 |
|
|
|
65,437 |
|
|
|
31,077 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss before income tax |
|
|
(603,251 |
) |
|
|
(1,088,341 |
) |
|
|
(125,746 |
) |
|
|
(887,923 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for
income taxes |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(603,251 |
) |
|
$ |
(1,088,341 |
) |
|
$ |
(125,746 |
) |
|
$ |
(887,923 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss per share of common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic
and diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.13 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic
and diluted |
|
|
11,602,292 |
|
|
|
6,157,465 |
|
|
|
11,768,332 |
|
|
|
6,618,317 |
|
*
Reflects the 1-for-20 reverse stock split that became effective on
June 7, 2019. Refer to Note 3 – Summary of Significant Accounting
Policies for further information.
See notes to financial statements
THUNDER ENERGIES CORPORATION
Condensed Statements of Changes in
Stockholders’ Deficit
| |
|
Preferred
Stock A |
|
|
Preferred
Stock B |
|
|
Preferred
Stock C |
|
|
Common
Stock* |
|
|
Additional
paid |
|
|
Accumulated |
|
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
capital |
|
|
Deficit |
|
|
Total |
|
|
Balance,
December 31, 2018 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
– |
|
|
$ |
– |
|
|
|
– |
|
|
$ |
– |
|
|
|
5,207,330 |
|
|
$ |
5,207 |
|
|
$ |
3,159,848 |
|
|
$ |
(3,781,938 |
) |
|
$ |
(565,933 |
) |
| Common
stock issued for services |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
469,167 |
|
|
|
469 |
|
|
|
78,556 |
|
|
|
– |
|
|
|
79,025 |
|
| Common
stock issued for cash |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
577,258 |
|
|
|
578 |
|
|
|
53,122 |
|
|
|
– |
|
|
|
53,700 |
|
| Net
loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(200,418 |
) |
|
|
(200,418 |
) |
|
Balance,
March 31, 2019 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
– |
|
|
$ |
– |
|
|
|
– |
|
|
$ |
– |
|
|
|
6,253,755 |
|
|
$ |
6,254 |
|
|
$ |
33,291,527 |
|
|
$ |
(3,982,356 |
) |
|
$ |
(633,626 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common
stock issued for service |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
587,500 |
|
|
|
588 |
|
|
|
737,462 |
|
|
|
– |
|
|
|
738,050 |
|
| Adjustment
for fractional shares due to 1 for 20 reverse split* |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
9 |
|
|
|
– |
|
|
|
950 |
|
|
|
– |
|
|
|
– |
|
| Paid-in
capital – Derivative liability |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(6,788 |
) |
|
|
– |
|
|
|
(6,788 |
) |
| Net
loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(887,923 |
) |
|
|
(887,923 |
) |
| Balance,
June 30, 2019 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
– |
|
|
$ |
– |
|
|
|
– |
|
|
$ |
– |
|
|
|
6,841,264 |
|
|
$ |
6,841 |
|
|
$ |
4,023,151 |
|
|
$ |
(4,870,279 |
) |
|
$ |
(790,286 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance,
December 31, 2019 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
– |
|
|
$ |
– |
|
|
|
– |
|
|
$ |
– |
|
|
|
11,544,923 |
|
|
$ |
11,545 |
|
|
$ |
4,989,405 |
|
|
$ |
(5,171,113 |
) |
|
$ |
(120,163 |
) |
| Cancellation
of shares to director |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(299,668 |
) |
|
|
(300 |
) |
|
|
300 |
|
|
|
– |
|
|
|
– |
|
| Paid-in
capital – Derivative liability |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(25,212 |
) |
|
|
– |
|
|
|
(25,212 |
) |
| Preferred
stock issued in conjunction with convertible notes
payable |
|
|
– |
|
|
|
– |
|
|
|
5,000 |
|
|
|
5 |
|
|
|
10,000 |
|
|
|
10 |
|
|
|
– |
|
|
|
– |
|
|
|
34,985 |
|
|
|
– |
|
|
|
35,000 |
|
| Loss
on extinguishment of change of control |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
337,348 |
|
|
|
– |
|
|
|
337,348 |
|
| Net
loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(477,505 |
) |
|
|
(477,505 |
) |
|
Balance
as at March 31, 2020 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
5,000 |
|
|
$ |
5 |
|
|
|
10,000 |
|
|
$ |
10 |
|
|
|
11,245,255 |
|
|
$ |
11,245 |
|
|
$ |
5,336,826 |
|
|
$ |
(5,648,618 |
) |
|
$ |
(250,532 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common
stock issued for cash |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
1,400,000 |
|
|
|
1,400 |
|
|
|
46,600 |
|
|
|
– |
|
|
|
48,000 |
|
| Net
loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(125,746 |
) |
|
|
(125,746 |
) |
| Balance,
June 30, 2019 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
5,000 |
|
|
$ |
5 |
|
|
|
10,000 |
|
|
$ |
10 |
|
|
|
12,644,923 |
|
|
$ |
12,645 |
|
|
$ |
5,383,426 |
|
|
$ |
(5,774,364 |
) |
|
$ |
(328,278 |
) |
*
Reflects the 1-for-20 reverse stock split that became effective on
June 7, 2019. Refer to Note 3 – Summary of Significant Accounting
Policies for further information
See notes to financial statements
THUNDER ENERGIES CORPORATION
Condensed Statements of Cash
Flows
| |
|
For the Six Months Ended June 30, |
|
| |
|
2020 |
|
|
2019 |
|
| |
|
|
|
|
|
|
| CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(603,251 |
) |
|
$ |
(1,088,341 |
) |
| Adjustment to
reconcile net loss to net cash used in operations: |
|
|
|
|
|
|
|
|
| Change in
fair value of derivative liability |
|
|
(9,044 |
) |
|
|
(681 |
) |
| Accretion of
debt discount |
|
|
106,522 |
|
|
|
21,850 |
|
|
Extinguishment of derivative liability related to debt
conversions |
|
|
(25,686 |
) |
|
|
– |
|
| Loss on
extinguishment of change of control |
|
|
337,348 |
|
|
|
– |
|
| Interest
expense in conjunction with debt issuance |
|
|
81,605 |
|
|
|
– |
|
| Stock issued
for services provided |
|
|
– |
|
|
|
817,075 |
|
| Changes in
assets and liabilities: |
|
|
|
|
|
|
|
|
| Increase
(decrease) in operating liabilities: |
|
|
|
|
|
|
|
|
| Prepaid
expenses |
|
|
(56,500 |
) |
|
|
– |
|
| Accounts
payable |
|
|
1,550 |
|
|
|
– |
|
| Accrued
interest |
|
|
– |
|
|
|
1,717 |
|
|
Accrued interest – related party |
|
|
– |
|
|
|
129,008 |
|
|
Net cash used in operating activities |
|
|
(167,456 |
) |
|
|
(119,372 |
) |
| |
|
|
|
|
|
|
|
|
| CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
| Proceeds
from shareholder loans |
|
|
– |
|
|
|
4,000 |
|
| Proceeds
from convertible notes payable |
|
|
118,000 |
|
|
|
57,000 |
|
|
Issuance of common stock |
|
|
48,000 |
|
|
|
53,700 |
|
|
Net cash provided by financing activates |
|
|
166,000 |
|
|
|
114,700 |
|
| |
|
|
|
|
|
|
|
|
| Net decrease in cash |
|
|
(1,456 |
) |
|
|
(4,672 |
) |
| |
|
|
|
|
|
|
|
|
| Cash |
|
|
|
|
|
|
|
|
|
Beginning of period |
|
|
3,111 |
|
|
|
7,920 |
|
|
End of period |
|
$ |
1,655 |
|
|
$ |
3,248 |
|
| |
|
|
|
|
|
|
|
|
| Supplemental cash flow
information |
|
|
|
|
|
|
|
|
| Cash paid
for interest |
|
$ |
– |
|
|
$ |
– |
|
| Cash paid
for taxes |
|
$ |
– |
|
|
$ |
– |
|
| |
|
|
|
|
|
|
|
|
| Non-cash transactions: |
|
|
|
|
|
|
|
|
| Preferred
stock issued in conjunction with convertible notes payable |
|
$ |
34,995 |
|
|
$ |
– |
|
| Cancellation
of shares to director against additional paid in capital |
|
|
300 |
|
|
|
– |
|
|
Extinguishment of derivative liability related to debt
conversions |
|
|
25,686 |
|
|
|
– |
|
| Original
discount recorded on the recognition of notes with derivative
liability |
|
|
165,052 |
|
|
|
57,000 |
|
See notes to financial statements
THUNDER ENERGIES CORPORATION
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.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
Special Note Regarding Forward Looking
Statements.
This quarterly report on Form 10-Q of Thunder Energies Corporation
for the period ended June 30, 2020 contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, which are intended to be covered by the safe
harbors created thereby. To the extent that such statements are not
recitations of historical fact, such statements constitute forward
looking statements which, by definition, involve risks and
uncertainties. In particular, statements under the Sections;
Description of Business, Management’s Discussion and Analysis of
Financial Condition and Results of Operations contain forward
looking statements. Where in any forward-looking statements, the
Company expresses an expectation or belief as to future results or
events, such expectation or belief is expressed in good faith and
believed to have a reasonable basis, but there can be no assurance
that the statement of expectation or belief will result or be
achieved or accomplished.
The following are factors that could cause actual results or events
to differ materially from those anticipated and include but are not
limited to: general economic, financial and business conditions;
changes in and compliance with governmental regulations; changes in
tax laws; and the cost and effects of legal proceedings.
You should not rely on forward looking statements in this quarterly
report. This quarterly report contains forward looking statements
that involve risks and uncertainties. We use words such as
“anticipates,” “believes,” “plans,” “expects,” “future,” “intends,”
and similar expressions to identify these forward-looking
statements. Prospective investors should not place undue reliance
on these forward-looking statements, which apply only as of the
date of this quarterly report. Our actual results could differ
materially from those anticipated in these forward-looking
statements.
Our Business Overview.
Thunder Energies Corporation f/k/a Thunder Fusion Corporation and
CCJ Acquisition Corp. (“we”, “us”, “our”, (“TEC” or the “Company”)
was incorporated in the State of Florida on April 21, 2011. The
Company selected December 31 as its fiscal year end.
On July 25, 2013, Dr. Ruggero M. Santilli acquired from Company’s
existing shareholders, a control block of stock in the Company
consisting of two million nine hundred forty thousand (2,940,000)
shares of restricted common stock of the Company, in a private
equity transaction. As a result of this acquisition, Dr. Ruggero M.
Santilli owned 98% of the issued and outstanding shares of common
stock of the Company.
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 (the “Company”)
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
Technologies, Inc., a Florida corporation (“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 be de-minimus to the value
received in the exchange and approximates the basis of those
assets.
The Company has 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
will be the par value of the stock received in exchange for the
rights and assets. The Company’s filings will include a disclosure
in the MD&A section and notes to the financial statement under
the heading “Non-Monetary Transaction”. Management believes that
the $1,000 valuation is reflective of the salvage value of the
physical property, at a minimum. Our Company purchased internet
website domain name assets owned by IBR and 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 owned by HyFuels as related to the reactors. None of the
assets purchased had ever generated revenue for IBR or HyFuels.
Although the Asset Assignment Agreements were more comprehensive in
their description of “assets”, the aforementioned items were the
only assets assigned to the Company.
Our Company purchased internet website domain name assets owned by
IBR and 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 owned by HyFuels as
related to the reactors. None of the assets purchased had ever
generated revenue for IBR or HyFuels. Although the Asset Assignment
Agreements were more comprehensive in their description of
“assets”, the aforementioned items were the only assets assigned to
the Company.
A further description of the assignors, IBR and HyFuels, follows.
IBR is a Florida Corporation whose only business operations are the
publication of an internet blog relating to scientific and academic
matters. IBR does not generate revenue and has no expenses.
Furthermore, IBR has never maintained a checking account. This
status has been consistent over the last several years. Our Chief
Executive Officer and Director, Dr. Ruggero M. Santilli is
president and a director for IBR. IBR does not have any ownership
interest in any of our securities.
HyFuels is a Florida corporation that utilized research and
development funds to create the seven Hadronic reactors, but
otherwise has no business operations since its inception. Its sole
purpose is to serve as a patent holding company. Our previous Chief
Executive Officer and Director, Dr. Ruggero M. Santilli is
president and a director for HyFuels. HyFuels also does not have
any ownership interest in any of our securities.
Neither IBR nor HyFuels has made any effort to commercialize the
assets for purposes of generating revenue. Both IBR and HyFuels
continue to exist as Florida corporations separate and distinct
from the Company. Though they are deemed “related” entities through
a common officer and director with our Company, they remain
otherwise “unaffiliated” with our Company.
IBR maintains its principal place of business at 90 East Winds
Court, Palm Harbor, Florida 34689. HyFuels maintains its principal
place of business at 35246 US Highway 19 North, #215, Palm Harbor,
Florida 34684. There is no continuity of facilities with the
Company.
Neither IBR nor HyFuels had an employee base, a distribution
system, a sales force, a customer base, production techniques or
trade names associated with the assets. Their ownership rights may
arguably be referred to as operating rights but there were
essentially no operations associated with the assets.
The only activities of the assignors involved the creation of the
Internet website domain names and the creation of the seven
Hadronic reactors and associated patents pending. These assets did
not generate revenue prior to the assignment, so there is
essentially no financial data to report regarding “revenue
producing activity previously associated with the acquired assets”.
Furthermore, there is no “sufficient continuity of operations with
our Company so that disclosure of prior financial information
regarding IBR or HyFuels is material to an understanding of future
operations regarding our Company.
Recent Developments
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.
Convertible Note Payable
On January 9, 2020, Mina Mar Corporation, a Florida corporation
(d/b/a Mina Mar Group) (“Mina Mar” or the “Purchaser”) acquired
50,000,000 shares of Series A Convertible Preferred Stock of
Thunder Energies Corporation (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.
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.
The Company will be using @CorpTnrg as its social media account
going forward; its interim corporate web site is www.otc-tnrg.com;
The Company’s new operating business web site is
www.nacaeli.com.
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. Current management anticipates a new
business model for the Company with the launch of its Nacaeli brand
www.nacaeli.com.
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 traunches: $50,000, paid on February 15, 2020, and
$20,000, paid in April 2020) and $48,000 (which was paid in three
traunches: $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
Debenture, the Promissory Debenture is 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 Debenture provides
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.
Preferred Stock
On March 24, 2020, Saveene (the “Purchaser”) 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, 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 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.
Revolving Line of Credit
On March 24 2020, Thunder
Energies 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. The balance of line of credit
was cancelled on July 1, 2020 in connection with the change of
control of the Company.
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, 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.
Patents, Trademarks, Licenses, Franchises, Concessions,
Royalty Agreements Or Labor Contracts, Including
Duration
The Company has no patents. No franchisee or license is expected
during the first three years of operation. Labor contracts for
employees are planned for implementation following legal assistance
and decisions by our Board of Directors.
Need For Any Government Approval Of Principal Products Or
Services
No governmental approval or permits are necessary for our
products.
Effect Of Existing Or Probable Governmental Regulations On
The Business
There are no governmental regulations affecting the Company.
Costs and Effects Of Compliance With Environmental
Laws
There are no environmental laws affecting the Company.
Number Of Total Employees And Number Of Full-Time
Employees
At this time, the Company has no full time employees and two
persons working part time in various functions.
Implications of Being an Emerging Growth Company
We qualify as an emerging growth company as that term is used in
the JOBS Act. An emerging growth company may take advantage of
specified reduced reporting and other burdens that are otherwise
applicable generally to public companies. These provisions
include:
| |
· |
A requirement to have only two years of audited
financial statements and only two years of related
MD&A; |
| |
· |
Exemption from the auditor attestation
requirement in the assessment of the emerging growth company’s
internal control over financial reporting under Section 404 of the
Sarbanes-Oxley Act of 2002; |
| |
· |
Reduced disclosure about the emerging growth
company’s executive compensation arrangements; and |
| |
· |
No non-binding advisory votes on executive
compensation or golden parachute arrangements. |
We have already taken advantage of these reduced reporting burdens
in this Form 10-Q, which are also available to us as a smaller
reporting company as defined under Rule 12b-2 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).
In addition, Section 107 of the JOBS Act also provides that an
emerging growth company can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities
Act of 1933, as amended (the “Securities Act”) for complying with
new or revised accounting standards. We are choosing to utilize the
extended transition period for complying with new or revised
accounting standards under Section 102(b)(2) of the JOBS Act. This
election allows our Company to delay the adoption of new or revised
accounting standards that have different effective dates for public
and private companies until those standards apply to private
companies. As a result of this election, our financial statements
may not be comparable to companies that comply with public company
effective dates.
We could remain an emerging growth company for up to five years, or
until the earliest of (i) the last day of the first fiscal year in
which our annual gross revenues exceed $1 billion, (ii) the date
that we become a “large accelerated filer” as defined in Rule 12b-2
under the Exchange Act, which would occur if the market value of
our common stock that is held by non-affiliates exceeds $700
million as of the last business day of our most recently completed
second fiscal quarter, or (iii) the date on which we have issued
more than $1 billion in non-convertible debt during the preceding
three year period.
We are a reporting company and file all reports required under
sections 13 and 15d of the Exchange Act.
Results of Operations and Critical Accounting Policies and
Estimates.
The results of operations are based on preparation of financial
statements in conformity with accounting principles generally
accepted in the United States. The preparation of financial
statements requires management to select accounting policies for
critical accounting areas as well as estimates and assumptions that
affect the amounts reported in the financial statements. The
Company’s accounting policies are more fully described in Note 3 to
the Notes of Financial Statements.
Results of Operations for the Three Months ended June 30,
2020 and 2019.
Revenues.
Total Revenue. For the three months ended June 30, 2020
and 2019, we had no revenues.
Expenses.
Total Operating Expenses. Total operating expenses for
the three months ended June 30, 2020 and June 30, 2019 were $60,309
and $856,846, respectively. Total operating expenses consisted of
research and development of $0 and $27,053, respectively; stock in
exchange for services of $0 and $738,050, respectively;
professional fees of $29,300 and $38,718, respectively and selling,
general and administrative expenses of $31,009 and $53,025,
respectively. Research and development expense decreased by
approximately 100% primarily due to a reduction in equipment and
supplies. Stock in exchange for services decreased by approximately
100% due to no shares of common stock being issued in exchange for
certain expenses. Professional fees decreased by approximately 24%
due to a decrease in consulting services.
Other Expense. Total other income expense for the three
months ended June 30, 2020 and 2019 was $65,437 and $31,077,
respectively. Other expense consisted of interest expense in
conjunction with debt issuance of $12,835 and $9,908, respectively;
accretion of debt discount of $55,018 and $21,850, respectively,
and the change in fair value of derivative liability of $2,416 and
$681, respectively.
Results of Operations for the Six Months ended June 30, 2020
and 2019.
Revenues.
Total Revenue. For the six months ended June 30, 2020
and 2019, we had no revenues.
Expenses.
Total Operating Expenses. Total operating expenses for
the six months ended June 30, 2020 and June 30, 2019 were $112,506
and $1,055,448, respectively. Total operating expenses consisted of
research and development of $2,741 and $41,310, respectively; stock
in exchange for services of $0 and $817,075, respectively;
professional fees of $78,260 and $83,166, respectively and selling,
general and administrative expenses of $31,505 and $113,897,
respectively. Research and development expense decreased by
approximately 93% primarily due to a reduction in equipment and
supplies. Stock in exchange for services decreased by approximately
100% due to no shares of common stock being issued in exchange for
certain expenses. Professional fees decreased by approximately 6%
due to a decrease in consulting services.
Other Expense. Total other income expense for the six months
ended June 30, 2020 and 2019 was $490,745 and $32,893,
respectively. Other expense consisted of interest expense in
conjunction with debt issuance of $81,605 and $11,724,
respectively; accretion of debt discount of $106,522 and $21,850,
respectively, change in fair value of derivative liability of
$9,044 and $681, respectively, extinguishment of derivative
liability related to debt conversion of $25,686 and $0,
respectively, and the loss on extinguishment of change in control
of $337,348 and $0, respectively. Interest expense in conjunction
with debt issuance increased by approximately 596% due to the
issuance of notes payable; accretion of debt discount increased by
approximately 388% due to the issuance of notes payable and the
extinguishment of derivative liability related to debt conversion
decreased by approximately 100% due to the convertible note payable
being paid in full.
Financial Condition.
Total Assets. Total assets at June 30, 2020 and December 31,
2019 were $58,155 and $3,111, respectively. Total assets at June
30, 2020 consist of cash of $1,655 and prepaid expenses of $56,500
and at December 31, 2019 consist of cash of $3,111. Total assets
decreased by approximately 1,769%. The primary reason for the
increase was an increase in prepaid expenses at period end.
Total Liabilities. Total liabilities at June 30, 2020 and
December 31, 2019 were $386,433 and $123,274, respectively. Total
liabilities consist of accounts payable of $1,550 and $0,
respectively, accrued interest of $23,204 and $5,365, respectively;
convertible note payable of $107,458 (net of discount of $46,308)
and $57,000, respectively, derivative liability of $216,443 and
$60,909, respectively, and convertible note payable of $37,778 (net
of discount of $12,222) and $0, respectively. Total liabilities
increased by approximately 213%. Accrued interest increased by
approximately 333% due to borrowings for operations. Convertible
note payable increased by approximately 155% due to a new
convertible note payable.
Liquidity and Capital Resources.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern which
contemplates, among other things, the realization of assets and
satisfaction of liabilities in the ordinary course of business.
The Company sustained a loss of $603,251 and $1,088,341 for the six
months ended June 30, 2020 and 2019, respectively. The Company has
accumulated losses totaling $5,774,364 at June 30, 2020. Because of
the absence of positive cash flows from operations, the Company
will require additional funding for continuing the development and
marketing of products. These factors raise substantial doubt about
the Company’s ability to continue as a going concern. The
accompanying financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
We are presently able to meet our obligations as they come due
through the support of our shareholders. At June 30, 2020, we had a
working capital deficit of $290,500. Our working capital deficit is
due to the results of operations.
Net cash used in operating activities for the six months ended June
30, 2020 and 2019 were $167,456 and $119,372, respectively. Net
cash used in operating activities includes our net loss, prepaid
expenses, accretion of debt discount, and loss on extinguishment of
change in control.
Net cash provided by financing activities for the six months ended
June 30, 2020 and 2019 were $166,000 and $114,700, respectively.
Net cash provided by financing activities includes proceeds from
convertible note payable of $118,000 and the issuance of stock of
$48,000.
We anticipate that our future liquidity requirements will arise
from the need to fund our growth from operations, pay current
obligations and future capital expenditures. The primary sources of
funding for such requirements are expected to be cash generated
from operations and raising additional funds from the private
sources and/or debt financing. However, we can provide no
assurances that we will be able to generate sufficient cash flow
from operations and/or obtain additional financing on terms
satisfactory to us, if at all, to remain a going concern. Our
continuation as a going concern is dependent upon our ability to
generate sufficient cash flow to meet our obligations on a timely
basis and ultimately to attain profitability. Our Plan of Operation
for the next twelve months is to raise capital to implement our
strategy. We do not have the necessary cash and revenue to satisfy
our cash requirements for the next twelve months. We cannot
guarantee that additional funding will be available on favorable
terms, if at all. If adequate funds are not available, then we may
not be able to expand our operations. If adequate funds are not
available, we believe that our officers and directors will
contribute funds to pay for some of our expenses. However, we have
not made any arrangements or agreements with our officers and
directors regarding such advancement of funds. We do not know
whether we will issue stock for the loans or whether we will merely
prepare and sign promissory notes. If we are forced to seek funds
from our officers or directors, we will negotiate the specific
terms and conditions of such loan when made, if ever. Although we
are not presently engaged in any capital raising activities, we
anticipate that we may engage in one or more private offering of
our company’s securities after the completion of this offering. We
would most likely rely upon the transaction exemptions from
registration provided by Regulation D, Rule 506 or conduct another
private offering under Section 4(2) of the Securities Act of 1933.
See “Note 2 – Going Concern” in our financial statements for
additional information as to the possibility that we may not be
able to continue as a “going concern.”
We are not aware of any trends or known demands, commitments,
events or uncertainties that will result in or that are reasonably
likely to result in material increases or decreases in
liquidity.
Capital Resources.
We had no material commitments for capital expenditures as of June
30, 2020.
Off-Balance Sheet Arrangements
We have made no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or
capital resources that is material to investors.
Inflation
We do not believe that inflation has had a material effect on our
results of operations.
Item 3. Quantitative and
Qualitative Disclosure About Market Risk.
The registrant qualifies as a smaller reporting company, as defined
by SEC Rule 229.10(f)(1) and is not required to provide the
information required by this Item.
Item 4. Controls and
Procedures.
(a) Management’s Annual Report on Internal Control over
Financial Reporting.
The management of the Company is responsible for establishing and
maintaining adequate internal control over financial reporting. The
Company’s internal control over financial reporting is a process
designed under the supervision of the Company’s Chief Executive
Officer and Chief Financial Officer to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of the Company’s financial statements for external
purposes in accordance with U.S. generally accepted accounting
principles.
With respect to the period ending June 30, 2020, under the
supervision and with the participation of our management, we
conducted an evaluation of the effectiveness of the design and
operations of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) promulgated under the Securities
Exchange Act of 1934.
Based upon our evaluation regarding the period ending June 30,
2020, the Company’s management, including its Principal Executive
Officer and Principal Financial Officer, has concluded that its
disclosure controls and procedures were not effective due to the
Company’s limited internal resources and lack of ability to have
multiple levels of transaction review. Material weaknesses noted
are lack of an audit committee, lack of a majority of outside
directors on the board of directors, resulting in ineffective
oversight in the establishment and monitoring of required internal
controls and procedures; and management is dominated by two
individuals, without adequate compensating controls. Through the
use of external consultants and the review process, management
believes that the financial statements and other information
presented herewith are materially correct.
The Company’s disclosure controls and procedures are designed to
provide reasonable assurance of achieving their objectives.
However, the Company’s management, including its Principal
Executive Officer and Principal Financial Officer, does not expect
that its disclosure controls and procedures will prevent all error
and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that
the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource
constraints, and the benefit of controls must be considered
relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any,
within the Company have been detected.
(b) Change in Internal Control Over Financial Reporting
We have not made any significant changes to our internal controls
during the period ending June 30, 2020. We have not identified any
significant deficiencies or material weaknesses or other factors
that could significantly affect these controls, and therefore, no
corrective action was taken.
PART II – OTHER
INFORMATION
Item 1. Legal
Proceedings.
None.
Item 1A. Risk
Factors.
We are a Smaller Reporting Company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
Item 2. Unregistered Sales of
Equity Securities and Use of Proceeds.
During the three months ended June 30, 2020, the Company issued
1,400,000 shares to non-related parties for cash as set forth in
the table below.
|
Date |
|
Shares |
|
|
Issuance
Description |
|
Relationship |
|
Share Price |
|
|
Amount |
|
|
5/27/20 |
|
|
1,400,000 |
|
|
Cash |
|
Non-related party |
|
|
0.0343 |
|
|
|
$48,000 |
|
Item 3. Defaults Upon Senior
Securities.
None.
Item 4. Mine Safety
Disclosure.
Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, issuers that are operators, or that
have a subsidiary that is an operator, of a coal or other mine in
the United States are required to disclose in their periodic
reports filed with the SEC information regarding specified health
and safety violations, orders and citations, related assessments
and legal actions, and mining-related fatalities from the Federal
Mine Safety and Health Administration, or MSHA, under the Federal
Mine Safety and Health Act of 1977, or the Mine Act. During the
quarter ended June 30, 2020, we did not have any projects that were
in production and as such, were not subject to regulation by MSHA
under the Mine Act.
Item 5. Other
Information.
None.
Item 6. Exhibits.
Exhibit Key
| 3.1 |
Incorporated by reference herein to the Company’s
Form 10 Registration Statement filed with the Securities and
Exchange Commission on July 21, 2011. |
| |
|
| 3.2 |
Incorporated by reference herein to the Company’s
Form 10-Q Quarterly Report filed with the Securities and Exchange
Commission on November 15, 2013. |
| |
|
| 3.3 |
Incorporated by reference herein to the Company’s
Form 10-Q Quarterly Report filed with the Securities and Exchange
Commission on November 15, 2013. |
| |
|
| 3.4 |
Incorporated by reference herein to the Company’s
Form 10-Q Quarterly Report filed with the Securities and Exchange
Commission on August 13, 2018. |
| |
|
| 3.5 |
Incorporated by reference herein to the Company’s
Form 10 Registration Statement filed with the Securities and
Exchange Commission on July 21, 2011. |
| |
|
| 10.0 |
Incorporated by reference herein to the Company’s
Form S-1 Registration Statement filed with the Securities and
Exchange Commission on March 2, 2018. |
| |
|
| 14.0 |
Incorporated by reference herein to the Company’s
Form 10-Q Quarterly Report filed with the Securities and Exchange
Commission on January 17, 2012. |
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THUNDER ENERGIES CORPORATION
|
NAME |
|
TITLE |
|
DATE |
| |
|
|
|
|
|
/s/ Yogev Shvo |
|
President and Chief Executive Officer, Chief
Financial Officer and Director |
|
August 13, 2020 |
| Yogev
Shvo |
|
(Principal Executive Officer and Principal Accounting
Officer) |
|
|
