Table of Contents
AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING
TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”). INFORMATION CONTAINED IN THIS PRELIMINARY
OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE
OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER
A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL
WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.
PRELIMINARY OFFERING CIRCULAR August 9,
2023
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THUNDER ENERGIES CORP.
1100 Peachtree St NE, Suite 200
Atlanta, GA 30309
404-793-1956
OFFERING SUMMARY
Up to 15,000,000 shares of
Class A Common Stock
SEE “SECURITIES BEING OFFERED”
AT PAGE 24
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Price to Public |
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Underwriting
discount and
commissions |
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Proceeds to
issuer |
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Proceeds to
other persons |
Per share |
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$5.00 |
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$0.25 |
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$4.75 |
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0 |
Total Maximum |
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$75,000,000 |
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$3,700,000 |
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$71,300,000 |
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0 |
The Company has engaged Dalmore Group, LLC, member FINRA/SIPC (“Dalmore”),
to act as the broker-dealer of record in connection with this Offering, but not for underwriting or placement agent services. This includes
the 1% commission, but it does not include the one-time set-up fee and consulting fee payable by the Company to Dalmore. See “Plan of Distribution and Selling Securityholders” for details. To the extent that the Company’s officers and directors make
any communications in connection with the Offering they intend to conduct such efforts in accordance with an exemption from registration
contained in Rule 3a4-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, therefore, none of
them is required to register as a broker-dealer.
The company expects that, not including state filing fees, the amount of
expenses of the offering that we will pay will be approximately $3,700,000 based on the maximum number of shares sold in this offering.
This offering (the “Offering”) will terminate at the earlier
of (1) the date at which the Maximum Offering amount has been sold, (2) the date which is one year from this offering being qualified
by the United States Securities and Exchange Commission, or (3) the date at which the offering is earlier terminated by the company at
its sole discretion. The Offering is being conducted on a best-efforts basis and there is no minimum number of shares that needs to be
sold in order for funds to be released to the company and for this Offering to close, which may mean that the company does not receive
sufficient funds to cover the cost of this Offering. The company may undertake one or more closings on a rolling basis. After each closing,
funds tendered by investors will be made available to the company. After the initial closing of this offering, we expect to hold closings
on at least a monthly basis.
The holders of Thunder Energies preferred stock (the “Preferred
Stock”) are entitled to an aggregate vote of the following:
Series A – Cumulative Control Voting of 75%
Series B – 1,000 votes per share convertible into 1,000
shares of Common Stock
Series C – 1,000 votes per share, non-convertible
Holders of the Preferred Stock will continue to hold a majority of the
voting power of all of the company’s equity stock at the conclusion of this Offering and therefore control the board.
The Company has granted Piggyback Registration Rights for current
holders of common stock and the underlying conversion rights of both Series B Preferred Shares and the currently outstanding Convertible
Notes.
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON
THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS
OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH
THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.
GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE
PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS
AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU
TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov.
This offering is inherently risky. See “Risk Factors” on page 3. THERE IS NO ASSURANCE THAT THE NECESSARY FUNDS WILL BE RAISED OR THAT THE ISSUER WILL BE ABLE TO BE SUCCESSFUL
IN THEIR BUSINESS OPERATIONS AS DESCRIBED HEREIN.
Sales of these securities will commence approximately 10 days after
the approval of this Offering.
The company is following the “Offering Circular” format
of disclosure under Regulation A.
TABLE OF CONTENTS
In this Offering Circular, the term “Thunder Energies,”
“we,” “us, “our” or “the company” refers to THUNDER ENERGIES CORP., a Florida corporation.
THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION
RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED
ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY’S MANAGEMENT. WHEN USED IN THE OFFERING
MATERIALS, THE WORDS “ESTIMATE,” “PROJECT,” “BELIEVE,” “ANTICIPATE,” “INTEND,”
“EXPECT” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS.
THESE STATEMENTS REFLECT MANAGEMENT’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT
COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS
ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE.
THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES
AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
SUMMARY
Thunder Energies Corp. was incorporated April 2011 and underwent new
management as of February 2022. This new team has created a vision that is still in the early stages of redevelopment and growth. The
Company looks to drive outstanding results for our shareholders by deploying capital in well diversified business venture acquisitions
and partnerships (i.e., commercial/residential real estate, mining, water purification technologies, solar energy, entertainment, etc.)
and seeks current sustainable income as a primary objective and capital appreciation as a secondary objective.
The company has already secured impressive partnerships - including
real estate development, mining, marketing and advertising, and is continually expanding investment opportunities in multiple capital
markets to create diverse revenue streams. Its mission is to protect the shareholders through a diversified operating base with various
industry classes that allow it to stay liquid and self-sufficient to aid in heading off any unforeseeable market shifts and political
changes around the globe, which are critically important in current times.
The company will operate under the brand name “Thunder Energies”
with consideration given to future name changes due to a diversification of operations outside of the former business.
Revenue Plan
The company will be identifying and acquiring operating businesses
that provide revenue or cash flowing assets and companies that will provide a return on investment to our shareholders.
The Offering
Securities offered |
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Common Stock |
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Common Stock outstanding before the Offering |
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25,140,735 shares of Common Stock. |
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Share Price |
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$5.00 per share |
Maximum Common Shares Offered |
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15,000,000 |
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Minimum Investment |
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$10,000 |
Use of Proceeds
Proceeds from this Offering will be used to acquire companies or interests
in companies. Thunder Energies has current minority interests in a mining venture, development of family resorts in Tennessee and Georgia
and letter of intent for a water purification technologies and solar energy company. Thunder Energies approach is to find and develop
companies who can benefit from its management expertise, synergies and access to capital.
Summary Risk Factors
Thunder Energies is a startup. The company was incorporated on April
2011 and is still in an early stage of development. The company is not close to profitability as projects take approximately 18 months
to develop and construct and may not provide a return on investment for approximately 24 months thereafter. Investing in the company
involves a high degree of risk (see “Risk Factors”). As an investor, you should be able to bear a complete
loss of your investment. Some of the more significant risks include those set forth below:
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This is a very young company. |
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The company has minimal operating capital and minimal
revenue from operations. |
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The success of Thunder Energies is dependent on
the acquisition of business venture assets that produce revenue at favorable prices. |
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The company may need to raise more capital and future fundraising rounds could result in dilution. |
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Success in the real estate and other investments is highly unpredictable, and there is no guarantee the company will be successful in the market. |
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Thunder Energies runs the risk of becoming an inadvertent investment company. |
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Market risks could have material negative effects on Thunder Energies’ planned operations. |
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Thunder Energies operates in a highly competitive market. |
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Litigation against our operations, our business,
results of operations or financial condition. |
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The company’s insurance coverage may not be adequate to cover all possible losses that it could suffer and its insurance costs may increase. |
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Some of the company’s operations will be in
real estate, which are subject to numerous risks, including the risk that the values of their investments may decline if there is
a prolonged downturn in real estate values. |
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The illiquidity of real estate may make it difficult for the company to dispose of one or more of our investments or negatively affect our ability to profitably sell such investments and access liquidity. |
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The company’s growth strategy depends on its ability to identify and fund acquisition of income producing assets. |
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The company’s real estate acquisitions may
depend on their ability to obtain favorable mortgage financing. |
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Thunder Energies depends on a small management team and may need to hire more people to be successful. |
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The Offering price has been arbitrarily set by the company. |
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The officers of Thunder Energies control the company and the company does
not currently have any independent directors.
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Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement and claims where the forum selection provision is applicable, which could result in less favorable outcomes to the plaintiff(s) in any such action. |
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There is little to no current market for Thunder Energies’ shares. |
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The interests of Thunder Energies and the company’s other affiliates may conflict with your interests. |
RISK FACTORS
The SEC requires the company to identify risks that are specific to its
business and its financial condition. The company is still subject to all the same risks that all companies in its business, and all companies
in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments
(such as hacking and the ability to prevent hacking). Additionally, early-stage companies are inherently riskier than more developed companies.
You should consider general risks as well as specific risks when deciding whether to invest.
Risks relating to our business
This is a very young company.
The company was incorporated in Florida on April 21, 2011 and underwent
new management as of February 2022. This new team has created a vision that is still in the early stages of redevelopment and growth.
Despite the time since incorporation the company is still a startup company that has recently been acquired and changed its operations
to a new business model. The company is initiating the execution of its business plan discussed herein. There is limited history upon
which an evaluation of its past performance and future prospects can be made. Statistically, most startup companies fail.
The company has minimal operating capital, no significant
assets and no revenue from operations.
The company currently has minimal operating capital and for the foreseeable
future will be dependent upon its ability to finance its planned operations from the sale of securities or other financing alternatives.
There can be no assurance that it will be able to successfully raise operating capital in this or other offerings of securities, or to
raise enough funds to become operational. The failure to successfully raise operating capital could result in its inability to execute
its business plan and potentially lead to bankruptcy, which would have a material adverse effect on the company and its investors.
The success of Thunder Energies business
is dependent on acquisition of operating assets that produce revenue at favorable prices.
As of the date of this Offering Circular the company has a minority
interest in a mining operation and a family resort operation. The company is also in negotiations with a water/solar technology company.
The company does not know whether it will be able to obtain additional acquisitions in other companies at acceptable purchase terms that
are favorable. Finally, if this Offering does not raise enough capital to finalize the acquisitions, the company may need to turn to
other sources of funds.
Thunder Energies
runs the risk of becoming an inadvertent investment company.
As Thunder Energies executes its business
plan it must acquire and control properties and businesses. Failure to control the assets could lead to Thunder Energies holding greater
than 40% of its assets in securities which could lead to it being ruled an investment company under Section 3(a)(1)(C) of the Investment
Company Act of 1940.
The company may raise more capital and future fundraising
rounds could result in dilution.
Thunder Energies may need to raise additional funds to finance its operations
or fund its business plan. Even if the company manages to raise subsequent financing or borrowing rounds, the terms of those borrowing
rounds might be more favorable to new investors or creditors than to existing investors such as you. New equity investors or lenders could
have greater rights to our financial resources (such as liens over our assets) compared to existing shareholders. Additional financings
could also dilute your ownership stake, potentially drastically. See “Dilution” and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations– Plan of Operation” for more information.
Success in real estate and other acquisitions
is highly unpredictable, and there is no guarantee the company will be successful in the market.
The company’s success will depend on the performance of the companies
and assets it acquires. Thunder Energies will perform due diligence, appraisals and evaluation of operations but investment trends are
difficult to predict. For example, if the company fails to anticipate future preferences in the real estate markets, its business and
financial performance will likely suffer. The company may also invest in operations that end up losing money. Even if one of its facilities
is successful, the company may lose money in others.
Market risks could have material negative effects
on Thunder Energies’ planned operations.
Market risk includes the risk that geopolitical and other events will disrupt
the economy on a national or global level. For instance, war, terrorism, market manipulation, government defaults, government shutdowns,
political changes or diplomatic developments, public health emergencies (such as the spread of infectious diseases, pandemics, such as
COVID-19, and epidemics) and natural/environmental disasters can all negatively impact markets, which could cause the Company to lose
value. These events could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and
significantly adversely impact the economy. The current contentious domestic political environment, as well as political and diplomatic
events within the United States and abroad, such as presidential elections in the United States or abroad or the U.S. government’s
inability at times to agree on a long-term budget and deficit reduction plan, has in the past resulted, and may in the future result,
in a government shutdown or otherwise adversely affect the U.S. regulatory landscape, the general market environment and/or investor sentiment,
which could have an adverse impact on the Company’s investments and operations. Additional and or prolonged U.S. federal government
shutdowns may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly
and to a significant degree.
Thunder Energies operates in a highly competitive market.
Thunder Energies plans to operate in a highly competitive market and faces
intense competition. Many of the company’s current and potential competitors have greater resources, longer histories, more customers,
and greater brand recognition. Competitors may secure better financial terms, adopt more aggressive pricing and devote more resources
to technology, infrastructure, fulfillment, and marketing.
Litigation against our operations, our business,
results of operations or financial condition.
The company’s businesses may be adversely affected by legal or
governmental proceedings. Regardless of whether any claims against the company are valid or whether they are liable, claims may be expensive
to defend and may divert time and money away from operations and hurt the company’s financial performance. A judgment significantly
in excess of their insurance coverage or not covered by insurance could have a material adverse effect on the company’s business,
results of operations or financial condition which will reduce or eliminate Thunder Energies’ ability to recover its investment.
The company’s insurance coverage may not
be adequate to cover all possible losses that it could suffer and its insurance costs may increase.
The company has not yet acquired insurance. It may not be able to acquire
insurance policies that cover all types of losses and liabilities. Additionally, once the company acquires insurance, there can be no
assurance that its insurance will be sufficient to cover the full extent of all of its losses or liabilities for which it is insured.
Further, insurance policies expire annually and the company cannot guarantee that it will be able to renew insurance policies on favorable
terms, or at all. In addition, if it, or other assets sustain significant losses or make significant insurance claims, then its ability
to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected. If the company’s insurance
coverage is not adequate, or it becomes subject to damages that cannot by law be insured against, such as punitive damages or certain
intentional misconduct by their employees, this could adversely affect the company’s financial condition or results of operations.
Some of the company’s assets will be
in real estate, which are subject to numerous risks, including the risk that the values of those assets may decline if there is a prolonged
downturn in real estate values.
Some of the company’s operations will consist of real estate
operations. Accordingly, the company is subject to the risks associated with holding and developing real estate. A prolonged decline
in the popularity of certain real estate could adversely affect the value of its holdings and could make it difficult to sell its interest
or divest from the company or businesses.
The company’s real estate holdings will be subject to risks typically
associated with real estate. The returns available from real estate depend in large part on the amount of income earned, expenses incurred
and capital appreciation generated by the related properties. In addition, a variety of other factors affect income from properties and
real estate values, including governmental regulations, real estate, insurance, zoning, tax and eminent domain laws, interest rate levels
and the availability of financing. For example, new or existing real estate zoning or tax laws can make it more expensive and time-consuming
to expand, modify or renovate older properties. Under eminent domain laws, governments can take real property. Sometimes this taking
is for less compensation than the owner believes the property is worth. Any of these factors could have an adverse impact on our business,
financial condition or results of operations.
The illiquidity of real estate may make it
difficult for the company to dispose of one or more of our assets or negatively affect our ability to profitably sell such assets and
access liquidity.
The company may from time to time decide to dispose of one or more
of its assets which may include real estate. Because real estate holdings generally, are relatively illiquid, the company may not be
able to dispose of one or more investment assets on a timely basis. In some circumstances, sales may result in losses which could adversely
affect the company’s financial condition. The illiquidity of its holdings assets could mean that it continues to operate a facility
that management has identified for disposition. Failure to dispose of a real estate asset in a timely fashion, or at all, could adversely
affect the company’s business, financial condition and results of operations.
The company’s growth strategy depends
on its ability to identify and fund acquisition of income producing companies.
A key element of the company’s growth strategy is to identify,
acquire and fund income producing companies. Positive cash flow is a critical consideration. The company has identified a number of strategic
markets and is still in the process of identifying additional opportunities. The company’s ability to fund, develop and operate
these companies on a cost-effective basis, is dependent on a number of factors, many of which are beyond its control, including but not
limited to our ability to:
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Find quality companies to acquire. |
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Reach acceptable agreements regarding the purchase
of assets and comply with our commitments to our shareholders. |
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Raise or have available an adequate amount of cash or currently available financing. |
The company’s real estate investments may
depend on the company’s ability to obtain favorable mortgage financing.
The company intends to acquire real estate operations and those companies
may need to secure both construction and mortgage financing beyond Thunder Energies ability to fund their operations. There is no guarantee
that the companies will be able to obtain financing on favorable terms. In the event that the companies are unable to obtain such financing
it may limit their ability to effectuate its plans and may, thereby negatively impacting Thunder Energies financial prospects.
Thunder Energies depends on a small management team and
may need to hire more people to be successful.
The success of Thunder Energies will greatly depend on the skills,
connections and experiences of its executives. Thunder Energies has entered into employment agreements with most of its executives but
additional skills and expertise may be necessary to effectively integrate the different operations of the acquired companies. Further,
there is no assurance that the company will be able to identify, hire and retain the right people for various key positions.
Risks relating to this Offering and our shares
The Offering price has been arbitrarily set by the company.
Thunder Energies has set the price of its Common Stock at $5.00 per share.
Valuations for companies at Thunder Energies stage are purely speculative. The company’s valuation has not been validated by any
independent third party and may fall precipitously. It is a question of whether you, the investor, are willing to pay this price for a
percentage ownership of a start-up company. You should not invest if you disagree with this valuation.
The officers of Thunder Energies control the
company and the company does not currently have any independent directors.
The Founders are currently the company’s controlling shareholders.
Moreover, they are the company’s executive officers and directors, through their ownership in Thunder Energies. This could lead
to unintentional subjectivity in matters of corporate governance, especially in matters of compensation and related party transactions.
The company does not benefit from the advantages of having independent directors, including bringing an outside perspective on strategy
and control, adding new skills and knowledge that may not be available within Thunder Energies, and having extra checks and balances to
prevent fraud and produce reliable financial reports.
The company does plan on the addition of independent
directors as a requirement of OTCQX or OTCQX uplifts.
Investors in this offering may not be entitled
to a jury trial with respect to claims arising under the subscription agreement and claims where the forum selection provision is applicable,
which could result in less favorable outcomes to the plaintiff(s) in any such action.
Investors in this offering will be bound by the subscription agreement,
which includes a provision under which investors waive the right to a jury trial of any claim they may have against the company arising
out of or relating to the subscription agreement. Section 27 of the Exchange Act does create exclusive federal jurisdiction over all
suits brought to enforce and duty or liability created by the Exchange Act or the rules and regulations thereunder. Section 22 of the
Securities Act creates a concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability
created by the by the Securities Act or the rules and regulations thereunder. Investors may not waive compliance with the federal securities
laws and rules and regulations promulgated thereunder.
If the company opposed a jury trial demand based on the waiver, a court
would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable
state and federal law. To the company’s knowledge, the enforceability of a contractual pre-dispute, jury trial waiver in connection
with claims arising under the state or federal securities laws has not been finally adjudicated by the courts. However, the company believes
that a contractual pre-dispute jury trial waiver provision is generally enforceable. In determining whether to enforce a contractual pre-dispute
jury trial waiver provision, courts will generally consider whether the visibility of the jury trial waiver provision within the agreement
is sufficiently prominent such that a party knowingly, intelligently and voluntarily waived the right to a jury trial. The company believes
that this is the case with respect to the subscription agreement. Investors should consult legal counsel regarding the jury waiver provision
before entering into the subscription agreement.
If an investor brings a claim against the company in connection with matters
arising under the subscription agreement, including claims under federal securities laws, an investor may not be entitled to a jury trial
with respect to those claims, which may have the effect of limiting and discouraging lawsuits against the company. If a lawsuit is brought
against the company under the subscription agreement, it may be heard only by a judge or justice of the applicable trial court, which
would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including
results that could be less favorable to the plaintiff(s) in such an action.
Nevertheless, if this jury trial waiver provision is not permitted by applicable
law, an action could proceed under the terms of the subscription agreement with a jury trial. No condition, stipulation or provision of
the subscription agreement serves as a waiver by any holder of common shares or by Thunder Energies of compliance with any substantive
provision of the federal securities laws and the rules and regulations promulgated under those laws.
In addition, when the shares are transferred, the transferee is required
to agree to all the same conditions, obligations and restrictions applicable to the shares or to the transferor with regard to ownership
of the shares, that were in effect immediately prior to the transfer of the shares, including but not limited to the subscription agreement.
There is little to no current market for Thunder Energies’
shares.
Thunder Energies is listed on the OTC Markets Pink with a pending application
to OTCQX. At the current time the Company’s trading is limited. There is no guarantee there will be demand for the shares. Investors
should assume that they may not be able to liquidate their investment or pledge their shares as collateral for some time.
Risks Related to Certain Conflicts of Interest
The interests of Thunder Energies and the company’s
other affiliates may conflict with your interests.
The company’s Amended and Restated Certificate of Incorporation,
bylaws and Florida law provide company management with broad powers and authority that could result in one or more conflicts of interest
between your interests and those of the officers and directors of Thunder Energies, and the Company’s future investments. This
risk may increase if and investment targets are controlled by Thunder Energies or our officers and directors, through ownership, as an
officer or director contractually or any combination thereof. Potential conflicts of interest include, but are not limited to, the following:
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Thunder Energies and the company’s other affiliates will not be required to disgorge any profits or fees or other compensation they may receive from any other business they own separate from the company, and you will not be entitled to receive or share in any of the profits, return, fees or compensation from any other business owned and operated by the management and their affiliates for their own benefit. |
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The investment target may engage Thunder Energies, or other companies affiliated with Thunder Energies to perform services, and determination for the terms of those services will not be conducted at arms’ length negotiations; and |
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The company’s officers and directors are not required to devote all of their time and efforts to the affairs of the company. |
DILUTION
Dilution means a reduction in value, control or earnings of the shares
the investor owns.
Immediate dilution
An early-stage company typically sells its shares (or grants options over
its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their “sweat equity”
into the company. When the company seeks cash investments from outside investors, like you, the new investors typically pay a much larger
sum for their shares than the founders or earlier investors, which means that the cash value of your stake is diluted because all the
shares are worth the same amount, and you paid more than earlier investors for your shares. If you invest in our Preferred Stock, your
interest will be diluted immediately to the extent of the difference between the Offering price per share of our Preferred Stock and the
pro forma net tangible book value per share of our Preferred Stock after this Offering.
As of March 31, 2023, the net tangible book
value of the Company was a deficit of $8,365,208. Based on the number of shares of Common Stock issued and outstanding as of the date
of the offering (25,140,735) that equates to a net tangible book value of approximately ($0.333) per share of Common Stock on a pro forma
basis. Based on the total number of shares of Common Stock that would be outstanding assuming full subscription (40,140,735) at total
net proceeds of $71,300,000, that equates to approximately $1.57 of tangible net book value per share.
Thus, if the Offering is fully subscribed,
the net tangible book value per share of Common Stock owned by our current stockholders will have immediately increased by approximately
$1.90 without any additional investment on their behalf and the net tangible book value per share for new investors will be immediately
diluted by $3.18 per share. These calculations do include the costs of the Offering, and such expenses will not cause further dilution.
Future dilution
Another important way of looking at dilution is the dilution that happens
due to future actions by the company. The investor’s stake in a company could be diluted due to the company issuing additional shares.
In other words, when the company issues more shares, the percentage of the company that you own will go down, even though the value of
the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from
a stock offering (such as a venture capital round, angel investment), employees exercising stock options, or by conversion of certain
instruments (e.g., convertible bonds, preferred shares or warrants) into stock.
If the company decides to issue more shares, an investor could experience
value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less
than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if
the company offers dividends, and most early stage companies are unlikely to offer dividends, preferring to invest any earnings into the
company).
The type of dilution that hurts early-stage investors most often occurs
when the company sells more shares in a “down round,” meaning at a lower valuation than in earlier offerings. An example of
how this might occur is as follows (numbers are for illustrative purposes only):
|
· |
In June 2014 Jane invests $20,000 for shares that represent 2% of a company valued at $1 million. |
|
|
|
|
· |
In December, the company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Jane now owns only 1.3% of the company but her stake is worth $200,000. |
|
|
|
|
· |
In June 2015, the company has run into serious problems and in order to stay afloat it raises $1 million at a valuation of only $2 million (the “down round”). Jane now owns only 0.89% of the company and her stake is worth only $26,660. |
This type of dilution might also happen upon conversion of convertible
notes into shares. Typically, the terms of convertible notes issued by early-stage companies provide that in the event of another round
of financing, the holders of the convertible notes get to convert their notes into equity at a “discount” to the price paid
by the new investors, i.e., they get more shares than the new investors would for the same price. Additionally, convertible notes may
have a “price cap” on the conversion price, which effectively acts as a share price ceiling. Either way, the holders of the
convertible notes get more shares for their money than new investors. In the event that the financing is a “down round” the
holders of the convertible notes will dilute existing equity holders, and even more than the new investors do, because they get more shares
for their money. Investors should pay careful attention to number of convertible notes that the company has issued and may issue in the
future, and the terms of those notes.
If you are making an investment expecting to own a certain percentage of
the company or expecting each share to hold a certain amount of value, it’s important to realize how the value of those shares can
decrease by actions taken by the company. Dilution can make drastic changes to the value of each share, ownership percentage, voting control,
and earnings per share.
PLAN OF DISTRIBUTION AND SELLING SECURITYHOLDERS
Plan of Distribution
Thunder Energies Corp. is offering a maximum of 15,000,000 shares
of Common Stock on a “best efforts” basis.
The cash price per share of Common Stock is $5.
While Shares are expected to be offered and sold directly by the Company
and its respective Officers and employees, the Company has reserved the right to offer and sell Shares through the services of independent
broker-dealers who are member firms of the Financial Industry Regulatory Authority (“FINRA”) and who will be entitled to receive
customary and standard commissions of up to ten percent (10%) of the Proceeds received for the sale of Shares. Notwithstanding the foregoing,
the amount and nature of commissions payable to broker-dealers is expected to vary in specific instances and may be lower than the one
listed herein. The Investor who is admitted to the Company through such broker-dealer (and not the Company) may be responsible for all
such commissions payable to broker-dealers (and such payments may reduce the Investor’s invested capital) or the Company may pay
such commissions.
The company is offering its securities in all states.
Selling Shareholders
No founders will be selling securities into the offering; all net proceeds
in this offering will go to Thunder Energies Corp.
Piggyback Rights
Existing holders of common stock, convertible preferred shares and
convertible notes will be eligible to obtain Piggyback Rights with respect to their ability to remove restrictive legends from their
shares and obtain free trading stock.
Investors’ Tender of Funds
After the Offering Statement has been qualified by the Securities and Exchange
Commission (the “SEC”), the company will accept tenders of funds to purchase the shares. Prospective investors who submitted
non-binding indications of interest during the “test the waters” period will receive an automated message from us indicating
that the Offering is open for investment. (NOTE: AT THIS TIME NO “TEST THE WATER” PRESENTATIONS HAVE BEEN MADE, NO PROSPECTIVE
INVESTIONS HAVE SUBMITTED INDICATIONS OF INTEREST AND NO PRESENTATION MATERIALS ARE AVAILABLE). We will conduct multiple closings on investments
(so not all investors will receive their shares on the same date). Each time the company accepts funds transferred from the Escrow Agent
is defined as a “Closing.".
Process of Subscribing
You will be required to complete a subscription agreement in order to invest.
The subscription agreement includes a representation by the investor to the effect that, if you are not an “accredited investor”
as defined under securities law, you are investing an amount that does not exceed the greater of 10% of your annual income or 10% of your
net worth (excluding your principal residence).
Any potential investor will have ample time to review the Subscription
Agreement, along with their counsel, prior to making any final investment decision.
If a subscription is rejected, all funds will be returned to subscribers
within thirty days of such rejection without deduction or interest. Upon acceptance by us of a subscription, a confirmation of such
acceptance will be sent to the subscriber. Escrow Agent has not investigated the desirability or advisability of investment in the shares
nor approved, endorsed or passed upon the merits of purchasing the securities.
The company intends to engage a registered transfer agent with the SEC,
who will serve as transfer agent to maintain shareholder information on a book-entry basis; there are no set up costs for this service,
fees for this service will be limited to secondary market activity. The company estimates the aggregate fee due to the transfer agent
for the above services to be $35,000 annually.
The Company has engaged Dalmore Group, LLC (“Dalmore”),
a broker-dealer registered with the Commission and a member of FINRA, to act as the broker-dealer of record for this Offering, but not
for underwriting or placement agent services. As compensation, the Company has agreed to pay Dalmore a commission equal to 1% of the
amount raised in the Offering to support the Offering on all newly invested funds after the issuance of a No Objection Letter by FINRA.
In addition, the Company has paid Dalmore a one-time advance set up fee of $5,000 to cover reasonable out-of-pocket accountable expenses
actually anticipated to be incurred by Dalmore, such as, among other things, preparing the FINRA filing. Dalmore will refund any fee
related to the advance to the extent it is not used, incurred or provided to the Company. In addition, the Company will pay a $20,000
consulting fee that will be due after FINRA issues a No Objection Letter and the Commission qualifies the Offering. An assumption of
$755,000 in total fees paid to Dalmore were used in estimating the expenses of this Offering.
USE OF PROCEEDS TO ISSUER
The following discussion addresses the use of proceeds from this Offering.
The company currently estimates that, at a per share price of $5, the net proceeds from the sale of the 15,000,000 shares of Preferred
Stock will likely be $71,300,000 after deducting the estimated offering expenses of approximately $3,700,000.
The following table breaks down the use of proceeds into different categories
under various funding scenarios:
| |
| 25% | | |
| 50% | | |
| 75% | | |
| 100% | |
Gross Proceeds | |
$ | 18,750,000 | | |
$ | 37,500,000 | | |
$ | 56,250,000 | | |
$ | 75,000,000 | |
Estimated Offering Expenses | |
$ | 736,250 | | |
$ | 1,472,500 | | |
$ | 2,208,750 | | |
$ | 2,945,000 | |
Dalmore | |
$ | 188,750 | | |
$ | 377,500 | | |
$ | 566,250 | | |
$ | 755,000 | |
Net Proceeds | |
$ | 17,825,000 | | |
$ | 35,650,000 | | |
$ | 53,475,000 | | |
$ | 71,300,000 | |
| |
| | | |
| | | |
| | | |
| | |
Overhead - 12 months | |
$ | 1,782,500 | | |
$ | 3,565,000 | | |
$ | 5,347,500 | | |
$ | 7,130,000 | |
| |
| | | |
| | | |
| | | |
| | |
Real Estate Acquisition | |
$ | 8,021,250 | | |
$ | 20,855,250 | | |
$ | 24,063,750 | | |
$ | 32,085,000 | |
| |
| | | |
| | | |
| | | |
| | |
Mining Acquisitions | |
$ | 4,812,750 | | |
$ | 4,812,750 | | |
$ | 4,812,750 | | |
$ | 4,812,750 | |
| |
| | | |
| | | |
| | | |
| | |
Entertainment/Lifestyle Acquisitions | |
$ | 3,208,500 | | |
$ | 3,208,500 | | |
$ | 9,625,500 | | |
$ | 13,636,125 | |
| |
| | | |
| | | |
| | | |
| | |
Infrastructure Technologies | |
$ | 0 | | |
$ | 2,406,375 | | |
$ | 7,219,125 | | |
$ | 10,227,094 | |
| |
| | | |
| | | |
| | | |
| | |
NASDAQ Uplift1 | |
$ | 0 | | |
$ | 802,125 | | |
$ | 2,406,375 | | |
$ | 3,409,031 | |
| 1 | The Company currently plans to file for an uplift to NASDAQ but
the uplift is not contingent upon final approval of this listing and offering. |
THE COMPANY’S BUSINESS
THUNDER ENERGIES BUSINESS OVERVIEW
Our principal business objective is to generate revenue through strategic
acquisitions, partnerships and joint ventures that focus on income generation. We achieve this vision through prudent management of borrowed
funds together with our capital and shareholders’ equity that is invested primarily in a diversified balance sheet of real estate
investments and other cash flowing companies that earns our shareholders a return on investment and share value appreciation.
The business is financed by an appropriate mix of shareholders’
equity and future sale of corporate debt to achieve its primary business objective of an annual return on equity while maintaining a
sound financial structure. This is achieved by rigorous due diligence to vet companies and assets that have significant upside potential
and cash flow while minimizing risks through a financial strategy that pursues an “absolute return” or positive returns to
preserve investor capital and returns to our shareholders. This strategy enables the company to maximize profitability by taking advantage
of different market cycles across various industries and diversifying risk.
We believe that our business objectives are supported through our
long-term conservative financial vision, the diversity of our acquisition strategy and comprehensive risk management approach to preserve
investor capital for our shareholders.
KEYS TO SUCCESS
Thunder Energies’ key to success is the effective negotiation
of value in the acquisition of certain income producing assets where the return on investment is based on asset appreciation and cash
flow from the asset. The Company’s management team are seasoned real estate developers, business managers and financial strategy
specialists.
THE COMPANY’S CURRENT ACQUISITIONS, JOINT
VENTURES AND PARTNERS
At the current time the Company has acquired
or is in the process of acquiring the rights or ownership in several diversified assets:
|
1. |
Fourth and One, LLC (Fourth and One) –
Thunder Energies acquired fifty-one point five percent (51.5%) of Fourth and One, LLC’s interest in W.C. Mine Holdings which equates
to 30.9% ownership of the property rights and development of the Kinsley Mountain mine project. Fourth and One will be distributing the
resources to the market. In addition to the mineral rights, Thunder Energies has the surface rights which will be used by Bear Village
as a third resort development site two hours outside of Salt Lake City.
Bear Village (discussed below) will start
analysis of the site and local family activities such as hiking, spelunking and panning for gold along with the traditional resort amenities.
With respect to the mining operation the preliminary rock sampling
is complete which indicates significant commercial minerals and ores available including silver, lead, copper, other critical metals,
gold and marble. The estimated valuation of the property is $33 million based on a November 17, 2022 review of site data (Please refer
to the attached Kinsley Mountain Valuation document). The Kinsley Mountain property is located in the Antelope Mountains in northeastern
Nevada divided by Elko County to the north and White Pine County to the south. It is approximately 93.2 miles (150 km) northeast of Ely,
Nevada and 51.6 miles (83 km) southwest of Wendover, Nevada.
|
The Kinsley Mountain property is attractive as a precious and
base metal (battery metals) prospect for the following reasons:
| · | Favorable jurisdiction for the conduct of exploration and mining activities.
Nevada is considered one of the best localities in the world for finding and developing a mineral resource. |
| | |
| · | Recent
drilling by other mining companies has demonstrated the existence of significant gold mineralization
in a geologic setting very similar to that which exists in the NW portion of the claim block
and at possibly a shallower depth and other mining companies have expressed interest in leasing
this ground. |
| | |
| · | The geology, mineralogy and milling details are well known in the general
area. |
| | |
| · | Permitting, environmental, and infrastructure concerns are minimal. |
| | |
| · | Water rights have been secured. |
| | |
| · | Critical base metals have been identified and historically produced from
the property. Copper, tungsten, lead, molybdenum, zinc, antimony and bismuth have been found in ore concentrations and in anomalous amounts. |
As part of the agreement Thunder Energies has the rights
to develop the surface as a family resort with its Bear Village, Inc. affiliate.
|
2. |
Bear Village Resorts, Inc. (Bear Village) –
Thunder Energies shares common ownership with this company and it is now wholly owned as a subsidiary of Thunder Energies. Bear Village
is focused on development of family resorts. The management team is actively involved in the operation of this company and its real estate
development strategy. Bear Village has properties planned in Snellville, GA and Pidgeon Forge, TN. The subsidiary is also evaluating
the Kinsley Mountain property to determine the best mode of creating a family resort.
Bear Villag has identified the drive to destination resort market
as its primary interest and has focused its efforts on the development of premiere Family Destination Resort featuring Eco-Friendly,
Eco-Tourism in conjunction with education in a heavily themed Resort. The initial developments are primarily focused on Tennessee, Georgia,
and Nevada. The Company has two resorts in development. The first, in Pigeon Forge, TN is the furthest in concept development with zoning
changes completed from R-1 (residential) to C-5 (commercial use for lodging, entertainment and tourism), water/sewer utilities available
to the property and a preliminary master design submitted to Sevier county in TN. A second proposed property located in Jackson County,
Georgia is undergoing initial site layout. The Nevada property is newly acquired and final master plans are being developed. Additional
properties will be acquired as destination resort demographics are evaluated. The goal is to provide family get away resorts from cities
and suburb communities within a four or five-hour driving radius of the resorts.
Strategic partners will own portions of the assets and business
within each Resort. As an example, the daily operations and general management of the hotel portion of the resorts will be performed
by Fairview Hospitality LLC, working in unison with Bear Village, and its team of industry professionals each with over 20 years in the
hospitality industry. Fairview Hospitality will provide a professional, experienced on-site management team.
Quality family entertainment and experiences is the primary focus
of Bear Village. The construction and commercialization of the proposed resorts is factored into the use of funds detailed within.
The first resort to be developed is Pidgeon Forge which is situated
on over 37.8 acres. The company's proposed resort will be designed to provide the type of facilities the current market demands. Situated
on the land will be a 250+ unit Condominium development, 250+ Time Share units, 250 room resort hotel, 80,000 sq. ft. Indoor Water Park,
15,000 Gallon Fresh Water Aquarium, 90,000 sq. ft. Family Entertainment Center and 20,000 sq. ft. banquet and conference center. Within
the resort facilities will be numerous revenue centers including multiple food and beverage outlets, unique retail outlets, chair lift
unique photo opportunities, our unique Family Entertainment Center.
|
|
3. |
Truvata Holdings Limited/RoRa Holdings, Inc.
(Truvata) – Thunder Energies entered into a contingent convertible promissory note with Truvata on May 12, 2022. The conversion
of the promissory note is contingent upon the listing of the Rora Prime coin on a United States exchange. To date Truvata has not successfully
obtain approved listing status as an asset back coin. Once listed the coins will be on the Thunder Energies balance sheet as an asset
which can be leveraged as collateral to obtain favorable construction financing.
This new crypto currency is backed by real
assets, including copper mines, gold, rhodium, real estate, oil and gas, precious gems and various other high-value assets. As a decentralized
cryptocurrency based on Ethereum, the RoRa™ Prime coins are inherently stable assets and provide a convenient means of value for
regular transactions. RoRa™ Prime coins expand the mobility of crypto assets across the ecosystem as adoption increases within
the Global FI standards. The synergistic management philosophies of providing asset backed business models is an excellent match as both
companies grow in their respective fields.
Rora obtains the benefit of holding shares
backed by real estate while Thunder Energies has a stable asset that may be used as collateral for further acquisition of additional
real estate and development.
At the current time the coins are not listed on Thunder Energies’
Balance Sheet because Rora has not been listed.
|
|
|
|
|
4. |
NextMart, Inc. (NextMart)
is a publicly traded company that is acquiring environmentally friendly water purification technologies and solar energy for industrial
applications. Thunder Energies is negotiating the formation of a joint venture where NextMart will expand into commercial and drinking
water applications with eco-friendly power generation and water recovery systems for Thunder Energies’ resorts developed by
Bear Village and other real estate projects. |
|
|
|
|
5. |
Las Vegas Aces (Aces) – Thunder Energies announced
on December 20, 2022, that it has negotiated a marketing agreement with the Las Vegas Aces WNBA team that is owned by Mark Davis
who also owns the Las Vegas Raiders NFL team. The agreement provides Thunder Energies the opportunity market its real estate development
projects and assets through the Aces to bring brand recognition to Thunder Energies owned companies, its Nevada owned Kinsley Mountain
asset and to strengthen their ties to champion change in multiple industries. The Aces are the 2022 WNBA Champions after only their
fifth season and they have advanced to the postseason in each of the last four years and these two forward-thinking and like-minded
organizations will help to align both brands into the future. |
The purpose of the aforementioned agreements are as follows:
| 1. | To
realize operational profits through the minority owned WC Mine Holdings while developing
a third family resort through the Bear Village subsidiary. |
| 2. | To
create an infrastructure development company with NextMart to provide an eco-friendly
experience to its visitors then expand into other real estate eco-friendly developments. |
| 3. | The
pending crypto currency equity swap agreement with Truvata will provide operational liquidity
to Thunder Energies for real estate development and acquisition. |
| 4. | To
provide marketing and brand awareness to Thunder Energies joint venture partnerships with
Fourth and Ones’ Kinsley Mountain family resort project in Nevada and the other
resorts in Tennessee and Georgia along with the eco-friendly infrastructure principals supplied
by the potential NextMart joint venture. Other future real estate and development acquisitions
may also be marketed through the Aces sponsorship. |
CONFLICTS OF INTEREST
We are not aware of any conflicts of interest between the founders
of Thunder Energies Corp. and the founders. Potential sources of conflicts are discussed below.
General
At the current time management contracts do not have conflicts in the operation
of the Company.
Bear Village
Bear Village shares common ownership with Thunder Energies and a full
acquisition of Bear Village is planned. To avoid any conflicts of interest the acquisition will be for a de minimis amount.
Allocation of Our Affiliates’ Time
Thunder Energies relies on Thunder Energies executive officers and other
professionals who act on behalf of Thunder Energies, for the day-to-day operation of our business.
As a result of the executives competing responsibilities, their obligations
to other investors and the fact that they will continue to engage in other business activities on behalf of themselves and others, they
will face conflicts of interest in allocating their time to Thunder Energies and other entities and other business activities in which
they are involved. However, the company believes that the executive officers and investment professionals have sufficient depth to fully
discharge their responsibilities to the company and the other entities for which they work. The long-term plan is for the executives to
resign from their other operations and dedicate their time to Thunder Energies.
Receipt of Fees and Other Compensation by Thunder Energies and its Affiliates
Thunder Energies and its affiliates will receive substantial fees from
the company, which fees will not be negotiated at arm’s length. These fees could influence Thunder Energies advice to the company
as well as the judgment of the affiliated executives of Thunder Energies. For additional information see “The Company’s Business
– Support from Thunder Energies” for conflicts relating to the payment structure between Thunder Energies and its’ affiliates.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion includes information
from the audited financial statements for the periods ending December 31, 2022 and March 31, 2023, and should be read in conjunction
with our financial statements and the related notes included in this Offering Circular. Audited financials are be completed in accordance
with the Regulation A requirements and have been filed with the SEC through the EDGAR System.
The following discussion contains forward-looking statements that reflect
our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.
Overview
Thunder Energies is an OTC Markets listed company (OTC:TNRG) and is
fully PCAOB audited with a pending OTCQX filing on OTC Markets. The current ownership group purchased controlling interest in the company
on February 23, 2022. Since that time the Company has continued to clean the financials, update the corporate finings and structure.
The Company is up to date on filing will continue to file its Annual and Quarterly reports with PCAOB audit review.
Results of Operations
Over the past 12 months, the prior ownership allowed its business to decline
with $0 revenues. The current ownership has taken over the prior management and reviewed all financials and updated all the filings.
As a result of the foregoing, the company generated a net loss of $5,466,473
which includes loss from operations of $2,386,303 with additional losses due to stock and interest expenses totaling $3,080,170 through
December 31, 2022. For the 3 month period ending March 31, 2023, the company generated a net loss of $2,866,314 which includes loss
from operations of $531,690 with additional losses due to stock and interest expenses totaling $2,334,624.
Plan of Operation
Upon completion of this Offering, the company intends to fund investments
with the proceeds from this Offering and use strategic acquisition of assets.
SHAREHOLDERS, DIRECTORS, EXECUTIVE OFFICERS AND
SIGNIFICANT EMPLOYEES
The table below sets forth the directors of the company.
Name |
|
Position |
|
Age |
|
Term of Office (If
indefinite give date
of appointment) |
Eric Collins |
|
Director, Chairman |
|
57 |
|
Indefinite - July 21,
2022 |
Ricardo Haynes |
|
Director |
|
55 |
|
Indefinite - July 21,
2022 |
Lance Lehr |
|
Director |
|
56 |
|
Indefinite - July 21,
2022 |
Tori White |
|
Director |
|
30 |
|
Indefinite - July 21,
2022 |
Donald R. Keer |
|
Director |
|
61 |
|
Indefinite - July 21,
2022 |
OTCQX requires independent directors
The table below sets forth the officers of THUNDER ENERGIES.
Name |
|
Position |
|
Age |
|
Term of Office (If
indefinite give date
of appointment) |
Eric Collins |
|
Director, Chairman |
|
57 |
|
Indefinite - July 21,
2022 |
Ricardo Haynes |
|
President/CEO |
|
55 |
|
Indefinite - July 21,
2022 |
Lance Lehr |
|
VP Operations |
|
56 |
|
Indefinite - July 21,
2022 |
Tori White |
|
Development Consultant |
|
30 |
|
Indefinite - July 21,
2022 |
Donald R. Keer |
|
Attorney, Secretary, Treasury |
|
61 |
|
Indefinite - July 21,
2022 |
Biographies
Eric Collins - Director, Chairman
Mr. Collins is a well-polished leader with over 39 years in project management
experience specializing in logistics planning for the U.S. Air Force, Special Operation Forces Division where he was responsible for oversight,
coordination and execution of operational cost efficiencies of funds, time, material and facilities to resolve problems and issues in
support and maintenance programs. This included preparing briefings and presentations for senior leadership using methods such as data
mining, data modeling, and or cost or benefit analysis to acquire and secure new government contracts. Over the past 5 years Mr. Collins
has continued working with the US Air Force at Warner Robins Air Base where he manages the defense budget and contracts. He has also worked
for Top Flight Development Group Inc. in Atlanta, GA buying and selling property for residential development.
Ricardo Haynes
President/CEO
Highly accomplished business development executive with more than 20 years
of experience in producing exponential revenue growth, cultivating enduring relationships within the hospitality and financial industry.
Worked for Marriot Corporation for over 15 years in property development, licensing and investment. Also operated in the financial industry
providing corporate bond placement and project financing. Total experience includes commercial real estate sales and loan origination
with regional and nationally based lending institutions, corporate finance consulting. Grass roots development experience in creating
and issuing collateralized bond obligation and related instruments. Over the last 5 years Mr. Haynes has worked assisting clients in construction
financing in both commercial and hospitality markets with Candela Group, Ltd. In Alberta, Canada.
Lance L. Lehr
Operations Manager
Mr. Lehr has 25 years of senior management experience
in the Hospitality Industry. He has worked at the senior most level of projects ranging from Ski Area’s with Hotel, Condo, F&B
and Adventure Parks to Indoor Water Park Resorts development and operations. Mr. Lehr serves as a senior advisor to one POS, a hospitality
technology leader and has developed numerous independent companies and concepts. His entrepreneurial management style of leadership empowers
associates and holds them accountable for high level performance. This has led to the successful development and operation of several
companies in the hospitality industry that focus on franchise like systems and aggressive labor and cost management. Mr. Lehr’s
entrepreneurial focus leads to creative solutions that deliver superior result in today’s dynamic marketplace. Through aggressive
cost control coupled with out of the box sales building efforts and an intense focus on the guest experience, Mr. Lehr has been able to
provide superior long term results for his clients. Over the past 5 years has worked as President of Hybrid Hospitality, LTD in Erie,
PA developing amusement parks, water parks and hospitality properties for clients.
Tori White
Development Consultant
Ms. White has been working for Northpointe Realty since 2015 in commercial
and residential real estate leasing and contracting. Prior to that, she worked at Jlew Enterprises, LLC in Boca Raton, FL in their residential
construction group from 2012-2015. Over the last 5 years Ms. White has marketed and sold commercial and residential real estate.
Donald R. Keer, P.E., ESQ.
Corporate Attorney
Mr. Keer is an attorney and a professional engineer who spent the first
half of his career as a construction project manager working for Fluor Corporation and then local developers in New Jersey and Pennsylvania.
Mr. Keer has also been an expert witness for various construction issues including delay damages, building code standards, construction
technologies and insurance claims.
For the past 25 years Mr. Keer has represented business clients working
on construction projects, real estate development, mergers and acquisitions and publicly traded companies to ensure their businesses and
construction projects move forward in a timely manner. He is a sole practitioner and has had his own law practice for 25 years.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The company paid Ricardo Haynes $47,708 and
$37,500 through December 31, 2022 and March 31, 2023 respectively and did not pay any of its other officers or directors a salary.
The company intends to pay salaries within 12 months after of the approval
of this Offering. The highest paid officers of the company will have employment agreements and salaries negotiated. Salaries are targeted
to be as follows:
Name |
|
Position |
|
Annual
Compensation |
|
Eric Collins |
|
Chairman/COO |
|
$ |
100,000 |
|
Ricardo Haynes |
|
President/CEO |
|
$ |
250,000 |
|
Lance Lehr |
|
VP Operations |
|
$ |
100,000 |
|
Tori White |
|
Director/Development Consultant |
|
$ |
100,000 |
|
Donald R. Keer |
|
Corporate Counsel |
|
$ |
150,000 |
|
All compensation will be on behalf of the company by Thunder Energies
Corp. and allocated to the subsidiaries.
In the future, the company will have to pay its officers, directors and
other employees, which will impact the company’s financial condition and results of operations, as discussed in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” The company may choose to establish an equity compensation
plan for its management and other employees in the future. Further, as the company grows, the company intends to add additional executives,
including but not limited to, a General Manager, a Food and Beverage Manager and Resort Managers.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
GENERALLY
Thunder Energies Corp. is authorized to issue
900,000,000 shares of common stock, $0.001 par value per share, in the Company and 750,000,000 shares of preferred stock. As of March
31, 2023, 25,140,735 shares of common stock issued and outstanding, 50,000,000 shares of Series A Preferred Stock have been authorized,
issued and outstanding,10,000,000 shares of Series B Preferred Stock have been authorized and 69,000 shares issued and outstanding, and
10,000,000 shares of Series C Preferred Stock have been authorized and 10,000 shares issued and outstanding. See “Description of
Capital” and “Principal Shareholders.”
We have reserved 15,000,000 shares of common stock for this issuance
under the Thunder Energies Corp.’s private placement. The Company has not issued any options.
COMMON STOCK
Holders of outstanding shares of common stock are entitled to one vote
per share on all matters submitted to a vote of the shareholders. Except as may be required by applicable law, holders of outstanding
shares of common stock vote together as a single class. Holders of a majority of the outstanding shares of common stock constitute a quorum
at any meeting of shareholders.
PREFERRED STOCK
Holders of the outstanding shares of Series A Preferred Stock, in accordance
with the Certificate of Designation, have conversion rights of 15:1 with Piggyback Rights and super majority voting rights of 75% of
all voting.
Holders of the outstanding shares of Series B Preferred Stock, in accordance
with the Certificate of Designation, have conversion rights of 1,000:1 with Piggyback Rights and voting rights of 1,000:1.
Holders of the outstanding shares of Series C Preferred Stock, in accordance
with the Certificate of Designation, have no conversion rights and voting rights of 1,000:1.
Principal Shareholders
Title
of Class |
Name
and Address of beneficial owner |
Amount and
Nature of
beneficial
ownership |
Amount and
Nature of
beneficial
ownership
acquirable |
Percent of
class |
Series A Preferred |
Ricardo Haynes; 1100 Peachtree Street NE, Suite
200, Atlanta, Georgia 30309 |
7,500,000 |
Restricted |
15% |
Series A Preferred |
Eric Collins; 1100 Peachtree Street NE, Suite
200, Atlanta, Georgia 30309 |
12,500,000 |
Restricted |
25% |
Series A Preferred |
Lance Lehr; 1100 Peachtree Street NE, Suite 200,
Atlanta, Georgia 30309 |
2,500,000 |
Restricted |
5% |
Series A Preferred |
Tori White; 1100 Peachtree Street NE, Suite 200,
Atlanta, Georgia 30309 |
24,000,000 |
Restricted |
48% |
Series A Preferred |
Donald Keer; 1100 Peachtree Street NE, Suite
200, Atlanta, Georgia 30309 |
3,500,000 |
Restricted |
7% |
Title of Class |
Name and Address of
beneficial owner |
Amount and
Nature of
beneficial
ownership |
Amount and
Nature of
beneficial
ownership
acquirable |
Percent of
class (1) |
Series B Preferred |
Ricardo Haynes; 1100 Peachtree Street NE, Suite 200, Atlanta, Georgia 30309 |
750 |
Restricted |
1.18% |
Series B Preferred |
Eric Collins; 1100 Peachtree Street NE, Suite 200, Atlanta, Georgia 30309 |
1,250 |
Restricted |
1.97% |
Series B Preferred |
Lance Lehr; 1100 Peachtree Street NE, Suite 200, Atlanta, Georgia 30309 |
250 |
Restricted |
0.39% |
Series B Preferred |
Tori White; 1100 Peachtree Street NE, Suite 200, Atlanta, Georgia 30309 |
2,400 |
Restricted |
3.78% |
Series B Preferred |
Donald Keer; 1100 Peachtree Street NE, Suite 200, Atlanta, Georgia 30309 |
350 |
Restricted |
0.55% |
Series B Preferred |
Top Flight Development Group; 1447 Peachtree St., Suite 230, Atlanta, Georgia 30309 |
58,500 |
Restricted |
92.13% |
| (1) | Series B Preferred is a convertible
stock. 48,600 Shares were converted between the issuance of the 10Q dated March 31, 2023
published May 15, 2023 and the date of this offering. |
Title
of Class |
Name
and Address of beneficial owner |
Amount and
Nature of
beneficial
ownership |
Amount and
Nature of
beneficial
ownership
acquirable |
Percent of
class |
Series C Preferred |
Ricardo Haynes; 1100 Peachtree Street NE, Suite
200, Atlanta, Georgia 30309 |
1,500 |
Restricted |
15% |
Series C Preferred |
Eric Collins; 1100 Peachtree Street NE, Suite
200, Atlanta, Georgia 30309 |
2,500 |
Restricted |
25% |
Series C Preferred |
Lance Lehr; 1100 Peachtree Street NE, Suite 200,
Atlanta, Georgia 30309 |
500 |
Restricted |
5% |
Series C Preferred |
Tori White; 1100 Peachtree Street NE, Suite 200,
Atlanta, Georgia 30309 |
4,800 |
Restricted |
48% |
Series C Preferred |
Donald Keer; 1100 Peachtree Street NE, Suite
200, Atlanta, Georgia 30309 |
700 |
Restricted |
7% |
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Management Services Agreement and Employment Agreements
No Management Services Agreement is in place with any of the management
team.
SECURITIES BEING OFFERED
Thunder Energies Corp. is offering Common Stock in this Offering.
The company is qualifying up to 15,000,000 shares of Common Stock under this Offering Statement, of which this Offering Circular is part.
Thunder Energies authorized capital stock consists of 900,000,000 shares of Common Stock (the “Common Stock”), at $0.001
par value, of which 25,140,735 shares are Common Stock are issued.
The following is a summary of the rights of Thunder Energies’ capital
common stock as provided in its Amended and Restated Certificate of Incorporation, and Bylaws, which have been filed as exhibits to the
Offering Statement of which this Offering Circular is a part.
Common Stock
Shares of our common stock have the following rights,
preferences and privileges:
Voting
Each holder of common stock is entitled to one vote for each share of common
stock held on all matters submitted to a vote of stockholders. Any action at a meeting at which a quorum is present will be decided by
a majority of the voting power present in person or represented by proxy, except in the case of any election of directors, which will
be decided by a plurality of votes cast. There is no cumulative voting.
Dividends
Holders of our common stock are entitled to receive dividends when, as
and if declared by our board of directors out of funds legally available for payment, subject to the rights of holders, if any, of any
class of stock having preference over the common stock. Any decision to pay dividends on our common stock will be at the discretion of
our board of directors. Our board of directors may or may not determine to declare dividends in the future. See “Dividend Policy.”
The board’s determination to issue dividends will depend upon our profitability and financial condition any contractual restrictions,
restrictions imposed by applicable law and the SEC, and other factors that our board of directors deems relevant.
Liquidation Rights
In the event of a voluntary or involuntary liquidation, dissolution or
winding up of the company, the holders of our common stock will be entitled to share ratably on the basis of the number of shares held
in any of the assets available for distribution after we have paid in full, or provided for payment of, all of our debts and after the
holders of all outstanding series of any class of stock have preference over the common stock, if any, have received their liquidation
preferences in full.
Other
Our issued and outstanding shares of common stock are fully paid and nonassessable.
Holders of shares of our common stock are not entitled to preemptive rights. Shares of our common stock are not convertible into shares
of any other class of capital stock, nor are they subject to any redemption or sinking fund provisions.
For a complete description of Thunder Energies’ capital stock,
you should refer to its Amended and Restated Certificate of Incorporation and Bylaws, and applicable provisions of the Florida General
Corporation Law.
THUNDER ENERGIES CORP.
Index to Financial Statements
THUNDER ENERGIES CORPORATION
Unaudited Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
32,210 |
|
|
$ |
48,881 |
|
Notes receivable - related party |
|
|
27,835 |
|
|
|
26,200 |
|
Deferred offering costs |
|
|
25,750 |
|
|
|
9,000 |
|
Prepaid expenses and other assets |
|
|
2,403,000 |
|
|
|
61,811 |
|
Total current assets |
|
|
2,488,795 |
|
|
|
145,892 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,488,795 |
|
|
$ |
145,892 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
80,019 |
|
|
$ |
82,819 |
|
Accrued expenses |
|
|
1,552,438 |
|
|
|
283,745 |
|
Derivative liability |
|
|
93,969 |
|
|
|
85,590 |
|
Short-term convertible notes payable, net of discount of $0 and $0, respectively |
|
|
2,037,066 |
|
|
|
1,568,366 |
|
Accrued interest |
|
|
7,082,511 |
|
|
|
4,756,266 |
|
Total current liabilities |
|
|
10,846,003 |
|
|
|
6,776,786 |
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Long-term convertible notes payable |
|
|
8,000 |
|
|
|
8,000 |
|
Total non-current liabilities |
|
|
8,000 |
|
|
|
8,000 |
|
Total liabilities |
|
|
10,854,003 |
|
|
|
6,784,786 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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; 69,000 and 5,000 shares issued and outstanding, respectively |
|
|
69 |
|
|
|
5 |
|
Preferred stock - Series C: $0.001 par value, 10,000,000 authorized; 10,000 and 10,000 shares issued and outstanding, respectively |
|
|
10 |
|
|
|
10 |
|
Common stock: $0.001 par value 900,000,000 authorized; 25,140,735 and 25,140,735 shares issued and outstanding, respectively |
|
|
25,140 |
|
|
|
25,140 |
|
Additional paid-in-capital |
|
|
1,912,824 |
|
|
|
720,888 |
|
Common stock to be issued |
|
|
– |
|
|
|
52,000 |
|
Accumulated deficit |
|
|
(10,353,251 |
) |
|
|
(7,486,937 |
) |
Total stockholders' deficit |
|
|
(8,365,208 |
) |
|
|
(6,638,894 |
) |
Total liabilities and stockholders' deficit |
|
$ |
2,488,795 |
|
|
$ |
145,892 |
|
See notes to unaudited condensed consolidated
financial statements
THUNDER ENERGIES CORPORATION
Unaudited Condensed Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
– |
|
|
$ |
– |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
Gross Profit |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Advertising and marketing expenses |
|
|
209,014 |
|
|
|
– |
|
Stock based compensation |
|
|
– |
|
|
|
750,000 |
|
General and administrative |
|
|
322,676 |
|
|
|
54,450 |
|
Total operating expenses |
|
|
531,690 |
|
|
|
804,450 |
|
Loss from operations |
|
|
(531,690 |
) |
|
|
(804,450 |
) |
|
|
|
|
|
|
|
|
|
Other (income) expense: |
|
|
|
|
|
|
|
|
Change in derivative liability |
|
|
8,379 |
|
|
|
(3,339 |
) |
Accretion of debt discount |
|
|
– |
|
|
|
77,671 |
|
Interest expense |
|
|
2,326,245 |
|
|
|
469,992 |
|
Gain on disposal of discontinued operations |
|
|
– |
|
|
|
(901,000 |
) |
Total other (income) |
|
|
2,334,624 |
|
|
|
(356,676 |
) |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(2,866,314 |
) |
|
|
(447,774 |
) |
Income taxes |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,866,314 |
) |
|
$ |
(447,774 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
|
$ |
(0.06 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding |
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
47,940,735 |
|
|
|
69,529,624 |
|
See notes to unaudited condensed consolidated
financial statements
THUNDER ENERGIES CORPORATION
Unaudited Condensed Consolidated Statements of Changes
in Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock A* |
|
|
Preferred Stock B* |
|
|
Preferred Stock C* |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2022 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
5,000 |
|
|
$ |
5 |
|
|
|
10,000 |
|
|
$ |
10 |
|
Common shares returned to treasury for cancellation* |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Issuance of fully vested common shares issued against employment services*# |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Net loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Balance, March 31, 2022 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
5,000 |
|
|
$ |
5 |
|
|
|
10,000 |
|
|
$ |
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2023 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
5,000 |
|
|
$ |
5 |
|
|
|
10,000 |
|
|
$ |
10 |
|
Common shares issued for services |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Conversion of common stock for Series B preferred stock# |
|
|
– |
|
|
|
– |
|
|
|
64,000 |
|
|
|
64 |
|
|
|
– |
|
|
|
– |
|
Net loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Balance, March 31, 2023 |
|
|
50,000,000 |
|
|
$ |
50,000 |
|
|
|
69,000 |
|
|
$ |
69 |
|
|
|
10,000 |
|
|
$ |
10 |
|
(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
Additional |
|
|
|
|
|
Total |
|
|
|
Common Stock |
|
|
to be Issued |
|
|
Paid |
|
|
Accumulated |
|
|
Stockholders' |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
in Capital |
|
|
Deficit |
|
|
Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2022 |
|
|
80,140,735 |
|
|
$ |
80,140 |
|
|
|
– |
|
|
$ |
– |
|
|
$ |
(693,112 |
) |
|
$ |
(2,020,464 |
) |
|
$ |
(2,583,421 |
) |
Common shares returned to treasury for cancellation* |
|
|
(55,000,000 |
) |
|
|
(55,000 |
) |
|
|
– |
|
|
|
– |
|
|
|
55,000 |
|
|
|
– |
|
|
|
– |
|
Issuance of fully vested common shares issued against employment services# |
|
|
– |
|
|
|
– |
|
|
|
25,000,000 |
|
|
|
25,000 |
|
|
|
725,000 |
|
|
|
– |
|
|
|
750,000 |
|
Net loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(447,774 |
) |
|
|
(447,774 |
) |
Balance, March 31, 2022 |
|
|
25,140,735 |
|
|
$ |
25,140 |
|
|
|
25,000,000 |
|
|
$ |
25,000 |
|
|
$ |
86,888 |
|
|
$ |
(2,468,238 |
) |
|
$ |
(2,281,195 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 1, 2023 |
|
|
25,140,735 |
|
|
$ |
25,140 |
|
|
|
52,000,000 |
|
|
$ |
52,000 |
|
|
$ |
720,888 |
|
|
$ |
(7,486,937 |
) |
|
$ |
(6,638,894 |
) |
Common shares issued for services |
|
|
– |
|
|
|
– |
|
|
|
12,000,000 |
|
|
|
12,000 |
|
|
|
1,128,000 |
|
|
|
– |
|
|
|
1,140,000 |
|
Conversion of common stock for Series B preferred stock# |
|
|
– |
|
|
|
– |
|
|
|
(64,000,000 |
) |
|
|
(64,000 |
) |
|
|
63,936 |
|
|
|
– |
|
|
|
– |
|
Net loss |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(2,866,314 |
) |
|
|
(2,866,314 |
) |
Balance, March 31, 2023 |
|
|
25,140,735 |
|
|
$ |
25,140 |
|
|
|
– |
|
|
$ |
– |
|
|
$ |
1,912,824 |
|
|
$ |
(10,353,251 |
) |
|
$ |
(8,365,208 |
) |
* Per Note 1, on acquisition of TNRG Preferred Stock,
Mr. Shvo (the Company’s previous CEO) submitted 55,000,000 shares of restricted common stock to the Company’s treasury for
cancellation. In addition, on February 28, 2022, Mr. Shvo sold 100% of the issued and outstanding shares of preferred stock of the Company
to purchaser, as defined.
# Relates to issue of unregistered securities as described
in Note 6. In addition, in January 2023, the Company issued 12,000,000 common shares. All shares are reflected in the Company’s
disclosures. These shares were subsequently converted to Series B preferred shares in February 2023.
See notes to unaudited condensed consolidated
financial statements
THUNDER ENERGIES CORPORATION
Unaudited Condensed Consolidated Statements of Cash
Flows
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,866,314 |
) |
|
$ |
(447,774 |
) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Accretion of debt discount |
|
|
– |
|
|
|
77,671 |
|
Change in fair value of derivative liability |
|
|
8,379 |
|
|
|
(3,339 |
) |
Gain on disposal of discontinued operations |
|
|
– |
|
|
|
(901,000 |
) |
Stock based compensation |
|
|
– |
|
|
|
750,000 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Notes receivable - related party |
|
|
(1,635 |
) |
|
|
– |
|
Deferred offering costs |
|
|
(16,750 |
) |
|
|
– |
|
Prepaid expenses |
|
|
(1,189 |
) |
|
|
– |
|
Accounts payable |
|
|
(2,800 |
) |
|
|
54,648 |
|
Accrued interest |
|
|
2,326,245 |
|
|
|
469,994 |
|
Accrued expenses |
|
|
68,693 |
|
|
|
– |
|
Other current liabilities |
|
|
– |
|
|
|
– |
|
Net cash (used in) provided by operating activities |
|
|
(485,371 |
) |
|
|
200 |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from convertible notes payable |
|
|
468,700 |
|
|
|
– |
|
Net cash provided by financing activities |
|
|
468,700 |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash |
|
|
(16,671 |
) |
|
|
200 |
|
|
|
|
|
|
|
|
|
|
Cash at beginning of period |
|
|
48,881 |
|
|
|
– |
|
Cash at end of period |
|
$ |
32,210 |
|
|
$ |
200 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Issuance of common stock for finder's fees in conjunction with investment |
|
$ |
1,140,000 |
|
|
$ |
– |
|
Accrued expenses for finder's fees in conjunction with investment |
|
$ |
1,200,000 |
|
|
$ |
– |
|
Conversion of common stock for Series B preferred stock |
|
$ |
64,000 |
|
|
$ |
– |
|
Common shares returned to treasury for cancellation |
|
$ |
– |
|
|
$ |
55,000 |
|
See notes to unaudited condensed consolidated
financial statements
THUNDER ENERGIES CORPORATION
Notes to Unaudited Condensed Consolidated Financial
Statements
For the Three Months Ended March 31, 2023 and 2022
NOTE 1 – NATURE OF BUSINESS
Corporate History and Background
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’s principal office address to PMB 388, 8570 Stirling Rd., Suite 102, Hollywood,
FL, 33024.
Acquisition of TNRG Preferred Stock
Fiscal Year 2022
On February 28, 2022, Mr. Ricardo Haynes, Mr. Eric
Collins, Mr. Lance Lehr, Ms. Tori White and Mr. Donald Keer, each as an individual and principal shareholder (“Shareholders”)
of Bear Village, Inc., a Wyoming corporation, (the “Purchaser”) collectively acquired 100% of the issued and outstanding shares
of preferred stock (the “Preferred Stock”) of Thunder Energies Corporation, a Florida corporation, (the “Company”
or the “Registrant”) from Mr. Yogev Shvo, an individual domiciled in Florida (the “Seller”) (the “Purchase”).
The consideration for the Purchase was provided to the Seller by the Company on behalf of the Shareholders and was recorded as compensation
expense.
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 part of the Purchase, on April 13, 2022, Mr. Shvo
submitted 55,000,000 shares of restricted common stock to the Company’s treasury for cancellation, in consideration for the transfer
to him by TNRG of all of the issued and outstanding membership interests, assets and liabilities of Nature and THEHEMPLUG, LLC a Florida
limited liability company (“HP”), both of which are wholly-owned subsidiaries of TNRG.
The purchase price of $50,000 for the Preferred Stock
was paid in cash. The consideration for the purchase was provided to the Seller by the Company on behalf of the Purchasers. The Company
had been in discussions with the Purchasers for repayment and finalized the Employment Agreements (“Employment Agreements”)
on October 1, 2022 for positions in the Company. As a result, the Company recorded the purchase price as compensation on March 1, 2022.
The Purchase of the Preferred Stock was the result of a privately negotiated transaction which consummation resulted in a change of control
of the Registrant.
1) Purchaser accepts TNRG subject to the
following existing debt and obligations:
a. $35,000 Convertible Note held by ELSR
plus accrued interest
b. $85,766 Convertible Note held by ELSR
and SP11 plus accrued interest
c. $220,000 Convertible Note held by 109
Canon plus accrued interest
d. $410,000 Convertible Note held by Moshe
Zucker plus accrued interest of which $190,000 has recently been converted into 3,800,000 shares of restricted common stock.
e. Auditor Invoice estimated at $30,000
past due and $37,000 for completion of 2021
f. Accountant Invoice estimated at $42,500
and approximately $4,500 for completion of 2021
g. No other debt or liability is being assumed
by Purchaser
h. Purchaser specifically assumes no liability
regarding any dispute between Orel Ben Simon and the Seller. Seller shall indemnify Company as required in the body of the Agreement.
i. Company may be subject to potential liability
and legal fees and associated costs regarding the FCV Matter if in excess of the Seller indemnification provisions set forth in Section
11 of the Agreement
j. Purchaser on behalf of the Company is
responsible for assuring the Company’s timely payment of all Company federal and state and any related tax obligations for fiscal
year 2021 with the exception of taxes due relating to income, sales, license, business or any other taxes associated with Nature and HP
2) The transfer to Seller of all of TNRG’s
security ownership interest in each of Nature and HP shall include the following existing Nature debt and related matters:
a. EIDL Loan ($149,490 plus $9,290 accrued
interest)
b. $72,743 note due to Orel Ben Simon plus
accrued interest
c. All cases in action and potential legal
liabilities concerning current disputes with Nature, HP, Ben Simon, Seller and any other parties.
As a result of the Purchase and change of control
of the Registrant, the existing officers and directors of the Company, Mr. Adam Levy, Mr. Bruce W.D. Barren, Ms. Solange Bar and Mr. Yogev
Shvo (Chairman) have either resigned or been voted out of their positions.
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. Ricardo Haynes became the sole Director, CEO and Chairman of the Board of the Registrant, and the acting sole officer of
the Company.
Fiscal Year 2020
On July 1, 2020, Yogev Shvo, a third party individual
and principal shareholder of Nature Consulting LLC (“Nature” or “Purchaser”) personally acquired 100% of the issued
and outstanding shares of preferred stock (the “Preferred Stock”) of TNRG from Saveene Corporation, a Florida corporation
(the “Seller”) (The “Purchase”). The purchase price of $250,000 for the
Preferred Stock was paid in cash and was provided from the individual private funds of Purchaser.
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. |
NOTE 2 – BASIS OF PRESENTATION
The accompanying interim unaudited condensed consolidated
financial statements (“Interim Financial Statements”) of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) for interim financial information and are presented in accordance
with the requirements of Rule 10-01 of Regulation S-X. Accordingly, these Interim Financial Statements do not include all of the information
and notes required by GAAP for complete financial statements. These Interim Financial Statements should be read in conjunction with the
financial statements and notes thereto for the year ended December 31, 2022 included in the Form 10-K filed with the SEC on March 31,
2023. In the opinion of management, the Interim Financial Statements included herein contain all adjustments, including normal recurring
adjustments, considered necessary to present fairly the Company’s financial position, the results of operations and cash flows for
the periods presented. The operating results and cash flows of the interim periods presented herein are not necessarily indicative of
the results to be expected for any other interim period or the full year.
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and
include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.
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
The accompanying consolidated financial statements
have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets
and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $10,353,251 and $7,486,937
at March 31, 2023 and December 31, 2022, respectively, had a working capital deficit of $8,357,208 and $6,630,894 at March 31, 2023 and
December 31, 2022, respectively, and had a net loss of $2,866,314 and $447,774 for the three months ended March 31, 2023 and 2022, respectively,
with limited revenue earned since inception, no current revenue generating operations, and a lack of operational history. These matters
raise substantial doubt about the Company’s ability to continue as a going concern.
The Company’s consolidated 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 consolidated 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 consolidated financial statements. The consolidated 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 consolidated financial statements.
Use of Estimates
The preparation of these consolidated 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 consolidated 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 consolidated financial statements. The more significant estimates
and assumptions by management include among others: derivative valuation. The current economic environment has increased the degree of
uncertainty inherent in these estimates and assumptions.
Cash
The Company’s cash is held in a bank account
in the United States and is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company has not experienced
any cash losses.
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 has no allowance for doubtful accounts as of March 31, 2023 and December 31, 2022.
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. The Company 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.
Related Parties
The Company follows ASC 850, “Related Party
Disclosures,” for the identification of related parties and disclosure of related party transactions. Related parties are any entities
or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management
and policies of the Company.
Income Taxes
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 Consolidated 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 Consolidated 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 consolidated 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, and currently, the Company does not have a liability for unrecognized income tax benefits.
Advertising and Marketing Costs
Advertising and marketing expenses are recorded when
they are incurred. Advertising and marketing expense was $209,014 and $0 for the three months ended March 31, 2023 and 2022, respectively.
Revenue Recognition
On January 19, 2019 (date of formation), the Company
adopted Accounting Standards Codification 606 (“ASC 606”), Revenue from Contracts with Customers. Results for the reporting
periods beginning on January 19, 2019 (date of formation) are presented under ASC 606.
The Company generates all of its revenue from contracts
with customers. 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 identifies 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.
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 carrying amount is not recoverable if it exceeds the sum of the discounted 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. The Company recorded no impairments as of March 31, 2023 and December 31, 2022.
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.
Leases
The Company determines whether an arrangement contains
a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange for
consideration. For identified leases, the Company determines whether it should be classified as an operating or finance lease. Operating
leases are recorded in the balance sheet as: right-of-use asset (“ROU asset”) and operating lease obligation. ROU assets represent
the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation
to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the commencement date of the
lease and measured based on the present value of lease payments over the lease term. The ROU asset also includes deferred rent liabilities.
The Company’s lease arrangements generally do not provide an implicit interest rate. As a result, in such situations the Company
uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease
payments. The Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option
in the measurement of its ROU assets and liabilities. Lease expense for operating leases is recognized on a straight-line basis over the
lease term.
Fair Value of Financial Instruments
The provisions of accounting guidance, FASB Topic
ASC 825 requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized
on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount
at which the instrument could be exchanged in a current transaction between willing parties. As of March 31, 2023 and December 31, 2022,
the fair value of cash, notes receivable, accounts payable, accrued expenses, and notes payable approximated carrying value due to the
short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates.
Fair Value Measurements
Fair value is defined 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. Valuation techniques used to measure fair value
must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels
of inputs, of which the first two are considered observable and the last unobservable, as follows:
|
· |
Level 1 – Quoted prices in active markets for identical assets or liabilities. |
|
|
|
|
· |
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
|
|
|
|
· |
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. |
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. 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 the Black Scholes valuation method.
The following table summarize the Company’s
fair value measurements by level at March 31, 2023 for the assets measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Derivative liability |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
93,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarize the Company’s
fair value measurements by level at December 31, 2022 for the assets measured at fair value on a recurring basis:
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
Derivative liability |
|
$ |
– |
|
|
$ |
– |
|
|
$ |
85,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, records them as a contra-liability against the debt, and
amortizes the discount over the life of the underlying debt as amortization of debt discount expense in the Consolidated 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 Consolidated Statements of Operations. If the debt is retired early,
the associated debt discount is then recognized immediately as amortization of debt discount expense. 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 the Black Scholes
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 Consolidated
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. 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 Consolidated 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 Consolidated 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.
Loss per Share
The computation of loss per share included in the
Consolidated Statements of Operations, represents the net profit (loss) per share that would have been reported had the Company been subject
to ASC 260, “Earnings Per Share” as a corporation for all periods presented.
Diluted earnings (loss) per share are computed on
the basis of the weighted average number of common shares (including common stock to be issued) plus dilutive potential common shares
outstanding for the reporting period. In periods where losses are reported, the weighted-average number of common stock outstanding excludes
common stock equivalents, because their inclusion would be 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:
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
Series A convertible preferred stock |
|
|
500,000,000 |
|
|
|
500,000,000 |
|
Series B convertible preferred stock |
|
|
69,000,000 |
|
|
|
5,000,000 |
|
Total potentially dilutive shares |
|
|
569,000,000 |
|
|
|
505,000,000 |
|
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 loss commitments or contingencies as of March 31, 2023 and December 31, 2022.
Concentrations, Risks, and Uncertainties
Business Risk
Substantial business risks and uncertainties are inherent
to an entity, including the potential risk of business failure.
The Company is headquartered and operates in the United
States. To date, the Company has generated limited revenues from operations. There can be no assurance that the Company will be able to
successfully continue to produce its products and failure to do so would have a material adverse effect on the Company’s financial
position, results of operations and cash flows. Also, the success of the Company’s operations is subject to numerous contingencies,
some of which are beyond management’s control. These contingencies include general economic conditions, price of raw material, competition,
and governmental and political conditions.
Interest rate risk
Financial assets and liabilities do not have material
interest rate risk.
Credit risk
The Company is exposed to credit risk from its cash
in banks and accounts receivable. The credit risk on cash in banks is limited because the counterparties are recognized financial institutions.
Recent Accounting Pronouncements
Recently issued accounting updates are not expected
to have a material impact on the Company’s consolidated financial statements.
NOTE 4 – PREPAID EXPENSES AND OTHER ASSETS
As of March 31, 2023, the Company had prepaid expenses
for consulting services related to Investment in WC Mine Holdings of $2,340,000. On April 6, 2022, as amended on December 2, 2022, the
Company entered into a Consulting Agreement with Top Flight Development, LLC (“Top Flight”), an entity controlled by the father
of the Company’s Director Real Estate Development, to provide consulting services to the Company. As part of the consideration terms
of the agreement, Top Flight was entitled to a total of 12,000,000 common shares, valued at $1,140,000 (based on the Company’s stock
price on the date of issuance), vesting immediately, and a bonus of $1,200,000 resulting from the Company’s investment in Kinsley
Mountain mineral, resources, and water rights (see Note 9). On January 5, 2023, the Company entered into a Membership Interest Purchase
Agreement (“Agreement”) with Fourth & One with respect to investment in WC Mine Holdings in exchange of promissory note
of $4,000,000 and 2,000 RoRa Prime digital coins (“Coins”), valued at $1,450,000 and accordingly, the Company issued 12,000,000
common shares to Top Flight valued at $1,140,000 on January 5, 2023. Since this agreement is contingent on until such time as the Coin
is ‘live” on NYXEX exchange and the Company’s Regulation A being declared effective, the shares issued valued at $1,140,000
along with bonus of $1,200,000 recorded as prepaid expenses as of March 31, 2023. Also, the amount of bonus is payable as of March 31,
2023 and shown as accrued expenses in the Condensed Consolidated Balance Sheet.
NOTE 5 – CONVERTIBLE NOTES PAYABLE
Convertible Note Payable
Short Term
$85,766 Note
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 Corporation, a Florida
corporation (d/b/a Mina Mar Group) acquired 50,000,000 shares of Series A Convertible Preferred Stock (the “Preferred Stock”)
of Thunder Energies Corporation (the “Company”), from Hadronic Technologies, Inc., a Florida corporation. 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.
On March 24,
2020, the then current note obligation 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 as of March 31, 2023.
The Company accounts for an 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 a derivative liability of $93,969 and $85,590 as of March 31, 2023 and December 31, 2022, and recorded a change in
derivative liability of $8,379 and $(3,339) during the three months ended March 31, 2023 and 2022, respectively.
On June 24,
2020, Emry, holder of a convertible promissory note in principal amount of $85,766 dated April 22, 2019, 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.
As a result of the failure to timely file our Form
10-Q for the three-month periods ended September 30, 2020, March 31, 2022 and 2021, June 30, 2022, and September 30, 2022, and the Form
10-K for the years ended December 31, 2021 and 2020, the Convertible Notes Payable were in default. The Company recorded default interest
of $14,931 and $7,398 during the three months ended March 31, 2023 and 2022, respectively.
The Company has not repaid this convertible note and
the convertible note is now in default. The Company is currently in discussions with the note holder to convert the GHS Note into the
Company’s common stock upon the Company’s Regulation A being declared effective.
On April 17, 2023, the Company informed SP11 and ELSR
Corporation of an illegal convertible promissory note (the “Notes”) in the name of Thunder Energies Corporation. The Notes
are being cancelled by Thunder Energies Corporation as there is no record of consideration paid to the Company, the agreement for the
Notes was not an arms length transaction with the lender and borrower, and it violates Chapter 687 of the 2022 Florida Statutes –
Commercial Relations, Interest and Usury; Lending Practices. The Company will no longer accrue interest or penalties on these Notes. The
Company will continue to recognize the Notes and accrued interest currently recorded in the Consolidated Balance Sheets with a total balance
due of $6,810,915 ($120,766 of Notes and $6,690,149 of accrued interest) as of March 31, 2023.
$220,000 Note
On September 21, 2020, the Company issued a convertible
promissory note in the principal amount of $220,000. The convertible promissory note bears interest at 8% per annum and is due and payable
in twenty-four (24) months. The holder of this note has the right, at the holder's option, upon the consummation of a sale of all or substantially
all of the equity interest in the Company or private placement transaction of the Company's equity securities or securities convertible
into equity securities, exclusive of the conversion of this note or any similar notes, to convert the principal amount of this note, in
whole or in part, plus any interest which accrues hereon, into fully paid and nonassessable shares at a conversion price of $0.05 per
share. The Note includes customary events of default, including, among other things, payment defaults, covenant breaches, certain representations
and warranties, certain events of bankruptcy, liquidation and suspension of the Company’s Common Stock from trading. If such
an event of default occurs, the holders of the Note may be entitled to take various actions, which may include the acceleration of amounts
due under the Note and accrual of interest as described above.
The Company analyzed the conversion option in the
notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument
does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject
to a beneficial conversion feature (“BCF”) and determined that the instrument does have a 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. As such, the proceeds of the notes were allocated, based on fair values,
as $220,000 to the debt discount. The debt discount is accreted over the term of the convertible notes to interest expense in the accompanying
consolidated Statements of Operations. The principal balance due at March 31, 2023 is $220,000 and is presented as a short-term liability
in the balance sheet.
As a result of the failure to timely file our Form
10-Q for the three-month periods ended September 30, 2020, March 31, 2022 and 2021, June 30, 2022, and September 30, 2022, and the Form
10-K for the years ended December 31, 2021 and 2020, the Convertible Notes Payable were in default. On July 19, 2021, the Company entered
into a Waiver Agreement (the “Agreement”) waiving the default provisions listed in the Notes related to the Company’s
failure to timely file its Form 10-Q for the three-month period ended September 30, 2020, the Form 10-K for the year ended December 31,
2020, and the three-month period ended March 31, 2021. In exchange for the Agreement, the Company agreed to pay a one-time interest charge
of $11,680 in the year ended December 31, 2021. The Company recorded default interest of $16,611 and $13,560 during the three months ended
March 31, 2023 and 2022, respectively.
The Company has not repaid this convertible note and
the convertible note is now in default. The Company is currently in discussions with the note holder to convert the Note into the Company’s
common stock upon the Company’s Regulation A being declared effective.
$410,000 Note (previously $600,000)
On October 9 and October 16, 2020, the Company issued
a convertible promissory note in the principal amount totaling $600,000. The convertible promissory note bears interest at 8% per annum
and is due and payable in twenty-four (24) months. The holder of this note has the right, at the holder's option, upon the consummation
of a sale of all or substantially all of the equity interest in the Company or private placement transaction of the Company's equity securities
or securities convertible into equity securities, exclusive of the conversion of this note or any similar notes, to convert the principal
amount of this note, in whole or in part, plus any interest which accrues hereon, into fully paid and nonassessable shares at a conversion
price of $0.05 per share. The Note includes customary events of default, including, among other things, payment defaults, covenant breaches,
certain representations and warranties, certain events of bankruptcy, liquidation and suspension of the Company’s Common Stock from
trading. If such an event of default occurs, the holders of the Note may be entitled to take various actions, which may include
the acceleration of amounts due under the Note and accrual of interest as described above.
The Company analyzed the conversion option in the
notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument
does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject
to a beneficial conversion feature (“BCF”) and determined that the instrument does have a 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. As such, the proceeds of the notes were allocated, based on fair values,
as $600,000 to the debt discount. The debt discount is accreted over the term of the convertible notes to interest expense in the accompanying
consolidated Statements of Operations.
On December 6, 2021, the holder of the note converted
$190,000 of the Note into 3,800,000 shares of the Company’s common stock. The principal balance of $410,000 was due October 16,
2022 and is presented as a short term liability in the balance sheet.
As a result of the failure to timely file our Form
10-Q for the three-month periods ended September 30, 2020, March 31, 2022 and 2021, June 30, 2022, and September 30, 2022, and the Form
10-K for the years ended December 31, 2021 and 2020, the Convertible Notes Payable were in default. On July 15, 2021, the Company entered
into a Waiver Agreement (the “Agreement”) waiving the default provisions listed in the Notes related to the Company’s
failure to timely file its Form 10-Q for the three-month period ended September 30, 2020, the Form 10-K for the year ended December 31,
2020, and the three-month period ended March 31, 2021. The Company recorded default interest of $30,517 and $24,891 during the three months
ended March 31, 2023 and 2022, respectively.
The Company has not repaid this convertible note and
the convertible note is now in default. The Company is currently in discussions with the note holder to convert the Note into the Company’s
common stock upon the Company’s Regulation A being declared effective.
April 2022 Notes
In April 2022, the Company authorized convertible
promissory notes (“April 2022 Notes”) that varies from 0% to 10% per annum and are due and payable on various dates from December
31, 2022 through October 31, 2024 for aggregate gross proceeds of $1,469,300 (including $1,500 against which services were received) through
March 31, 2023. Notes totaling $300,000 issued in February 2023 and December 2022 allows for the repurchase of up to a total of 385,714
converted common shares at $2.50 per share and notes totaling $100,000 issued in March 2023 allows for the repurchase of up to a total
of 100,000 converted common shares at $2.75 per share should the Company fail to meet the Regulation A Tier II offering of $5.00 per share.
The holders of the April 2022 Notes have the right, at the holder's option, to convert the principal amount of this note, in whole or
in part, plus any interest which accrues hereon, into fully paid and nonassessable shares at a conversion price of $0.07 per share for
notes amounting to $750,100, $0.70 per share for notes amounting to $284,200, and $1.00 per share for notes amounting to $435,000 into
the Company’s common stock if before any public offering. The April 2022 Notes include customary events of default, including, among
other things, payment defaults and certain events of bankruptcy. If such an event of default occurs, the holders of the Note may be entitled
to take various actions, which may include the acceleration of amounts due under the Note and accrual of interest as described above.
The Company analyzed the conversion option in the
notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument
does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject
to a beneficial conversion feature (“BCF”) and determined that the instrument does not have a BCF.
The Company has not repaid fifty convertible notes
totaling $487,100 and these convertible notes are now in default. The Company is currently in discussions with these note holders to convert
the Notes into the Company’s common stock upon the Company’s Regulation A being declared effective.
$4,000,000 Promissory Note
On January 5, 2023, the Company reentered into a Membership
Interest Purchase Agreement (“Agreement”) with Fourth & One with respect to the sale and transfer of 51.5% of Fourth &
One’s interest in WCMH giving the Company a 30.9% ownership in WCMH for consideration totaling $5,450,000. In exchange, the Company
issued Fourth & One a promissory note of $4,000,000 and 2,000 RoRa Prime Coins (“Coins”), valued at $1,450,000. The Fourth
& One agreement is contingent on until such time as the Coin is "live" on NYXEX exchange and the Company’s Regulation
A being declared effective. The expectation is that the conversion will take place as part of the Regulation A filing (see Note 9).
$40,000,000 Convertible Note
On May 13, 2022, the Company issued a convertible
promissory note in the principal amount totaling $40,000,000 in exchange for 50,000 Coins, valued at $800 per Coin. The convertible promissory
note bears no interest and is due and payable in twenty-four (24) months. The holder of this Note has the right, at the holder's option,
to convert the principal amount of this Note, in whole or in part, into fully paid and nonassessable shares at a conversion price of $2.00
per share. As amended effective May 7, 2023, the Convertible Promissory Note shall not be enforceable until such time as the Holder’s
consideration, RoRa Coin is “live” on an exchange, or swap engine, and available through a mutually agreed upon cryptocurrency
wallet such as NyX, MetaMask, Exodus, Ledger, or similar. The expected date for being live is June 3, 2023. The parties agree to establish
a time is of the essence date of December 31, 2023 for Holder to meet the “live” requirement. Should Holder not meet the “live”
requirement by December 31, 2023, then Borrower shall return all RoRa Coins and Holder shall release all claims on any shares or Convertible
Promissory Note, Conversion rights shall not vest until such time as the holder’s consideration, Coins are live on a U.S. Exchange
and available through a mutually agreed upon cryptocurrency wallet. Subsequent to the Coins live date and before the holder coverts the
Note, should the Company issue any dilutive security, the conversion price will be reduced to the price of the dilutive issuance. The
Note includes customary events of default, including, among other things, payment defaults, covenant breaches, certain representations
and warranties, certain events of bankruptcy, liquidation and suspension of the Company’s Common Stock from trading. If such an
event of default occurs, the holders of the Note may be entitled to take various actions, which may include the acceleration of amounts
due under the Note as described above.
The Company analyzed the conversion option in the
notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument
does not qualify for derivative accounting.
Promissory Debenture
On February 15, 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). The Promissory Debentures bear 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 a conversion price of $0.001 per share. In addition, the Promissory Debentures provide for an interest
equal to 15% of TNRG 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 (i) Promissory Debentures in principal amount of $70,000 dated February 15, 2020, and (ii) that certain convertible
promissory note in principal amount of $85,766 dated April 22, 2019, 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.
On October 4,
2020, SP11 converted $35,000 of its Promissory Debentures at $0.01 per share into 3,500,000 shares of the Company’s common stock.
On November 22, 2021, the loan of $48,000 and accrued and unpaid interest of $573,798 totaling $621,798 was forgiven by EMRY. On April
17, 2023, the Company informed SP11 and ELSR Corporation of an illegal convertible promissory note (the “Notes”) in the name
of Thunder Energies Corporation. The Notes are being cancelled by Thunder Energies Corporation as there is no record of consideration
paid to the Company, the agreement for the Notes was not an arms length transaction with the lender and borrower, and it violates Chapter
687 of the 2022 Florida Statutes – Commercial Relations, Interest and Usury; Lending Practices. The Company will no longer accrue
interest or penalties on these Notes. The Company will continue to recognize the Notes and accrued interest currently recorded in the
Consolidated Balance Sheets with a total balance due of $6,810,915 ($120,766 of Notes and $6,690,149 of accrued interest) as of March
31, 2023.
NOTE 6 – STOCKHOLDERS’ DEFICIT
Common Stock
The Company has been authorized to issue 900,000,000
shares of common stock, $0.001 par value of which there are 25,140,735 issued and outstanding at March 31, 2023 and December 31, 2022,
respectively. 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.
As part of the Purchase, on April 13, 2022, Mr. Shvo
submitted 55,000,000 shares of restricted common stock to the Company’s treasury for cancellation, in consideration for the transfer
to him by TNRG of all of the issued and outstanding membership interests, assets and liabilities of Nature and HP, both of which are wholly-owned
subsidiaries of TNRG.
On March 1, 2022, as amended on October 1, 2022 and
December 28, 2022, the Company entered into an Employment Agreement with Mr. Ricardo Haynes whereby Mr. Haynes became the sole Director,
CEO and Chairman of the Board, and the acting sole officer of the Company. The Employment Agreement is in effect until September 30, 2027.
Under this Engagement Agreement, Mr. Haynes will be entitled to a total of 25,000,000 common shares, vesting immediately, valued at $750,000
(based on the Company’s stock price on the date of issuance). In February 2023, these shares were converted to Series B Convertible
Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts into one thousand (1,000)
shares of the Company’s common stock. The shares are included under Common stock to be issued
in the Statement of Changes in Shareholders’ Deficit at December 31, 2022.
On April 6, 2022, as amended on December 2, 2022,
the Company entered into a Consulting Agreement with Top Flight Development, LLC (“Top Flight”), an entity controlled by the
father of the Company’s Director Real Estate Development, to provide consulting services to the Company. The consulting agreement
is in effect until the Company is profitable with a balance sheet of over $400 million or thirty-six (36) months, whichever is longer.
Under this consulting agreement, Top Flight will be entitled to the following:
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a total of 15,000,000 common shares issued on the inception of the agreement of April 6, 2022, valued at $450,000 (based on the Company’s stock price on the date of issuance) and vesting immediately. In February 2023, these shares were converted to Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022. |
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Up to 50,000,000 common shares and $6,000,000 as bonuses based on the goals outlined in the agreement as follows: |
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a total of 5,000,000 common shares issued on December 15, 2022, valued at $1,000 (based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus of $400,000 resulting from the Company’s execution of the Joint Marketing and Advertising Agreement with the Las Vegas Aces professional Women’s basketball team. In February 2023, these shares were converted to Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022. |
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a total of 12,000,000 common shares issued on January 5, 2023, valued at $1,140,000 (based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus of $1,200,000 resulting from the Company’s investment in Kinsley Mountain mineral, resources, and water rights. The shares and the bonus are included under prepaid expenses and other assets in the Consolidated Balance Sheets at March 31, 2023. |
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a total of 28,000,000 common shares, vesting immediately, and a bonus of $2,800,000 resulting from the activation of the $40,000,000 RoRa coins on a recognized exchange which is expected to occur in June 2023. |
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a total of 5,000,000 common shares, vesting immediately, and a bonus of $1,600,000 resulting from the Company’s investment and promotion of Bear Village Resort’s facilities in Tennessee and Georgia which is expected to occur in July 2023. |
On April 6, 2022, the Company entered into a Consulting
Agreement with a third party to provide consulting services to the Company. The consulting agreement is in effect until the Company is
profitable with a balance sheet of over $200 million or thirty-six (36) months, whichever is longer. Under this consulting agreement,
the third party will be entitled to a total of 5,000,000 common shares, valued at $150,000 (based on the Company’s stock price on
the date of issuance) and vesting immediately. In February 2023, these shares were converted to
Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts
into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement
of Changes in Shareholders’ Deficit at December 31, 2022.
On April 6, 2022, the Company entered into a Consulting
Agreement with a third party to provide consulting services to the Company. The consulting agreement is in effect until the Company is
profitable with a balance sheet of over $200 million or thirty-six (36) months, whichever is longer. Under this consulting agreement,
the third party will be entitled to a total of 2,000,000 common shares, valued at $60,000 (based on the Company’s stock price on
the date of issuance) and vesting immediately. In February 2023, these shares were converted to
Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts
into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement
of Changes in Shareholders’ Deficit at December 31, 2022.
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.
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.
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.
During February and March 2023, holders of 64,000,000
shares of common stock (57,000,000 shares from related parties and 7,000,000 shares from third parties) elected to exchange these shares
for an aggregate of 64,000 shares of Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one
thousand (1,000) votes and converts into one thousand (1,000) shares of the Company’s common stock.
Acquisition of TNRG Preferred Stock
Fiscal Year 2022
On February 28, 2022, Mr.
Ricardo Haynes, Mr. Eric Collins, Mr. Lance Lehr, Ms. Tori White and Mr. Donald Keer, each as an individual and principal shareholder
of Bear Village, Inc., a Wyoming corporation, (the “Purchaser”) collectively acquired 100% of the issued and outstanding shares
of preferred stock (the “Preferred Stock”) of Thunder Energies Corporation, a Florida corporation, (the “Company”
or the “Registrant”) from Mr. Yogev Shvo, an individual domiciled in Florida (the “Seller”) (the “Purchase”).
The consideration for the Purchase was provided to the Seller by the Company on behalf of the Shareholders and was recorded as compensation
expense (see Note 1).
NOTE 7 – RELATED PARTY TRANSACTIONS
Other than as set forth below, and as disclosed in
Notes 6 and 9, there have not been any transaction entered into or been a participant in which a related person had or will have a direct
or indirect material interest.
On April 2, 2022, the Company entered into a demand
note (“Demand Note”) with Bear Village, Inc., a related party, for $36,200. The Demand Note bears no interest, is due on demand,
and is unsecured. The Company advanced Bear Village $1,635 and received no repayments during the three months ended March
31, 2023. The Company had no advances and received no repayments from Bear Village during the three months ended March
31, 2022. The Company has a balance due from Bear Village of $27,835 as of March 31, 2023.
On April 6, 2022, as amended on December 2, 2022,
the Company entered into a Consulting Agreement with Top Flight Development, LLC (“Top Flight”), an entity controlled by the
father of the Company’s Director Real Estate Development, to provide consulting services to the Company. The consulting agreement
is in effect until the Company is profitable with a balance sheet of over $400 million or thirty-six (36) months, whichever is longer.
Under this consulting agreement, Top Flight will be entitled to the following:
|
1. |
a total of 15,000,000 common shares issued on the inception of the agreement of April 6, 2022, valued at $450,000 (based on the Company’s stock price on the date of issuance) and vesting immediately. In February 2023, these shares were converted to Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022. |
|
2. |
Up to 50,000,000 common shares and $6,000,000 as bonuses based on the goals outlined in the agreement as follows: |
|
|
|
|
|
|
· |
a total of 5,000,000 common shares issued on December 15, 2022, valued at $1,000 (based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus of $400,000 resulting from the Company’s execution of the Joint Marketing and Advertising Agreement with the Las Vegas Aces professional Women’s basketball team. In February 2023, these shares were converted to Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022. |
|
|
|
|
|
|
· |
a total of 12,000,000 common shares issued on January 5, 2023, valued at $1,140,000 (based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus of $1,200,000 resulting from the Company’s investment in Kinsley Mountain mineral, resources, and water rights. In February 2023, these shares were converted to Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022. |
|
|
|
|
|
|
· |
a total of 28,000,000 common shares, vesting immediately, and a bonus of $2,800,000 resulting from the activation of the $40,000,000 RoRa coins on a recognized exchange which is expected to occur in June 2023. |
|
|
|
|
|
|
· |
a total of 5,000,000 common shares, vesting immediately, and a bonus of $1,600,000 resulting from the Company’s investment and promotion of Bear Village Resort’s facilities in Tennessee and Georgia which is expected to occur in July 2023. |
|
|
|
|
|
3. |
Shall be paid $21,000 per month beginning May 2022 increasing to $25,000 per month beginning January 2023. |
|
|
|
|
|
4. |
Additional awards may be made at the Company’s discretion based on other strategic goals. There were no additional awards granted for the three months ended March 31, 2023. |
During the three months ended March 31, 2023 and 2022,
the Company paid Top Flight $245,000 ($75,000 for monthly consulting services and $170,000 for goals based bonus) and $0, respectively,
with a balance due of $1,277,000 and $247,000 as of March 31, 2023 and December 31, 2022, respectively.
NOTE 8 – EARNINGS PER SHARE
FASB ASC Topic 260, Earnings Per Share, requires
a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (“EPS”) computations.
Basic earnings (loss) per share are computed by dividing
net earnings available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings
(loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were
dilutive. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common stock equivalents,
because their inclusion would be 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:
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
Series A convertible preferred stock |
|
|
500,000,000 |
|
|
|
500,000,000 |
|
Series B convertible preferred stock |
|
|
69,000,000 |
|
|
|
5,000,000 |
|
Total potentially dilutive shares |
|
|
569,000,000 |
|
|
|
505,000,000 |
|
The following table sets forth the computation of basic and diluted net
loss per share:
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
Net loss attributable to the common stockholders |
|
$ |
(2,866,314 |
) |
|
$ |
(447,774 |
) |
|
|
|
|
|
|
|
|
|
Basic weighted average outstanding shares of common stock |
|
|
47,940,735 |
|
|
|
69,529,624 |
|
Dilutive effect of options and warrants |
|
|
– |
|
|
|
– |
|
Diluted weighted average common stock and common stock equivalents |
|
$ |
47,940,735 |
|
|
$ |
69,529,624 |
|
|
|
|
|
|
|
|
|
|
Loss per share: |
|
|
|
|
|
|
|
|
Basic and diluted |
|
$ |
(0.06 |
) |
|
$ |
(0.01 |
) |
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Legal
From time to time, various lawsuits and legal proceedings
may arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these,
or other matters may arise from time to time that may harm our business. We are currently not aware of any legal proceedings or claims
that it believes will have a material adverse effect on its business, financial condition or operating results except:
Employment Contracts
On March 1, 2022, as amended on October 1, 2022 and
December 28, 2022, Mr. Ricardo Haynes, the Company’s sole Director, Chief Executive Officer (“CEO”) and Chairman of
the Board, and the acting sole officer of the Company entered into an Employment Agreement with the Company. The Employment agreement
terminates September 30, 2027 and automatically renews on a year-to-year basis unless terminated by either party on six months’
notice. In addition, Mr. Haynes is entitled to employee reimbursements totaling $820 per month, entitled to six (6) weeks paid vacation
each year, provides for medical and dental insurance, and entitled to stock options upon the implementation of a Company employee option
plan. Under this Employment agreement, the CEO will be entitled to the following:
|
· |
$5,700 for services performed from March 1, 2022 – June 30, 2022. |
|
· |
Lump Sum payment of $21,299 for services from July 1, 2022 – December 31, 2022. |
|
· |
Base salary of $11,000 per month paid on a bi-weekly basis starting January 2, 2023. |
|
· |
Bonus of $14,201 was paid in November and December 2022. |
|
· |
Automobile allowance of $1,500 per month starting January 2, 2023. |
|
· |
25,000,000 shares of TNRG common stock in the Company which vest immediately. |
|
· |
7,500,000 newly issued Preferred A shares of TNRG stock CUSIP (88604Y209) Cert No. 400002. |
|
· |
750 newly issued Preferred B shares of TNRG stock CUSIP (88604Y209), Cert. No. 500002. |
|
· |
1,500 newly issued Preferred C shares of TNRG stock CUSIP (8860Y209), Cert No. 600002. |
|
· |
$7,500 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
· |
1,500 RoRa Coins in possession of the Company. |
On October 1, 2022, the Company entered into Employment
Agreements with individuals for positions in the Company. Each of the Employment agreements shall begin October 1, 2022 and terminate
September 30, 2027 and automatically renews on a year-to-year basis unless terminated by either party on six months’ notice. In
addition, each employee is entitled to employee reimbursements totaling $820 per month, entitled to six (6) weeks paid vacation each year,
provides for medical and dental insurance, and entitled to stock options upon the implementation of a Company employee option plan. Under
these Employment agreements, each employee will be entitled to the following:
|
· |
Ms. Tori White, Director Real Estate Development. |
|
|
|
○ |
$24,000 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
|
|
○ |
4,800 RoRa Coins in possession of the Company. |
|
· |
Mr. Eric Collins, Chairman and Chief Operations Officer. |
|
|
|
○ |
$12,500 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
|
|
○ |
2,500 RoRa Coins in possession of the Company. |
|
· |
Mr. Donald Keer, Corporate Counsel |
|
|
|
○ |
$3,500 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
|
|
○ |
700 RoRa Coins in possession of the Company. |
|
· |
Mr. Lance Lehr, Chief Operating Officer |
|
|
|
○ |
$2,500 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
|
|
○ |
500 RoRa Coins in possession of the Company. |
The Company had been in discussions with the Shareholders
for repayment by them of the Acquisition of Preferred Shares and finalized the Employment Agreements on October 1, 2022 for positions
in the Company. As a result, the Company recorded the purchase price payable by these employees as compensation on March 1, 2022 (see
Note 1).
Consulting Agreements
On April 6, 2022, as amended on December 2, 2022,
the Company entered into a Consulting Agreement with Top Flight Development, LLC (“Top Flight”), an entity controlled by the
father of the Company’s Director Real Estate Development, to provide consulting services to the Company. The consulting agreement
is in effect until the Company is profitable with a balance sheet of over $400 million or thirty-six (36) months, whichever is longer.
Under this consulting agreement, Top Flight will be entitled to the following:
|
1. |
a total of 15,000,000 common shares issued on the inception of the agreement of April 6, 2022, valued at $450,000 (based on the Company’s stock price on the date of issuance) and vesting immediately. In February 2023, these shares were converted to Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022. |
|
|
|
|
|
2. |
Up to 50,000,000 common shares and $6,000,000 as bonuses based on the goals outlined in the agreement as follows: |
|
|
|
|
|
|
· |
a total of 5,000,000 common shares issued on December 15, 2022, valued at $1,000 (based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus of $400,000 resulting from the Company’s execution of the Joint Marketing and Advertising Agreement with the Las Vegas Aces professional Women’s basketball team. In February 2023, these shares were converted to Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022. |
|
|
· |
a total of 12,000,000 common shares issued on January 5, 2023, valued at $1,140,000 (based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus of $1,200,000 resulting from the Company’s investment in Kinsley Mountain mineral, resources, and water rights. The shares and the bonus are included under prepaid expenses and other assets in the Consolidated Balance Sheets at March 31, 2023. |
|
|
|
|
|
|
· |
a total of 28,000,000 common shares, vesting immediately, and a bonus of $2,800,000 resulting from the activation of the $40,000,000 RoRa coins on a recognized exchange which is expected to occur in June 2023. |
|
|
|
|
|
|
· |
a total of 5,000,000 common shares, vesting immediately, and a bonus of $1,600,000 resulting from the Company’s investment and promotion of Bear Village Resort’s facilities in Tennessee and Georgia which is expected to occur in July 2023. |
|
|
|
|
|
3. |
Shall be paid $21,000 per month beginning May 2022 increasing to $25,000 per month beginning January 2023. |
|
|
|
|
|
4. |
Additional awards may be made at the Company’s discretion based on other strategic goals. There were no additional awards granted for the three months ended March 31, 2023. |
During the three months ended March 31, 2023 and 2022,
the Company paid Top Flight $245,000 ($75,000 for monthly consulting services and $170,000 for goals based bonus) and $0, respectively,
with a balance due of $1,277,000 and $247,000 as of March 31, 2023 and December 31, 2022, respectively.
On April 6, 2022, the Company entered into a Consulting
Agreement with a third party to provide consulting services to the Company. The consulting agreement is in effect until the Company is
profitable with a balance sheet of over $200 million or thirty-six (36) months, whichever is longer. Under this consulting agreement,
the third party will be entitled to a total of 5,000,000 common shares, valued at $150,000 (based on the Company’s stock price on
the date of issuance) and vesting immediately. In February 2023, these shares were converted to
Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts
into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement
of Changes in Shareholders’ Deficit at December 31, 2022.
On April 6, 2022, the Company entered into a Consulting
Agreement with a third party to provide consulting services to the Company. The consulting agreement is in effect until the Company is
profitable with a balance sheet of over $200 million or thirty-six (36) months, whichever is longer. Under this consulting agreement,
the third party will be entitled to a total of 2,000,000 common shares, valued at $60,000 (based on the Company’s stock price on
the date of issuance) and vesting immediately. In February 2023, these shares were converted to
Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes and converts
into one thousand (1,000) shares of the Company’s common stock. The shares are included under Common stock to be issued in the Statement
of Changes in Shareholders’ Deficit at December 31, 2022.
Investment in WC Mine Holdings
On September 8, 2022, the Company entered into a Membership
Interest Purchase Agreement (“Agreement”) with Fourth & One, LLC (“Fourth & One”) with respect to the
sale and transfer of 51.5% of Fourth & One’s interest in WC Mine Holdings, LLC (“WCMH”) giving the Company a 30.9%
ownership in WCMH for consideration totaling $5,450,000 for the Kinsley Mountain mineral, resources, and water rights. In exchange, the
Company issued Fourth & One a promissory note of $4,000,000 and 2,000 RoRa Prime digital coins (“Coins”), valued at $1,450,000.
The promissory note provides for no interest and matured on October 31, 2022 (“Maturity Date”). In addition, the promissory
note provides that the Company may convert all amounts at any time prior to the Maturity Date and after gaining approval by the Securities
and Exchange Commission of the Company’s Regulation A II Offering and Fourth & One may convert all amounts into common stock
prior to the Maturity Date at a conversion price of $2.00 per share. The Agreement also provides that should Fourth & One not be able
to convert the Coins on or before October 31, 2022 at a conversion ratio of $800 per Coin, the Company will purchase all of the Coins
for a total of $1,600,000 (2,000 Coins at $800 per Coin) on October 31, 2022. The Company is currently in discussions with Fourth &
One to convert the promissory note into the Company’s common stock. The expectation is that the conversion will take place as part
of the Regulation A filing.
On November 1, 2022, the Company and Fourth &
One mutually agreed to terminate the Agreement and the Company was released from any obligations.
On January 5, 2023, the Company reentered into a Membership
Interest Purchase Agreement (“Agreement”) with Fourth & One with respect to the sale and transfer of 51.5% of Fourth &
One’s interest in WCMH giving the Company a 30.9% ownership in WCMH for consideration totaling $5,450,000. In exchange, the Company
issued Fourth & One a promissory note of $4,000,000 and 2,000 Coins, valued at $1,450,000. The Fourth & One agreement is contingent
on until such time as the Coin is “live” on NYXEX exchange and the Company’s Regulation A being declared effective.
The expectation is that the conversion will take place as part of the Regulation A filing.
Sponsorship Agreement
On December 15, 2022, the Company entered into a Joint
Marketing and Advertising Agreement with the Las Vegas Aces (“Aces”) professional Women’s basketball team. The Aces
shall provide the Company branding, digital advertising, and partner marketing and advertising for payments totaling $875,000, $901,250,
and $928,288 for the years 2023, 2024, and 2025, respectively. The agreement is effective December 15, 2022 through December 31, 2025,
with an option to extend for an additional two years, unless terminated sooner. During the three months ended March 31, 2023 and 2022,
the Company made no payments to the Aces with a balance due of $243,438 and $36,745 as of March 31, 2023 and December 31, 2022, respectively.
Financing Engagement Agreement
On August 25, 2022, the Company entered into a Legal
Services Agreement with The George Law Group in connection with an issuance of multi-tranched securitization (“Financing”)
which shall utilize a pledge of the Company’s stock and other properties currently owned or under the Company’s control. The
legal fee shall be one-half of one percent (0.5%) of the par amount of any Financing. The Company has paid a retainer of $21,000 during
the three months ended March 31, 2023 with a prepaid balance of $63,000 and $42,000 as of March 31, 2023 and December 31, 2022, respectively.
NOTE 10 – SUBSEQUENT EVENTS
April 2022 Notes
Subsequent to March 31, 2023, the Company offered
and sold an additional $202,000 of the April 2022 Notes bearing no interest and are due and payable on December 31, 2023. Notes totaling
$200,000 issued in April 2023 allows for the repurchase of up to 400,000 converted common shares at $2.75 per share should the Company
fail to meet the Regulation A Tier II offering of $5.00 per share.
ELSR and SP11 Promissory Debenture and Convertible
Note
On April 17, 2023, the Company informed SP11 and ELSR
Corporation of an illegal convertible promissory note (the “Notes”) in the name of Thunder Energies Corporation. The Notes
are being cancelled by Thunder Energies Corporation as there is no record of consideration paid to the Company, the agreement for the
Notes was not an arms length transaction with the lender and borrower, and it violates Chapter 687 of the 2022 Florida Statutes –
Commercial Relations, Interest and Usury; Lending Practices. The Company will no longer accrue interest or penalties on these Notes. The
Company will continue to recognize the Notes and accrued interest currently recorded in the Consolidated Balance Sheets with a total balance
due of $6,810,915 ($120,766 of Notes and $6,690,149 of accrued interest) as of March 31, 2023.
$40,000,000 Convertible Note
On May 13, 2022, the Company issued a convertible
promissory note in the principal amount totaling $40,000,000 in exchange for 50,000 RoRa Prime Coins (“Coins”), valued at
$800 per Coin. The convertible promissory note bears no interest and is due and payable in twenty-four (24) months. The holder of this
Note has the right, at the holder's option, to convert the principal amount of this Note, in whole or in part, into fully paid and nonassessable
shares at a conversion price of $2.00 per share. As amended effective May 7, 2023, the Convertible Promissory Note shall not be enforceable
until such time as the Holder’s consideration, RoRa Coin is “live” on an exchange, or swap engine, and available through
a mutually agreed upon cryptocurrency wallet such as NyX, MetaMask, Exodus, Ledger, or similar. The expected date for being live is June
3, 2023. The parties agree to establish a time is of the essence date of December 31, 2023 for Holder to meet the “live” requirement.
Should Holder not meet the “live” requirement by December 31, 2023, then Borrower shall return all RoRa Coins and Holder shall
release all claims on any shares or Convertible Promissory Note.
THUNDER ENERGIES CORPORATION
Consolidated Balance Sheets
| |
| | | |
| | |
| |
December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
ASSETS | |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash | |
$ | 48,881 | | |
$ | – | |
Notes receivable - related party | |
| 26,200 | | |
| – | |
Deferred offering costs | |
| 9,000 | | |
| – | |
Prepaid expenses | |
| 61,811 | | |
| – | |
Total current assets | |
| 145,892 | | |
| – | |
Total assets | |
$ | 145,892 | | |
$ | – | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 82,819 | | |
$ | 70,971 | |
Accrued expenses | |
| 283,745 | | |
| – | |
Derivative liability | |
| 85,590 | | |
| 83,404 | |
Short-term convertible notes payable, net of discount of $0 and $241,876, respectively | |
| 1,568,366 | | |
| 508,890 | |
Accrued interest | |
| 4,756,266 | | |
| 1,019,156 | |
Current liabilities of discontinued operations | |
| – | | |
| 901,000 | |
Total current liabilities | |
| 6,776,786 | | |
| 2,583,421 | |
Non-current liabilities: | |
| | | |
| | |
Long-term convertible notes payable | |
| 8,000 | | |
| – | |
Total non-current liabilities | |
| 8,000 | | |
| – | |
Total liabilities | |
| 6,784,786 | | |
| 2,583,421 | |
| |
| | | |
| | |
Commitments and contingencies (Note 15) | |
| – | | |
| – | |
| |
| | | |
| | |
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 5,000 shares issued and outstanding, respectively | |
| 5 | | |
| 5 | |
Preferred stock - Series C: $0.001 par value, 10,000,000 authorized; 10,000 and 10,000 shares issued and outstanding, respectively | |
| 10 | | |
| 10 | |
Common stock: $0.001 par value 900,000,000 authorized; 25,140,735 and 80,140,735 shares issued and outstanding, respectively | |
| 25,140 | | |
| 80,140 | |
Additional paid-in-capital | |
| 720,888 | | |
| (693,112 | ) |
Common stock to be issued | |
| 52,000 | | |
| – | |
Accumulated deficit | |
| (7,486,937 | ) | |
| (2,020,464 | ) |
Total stockholders' deficit | |
| (6,638,894 | ) | |
| (2,583,421 | ) |
Total liabilities and stockholders' deficit | |
$ | 145,892 | | |
$ | – | |
See notes to consolidated financial statements
THUNDER ENERGIES CORPORATION
Consolidated Statements of Operations
| |
| | | |
| | |
| |
Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Net revenues | |
$ | – | | |
$ | – | |
| |
| | | |
| | |
Cost of sales | |
| – | | |
| – | |
| |
| | | |
| | |
Gross Profit | |
| – | | |
| – | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
Advertising and marketing expenses | |
| 43,957 | | |
| – | |
Stock based compensation | |
| 1,411,000 | | |
| – | |
General and administrative | |
| 931,346 | | |
| 128,900 | |
Total operating expenses | |
| 2,386,303 | | |
| 128,900 | |
Loss from operations | |
| (2,386,303 | ) | |
| (128,900 | ) |
| |
| | | |
| | |
Other (income) expense: | |
| | | |
| | |
Change in derivative liability | |
| 2,186 | | |
| (40,776 | ) |
Accretion of debt discount | |
| 241,876 | | |
| 509,950 | |
Interest expense | |
| 3,737,108 | | |
| 1,279,622 | |
Gain on disposal of discontinued operations | |
| (901,000 | ) | |
| (621,798 | ) |
Total other expense | |
| 3,080,170 | | |
| 1,126,998 | |
| |
| | | |
| | |
Income taxes | |
| – | | |
| – | |
Loss from continuing operations | |
| (5,466,473 | ) | |
| (1,255,898 | ) |
Discontinued operations | |
| – | | |
| (116,652 | ) |
| |
| | | |
| | |
Net loss | |
$ | (5,466,473 | ) | |
$ | (1,372,550 | ) |
| |
| | | |
| | |
Net loss per share from continuing operations, basic and diluted | |
$ | (0.08 | ) | |
$ | (0.02 | ) |
Net loss per share from discontinued operations, basic and diluted | |
| – | | |
| (0.00 | ) |
Net loss per share, basic and diluted | |
$ | (0.08 | ) | |
$ | (0.02 | ) |
| |
| | | |
| | |
Weighted average number of shares outstanding | |
| | | |
| | |
Basic and diluted | |
| 71,354,434 | | |
| 76,735,271 | |
See notes to consolidated financial statements
THUNDER ENERGIES CORPORATION
Consolidated Statements of Changes in Stockholders’
Deficit
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Preferred Stock A* | | |
Preferred Stock B* | | |
Preferred Stock C* | |
| |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | |
Balance, January 1, 2021 | |
| 50,000,000 | | |
$ | 50,000 | | |
| 5,000 | | |
$ | 5 | | |
| 10,000 | | |
$ | 10 | |
Issuance of common stock in conjunction with conversion of convertible note payable | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Net loss | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Balance, December 31, 2021 | |
| 50,000,000 | | |
$ | 50,000 | | |
| 5,000 | | |
$ | 5 | | |
| 10,000 | | |
$ | 10 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance, January 1, 2022 | |
| 50,000,000 | | |
$ | 50,000 | | |
| 5,000 | | |
$ | 5 | | |
| 10,000 | | |
$ | 10 | |
Common shares returned to treasury for cancellation | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Issuance of fully vested common shares issued against employment services | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Issuance of fully vested common shares issued for consulting services | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Net loss | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
Balance, December 31, 2022 | |
| 50,000,000 | | |
$ | 50,000 | | |
| 5,000 | | |
$ | 5 | | |
| 10,000 | | |
$ | 10 | |
(continued)
| |
| | | |
| | |
|
|
|
|
|
|
|
| |
| | | |
| | | |
| | |
| |
Common Stock | |
|
|
Common Stock
to be Issued |
| |
Additional Paid | | |
Accumulated | | |
Stockholders' | |
| |
Shares | | |
Amount | |
|
|
Shares |
|
|
|
Amount |
| |
in Capital | | |
Deficit | | |
Deficit | |
Balance, January 1, 2021 | |
| 76,340,735 | | |
$ | 76,340 | |
|
|
– |
|
|
$ |
– |
| |
$ | (879,312 | ) | |
$ | (647,914 | ) | |
$ | (1,400,871 | ) |
Issuance of common stock in conjunction with conversion of convertible note payable | |
| 3,800,000 | | |
| 3,800 | |
|
|
– |
|
|
|
– |
| |
| 186,200 | | |
| – | | |
| 190,000 | |
Net loss | |
| – | | |
| – | |
|
|
– |
|
|
|
– |
| |
| – | | |
| (1,372,550 | ) | |
| (1,372,550 | ) |
Balance, December 31, 2021 | |
| 80,140,735 | | |
$ | 80,140 | |
|
|
– |
|
|
$ |
– |
| |
$ | (693,112 | ) | |
$ | (2,020,464 | ) | |
$ | (2,583,421 | ) |
| |
| | | |
| | |
|
|
|
|
|
|
|
| |
| | | |
| | | |
| | |
| |
| | | |
| | |
|
|
|
|
|
|
|
| |
| | | |
| | | |
| | |
| |
| | | |
| | |
|
|
|
|
|
|
|
| |
| | | |
| | | |
| | |
Balance, January 1, 2022 | |
| 80,140,735 | | |
$ | 80,140 | |
|
|
– |
|
|
$ |
– |
| |
$ | (693,112 | ) | |
$ | (2,020,464 | ) | |
$ | (2,583,421 | ) |
Common shares returned to treasury for cancellation* | |
| (55,000,000 | ) | |
| (55,000 | ) |
|
|
– |
|
|
|
– |
| |
| 55,000 | | |
| – | | |
| – | |
Issuance of fully vested common shares issued against employment services*# | |
| – | | |
| – | |
|
|
25,000,000 |
|
|
|
25,000 |
| |
| 725,000 | | |
| – | | |
| 750,000 | |
Issuance of fully vested common shares issued for consulting services# | |
| – | | |
| – | |
|
|
27,000,000 |
|
|
|
27,000 |
| |
| 634,000 | | |
| – | | |
| 661,000 | |
Net loss | |
| – | | |
| – | |
|
|
– |
|
|
|
– |
| |
| – | | |
| (5,466,473 | ) | |
| (5,466,473 | ) |
Balance, December 31, 2022 | |
| 25,140,735 | | |
$ | 25,140 | |
|
|
52,000,000 |
|
|
$ |
52,000 |
| |
$ | 720,888 | | |
$ | (7,486,937 | ) | |
$ | (6,638,894 | ) |
* | | Per Note 1, on acquisition of TNRG Preferred Stock, Mr. Shvo (the Company’s previous CEO)
submitted 55,000,000 shares of restricted common stock to the Company’s treasury for cancellation. In addition, on February
28, 2022, Mr. Shuo sold 100% of the issued and outstanding shares of preferred stock of the Company to purchaser, as defined. |
# | | Relates to issue of unregistered
securities as described in Note 17. These shares are reflected in the Company’s disclosures.
These shares were not issued as of December 31, 2022 and subsequently will be issued to the holders. |
See notes to consolidated financial statements
THUNDER ENERGIES CORPORATION
Consolidated Statements of Cash Flows
| |
| | | |
| | |
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Cash flows from operating activities: | |
| | | |
| | |
Net loss | |
$ | (5,466,473 | ) | |
$ | (1,372,550 | ) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |
| | | |
| | |
Accretion of debt discount | |
| 241,876 | | |
| 509,950 | |
Change in fair value of derivative liability | |
| 2,186 | | |
| (40,776 | ) |
Gain on disposal of discontinued operations | |
| (901,000 | ) | |
| – | |
Stock based compensation | |
| 1,411,000 | | |
| – | |
Convertible notes issued for services | |
| 1,500 | | |
| – | |
Impairment of assets | |
| – | | |
| 195,347 | |
Gain on extinguishment of debt | |
| – | | |
| (621,798 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Notes receivable - related party | |
| (26,200 | ) | |
| – | |
Deferred offering costs | |
| (9,000 | ) | |
| – | |
Prepaid expenses | |
| (61,811 | ) | |
| – | |
Accounts payable | |
| 11,848 | | |
| 53,720 | |
Accrued interest | |
| 3,737,110 | | |
| 1,278,669 | |
Accrued expenses | |
| 283,745 | | |
| – | |
Net cash (used in) provided by continuing operating
activities | |
| (775,219 | ) | |
| 2,562 | |
Net cash provided by operating
activities - discontinued activities | |
| – | | |
| 78,222 | |
Net cash (used in) provided by operating activities | |
| (775,219 | ) | |
| 80,784 | |
| |
| | | |
| | |
Cash flows from investing activities: | |
| | | |
| | |
Net cash provided by continuing investing
activities | |
| – | | |
| – | |
Net cash used in investing activities - discontinued operations | |
| – | | |
| (15,337 | ) |
Net cash used in investing activities | |
| – | | |
| (15,337 | ) |
| |
| | | |
| | |
Cash flows from financing activities: | |
| | | |
| | |
Proceeds from convertible notes payable | |
| 824,100 | | |
| – | |
Net cash provided by continuing financing activities | |
| 824,100 | | |
| – | |
Net cash used in financing activities - discontinued activities | |
| – | | |
| (162,950 | ) |
Net cash provided by (used in) financing activities | |
| 824,100 | | |
| (162,950 | ) |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| 48,881 | | |
| (97,503 | ) |
| |
| – | | |
| | |
Cash at beginning of period | |
| – | | |
| 97,503 | |
Cash at end of period | |
$ | 48,881 | | |
$ | – | |
| |
| | | |
| | |
Non-cash investing and financing activities: | |
| | | |
| | |
Issuance of common stock in conjunction with conversion of convertible note payable | |
$ | – | | |
$ | 190,000 | |
Common shares returned to treasury for cancellation | |
$ | 55,000 | | |
$ | – | |
See notes to consolidated financial statements
THUNDER ENERGIES CORPORATION
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2022 and 2021
NOTE 1 – NATURE OF BUSINESS
Corporate History and Background
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’s principal office address to PMB 388, 8570 Stirling Rd., Suite 102, Hollywood,
FL, 33024.
Acquisition of TNRG Preferred Stock
Fiscal Year 2022
On February 28, 2022, Mr. Ricardo Haynes, Mr.
Eric Collins, Mr. Lance Lehr, Ms. Tori White and Mr. Donald Keer, each as an individual and principal shareholder (“Shareholders”)
of Bear Village, Inc., a Wyoming corporation, (the “Purchaser”) collectively acquired 100% of the issued and outstanding shares
of preferred stock (the “Preferred Stock”) of Thunder Energies Corporation, a Florida corporation, (the “Company”
or the “Registrant”) from Mr. Yogev Shvo, an individual domiciled in Florida (the “Seller”) (the “Purchase”).
The consideration for the Purchase was provided to the Seller by the Company on behalf of the Shareholders and was recorded as compensation
expense.
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 part of the Purchase on April 13, 2022, Mr.
Shvo submitted 55,000,000
shares of restricted common stock to the Company’s treasury for cancellation, in consideration for the transfer to him by TNRG
of all of the issued and outstanding membership interests, assets and liabilities of Nature and THEHEMPLUG, LLC a Florida limited
liability company (“HP”), both of which are wholly-owned subsidiaries of TNRG.
The purchase price of $50,000 for the Preferred
Stock was paid in cash. The consideration for the purchase was provided to the Seller by the Company on behalf
of the Purchasers. The Company had been in discussions with the Purchasers for repayment and finalized the Employment Agreements (“Employment
Agreements”) on October 1, 2022 for positions in the Company. As a result, the Company recorded the purchase price as compensation
on March 1, 2022. The Purchase of the Preferred Stock was the result of a privately negotiated transaction which consummation resulted
in a change of control of the Registrant.
|
1) |
Purchaser accepts TNRG subject to the following existing debt and obligations: |
|
a. |
$35,000 Convertible Note held by
ELSR plus accrued interest |
|
b. |
$85,766 Convertible Note held by
ELSR plus accrued interest |
|
c. |
$220,000 Convertible Note held by
109 Canon plus accrued interest |
|
d. |
$410,000 Convertible Note held by
Moshe Zucker plus accrued interest of which $190,000 has recently been converted into 3,800,000 shares of restricted common stock. |
|
e. |
Auditor Invoice estimated at $30,000
past due and $37,000 for completion of 2021 |
|
f. |
Accountant Invoice estimated at $42,500
and approximately $4,500 for completion of 2021 |
|
g. |
No other debt or liability is being
assumed by Purchaser |
|
h. |
Purchaser specifically assumes no
liability regarding any dispute between Orel Ben Simon and the Seller. Seller shall indemnify Company as required in the body of the Agreement. |
|
i. |
Company may be subject to potential
liability and legal fees and associated costs regarding the FCV Matter if in excess of the Seller indemnification provisions set forth
in Section 11 of the Agreement
|
|
j. |
Purchaser on behalf of the Company
is responsible for assuring the Company’s timely payment of all Company federal and state and any related tax obligations for fiscal
year 2021 with the exception of taxes due relating to income, sales, license, business or any other taxes associated with Nature and HP |
|
2) |
The transfer to Seller of all of
TNRG’s security ownership interest in each of Nature and HP shall include the following existing Nature debt and related matters: |
|
a. |
EIDL Loan ($149,490 plus $9,290 accrued
interest) |
|
b. |
$72,743 note due to Orel Ben Simon
plus accrued interest |
|
c. |
All cases in action and potential
legal liabilities concerning current disputes with Nature, HP, Ben Simon, Seller and any other parties. |
As a result of the Purchase and change of control
of the Registrant, the existing officers and directors of the Company, Mr. Adam Levy, Mr. Bruce W.D. Barren, Ms. Solange Bar and Mr. Yogev
Shvo (Chairman) have either resigned or been voted out of their positions.
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. Ricardo Haynes became the sole Director, CEO and Chairman of the Board of the Registrant, and the acting sole
officer of the Company.
Fiscal Year 2020
On July 1, 2020, Yogev Shvo, a third party individual
and principal shareholder of Nature Consulting LLC (“Nature” or “Purchaser”) personally acquired 100% of the issued
and outstanding shares of preferred stock (the “Preferred Stock”) of TNRG from Saveene Corporation, a Florida corporation
(the “Seller”) (The “Purchase”). The purchase price of $250,000 for the
Preferred Stock was paid in cash and was provided from the individual private funds of Purchaser.
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. |
Filing of Complaint Against Certain Former
Officers and Other Parties
On October 14, 2021 Nature Consulting, LLC, a
wholly owned subsidiary, filed a complaint in the United States District Court of the Southern District of Florida against Or-El Ben Simon,
individually, Adam Levy (previously the Chief Executive Officer of the Company), individually, Solange Baruk (previously a bookkeeper
of the Company), individually, DVP Distro, LLC, a Florida limited liability company, Custom Graphics 2011, Inc. a Florida corporation,
Beso Group, LLC, a Florida limited liability company, and Tops Consulting, LLC a Florida limited liability company (collectively, the
“Defendants”). The complaint alleges that the Defendants assumed control of Nature Consulting, LLC and in doing so:
|
(a) |
Violated the Electronic Communications Privacy Act, 18 U.S.C. ss2511 |
|
(b) |
Violated the Stored Communications Act, 18 U.S.C. ss2701 |
|
(c) |
Violated the Computer Fraud and Abuse Act, 18 U.S.C. ss1030 |
|
(d) |
Committed Conversion in the taking control of Nature Consulting, LLC’s premises (Ben Simon, DVP, Custom, Beso and Tops) |
|
(e) |
Committed Tortious Interference with Prospective Economic Opportunities |
|
(f) |
Committed Breach of Fiduciary Duty of Loyalty (Baruk) |
|
(g) |
Committed Civil Conspiracy (Ben Simon, Levy and Baruk) |
|
(h) |
Violated the Defend Trade Secrets Act Theft of Trade Secrets, 18 U.S.C. ss1832 |
Ben Simon and those in active consort with him
have effectively hijacked Nature’s assets under the threat of force and physical violence. Moreover, they have systematically divested
Nature of its assets, moved into its physical location without reason, and have otherwise converted its assets.
During this time, Defendants also assumed control
of all computers belonging to Nature – including its Office365 access and database registered to Nature and using the domains of
“@thpcbd.com,” “@thehemplug.com,” and “@natureconsulting.com.”
Additionally, Defendants looted and destroyed
the premises leased by Nature, as follows:
|
a. |
Defendants commandeered all inventory belonging to Nature and refused to distribute to clients; |
|
b. |
Defendants commandeered a forklift belonging to Nature; |
|
c. |
Defendants have taken possession of all of Nature’s furniture, computers, printers, packaging, machineries, office supplies, phone systems, televisions, security cameras and other electronics; |
|
d. |
Defendants have discarded in a large trash container Nature’s merchandise, customer labels, catalogues, business cards, desks, office decorations and other inventory; |
|
e. |
Defendants destroyed Nature’s property by stripping its headquarters of all aesthetic enhancements and signage; |
|
f. |
Defendants assumed control of all e-mail accounts belonging to Nature and have intercepted Nature’s communications sent to the domain “@thpcbd.com,” “@thehemplug.com,” and “@natureconsulting.com”; and, |
|
g. |
Defendants have terminated Nature’s contracts with other vendors – to do this, they have used the commandeered “@thpcbd.com,” “@thehemplug.com,” and “@natureconsulting.com” email addresses. |
Furthermore, Defendants’ conduct have impeded
the fulfillment of orders already paid for by Nature’s clients. This has caused Nature’s clients to threaten Nature with suit
and to otherwise end their business relationships with Nature due to Nature’s failure to satisfy orders. Even if Nature wanted to
operate, due to the unlawful interception of its communications with clients and vendors, it would be impossible.
Nature Consulting, LLC has demanded a jury trial to adjudicate this
complaint.
As a result of the actions of the Defendants,
the Company recorded an impairment charge of $195,347 during the year ended December 31, 2021 comprised of the following:
Schedule of impairment charges | |
December 31, | |
Impairment charges: | |
2021 | |
Prepaids | |
$ | (12,500 | ) |
Inventories | |
| (136,309 | ) |
Net office equipment | |
| (18,586 | ) |
Net computer equipment | |
| (15,283 | ) |
Net machinery and equipment | |
| (21,782 | ) |
Net leasehold improvements | |
| (79,665 | ) |
Net website | |
| (64,100 | ) |
Net operating lease right-of-use assets | |
| (306,902 | ) |
Deposits(2) | |
| (24,799 | ) |
Due to related party(1) | |
| 169,744 | |
Current portion of operating lease liabilities(2) (3) | |
| 187,754 | |
Operating lease liabilities net of current portion(2) (3) | |
| 127,081 | |
Total impairment charges | |
$ | (195,347 | ) |
____________________
(1)The Company has included due to
related party of $169,744 within the impairment charge above as these amounts have been used to settle for the assets, as impaired, which
have been commandeered, discarded, destroyed and taken possession of by the defendant. This amount related to the working capital loan
taken from the defendants.
(2) On October 22, 2021 the Company
entered into a lease termination agreement (“Termination Agreement”) with Canal Park Office to terminate the Company’s
North Miami Beach, Florida office space. The Termination Agreement allows Canal Park Office to retain the security deposit of $24,799
and to be paid $21,000. The Company was released from any other obligations.
(3) In December 2021, the Company confirmed
with the landlord that as of that time and on a going forward basis, the Company has no rental obligation, or past due rental obligation
or any other related liability on its office/ warehouse space located at 3017 Greene Street, Hollywood, Florida.
On February 28, 2022, as part of acquisition of
TNRG Preferred Stock with Bear Village, other than liabilities specifically identified in the acquisition, no debt or liability is assumed
by the Purchaser.
NOTE 2 – Basis of Presentation
The accompanying consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America and include all adjustments
necessary for the fair presentation of the Company’s financial position for the periods presented.
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
The accompanying consolidated financial statements
have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets
and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $7,486,937 and $2,020,464
at December 31, 2022 and 2021, respectively, had a working capital deficit of $6,630,894 and $2,583,421 at December 31, 2022 and 2021,
respectively, had net losses of $5,466,473 and $1,372,550 for the years ended December 31, 2022 and 2021, respectively, with limited revenue
earned since inception, no current revenue generating operations, and a lack of operational history. These matters raise substantial doubt
about the Company’s ability to continue as a going concern.
The Company’s consolidated 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 consolidated 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 consolidated financial statements. The consolidated 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 consolidated financial statements.
Use of Estimates
The preparation of these consolidated
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 consolidated 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 consolidated financial
statements. The more significant estimates and assumptions by management include among others: derivative valuation. The current
economic environment has increased the degree of uncertainty inherent in these estimates and assumptions.
Cash
The Company’s cash is held in a bank
account in the United States and is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company has not
experienced any cash losses.
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 has an allowance for doubtful accounts of $0 and $147,357 (included in discontinued operations) as of December
31, 2022 and 2021, respectively.
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. The Company 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.
Related Parties
The Company follows ASC 850, “Related Party
Disclosures,” for the identification of related parties and disclosure of related party transactions. Related parties are any entities
or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of the management
and policies of the Company.
Income Taxes
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 Consolidated 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 Consolidated 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 consolidated 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, and currently, the Company does not have a liability for unrecognized income tax benefits.
Advertising and Marketing Costs
Advertising and marketing expenses are
recorded when they are incurred. Advertising and marketing expense was $43,957
and $392,171
(included in discontinued operations) for the years ended December 31, 2022 and 2021, respectively.
Revenue Recognition
On January 19, 2019 (date of formation), the Company
adopted Accounting Standards Codification 606 (“ASC 606”), Revenue from Contracts with Customers. Results for the
reporting periods beginning on January 19, 2019 (date of formation) are presented under ASC 606.
The Company generates all of its revenue from
contracts with customers. 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 identifies 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.
Customer Advanced Payments – Discontinued
Operations
Customer advanced payments consisted of
customer orders paid in advance of the delivery of the order. Customer advanced payments were classified as short-term as the
typical order ships within approximately three weeks of placing the order. Customer advanced payments were recognized as revenue
when the product was shipped to the customer and all other revenue recognition criteria had been met. Customer advanced payments as
of December 31, 2022 and 2021 were $0
and $203,518
(from discontinued operations), respectively. Customer advanced payments were included in current liabilities in the accompanying
Consolidated Balance Sheets. The Company’s ability to fulfill these orders have been impaired (see Note 1).
Inventories – Discontinued Operations
The Company manufactured its own products, made
to order, and when completed were shipped to the customer. The Company's inventories were valued by the first-in, first-out (“FIFO”)
cost method and were stated at the lower of cost or net realizable value. The Company had inventories of $0 and $0 (from discontinued operations)
as of December 31, 2022 and 2021, respectively. See Note 1 for impairment discussion as of December 31, 2021.
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 carrying amount is not recoverable if it exceeds the sum of the discounted 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. All long-lived assets are impaired as of December 31, 2022 and 2021.
See Note 1 for impairment discussion.
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.
Leases
The Company determines whether an arrangement
contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange
for consideration. For identified leases, the Company determines whether it should be classified as an operating or finance lease. Operating
leases are recorded in the balance sheet as: right-of-use asset (“ROU asset”) and operating lease obligation. ROU assets represent
the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation
to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the commencement date of the
lease and measured based on the present value of lease payments over the lease term. The ROU asset also includes deferred rent liabilities.
The Company’s lease arrangements generally do not provide an implicit interest rate. As a result, in such situations the Company
uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease
payments. The Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option
in the measurement of its ROU assets and liabilities. Lease expense for operating leases is recognized on a straight-line basis over the
lease term. The Company has some lease agreements with lease and non-lease components, which are accounted for as a single lease component.
See Note 1 for impairment discussion.
Fair Value of Financial Instruments
The provisions of accounting guidance, FASB Topic
ASC 825 requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized
on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount
at which the instrument could be exchanged in a current transaction between willing parties. As of December 31, 2022 and 2021, the fair
value of cash, accounts payable, accrued expenses, and notes payable approximated carrying value due to the short maturity of the instruments,
quoted market prices or interest rates which fluctuate with market rates.
Fair Value Measurements
Fair value is defined 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. Valuation techniques used to measure fair
value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three
levels of inputs, of which the first two are considered observable and the last unobservable, as follows:
|
· |
Level 1 – Quoted prices in active markets for identical assets or liabilities. |
|
|
|
|
· |
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
|
|
|
|
· |
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities. |
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. 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 the Black Scholes valuation method.
The following table summarize the Company’s
fair value measurements by level at December 31, 2022 for the assets measured at fair value on a recurring basis:
Schedule of fair value measurements | |
| | |
| | |
| |
| |
Level 1 | | |
Level 2 | | |
Level 3 | |
Derivative liability | |
$ | – | | |
$ | – | | |
$ | 85,590 | |
The following table summarize the Company’s
fair value measurements by level at December 31, 2021 for the assets measured at fair value on a recurring basis:
| |
Level 1 | | |
Level 2 | | |
Level 3 | |
Derivative liability | |
$ | – | | |
$ | – | | |
$ | 83,404 | |
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, records them as a contra-liability against the debt, and
amortizes the discount over the life of the underlying debt as amortization of debt discount expense in the Consolidated 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 Consolidated Statements of Operations. If the debt is retired early,
the associated debt discount is then recognized immediately as amortization of debt discount expense. 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 the Black Scholes
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 Consolidated
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. 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 Consolidated 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 Consolidated 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.
Loss per Share
The computation of loss per share included in
the Consolidated Statements of Operations, represents the net profit (loss) per share that would have been reported had the Company been
subject to ASC 260, “Earnings Per Share” as a corporation for all periods presented.
Diluted earnings (loss) per share are
computed on the basis of the weighted average number of common shares (including common stock to be issued) plus
dilutive potential common shares outstanding for the reporting period. In periods where losses are reported, the weighted-average
number of common stock outstanding excludes common stock equivalents, because their inclusion would be 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:
Schedule of antidilutive shares | |
| | | |
| | |
| |
December 31, 2022 | | |
December 31, 2021 | |
Options to purchase shares of common stock | |
| – | | |
| – | |
Series A convertible preferred stock | |
| 500,000,000 | | |
| 500,000,000 | |
Series B convertible preferred stock | |
| 5,000,000 | | |
| 5,000,000 | |
Total potentially dilutive shares | |
| 505,000,000 | | |
| 505,000,000 | |
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 December 31, 2022 and 2021.
See Note 1 for impairment discussion and Note 15 for commitments and contingencies.
Discontinued Operations
As a result of the
October 14, 2021 Complaint filed against Defendants, the Company determined that Nature would be accounted as a discontinued
operation pursuant to ASC 205-20 Discontinued Operations. In determining whether a group of assets that is disposed (or to be
disposed) should be presented as a discontinued operation, we analyzed whether the group of assets being disposed represents a
component of the Company; that is, whether it had historic operations and cash flows that were clearly distinguished, both
operationally and for financial reporting purposes. In addition, we considered whether the disposal represents a strategic shift
that has or will have a major effect on our operations and financial results. The results of discontinued operations, as well as any
gain or loss on the disposal, if applicable, are aggregated and separately presented in our consolidated statements of operations,
net of income taxes. The historical financial position of discontinued operations are aggregated and separately presented in our
accompanying consolidated balance sheets. See Note 1 for impairment discussion.
Reclassifications
Certain prior period’s accounts have been
reclassified in conformity with current period’s presentation. These reclassifications had no effect on the reported results of
operations.
Concentrations, Risks, and Uncertainties
Business Risk
Substantial business risks and uncertainties are
inherent to an entity, including the potential risk of business failure.
The Company is headquartered and operates in the
United States. To date, the Company has generated limited revenues from operations. There can be no assurance that the Company will be
able to successfully continue to produce its products and failure to do so would have a material adverse effect on the Company’s
financial position, results of operations and cash flows. Also, the success of the Company’s operations is subject to numerous contingencies,
some of which are beyond management’s control. These contingencies include general economic conditions, price of raw material, competition,
and governmental and political conditions.
Interest rate risk
Financial assets and liabilities do not have material
interest rate risk.
Credit risk
The Company is exposed to credit risk from its
cash in banks and accounts receivable. The credit risk on cash in banks is limited because the counterparties are recognized financial
institutions.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12,
Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by removing certain exceptions
to the general principles in ASC 740, Income Taxes, while also clarifying and amending existing guidance, including interim-period
accounting for enacted changes in tax law. This standard is effective for fiscal years, and for interim periods within those fiscal years,
beginning after December 15, 2020, with early adoption permitted. The Company adopted ASU No. 2019-12 in the first quarter of fiscal 2021,
coinciding with the standard’s effective date, and the impact from this standard was immaterial.
At the beginning of the first quarter of 2021,
the Company adopted the Financial Accounting Standards Board’s Accounting Standards Update No. 2016-13, Financial Instruments –
Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which modifies the measurement
of expected credit losses on certain financial instruments. The Company adopted ASU 2016-13 utilizing the modified retrospective transition
method. The adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements.
Other recently issued accounting updates are not
expected to have a material impact on the Company’s consolidated financial statements.
NOTE 4 – PROPERTY AND EQUIPMENT
The Company had no property and equipment as of
December 31, 2022 and 2021.
Depreciation expense was $0 and $44,959 (from
discontinued operations) for the years ended December 31, 2022 and 2021, respectively, and is classified in general and administrative
expenses in the Consolidated Statements of Operations. See Note 1 for impairment discussion as of December 31, 2021.
NOTE 5 – INTANGIBLE
ASSETS
The Company had no intangible assets as of December
31, 2022 and 2021:
Amortization expense was $0 and $7,755 (from discontinued
operations) for the years ended December 31, 2022 and 2021, respectively, and is classified in general and administrative expenses in
the Consolidated Statements of Operations. See Note 1 for impairment discussion as of December 31, 2021.
NOTE 6 – DEBT
TO FORMER SHAREHOLDER – discontinued operations
On March 1, 2020, the members of Nature entered
into the Ownership Interest Purchase Agreement (“Ownership Agreement”) whereby Yogev Shvo, a member of the Company, acquired
the remaining 50% member ownership (“Seller”) giving Mr. Shvo 100% member ownership of the Company. As consideration for the
Ownership Agreement, the Seller received a Promissory Note of $750,000. The Promissory Note bears interest at 15% per annum and matures
March 1, 2022, as amended on June 30, 2021. The Company included $72,743 in due to related party in discontinued operations as of December
31, 2021. This contingency will remain with Nature and not be a contingency for the Company per the Bear Village acquisition (see Note
1).
The Company borrows funds from related parties
for working capital purposes from time to time. There are no outstanding amounts as of December 31, 2022. Advances are non-interest
bearing and due on demand. See Note 1 for impairment discussion.
NOTE 7 – LOANS PAYABLE
Economic Injury Disaster Loan –
Discontinued operations
On May 14, 2020, the
Company executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the SBA under its Economic
Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business.
Pursuant to that certain
Loan Authorization and Agreement (the “SBA Loan Agreement”), the Company borrowed an aggregate principal amount of the EIDL
Loan of $150,000, with proceeds to be used for working capital purposes. Interest accrues at the rate of 3.75% per annum and will accrue
only on funds actually advanced from the date of each advance. Installment payments, including principal and interest, are due monthly
beginning May 14, 2021 (twelve months from the date of the SBA Note) in the amount of $731. The balance of principal and interest is payable
thirty years from the date of the SBA Note. In connection therewith, the Company also received a $7,000 grant, which does not
have to be repaid.
In
connection therewith, the Company executed (i) a note for the benefit of the SBA (the “SBA Note”), which contains customary
events of default and (ii) a Security Agreement, granting the SBA a security interest in all tangible and intangible personal property
of the Company, which also contains customary events of default (the “SBA Security Agreement”). As a result of the failure
to repay amounts based on the repayment schedule, on December 21, 2021, the Company was notified that it was in default of the EIDL Loan
and that the entire balance of principal and unpaid interest of $155,598 is due. This contingency will remain with Nature and not
be a contingency for the Company per the Bear Village acquisition (see Note 1).
Paycheck Protection Program Loan – Discontinued
operations
On May 6, 2020, the Company executed a note (the
“PPP Note”) for the benefit of TD Bank, N.A. (the “Lender”) in the aggregate amount of $51,065 under the
Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).
The PPP is administered by the U.S. Small Business Administration (the “SBA”). The interest rate of the loan is
1.00% per annum and accrues on the unpaid principal balance computed on the basis of the actual number of days elapsed in a year of 360
days. Commencing seven months after the effective date of the PPP Note, the Company is required to pay the Lender equal monthly payments
of principal and interest as required to fully amortize any unforgiven principal balance of the loan by the two-year anniversary of the
effective date of the PPP Note. The PPP Note of $51,065 was repaid in February 2021.
Paycheck Protection Program Loan Round 2 –
Discontinued operations
On April 2, 2021, the Company executed a note
(the “PPP Note”) for the benefit of First Federal Bank (the “Lender”) in the aggregate amount of $200,000 under
the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)
through a second draw. The PPP is administered by the U.S. Small Business Administration (the “SBA”). The terms of the second
draw have the same general loan terms as the first draw PPP loan. On December 31, 2021, the PPP Round 2 loan was forgiven and $200,000
was recorded as Other Income in the Consolidated Statements of Operations for the year ended December 31, 2021.
NOTE 8 – LOAN
PAYABLE TO SHAREHOLDER – discontinued operations
The Company borrows funds from its shareholders
from time to time for working capital purposes. During the year ended December 31, 2022, the Company had no additional borrowings and
made no repayments for a balance of $0 at December 31, 2022. Advances are non-interest bearing and due on demand.
NOTE 9 – CONVERTIBLE NOTES PAYABLE
Convertible Note Payable
Short Term
$85,766 Note
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 March
24, 2020, the note obligation 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 as of December 31, 2022.
The Company accounts for an 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 a derivative liability of $85,590 and 83,404 as at December 31, 2022 and 2021, and recorded a change in
derivative liability of $2,186 and $(40,776) during the years ended December 31, 2022 and 2021, respectively.
As a result of the failure to timely file our
Form 10-Q for the three-month periods ended September 30, 2020, March 31, 2022 and 2021, June 30, 2022, and September 30, 2022, and the
Form 10-K for the years ended December 31, 2021 and 2020, the Convertible Notes Payable were in default. The Company recorded default
interest of $22,452 and $22,450 during the years ended December 31, 2022 and 2021, respectively.
The Company has not repaid this convertible note
and the convertible note is now in default. The Company is currently in discussions with the note holder to convert the GHS Note into
the Company’s common stock upon the Company’s Reg A being declared effective.
$220,000 Note
On September 21, 2020, the Company issued a convertible
promissory note in the principal amount of $220,000. The convertible promissory note bears interest at 8% per annum and is due and payable
in twenty-four (24) months. The holder of this note has the right, at the holder's option, upon the consummation of a sale of all or substantially
all of the equity interest in the Company or private placement transaction of the Company's equity securities or securities convertible
into equity securities, exclusive of the conversion of this note or any similar notes, to convert the principal amount of this note, in
whole or in part, plus any interest which accrues hereon, into fully paid and nonassessable shares at a conversion price of $0.05 per
share. The Note includes customary events of default, including, among other things, payment defaults, covenant breaches, certain representations
and warranties, certain events of bankruptcy, liquidation and suspension of the Company’s Common Stock from trading. If such
an event of default occurs, the holders of the Note may be entitled to take various actions, which may include the acceleration of amounts
due under the Note and accrual of interest as described above.
The Company analyzed the conversion option in
the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument
does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject
to a beneficial conversion feature (“BCF”) and determined that the instrument does have a 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. As such, the proceeds of the notes were allocated, based on fair values,
as $220,000 to the debt discount. The debt discount is accreted over the term of the convertible notes to interest expense in the accompanying consolidated Statements of Operations. The principal balance due at December 31, 2022 is $220,000 and is presented as a short-term
liability in the balance sheet.
As a result of the failure to timely file our
Form 10-Q for the three-month periods ended September 30, 2020, March 31, 2022 and 2021, June 30, 2022, and September 30, 2022, and the
Form 10-K for the years ended December 31, 2021 and 2020, the Convertible Notes Payable were in default. On July 19, 2021, the Company
entered into a Waiver Agreement (the “Agreement”) waiving the default provisions listed in the Notes related to the Company’s
failure to timely file its Form 10-Q for the three-month period ended September 30, 2020, the Form 10-K for the year ended December 31,
2020, and the three-month period ended March 31, 2021. In exchange for the Agreement, the Company agreed to pay a one-time interest charge
of $11,680 in the year ended December 31, 2021. The Company recorded default interest of $43,419 and $12,708 during the years ended December
31, 2022 and 2021, respectively.
The Company has not repaid this convertible note
and the convertible note is now in default. The Company is currently in discussions with the note holder to convert the Note into the
Company’s common stock upon the Company’s Reg A being declared effective.
$410,000 Note (previously $600,000)
On October 9 and October 16, 2020, the Company
issued a convertible promissory note in the principal amount totaling $600,000. The convertible promissory note bears interest at 8% per
annum and is due and payable in twenty-four (24) months. The holder of this note has the right, at the holder's option, upon the consummation
of a sale of all or substantially all of the equity interest in the Company or private placement transaction of the Company's equity securities
or securities convertible into equity securities, exclusive of the conversion of this note or any similar notes, to convert the principal
amount of this note, in whole or in part, plus any interest which accrues hereon, into fully paid and nonassessable shares at a conversion
price of $0.05 per share. The Note includes customary events of default, including, among other things, payment defaults, covenant breaches,
certain representations and warranties, certain events of bankruptcy, liquidation and suspension of the Company’s Common Stock from
trading. If such an event of default occurs, the holders of the Note may be entitled to take various actions, which may include
the acceleration of amounts due under the Note and accrual of interest as described above.
The Company analyzed the conversion option in
the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument
does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject
to a beneficial conversion feature (“BCF”) and determined that the instrument does have a 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. As such, the proceeds of the notes were allocated, based on fair values,
as $600,000 to the debt discount. The debt discount is accreted over the term of the convertible notes to interest expense in the accompanying consolidated Statements of Operations.
On December 6, 2021, the holder of the note converted
$190,000 of the Note into 3,800,000 shares of the Company’s common stock. The principal balance of $410,000 was due October 16, 2022
and is presented as a short term liability in the balance sheet.
As a result of the failure to timely file our
Form 10-Q for the three-month periods ended September 30, 2020, March 31, 2022 and 2021, June 30, 2022, and September 30, 2022, and the
Form 10-K for the years ended December 31, 2021 and 2020, the Convertible Notes Payable were in default. On July 15, 2021, the Company
entered into a Waiver Agreement (the “Agreement”) waiving the default provisions listed in the Notes related to the Company’s
failure to timely file its Form 10-Q for the three-month period ended September 30, 2020, the Form 10-K for the year ended December 31,
2020, and the three-month period ended March 31, 2021. The Company recorded default interest of $79,767 and $23,321 during the years ended
December 31, 2022 and 2021, respectively.
The Company has not repaid this convertible note
and the convertible note is now in default. The Company is currently in discussions with the note holder to convert the Note into the
Company’s common stock upon the Company’s Reg A being declared effective.
April 2022 Notes
In April 2022, the Company authorized convertible
promissory notes (“April 2022 Notes”) that varies from 0% to 10% per annum and are due and payable on various dates from December
31, 2022 through October 31, 2024 for aggregate gross proceeds of $825,600 (including $1,500 against which services were received) during
the year ended December 31, 2022. In addition, one note of $200,000 issued in December 2022 allows for the repurchase of up to 100,000
converted common shares at $2.50 per share should the Company fail to meet the Reg A Tier II offering of $5.00 per share. The holders
of the April 2022 Notes have the right, at the holder's option, to convert the principal amount of this note, in whole or in part, plus
any interest which accrues hereon, into fully paid and nonassessable shares at a conversion price of $0.07 per share for notes amounting
to $598,600 and $0.70 per share for notes amounting to $227,000 into the Company’s common stock if before any public offering. The
Note includes customary events of default, including, among other things, payment defaults and certain events of bankruptcy. If
such an event of default occurs, the holders of the Note may be entitled to take various actions, which may include the acceleration of
amounts due under the Note and accrual of interest as described above (see Note 17).
The Company analyzed the conversion option in
the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument
does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject
to a beneficial conversion feature (“BCF”) and determined that the instrument does not have a BCF.
$40,000,000 Convertible Note
On May 13, 2022,
the Company issued a convertible promissory note in the principal amount totaling $40,000,000 in exchange for 50,000 RoRa Prime Coins
(“Coins”), valued at $800 per Coin. The convertible promissory note bears no interest and is due and payable in twenty-four
(24) months. The holder of this Note has the right, at the holder's option, to convert the principal amount of this Note, in whole or
in part, into fully paid and nonassessable shares at a conversion price of $2.00 per share. The Convertible Promissory Note shall not
be enforceable until such time as the Holder's consideration, RoRa Prime Coin is “live” on a US exchange and available
through a mutually agreed upon cryptocurrency wallet such as NyX, Exodus, Ledger, TREZOR Model T Wallet, ZenGo, or Atomic. The parties
agree to establish a time is of the essence date of May 1,2023 for Holder to meet the “live” requirement. Should Holder not
meet the “live” requirement by May 1, 2023, then Borrower shall return all RoRa Prime Coins and Holder shall release all claims
on any shares or Convertible Promissory Note. Conversion rights shall not vest until such time as
the holder’s consideration, Coins are live on a U.S. Exchange and available through a mutually agreed upon cryptocurrency wallet.
Subsequent to the Coins live date and before the holder coverts the Note, should the Company issue any dilutive security, the conversion
price will be reduced to the price of the dilutive issuance. The Note includes customary events of default, including, among other things,
payment defaults, covenant breaches, certain representations and warranties, certain events of bankruptcy, liquidation and suspension
of the Company’s Common Stock from trading. If such an event of default occurs, the holders of the Note may be entitled to take
various actions, which may include the acceleration of amounts due under the Note as described above.
As a result of the failure to timely file our Form 10-Q for the three-month periods ended June 30, 2022 and
September 30, 2022, the convertible promissory note was in default. On June 30, 2022, the Company entered into a Waiver Agreement (the
“Agreement”) waiving the default provisions listed in the convertible promissory note related to the Company’s failure
to timely file its 10-K for the year ended December 31, 2021, and Form 10-Q for the three-month periods ended March 31, 2022, June 30,
2022, and September 30, 2022
The Company analyzed the conversion option in
the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument
does not qualify for derivative accounting.
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 Debentures bear 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 a conversion price of $0.001 per share. In addition,
the Promissory Debentures provide for an interest equal to 15% of TNRG 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 (i) Promissory Debentures in principal amount of $70,000 dated February 15, 2020, and (ii) that certain convertible
promissory note in principal amount of $85,766 dated April 22, 2019, 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.
On October
4, 2020, SP11 converted $35,000 of its Promissory Debentures at $0.01 per share into 3,500,000 shares of the Company’s common stock.
On November
22, 2021, the loan of $48,000 and accrued and unpaid interest of $573,798 totaling $621,798 was forgiven by EMRY and recorded as a gain
on extinguishment of debt in Other Expense in the consolidated Statements of Operations.
NOTE 10 – STOCKHOLDERS’ DEFICIT
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 December 6, 2021, the holder of the note converted
$190,000 of the Note into 3,800,000 shares of the Company’s common stock for a balance due of $410,000 at December 31, 2021 on the
Note.
As part of the Purchase on April 13, 2022, Mr.
Shvo submitted 55,000,000 shares of restricted common stock to the Company’s treasury for cancellation, in consideration for
the transfer to him by TNRG of all of the issued and outstanding membership interests, assets and liabilities of Nature and HP, both
of which are wholly-owned subsidiaries of TNRG.
On March 1, 2022, as amended on October 1, 2022
and December 28, 2022, the Company entered into an Employment Agreement with Mr. Ricardo Haynes whereby Mr. Haynes became the sole Director,
CEO and Chairman of the Board, and the acting sole officer of the Company. The Employment Agreement is in effect until September 30,
2027. Under this Engagement Agreement, Mr. Haynes will be entitled to a total of 25,000,000
common shares, vesting immediately, valued at $750,000
(based on the Company’s stock price on the date of issuance). The shares are included
under Common stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022.
On April 6, 2022, as amended on December 2, 2022,
the Company entered into a Consulting Agreement with Top Flight Development, LLC (“Top Flight”), an entity controlled by the
father of the Company’s Director Real Estate Development, to provide consulting services to the Company. The consulting agreement
is in effect until the Company is profitable with a balance sheet of over $400 million or thirty-six (36) months, whichever is longer.
Under this consulting agreement, Top Flight will be entitled to the following:
|
1. |
a total of
15,000,000 common shares issued on the inception of the agreement of April 6, 2022, valued at $450,000 (based on the Company’s
stock price on the date of issuance) and vesting immediately. The shares are included under Common
stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022. |
|
|
|
|
|
2. |
Up to 50,000,000 common shares and $6,000,000 as bonuses based on the goals outlined in the agreement as follows: |
|
|
|
|
|
|
· |
a total of 5,000,000 common shares issued on December 15, 2022, valued at
$1,000 (based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus of $400,000 resulting from
the Company’s execution of the Joint Marketing and Advertising Agreement with the Las Vegas Aces professional Women’s basketball
team. The shares are included under Common
stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022. |
|
|
|
|
|
|
· |
a total of 12,000,000 common shares issued on January 5, 2023, valued at $1,140,000
(based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus based of $1,200,000 resulting from
the Company’s investment in Kinsley Mountain mineral, resources, and water rights (see Note 17). |
|
|
|
|
|
|
· |
a total of 28,000,000 common shares, vesting immediately, and a bonus of $2,800,000
resulting from the activation of the $40,000,000 RoRa coins on a recognized exchange which is expected to occur in July 2023. |
|
|
|
|
|
|
· |
a total of 5,000,000 common shares, vesting immediately, and a bonus of $1,600,000 resulting from
the Company’s investment and promotion of Bear Village Resort’s facilities in Tennessee and Georgia which is expected
to occur in July 2023. |
On April 6, 2022, the Company entered into a Consulting
Agreement with a third party to provide consulting services to the Company. The consulting agreement is in effect until the Company is
profitable with a balance sheet of over $200 million or thirty-six (36) months, whichever is longer. Under this consulting agreement,
the third party will be entitled to a total of 5,000,000 common shares, valued at $150,000 (based on the Company’s stock price on
the date of issuance) and vesting immediately. The shares are included under Common
stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022.
On April 6, 2022, the Company entered into a Consulting
Agreement with a third party to provide consulting services to the Company. The consulting agreement is in effect until the Company is
profitable with a balance sheet of over $200 million or thirty-six (36) months, whichever is longer. Under this consulting agreement,
the third party will be entitled to a total of 2,000,000 common shares, valued at $60,000 (based on the Company’s stock price on
the date of issuance) and vesting immediately. The shares are included under Common
stock to be issued in the Statement of Changes in Shareholders’ Deficit at December 31, 2022.
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.
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.
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.
Acquisition of TNRG Preferred Stock
Fiscal Year 2022
On February 28, 2022,
Mr. Ricardo Haynes, Mr. Eric Collins, Mr. Lance Lehr, Ms. Tori White and Mr. Donald Keer, each as an individual and principal shareholder
of Bear Village, Inc., a Wyoming corporation, (the “Purchaser”) collectively acquired 100% of the issued and outstanding shares
of preferred stock (the “Preferred Stock”) of Thunder Energies Corporation, a Florida corporation, (the “Company”
or the “Registrant”) from Mr. Yogev Shvo, an individual domiciled in Florida (the “Seller”) (the “Purchase”).
The consideration for the Purchase was provided to the Seller by the Company on behalf of the Shareholders and was recorded as compensation
expense (see Note 1).
NOTE 11 – OPERATING LEASES – DISCONTINUED
OPERATIONS
The Company adopted ASC 842 as of December 31,
2019. The Company has an operating lease for the Company’s warehouse and office and accounts
for this lease in accordance with ASC 842. Adoption of the standard resulted in the initial recognition of operating lease ROU asset of
$344,203 and operating lease liability of $344,203 as of December 31, 2019.
Operating lease right-of-use (“ROU”)
assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets
represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments
arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes
its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a
hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments
made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our
real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in the period in
which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably
certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease
term.
We have lease agreements with lease and non-lease
components. We have elected to account for these lease and non-lease components as a single lease component. We are also electing not
to apply the recognition requirements to short-term leases of twelve months or less and instead will recognize lease payments as expense
on a straight-line basis over the lease term.
In December 2021, the Company confirmed with the
landlord that as of that time and on a going forward basis, the Company has no rental obligation, or past due rental obligation or any
other related liability on its office/ warehouse space located at 3017 Greene Street, Hollywood, Florida.
On October 22, 2021, the Company entered into
a lease termination agreement (“Termination Agreement”) with Canal Park Office to terminate the Company’s North Miami
Beach, Florida office space. The Termination Agreement allows Canal Park Office to retain the security deposit of $24,799 and to be paid
$21,000. The Company was released from any other obligations.
See Note 16 for impairment discussion as of December
31, 2021.
The components of lease expense and supplemental
cash flow information related to leases for the period are as follows:
In
accordance with ASC 842, the components of lease expense were as follows:
Schedule of components of lease expense | |
| | | |
| | |
| |
Years ended December 31, | |
| |
2022 | | |
2021 | |
Operating lease expense | |
$ | – | | |
$ | 102,280 | |
Short term lease cost | |
$ | – | | |
$ | 4,430 | |
Total lease expense | |
$ | – | | |
$ | 102,280 | |
In
accordance with ASC 842, other information related to leases was as follows:
Schedule of other information related to leases | |
| | | |
| | |
Years ended December 31, | |
2022 | | |
2021 | |
Operating cash flows from operating leases | |
$ | – | | |
$ | 102,280 | |
Cash paid for amounts included in the measurement of lease liabilities | |
$ | – | | |
$ | 102,280 | |
| |
| | | |
| | |
Weighted-average remaining lease term—operating leases | |
| – | | |
| – | |
Weighted-average discount rate—operating leases | |
| – | | |
| –% | |
In accordance with ASC 842, maturities of operating lease liabilities
as of December 31, 2022 were as follows:
Schedule of Reconciliation of lease liabilities | |
| | |
| |
| Operating | |
Year ending: | |
| Lease | |
2022 | |
$ | – | |
Total undiscounted cash flows | |
$ | – | |
| |
| | |
Reconciliation of lease liabilities: | |
| | |
Weighted-average remaining lease terms | |
$ | – | |
Weighted-average discount rate | |
| – | |
Present values | |
| – | |
| |
| | |
Lease liabilities—current | |
| – | |
Lease liabilities—long-term | |
| – | |
Lease liabilities—total | |
| – | |
| |
| | |
Difference between undiscounted and discounted cash flows | |
$ | – | |
Operating lease cost was $0 and $102,280 for the
years ended December 31, 2022 and 2021, respectively.
NOTE 12 – Related
Party Transactions
Other than as set forth below, and as disclosed
in Notes 6, 8, and 10, there have not been any transaction entered into or been a participant in which a related person had or will have
a direct or indirect material interest.
On April 2, 2022, the Company entered into a demand
note (“Demand Note”) with Bear Village, Inc., a related party, for $36,200. The Demand Note bears no interest, is due on demand,
and is unsecured. On September 27, 2022, Bear Village repaid $10,000 for a balance due from Bear Village of $26,200 at December 31, 2022.
On April 6, 2022, as amended on December 2, 2022,
the Company entered into a Consulting Agreement with Top Flight Development, LLC (“Top Flight”), an entity controlled by the
father of the Company’s Director Real Estate Development, to provide consulting services to the Company. The consulting agreement
is in effect until the Company is profitable with a balance sheet of over $400 million or thirty-six (36) months, whichever is longer.
Under this consulting agreement, Top Flight will be entitled to the following:
|
1. |
a total of 15,000,000 common shares issued on the inception of the agreement of April 6, 2022, valued at $450,000 (based on the Company’s stock price on the date of issuance) and vesting immediately. |
|
|
|
|
|
2. |
Up to 50,000,000 common shares and $6,000,000 as bonuses based on the goals outlined in the agreement as follows: |
|
|
|
|
|
|
· |
a total of 5,000,000 common shares issued on December 15, 2022, valued at
$1,000 (based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus of $400,000 resulting from
the Company’s execution of the Joint Marketing and Advertising Agreement with the Las Vegas Aces professional Women’s basketball
team. |
|
|
|
|
|
|
· |
a total of 12,000,000 common shares issued on January 5, 2023, valued at $1,140,000
(based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus based of $1,200,000 resulting from
the Company’s investment in Kinsley Mountain mineral, resources, and water rights (see Note 17). |
|
|
|
|
|
|
· |
a total of 28,000,000 common shares, vesting immediately, and a bonus of $2,800,000
resulting from the activation of the $40,000,000 RoRa coins on a recognized exchange which is expected to occur in July 2023. |
|
|
|
|
|
|
· |
a total of 5,000,000 common shares, vesting immediately, and a bonus of $1,600,000 resulting from
the Company’s investment and promotion of Bear Village Resort’s facilities in Tennessee and Georgia which is expected to occur in July 2023. |
|
|
|
|
|
3. |
Shall be paid $21,000 per month beginning May 2022 increasing to $25,000 per month beginning January 2023. |
|
|
|
|
|
4. |
Additional awards may be made at the Company’s discretion based on other strategic goals. There were no additional awards granted for the year ended December 31, 2022. |
During the years ended December 31, 2022 and 2021,
the Company paid Top Flight $320,600 and $0, respectively, with a balance due of $247,000 as of December 31, 2022.
NOTE 13 – INCOME TAXES
At December 31, 2022, net operating loss carry
forwards for Federal and state income tax purposes totaling approximately $5,322,000 available to reduce future income which, if not utilized,
will begin to expire in the year 2041. There is no income tax affect due to the recognition of a full valuation allowance on the expected
tax benefits of future loss carry forwards based on uncertainty surrounding realization of such assets.
A reconciliation of the statutory income tax
rates and the effective tax rate is as follows:
Schedule of income tax expense | |
| | | |
| | |
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Statutory U.S. federal rate | |
| 21.0% | | |
| 21.0% | |
State income tax, net of federal benefit | |
| 3.5% | | |
| 3.5% | |
Permanent differences | |
| (3.4)% | | |
| 0.0% | |
Valuation allowance | |
| (21.1)% | | |
| (24.5)% | |
| |
| | | |
| | |
Provision for income taxes | |
| 0.0% | | |
| 0.0% | |
The tax effects of the temporary differences
and carry forwards that give rise to deferred tax assets consist of the following:
Schedule of deferred income taxes | |
| | | |
| | |
| |
December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Deferred tax assets: | |
| | | |
| | |
Net operating loss carry forwards | |
$ | 1,305,033 | | |
$ | 495,455 | |
Stock based compensation | |
| 346,003 | | |
| – | |
Valuation allowance | |
| (1,651,036 | ) | |
| (495,455 | ) |
| |
| | | |
| | |
Deferred tax asset, net | |
$ | – | | |
$ | – | |
Major tax jurisdictions are the United States
and Florida. All of the tax years will remain open three and four years for examination by the Federal and state tax authorities, respectively,
from the date of utilization of the net operating loss. There are no tax audits pending.
NOTE 14 – EARNINGS PER SHARE
FASB ASC Topic 260, Earnings Per Share,
requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (“EPS”) computations.
Basic earnings (loss) per share are computed by
dividing net earnings available to common stockholders by the weighted-average number of common shares outstanding during the period.
Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include
the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. In periods where losses are reported, the weighted-average number of common stock outstanding excludes common
stock equivalents, because their inclusion would be 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:
Schedule of anti dilutive shares | |
| | | |
| | |
| |
Years Ended December 31, | |
| |
2022 | | |
2021 | |
Series A convertible preferred stock | |
| 500,000,000 | | |
| 500,000,000 | |
Series B convertible preferred stock | |
| 5,000,000 | | |
| 5,000,000 | |
Total potentially dilutive shares | |
| 505,000,000 | | |
| 505,000,000 | |
The following table sets forth the computation of basic and diluted
net income per share:
Schedule of earnings per share | |
| | | |
| | |
| |
Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Loss from continuing operations | |
$ | (5,466,473 | ) | |
$ | (1,255,898 | ) |
Discontinued operations | |
| – | | |
| (116,652 | ) |
Net loss attributable to the common stockholders | |
$ | (5,466,473 | ) | |
$ | (1,372,550 | ) |
| |
| | | |
| | |
Basic weighted average outstanding shares of common stock | |
| 71,354,434 | | |
| 76,735,271 | |
Dilutive effect of options and warrants | |
| – | | |
| – | |
Diluted weighted average common stock and common stock equivalents | |
| 71,354,434 | | |
| 76,735,271 | |
| |
| | | |
| | |
Loss per share: | |
| | | |
| | |
Net loss per share from continuing operations, basic and diluted | |
$ | (0.08 | ) | |
$ | (0.02 | ) |
Net loss per share from discontinued operations, basic and diluted | |
| (0.00 | ) | |
| (0.00 | ) |
Net loss per share total, basic and diluted | |
$ | (0.08 | ) | |
$ | (0.02 | ) |
NOTE 15 – COMMITMENTS AND CONTINGENCIES
Legal
From time to time, various lawsuits and legal
proceedings may arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result
in these, or other matters may arise from time to time that may harm our business. We are currently not aware of any legal proceedings
or claims that it believes will have a material adverse effect on its business, financial condition or operating results except:
First Capital Venture
On November 3, 2020, First Capital Venture Co.,
a subsidiary of the client, d/b/a Diamond CBD, filed a civil complaint against Thunder Energies Corporation (the “Defendants”),
in the pending 17th Judicial Circuit Court in and for Broward County, Florida, (the “Florida Court”), Case Number CACE-20-019111
(the “Complaint”).
On January 26, 2021 Plaintiffs were erroneously
granted an Order of Default to which the Defendants immediately pointed out to the Court and on February 23, 2021 an Order Vacating the
Default was granted in favor of the Defendants. The Plaintiff knew, or should have known, that the Order of Default was not valid but
they proceeded on February 9, 2021 to publish false and misleading press releases.
On November 23, 2022 (“Settlement Date”),
Mr. Shvo settled with First Capital Venture on behalf of the Defendants for $11,500 to be paid within ten (10) days from the Settlement
Date. On November 23, 2022, the settlement payment of $11,500 was paid.
Rocket Systems – Discontinued Operations
On October 13, 2021, Rocket Systems, Inc. (“Plaintiff”)
filed a complaint against Nature Consulting LLC (“Nature”) in the pending 17th Judicial Circuit Court in and for Broward County,
Florida, (the “Florida Court”), Case Number CACE-21-018840 (the “Complaint”).
The complaint alleged that the Plaintiff paid
Nature a deposit of $50,000 for the delivery of Nature products. According to the Complaint, Nature delivered $6,188 of the product but
failed to deliver the remaining $43,812 of product.
Plaintiff has demanded that the remainder of the
product order be canceled and the refund of $43,812. In addition, the Plaintiff sought prejudgment interest and costs of this action.
This contingency remained with Nature and is not
a contingency for the Company per the Bear Village acquisition (see Note 1).
Home Remedies CBD – Discontinued Operations
On November 23, 2021, Home Remedies CBD, LLC (“Plaintiff”)
filed a complaint against TheHemplug LLC (“THP”) in the pending 3rd Judicial Circuit Court in and for Wayne County, Michigan,
(the “Michigan Court”), Case Number CACE-21-016306-CB (the “Complaint”).
The complaint alleged that the Plaintiff paid
Nature a deposit of $60,030 for the delivery of THP products. According to the Complaint, Nature delivered $27,600 of the product but
failed to deliver the remaining $32,430 of product. In addition, Plaintiff returned $4,575 of product to correct the labeling and that
THP failed to correct the labeling and return the product to Plaintiff.
Plaintiff demanded that the remainder of the product
order be canceled and a refund of $37,005. In addition, the Plaintiff sought prejudgment interest and costs of this action.
On July 19, 2022, THP agreed to pay Plaintiff
a settlement of $15,000. This contingency remained with Nature and is not a contingency of the Company per the Bear Village acquisition
(see Note 1).
Employment Contracts
On March 1, 2022, as amended on October 1,
2022 and December 28, 2022, Mr. Ricardo Haynes, the Company’s sole Director, Chief Executive Officer (“CEO”) and
Chairman of the Board, and the acting sole officer of the Company entered into an Employment Agreement with the Company. The
Employment agreement terminates September 30, 2027 and automatically renews on a year-to-year basis unless terminated by either
party on six months’ notice. In addition, Mr. Haynes is entitled to employee reimbursements totaling $820
per month, entitled to six (6) weeks paid vacation each year, provides for medical and dental insurance, and entitled to stock
options upon the implementation of a Company employee option plan. Under this Employment agreement, the CEO will be entitled to the
following:
|
· |
$5,700 for services performed from March 1, 2022 – June 30, 2022. |
|
· |
Lump Sum payment of $21,299 for services from July 1, 2022 – December 31, 2022. |
|
· |
Base salary of $11,000 per month paid on a bi-weekly basis starting January 2, 2023. |
|
· |
Bonus of $14,201 was paid in November and December 2022. |
|
· |
Automobile allowance of $1,500 per month starting January 2, 2023. |
|
· |
25,000,000 shares of TNRG common stock in the Company which vest immediately. |
|
· |
7,500,000 newly issued Preferred A shares of TNRG stock CUSIP (88604Y209) Cert No. 400002. |
|
· |
750 newly issued Preferred B shares of TNRG stock CUSIP (88604Y209), Cert. No. 500002. |
|
· |
1,500 newly issued Preferred C shares of TNRG stock CUSIP (8860Y209), Cert No. 600002. |
|
· |
$7,500 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
· |
1,500 RoRa Coins in possession of the Company. |
On October 1, 2022, the Company entered into Employment
Agreements with individuals for positions in the Company. Each of the Employment agreements shall begin October 1, 2022 and terminate
September 30, 2027 and automatically renews on a year-to-year basis unless terminated by either party on six months’ notice. In
addition, each employee is entitled to employee reimbursements totaling $820 per month, entitled to six (6) weeks paid vacation each year,
provides for medical and dental insurance, and entitled to stock options upon the implementation of a Company employee option plan. Under
these Employment agreements, each employee will be entitled to the following:
|
· |
Ms. Tori White, Director Real Estate Development. |
|
○ |
$24,000 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
○ |
4,800 RoRa Coins in possession of the Company. |
|
· |
Mr. Eric Collins, Chairman and Chief Operations Officer. |
|
○ |
$12,500 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
○ |
2,500 RoRa Coins in possession of the Company. |
|
· |
Mr. Donald Keer, Corporate Counsel |
|
○ |
$3,500 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
○ |
700 RoRa Coins in possession of the Company. |
|
· |
Mr. Lance Lehr, Chief Operating Officer |
|
○ |
$2,500 loan forgiveness cancelling debt used for the acquisition of shares in the Company. |
|
○ |
500 RoRa Coins in possession of the Company. |
The Company had been in discussions with the Shareholders
for repayment by them of the Acquisition of Preferred Shares and finalized the Employment Agreements on October 1, 2022 for positions
in the Company. As a result, the Company recorded the purchase price payable by these employees as compensation on March 1, 2022 (see
Note 1).
Consulting Agreements
On April 6, 2022, as amended on December 2, 2022,
the Company entered into a Consulting Agreement with Top Flight Development, LLC (“Top Flight”), an entity controlled by the
father of the Company’s Director Real Estate Development, to provide consulting services to the Company. The consulting agreement
is in effect until the Company is profitable with a balance sheet of over $400 million or thirty-six (36) months, whichever is longer.
Under this consulting agreement, Top Flight will be entitled to the following:
|
1. |
a total of 15,000,000 common shares issued on the inception of the agreement of April 6, 2022, valued at $450,000 (based on the Company’s stock price on the date of issuance) and vesting immediately. |
|
2. |
Up to 50,000,000 common shares and $6,000,000 as bonuses based on the goals outlined in the agreement as follows: |
|
|
|
|
|
|
· |
a total of 5,000,000 common shares issued on December 15, 2022, valued at
$1,000 (based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus of $400,000 resulting from
the Company’s execution of the Joint Marketing and Advertising Agreement with the Las Vegas Aces professional Women’s basketball
team. |
|
|
|
|
|
|
· |
a total of 12,000,000 common shares issued on January 5, 2023, valued at $1,140,000
(based on the Company’s stock price on the date of issuance), vesting immediately, and a bonus based of $1,200,000 resulting from
the Company’s investment in Kinsley Mountain mineral, resources, and water rights (see Note 17). |
|
|
|
|
|
|
· |
a total of 28,000,000
common shares, vesting immediately, and a bonus of $2,800,000
resulting from the activation of the $40,000,000
RoRa coins on a recognized exchange which is expected to occur in July 2023. |
|
|
|
|
|
|
· |
a total of 5,000,000
common shares, vesting immediately, and a bonus of $1,600,000
resulting from the Company’s investment and promotion of Bear Village Resort’s facilities in Tennessee and Georgia
which is expected to occur in July 2023. |
|
|
|
|
|
3. |
Shall be paid $21,000 per month beginning May 2022 increasing to $25,000 per month beginning January 2023. |
|
|
|
|
|
4. |
Additional awards may be made at the Company’s discretion based on other strategic goals. There were no additional awards granted for the year ended December 31, 2022. |
During the years ended December 31, 2022 and 2021,
the Company paid Top Flight $320,600 and $0, respectively, with a balance due of $247,000 as of December 31, 2022.
On April 6, 2022, the Company entered into a Consulting
Agreement with a third party to provide consulting services to the Company. The consulting agreement is in effect until the Company is
profitable with a balance sheet of over $200 million or thirty-six (36) months, whichever is longer. Under this consulting agreement,
the third party will be entitled to a total of 5,000,000 common shares, valued at $150,000 (based on the Company’s stock price on
the date of issuance) and vesting immediately.
On April 6, 2022, the Company entered into a Consulting
Agreement with a third party to provide consulting services to the Company. The consulting agreement is in effect until the Company is
profitable with a balance sheet of over $200 million or thirty-six (36) months, whichever is longer. Under this consulting agreement,
the third party will be entitled to a total of 2,000,000 common shares, valued at $60,000 (based on the Company’s stock price on
the date of issuance) and vesting immediately.
Investment in WC Mine Holdings
On September 8, 2022, the Company entered into
a Membership Interest Purchase Agreement (“Agreement”) with Fourth & One, LLC (“Fourth & One”) with respect
to the sale and transfer of 51.5% of Fourth & One’s interest in WC Mine Holdings, LLC (“WCMH”) giving the Company
a 30.9% ownership in WCMH for consideration totaling $5,450,000 for the Kinsley Mountain mineral, resources, and water rights. The preliminary
appraisal of the property value is estimated at approximately $33 million. In exchange, the Company issued Fourth & One a promissory
note of $4,000,000 and 2,000 RoRa Prime digital coins (“Coins”), valued at $1,450,000. The promissory note provides for no
interest and matures on October 31, 2022 (“Maturity Date”). In addition, the promissory note provides that the Company may
convert all amounts at any time prior to the Maturity Date and after gaining approval by the Securities and Exchange Commission of the
Company’s REG A II Offering and Fourth & One may convert all amounts into common stock prior to the Maturity Date at a conversion
price of $2.00 per share. The Agreement also provides that should Fourth & One not be able to convert the Coins on or before October
31, 2022 at a conversion ratio of $800 per Coin, the Company will purchase all of the Coins for a total of $1,600,000 (2,000 Coins at
$800 per Coin) on October 31, 2022.
On November 1, 2022, the Company and Fourth &
One mutually agreed to terminate the Agreement and the Company was released from any obligations.
On January 5, 2023, the Company reentered into a Membership Interest
Purchase Agreement (“Agreement”) with Fourth & One with respect to the sale and transfer of 51.5% of Fourth & One’s
interest in WCMH giving the Company a 30.9% ownership in WCMH for consideration totaling $5,450,000. In exchange, the Company issued Fourth
& One a promissory note of $4,000,000 and 2,000 Coins, valued at $1,450,000 (see Note 17).
Sponsorship Agreement
On December 15, 2022, the Company entered into
a Joint Marketing and Advertising Agreement with the Las Vegas Aces (“Aces”) professional Women’s basketball team. The
Aces shall provide the Company branding, digital advertising, and partner marketing and advertising for payments totaling $875,000, $901,250,
and $928,288 for the years 2023, 2024, and 2025, respectively. The agreement is effective December 15, 2022 through December 31, 2025,
with an option to extend for an additional two years, unless terminated sooner.
Financing Engagement Agreement
On August 25, 2022, the Company entered into a
Legal Services Agreement with The George Law Group in connection with an issuance of multi-tranched securitization (“Financing”)
which shall utilize a pledge of the Company’s stock and other properties currently owned or under the Company’s control. The
legal fee shall be one-half of one percent (0.5%) of the par amount of any Financing. The Company paid a retainer of $42,000 as of December
31, 2022 which will be applied to any fees incurred in the Financing.
NOTE 16 – DISCONTINUED OPERATIONS
As a result of the October 14, 2021 Complaint
filed against Defendants, the Company determined that Nature would be accounted as a discontinued operation pursuant to ASC 205-20 Discontinued
Operations. In determining whether a group of assets that is disposed (or to be disposed) should be presented as a discontinued operation,
we analyzed whether the group of assets being disposed represents a component of the Company; that is, whether it had historic operations
and cash flows that were clearly distinguished, both operationally and for financial reporting purposes. In addition, we considered whether
the disposal represents a strategic shift that has or will have a major effect on our operations and financial results.
The following table reconciles the loss realized
from the disposal of discontinued operations:
Schedule of gain on disposal of discontinued operation | |
| | |
| |
December 31, | |
| |
2021 | |
Accounts payable | |
$ | 386,129 | |
Due to related party | |
| 72,743 | |
Customer advance payments | |
| 203,518 | |
Short term notes payable | |
| 149,490 | |
Accrued interest | |
| 89,120 | |
Gain on disposal of discontinued operation | |
$ | 901,000 | |
Discontinued operations for the years ended December
31, 2021 consist of the operations from Nature.
The following tables lists the assets and liabilities
of discontinued operations as of December 31, 2022 and 2021 and the discontinued operations for Nature for years ended December 31, 2022
and 2021:
Schedule of assets and liabilities of discontinued operations | |
| | | |
| | |
| |
December 31, | | |
December 31, | |
| |
2022 | | |
2021 | |
Liabilities | |
| | |
| |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | – | | |
$ | 386,129 | |
Due to related party | |
| – | | |
| 72,743 | |
Loan payable to shareholder | |
| – | | |
| 68,405 | |
Customer advance payments | |
| – | | |
| 203,518 | |
Short term notes payable | |
| – | | |
| 149,490 | |
Current portion of operating lease liabilities | |
| – | | |
| – | |
Accrued interest | |
| – | | |
| 89,120 | |
Other current liabilities | |
| – | | |
| – | |
Total current liabilities of discontinued operation | |
| – | | |
| 901,000 | |
| |
| | | |
| | |
Total liabilities of discontinued operation | |
$ | – | | |
$ | 901,000 | |
| |
| | | |
| | |
| |
For the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Revenue | |
$ | – | | |
$ | 3,750,519 | |
Cost of sales | |
| – | | |
| 1,574,770 | |
Gross profit | |
| – | | |
| 2,175,749 | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
Advertising and marketing expenses | |
| – | | |
| 392,171 | |
General and administrative | |
| – | | |
| 1,876,217 | |
Total operating expenses | |
| – | | |
| 2,268,388 | |
Profit from operations | |
| – | | |
| (92,639 | ) |
| |
| | | |
| | |
Other expense (income): | |
| | | |
| | |
Impairment of assets | |
| – | | |
| 195,347 | |
Interest expense | |
| – | | |
| 28,962 | |
Other expense | |
| – | | |
| – | |
Other income | |
| – | | |
| (200,296 | ) |
Total other expense | |
| – | | |
| 24,013 | |
| |
| | | |
| | |
Loss before income taxes | |
| – | | |
| (116,652 | ) |
Income taxes | |
| – | | |
| – | |
| |
| | | |
| | |
Net loss of discontinued operations | |
$ | – | | |
$ | (116,652 | ) |
NOTE 17 – SUBSEQUENT EVENTS
April 2022 Notes
Subsequent to December 31, 2022, the Company offered
and sold an additional $306,200 of the April 2022 Notes bearing no interest and are due and payable on various dates from June 30, 2023
through September 30, 2023.
As of March 31, 2023, the Company has not repaid
April 2022 Notes convertible notes totaling $431,500 with maturity dates of December 31, 2022 through March 31, 2023 and these convertible
notes are now in default. The Company is currently in discussions with the note holders to convert the April 2022 Notes into the Company’s
common stock upon the Company’s Reg A being declared effective.
In addition, one note
of $100,000 issued in January 2023 allows for the repurchase of up to 100,000 converted common shares at $2.50 per share should the Company
fail to meet the Reg A Tier II offering of $5.00 per share.
Investment in WC Mine Holdings
On January 5, 2023, the Company entered into
a Membership Interest Purchase Agreement (“Agreement”) with Fourth & One, LLC (“Fourth & One”) with
respect to the sale and transfer of 51.5% of Fourth & One’s interest in WC Mine Holdings, LLC (“WCMH”) giving
the Company a 30.9% ownership in WCMH for consideration totaling $5,450,000 for the Kinsley Mountain mineral, resources, and water
rights. The preliminary appraisal of the property is estimated at approximately $33 million. In exchange, the Company issued Fourth
& One a promissory note of $4,000,000 and 2,000 RoRa Prime digital coins (“Coins”), valued at $1,450,000. The
promissory note provides for no interest and matured on March 31, 2023 (“Maturity Date”). The Company is currently in
discussions with Fourth & One to convert the promissory note into the Company’s common stock. In addition, the promissory
note provides that the Company may convert all amounts at any time prior to the Maturity Date and after gaining approval by the
Securities and Exchange Commission of the Company’s REG A II $3 per share Offering and Fourth & One may convert all
amounts into common stock prior to the Maturity Date at a conversion price of $2.00 per share. The Agreement also provides that
should Fourth & One not be able to convert the Coins on or before June 1, 2023 at a conversion ratio of $800 per Coin, the
Company will purchase all of the Coins for a total of $1,600,000 (2,000 Coins at $800 per Coin) on June 1, 2023.
Consulting Agreement
In conjunction with the December 2, 2022 Consulting Agreement with
Top Flight, a total of 12,000,000 common shares were issued on January 5, 2023, valued at $1,140,000 (based on the Company’s stock
price on the date of issuance), vesting immediately, and a bonus based of $1,200,000 resulting from the Company’s investment in
Kinsley Mountain mineral, resources, and water rights (see Note 15).
Preferred Stock
During February and March 2023, holders of 64,000,000 shares of common
stock (57,000,000 shares from related parties and 7,000,000 shares third parties) elected to exchange these shares for an aggregate of
64,000 shares of Series B Convertible Preferred Stock. Each Series B Convertible Preferred Share is entitled to one thousand (1,000) votes
and converts into one thousand (1,000) shares of the Company’s common stock.
PART III
INDEX TO EXHIBITS
___________________________
|
* |
To be filed prior to
qualification. |
|
** |
Previously filed. |
|
*** |
To be filed with qualification |
|
**** |
No “Test the Waters” presentations were made and no “Test the Waters” materials were prepared. |
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer certifies that
it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in State of Georgia, on August 9, 2023.
THUNDER ENERGIES CORP. |
|
|
|
By: /s/ Ricardo Haynes |
|
|
|
By: Ricardo Haynes |
|
CEO of THUNDER ENERGIES CORP. |
|
This Offering Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Eric Collins |
|
Eric Collins, Director |
|
|
|
Date: August 9, 2023 |
|
|
|
/s/ Lance Lehr |
|
Lance Lehr, Director |
|
|
|
Date: August 9, 2023 |
|
|
|
/s/ Tori White |
|
Tori White, Director |
|
|
|
Date: August 9, 2023 |
|
|
|
/s/ Donald R. Keer |
|
Donald R. Keer, Director |
|
|
|
Date: August 9, 2023 |
|
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