UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2018

 

or

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

 

For the transition period from __________ to __________.

 

Commission file number 000-54464

 

THUNDER ENERGIES CORPORATION

(Exact Name of Registrant as specified in its charter)

 

Florida

 

45-1967797

(State or jurisdiction of

Incorporation or organization

 

(I.R.S Employer

Identification No.)

 

1444 Rainville Road, Tarpon Springs, Florida

 

34689

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code 727-940-3944

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes  ¨ No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes  ¨ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definition of "accelerated filer,” “large accelerated filer," “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer 

¨

Accelerated filer 

¨

Non-accelerated filer 

¨

Smaller Reporting Company 

x

Emerging growth company

x

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes  ¨ No x .

 

The number of shares of the issuer’s common stock, par value $.001 per share, outstanding as of August 10, 2018 was 66,833,367.

 

 
 
 
 

 

TABLE OF CONTENTS

 

 

Page

 

Part I. Financial Information

 

Item 1.

Condensed Financial Statements.

 

3

 

Condensed Balance Sheets as of June 30, 2018 (unaudited) and December 31, 2017 (audited).

 

3

 

Condensed Statements of Operations for the three and six months ended June 30, 2018 and June 30, 2017 (unaudited).

 

4

 

Condensed Statements of Cash Flows for the six months ended June 30, 2018 and 2017 (unaudited)

 

5

 

Notes to Condensed Financial Statements (unaudited).

 

6

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

18

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

25

 

Item 4.

Controls and Procedures.

 

25

 

Part II. Other Information.

 

Item 1.

Legal Proceedings.

 

26

 

Item 1A.

Risk Factors

 

26

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

26

 

Item 3.

Defaults Upon Senior Securities.

 

27

 

Item 4.

Mine Safety Disclosures.

 

27

 

Item 5.

Other Information.

 

27

 

Item 6.

Exhibits.

 

27

 

Signatures

 

29

 

 
2
 
 

 

Part I. Financial Information

 

Item 1. Financial Statements.

 

THUNDER ENERGIES CORPORATION

 

Condensed Balance Sheets

(Unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash

 

$ 1,428

 

 

$ 1,883

 

Accounts receivable

 

 

---

 

 

 

24,469

 

Total Current Assets

 

 

1,428

 

 

 

26,352

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Intangible assets, net of accumulated amortization and impairment of $15,220 and $15,120, respectively

 

 

100

 

 

 

200

 

Total non-current assets

 

 

100

 

 

 

200

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$ 1,528

 

 

$ 26,552

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$ 25,780

 

 

$ ---

 

Accrued interest

 

 

41,214

 

 

 

33,262

 

Accrued compensation, related party

 

 

63,000

 

 

 

---

 

Derivative liability

 

 

189,159

 

 

 

116,654

 

Convertible note payable, net of discount of $28,394 and $49,134, respectively

 

 

67,606

 

 

 

16,866

 

Note payable, related parties

 

 

521,500

 

 

 

520,000

 

Total Current Liabilities

 

 

908,259

 

 

 

686,782

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

908,259

 

 

 

686,782

 

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

Preferred stock: $0.001 par value, 750,000,000 authorized; 50,000,000 and 50,000,000 shares issued and outstanding, respectively

 

 

50,000

 

 

 

50,000

 

Common stock: $0.001 par value 900,000,000 authorized; 56,841,499 and 44,904,708 shares issued and outstanding, respectively

 

 

56,842

 

 

 

44,905

 

Additional paid in capital

 

 

2,500,279

 

 

 

2,236,440

 

Accumulated deficit

 

 

(3,513,851 )

 

 

(2,991,576 )

Total Stockholders' Deficit

 

 

(906,731 )

 

 

(660,230 )

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT

 

$ 1,528

 

 

$ 26,552

 

 

See notes to financial statements

 

 
3
 
Table of Contents

 

THUNDER ENERGIES CORPORATION

 

Condensed Statements of Operations

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

$ ---

 

 

$ ---

 

 

$ ---

 

 

$ ---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

12,106

 

 

 

15,795

 

 

 

37,593

 

 

 

25,581

 

Professional fees

 

 

119,865

 

 

 

95,337

 

 

 

288,602

 

 

 

182,397

 

Selling, general and administrative expenses

 

 

55,604

 

 

 

73,028

 

 

 

119,342

 

 

 

129,159

 

Total operating expenses

 

 

187,575

 

 

 

184,160

 

 

 

445,537

 

 

 

337,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from operations

 

 

(187,575 )

 

 

(184,160 )

 

 

(445,537 )

 

 

(337,137 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(5,733 )

 

 

(4,052 )

 

 

(10,591 )

 

 

(7,194 )

Interest expense related to derivative liability

 

 

2,249

 

 

 

(26,794 )

 

 

(50,740 )

 

 

(31,800 )

Change in derivative

 

 

(16,219 )

 

 

(118,698 )

 

 

(15,407 )

 

 

(118,698 )

Net loss before income taxes

 

 

(207,278 )

 

 

(333,704 )

 

 

(522,275 )

 

 

(494,829 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

---

 

 

 

---

 

 

 

---

 

 

 

---

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$ (207,278 )

 

$ (333,704 )

 

$ (522,275 )

 

$ (494,829 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per share

 

$ (0.00 )

 

$ (0.02 )

 

$ (0.01 )

 

$ (0.03 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding

 

 

50,578,680

 

 

 

21,592,885

 

 

 

47,976,471

 

 

 

19,491,151

 

 

See notes to financial statements

 

 
4
 
Table of Contents

 

THUNDER ENERGIES CORPORATION

 

Condensed Statements of Cash Flows

(Unaudited)

 

 

 

For the Six Months Ended

 

 

 

June 30,

 

 

 

2018

 

 

2017

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

Net loss

 

$ (522,275 )

 

$ (494,829 )

Adjustment to reconcile net loss to net cash used in in operations:

 

 

 

 

 

 

 

 

Amortization

 

 

100

 

 

 

100

 

Change in fair market value of derivatives

 

 

15,407

 

 

 

150,498

 

Amortization of debt discount

 

 

50,740

 

 

 

---

 

Stock issued for services provided

 

 

234,233

 

 

 

1,089,446

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Increase (decrease) in operating liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

24,469

 

 

 

---

 

Accounts payable

 

 

25,780

 

 

 

---

 

Accrued expenses – related party

 

 

63,000

 

 

 

(865,846 )

Deposits

 

 

---

 

 

 

120,067

 

Accrued interest

 

 

10,591

 

 

 

7,194

 

Net Cash used in operating activities

 

 

(97,955 )

 

 

6,630

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from shareholder loans

 

 

27,000

 

 

 

29,500

 

Principal payments on shareholder loans

 

 

(25,500 )

 

 

(30,000 )

Proceeds from convertible notes payable

 

 

96,000

 

 

 

53,000

 

Net Cash provided by financing activates

 

 

97,500

 

 

 

52,500

 

 

 

 

 

 

 

 

 

 

Net increase in cash

 

 

(405 )

 

 

59,130

 

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

 

Beginning of period

 

 

1,883

 

 

 

961

 

End of period

 

$ 1,428

 

 

$ 60,091

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

$ ---

 

 

$ ---

 

Cash paid for taxes

 

$ ---

 

 

$ ---

 

 

 

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

 

 

 

Derivative convertible liability recorded

 

$ ---

 

 

$ 213,299

 

Original discount recorded on the recognition of notes with derivative liabilities

 

$ 96,000

 

 

$ ---

 

Extinguishment of derivative liability related to debt conversions

 

$ 117,115

 

 

$ ---

 

Debt/accrued interest converted into common stock

 

$ 68,641

 

 

$ ---

 

 

See notes to financial statements.

 

 
5
 
Table of Contents

 

THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

  

NOTE 1 – NATURE OF BUSINESS

 

Thunder Energies Corporation (“we”, “us”, “our”, “TEC” or the “Company”) was incorporated in the State of Florida on April 21, 2011. On 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 Amendment also changed the principal office address of the Company to 1444 Rainville Road, Tarpon Springs, Florida 34689.

 

The business of Thunder Energies Corporation ("TEC") is focused, depending on funding, on the manufacturing, sale and service of three new cutting-edge technologies (patents and trademarks pending): the new Santilli telescopes with concave lenses; the new hadronic reactors for the synthesis of the neutron from the hydrogen gas, and the new HyperFurnaces for the full combustion of fossil fuels. 

 

NOTE 2 – GOING CONCERN

 

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating cost and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan to obtain such resources for the Company include, obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.

 

There is no assurance that the Company will be able to obtain sufficient additional funds when needed or that such funds, if available, will be obtainable on terms satisfactory to the Company. In addition, profitability will ultimately depend upon the level of revenues received from business operations. However, there is no assurance that the Company will attain profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

UNAUDITED INTERIM FINANICAL STATEMENTS

 

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The interim financial statements should be read in conjunction with the annual financial statements included in the Form 10K/A as of December 31, 2017 and filed with the Securities and Exchange Commission on April 14, 2017.

 

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

 

BASIS OF PRESENTATION AND USE OF ESTIMATES

 

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"), which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

 
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Table of Contents

 

THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

 

CASH AND CASH EQUIVALENTS

 

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents totaled $1,428 at June 30, 2018 and $1,883 at December 31, 2017.

 

ACCOUNTS RECEIVABLE

 

The Company’s accounts receivable result from revenues earned but not collected from customers. Credit is extended based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are due within 30 to 60 days and are stated at amounts due from customers. The Company evaluates if an allowance is necessary by considering several factors, including the length of time accounts receivable are past due, the Company’s previous loss history and the customer’s current ability to pay its obligation. If amounts become uncollectible, they are charged to operations when that determination is made. The allowance for doubtful accounts was $0 and $0 as of June 30, 2018 and December 31, 2017, respectively.

 

At June 30, 2018, the Company had no accounts receivable. At December 31, 2017 the Company had accounts receivable from one customer which individually represented 100% of total accounts receivable. The customer received shipment of a Neutron Source Directional Equipment shortly before December 31, 2017 and 100% of accounts receivable were collected in January of 2018. The balance of accounts receivable at June 30, 2018 and December 31, 2017 were $0 and $24,469, 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, and uses the indirect or reconciliation method (“Indirect method”) as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides information about investing and financing activities not resulting in cash receipts or payments in the period.

 

RELATED PARTIES

 

The Company follows ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions.

 

FINANCIAL INSTRUMENTS

 

The Company’s balance sheet includes financial instruments, including cash, accounts payable, accrued expenses and notes payable. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

 

ASC 820, Fair Value Measurements and Disclosures , defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

 

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

 

 

Level 2

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

 

Level 3

Inputs that are both significant to the fair value measurement and unobservable.

 

 
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THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2018. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.

 

INTANGIBLE ASSETS

 

The Company has applied the provisions of ASC topic 350 – Intangible – goodwill and other, in accounting for its intangible assets. Intangible assets are being amortized on a straight-line method on the basis of a useful life of 5 to 17 years. The balance at June 30, 2018 and December 31, 2017 was $100 and $200, respectively.

 

June 30, 2018

 

Gross Carrying Value

 

 

Accumulated Amortization

 

Intellectual property

 

$ 1,000

 

 

$ 900

 

Patents

 

 

14,320

 

 

 

14,320

 

 

December 31, 2017

 

Gross Carrying Value

 

 

Accumulated Amortization

 

Intellectual property

 

$ 1,000

 

 

$ 800

 

Patents

 

 

14,320

 

 

 

14,320

 

 

IMPAIRMENT OF LONG- LIVED ASSETS

 

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under FASB ASC 360-10-35-17 if events or circumstances indicate that their carrying amount might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of FASB ASC 930-360-35, Asset Impairment, and 360-0 through 15-5, Impairment or Disposal of Long- Lived Assets.

 

DERIVATIVE LIABILITIES

 

Derivative liabilities include the fair value of instruments such as common stock warrants, preferred stock warrants and convertible features of notes, that are initially recorded at fair value and are required to be re-measured to fair value at each reporting period under provisions of ASC 480, Distinguishing Liabilities from Equity, or ASC 815, Derivatives and Hedging . The change in fair value of the instruments is recognized as a component of other income (expense) in the Company’s statements of operations until the instruments settle, expire or are no longer classified as derivative liabilities. The Company estimates the fair value of these instruments using the Black-Scholes pricing model. The significant assumptions used in estimating the fair value include the exercise price, volatility of the stock underlying the instrument, risk-free interest rate, estimated fair value of the stock underlying the instrument and the estimated life of the instrument.

 

NON-MONETARY TRANSACTION

 

According to ASC 845-10-S99, transfers of non-monetary assets to a company by its promoters or shareholders in exchange for stock prior to or at the time of the entity’s initial public offering should be recorded at the transferors’ historical cost basis determined under Generally Accepted Accounting Principles. As such, the cost basis carried on Hyfuel’s books and records was nominal. Therefore, the accounting principles in ASC 845-10-S99 were followed and the Company recorded the intellectual and physical properties at its historical cost basis, which was at the historical cost basis of a nominal amount. In the transfer agreement 1,000,000 shares of common stock was transferred in exchange for the properties.

 

 
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THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

    

CONCENTRATIONS OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

 

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, accounts receivable and restricted cash. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit-quality financial institutions in bank deposits, money market funds, U.S. government securities and other investment grade debt securities that have strong credit ratings. The Company has established guidelines relative to diversification of its cash and marketable securities and their maturities that are intended to secure safety and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates and changes in the Company’s operations and financial position. Although the Company may deposit its cash and cash equivalents with multiple financial institutions, its deposits, at times, may exceed federally insured limits.

 

EXPENSES

 

Operating expenses encompass research and development, professional fees and selling general and administrative expenses. Total operating expenses were $445,537 and $337,137 for the six months ended June 30, 2018 and 2017, respectively. Total operating expenses consisted of the following.

 

RESEARCH AND DEVELOPMENT

 

The Company expenses research and development costs when incurred. Research and development costs include engineering and testing of product and outputs. Indirect costs related to research and developments are allocated based on percentage usage to the research and development. We spent $37,593 and $25,581 for the six months ended June 30, 2018 and 2017, respectively.

 

PROFESSIONAL FEES

 

Professional services are principally comprised of outside legal, audit and consulting services as well as the costs related to being a publicly traded company. Total professional fees were $288,602 and $182,397 for the six months ended June 30, 2018 and 2017, respectively.

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

Selling, general and administrative expenses consist primarily of management fees, technology services, public relations and travel expenses. Total selling, general and administrative expenses were $119,342 and $129,159 for the six months ended June 30, 2018 and 2017, respectively.

 

DEFERRED INCOME TAXES AND VALUATION ALLOWANCE

 

The Company accounts for income taxes under ASC 740, Income Taxes . Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities were recognized as of June 30, 2018 or December 31, 2017.

 

 
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THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

  

NET LOSS PER COMMON SHARE

 

Net loss per share is calculated in accordance with ASC 260, “Earnings Per Share.” The weighted-average number of common shares outstanding during each period is used to compute basic earning or loss per share. Diluted earnings or loss per share is computed using the weighted average number of shares and diluted potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.

 

Basic net loss per common share is based on the weighted average number of shares of common stock outstanding at June 30, 2018. As of June 30, 2018, the common stock equivalents have not been included as they are anti-dilutive. 

 

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share because the effects were anti-dilutive based on the application of the treasury stock method and because the Company incurred net losses during the period:

 

 

 

June 30,

 

 

December 31,

 

 

 

2018

 

 

2017

 

Options to purchase shares of common stock

 

 

14,265

 

 

 

14,265

 

Series A convertible preferred stock

 

 

50,000,000

 

 

 

50,000,000

 

Total potentially dilutive shares

 

 

50,007,530

 

 

 

50,007,530

 

___________ 

* Options to purchase shares are calculated in accordance with employment agreements.

** Total potentially dilutive shares reflect a 10 for 1 conversion into common shares per its designation.

 

SHARE-BASED EXPENSE

 

ASC 718, Compensation – Stock Compensation , prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

 

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, Equity – Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:(a) the goods or services received; or (b) the equity instruments issued.

 

Share-based expense for the six months ended June 30, 2018 and 2017 was $234,233 and $1,089,446 respectively.

 

COMMITMENTS AND CONTINGENCIES

 

The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. There were no known commitments or contingencies as of June 30, 2018 and December 31, 2017.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations and financial statements.

 

 
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THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

  

In February 2016, the FASB issued ASU No. 2016-02, Leases , which is intended to improve financial reporting on leasing transactions. This standard requires a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. This standard will be effective for the Company on September 1, 2019. The Company is currently evaluating the impact the adoption of this ASU will have on its consolidated financial statements.

  

NOTE 4 – INTANGIBLE PROPERTY

 

On August 10, 2013, the Company entered into an Asset Assignment Agreement (the “IBR Assignment Agreement”) with Institute For Basic Research, Inc., a Florida corporation (“IBR”) that also is beneficially controlled by our Chief Executive Officer, Dr. Ruggero M. Santilli. Pursuant to the IBR Assignment Agreement, IBR irrevocably assigned to the Company all rights, title, ownership and interests in all of IBR’s internet website domain name assets, owned and hereinafter acquired by IBR including, but not limited to, all physical and intangible assets and intellectual property related to the assets.

 

On August 11, 2013, Thunder Energies Corporation (f/k/a Thunder Fusion Corporation) entered into an Asset Assignment Agreement (the “Assignment Agreement”) with HyFuels, Inc., a Florida corporation (“HyFuels”) beneficially controlled by our Chief Executive Officer, Dr. Ruggero M. Santilli. Pursuant to the Assignment Agreement, HyFuels irrevocably assigned to the Company all physical assets, intangible assets, accounts receivable, intellectual property, accounting software, billing software, client lists, client prospects, trade secrets, proprietary property, the intellectual and physical property known as intermediate nuclear fusion without radiation, the physical property consisting of seven (7) Hadronic reactors, all copyrights, patents, patent applications, patent assignments, trademarks and anything having commercial or exchange value and the like.

 

Consideration for the assignment agreements consisted of one million (1,000,000) shares of our common stock that were issued to Dr. Ruggero M. Santilli, as designee for IBR and HyFuels. Company management determined the amount of consideration based upon ASC 845-10-S99 pertaining to transfer of non-monetary assets. According to ASC 845-10-S99, transfers of non-monetary assets to a company by its promoters or shareholders in exchange for stock prior to or at the time of the entity’s initial public offering should be recorded at the transferors’ historical cost basis determined under Generally Accepted Accounting Principles. As such, the cost basis carried on the books and records of HyFuels and IBR was minimal or essentially zero. Therefore, the accounting principles in ASC 845-10-S99 were followed and the Company recorded the intellectual and physical properties at its historical cost basis, which was at the historical cost basis of a nominal amount. In connection with the aforementioned assignment agreements, 1,000,000 shares of our common stock were transferred in exchange for the assets. The transfer was valued at one thousand dollars ($1,000.00), the value of the shares issued at par ($0.001) in exchange for the assets. This amount was determined by the Company to approximate the basis of those assets.

 

The Company recorded the property and intangibles (7 reactors, intellectual property rights to develop the technology, and website) as an intangible asset. The valuation of the properties was the par value of the stock received in exchange for the rights and assets.

 

The Company has capitalized the legal expenses associated with filing applications with the United States Patent and Trademark Office. At June 30, 2018, the Company has capitalized $14,320. The Company has recorded $14,320 of impairment loss for the patent application process as of December 31, 2017.

 

The Company recognized amortization expense of $100 for the six months ended June 30, 2018 and 2017. The Company has accumulated amortization of $900 as of June 30, 2018.

 

NOTE 5 – CONVERTIBLE NOTE PAYABLE

 

POWER UP LENDING GROUP

 

On October 31, 2017; The Company executed a convertible promissory note with Power Up Lending Group, Ltd. The note carries a principal balance of $33,000 together with an interest rate of eight (8%) per annum and a maturity date of August 15, 2018. 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 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 June 30, 2018, the principal balance of $33,000 has been paid in full along with all accrued interest.

 

 
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THUNDER ENERGIES CORPORATION
Notes to Condensed Financial Statements
For the period ending June 30, 2018
(Unaudited)

     

On November 30, 2017; The Company executed a convertible promissory note with Power Up Lending Group, Ltd. The note carries a principal balance of $33,000 together with an interest rate of eight (8%) per annum and a maturity date of September 10, 2018. 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 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 June 30, 2018, the principal balance of $33,000 has been paid in full along with all accrued interest.

 

On January 9, 2018; The Company executed a convertible promissory note with Power Up Lending Group, Ltd. The note carries a principal balance of $28,000 together with an interest rate of eight (8%) per annum and a maturity date of October 15, 2018. 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 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.

 

On February 21, 2018; The Company executed a convertible promissory note with Power Up Lending Group, Ltd. The note carries a principal balance of $35,000 together with an interest rate of eight (8%) per annum and a maturity date of November 30, 2018. 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 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.

 

On April 5, 2018; The Company executed a convertible promissory note with Power Up Lending Group, Ltd. The note carries a principal balance of $33,000 together with an interest rate of eight (8%) per annum and a maturity date of January 30, 2019. 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 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.

 

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-one percent (61%) of the average of the lowest two (2) trading prices for the Common Stock during the twelve (12) day trading period ending on the latest complete trading day prior to the conversion date, representing a discount rate of forty-five percent (39%).

 

The Company accounts for this embedded conversion feature as a derivative under ASC 815-10-15-83 and valued separately from the note at fair value. The embedded conversion feature of the note is revalued at each subsequent reporting date at fair value and any changes in fair value will result in a gain or loss in those periods. At June 30, 2018 and December 31, 2017, the derivative liability associated with Power up lending was $189,159 and $116,654, respectively.

 

Convertible Notes payable consisted of the following:

 

 

 

June 30,

2018

 

 

December 31,

2017

 

Convertible notes payable:

 

$ 96,000

 

 

$ 66,000

 

Debt discount

 

 

(28,394 )

 

 

(49,134 )

Convertible notes payable net of debt discount

 

$ 67,606

 

 

$ 16,866

 

 

 

 

 

 

 

 

 

 

Accrued interest

 

 

3,587

 

 

 

665

 

 

 

 

 

 

 

 

 

 

Current portion of convertible note payable and interest

 

$ 71,193

 

 

$ 17,531

 

 

 
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THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

 

NOTE 6 – ACCRUED INTEREST

 

The Company’s accrued interest consisted of the following:

 

 

 

June 30,

2018

 

 

December 31,

2017

 

Accrued Interest

 

 

 

 

 

 

Power Up Lending Group

 

$ 3,587

 

 

$ 665

 

Note payable related party

 

 

37,627

 

 

 

32,597

 

Total Accrued Interest

 

$ 41,214

 

 

$ 33,262

 

 

NOTE 7– SHAREHOLDERS’ EQUITY

 

COMMON STOCK

 

The Company has been authorized to issue 900,000,000 shares of common stock, $.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 January 9, 2017 the Company issued 3,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $690.

 

On January 10, 2017 the Company issued 5,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $1,250.

 

On January 24, 2017 the Company issued 8,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $2,080.

 

On January 27, 2017 the Company issued 36,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $10,800.

 

On February 13, 2017 the Company issued 10,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $2,100.

 

On March 6, 2017 the Company issued 10,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $3,000.

 

On April 12, 2017 the Company issued 150,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $22,500.

 

On May 9, 2017 the Company issued 70,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $5,600.

 

On June 5, 2017 the Company issued 120,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $10,000.

 

 
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THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

  

On June 8, 2017 the Company issued 16,530,769 shares to related parties for conversion of accrued compensation of $991,846, recorded at the fair market value of the share price.

 

On July 7, 2017 the Company issued 120,196 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $8,413.

 

On July 14, 2017 the Company issued 150,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $13,350.

 

On September 7, 2017 the Company sold 8,000,000 restricted shares to non-related parties for cash proceeds in the amount of $80,000.

 

On October 2, 2017 the Company issued 50,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $15,000.

 

On October 9, 2017 the Company issued 150,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $5,495.

 

On October 16, 2017 the Company issued 100,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $9,180.

 

On October 24, 2017 the Company issued 100,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $8,010.

 

On November 6, 2017 the Company issued 50,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $4,050.

 

On December 11, 2017 the Company issued 600,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $72,000.

 

On December 21, 2017 the Company issued 1,260,000 shares to related parties for conversion of accrued compensation of $126,000, recorded at the fair market value of the share price.

 

On December 27, 2017 the Company issued 75,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $6,045.

 

On January 12, 2018 the Company issued 200,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $30,000.

 

On January 16, 2018 the Company issued 150,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $22,500.

 

On February 12, 2018 the Company issued 40,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $3,216.

 

On February 15, 2018 the Company issued 100,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $10,000.

 

On February 23, 2018 the Company issued 100,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $8,810.

 

On March 15, 2018 the Company issued 100,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $8,500.

 

 
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THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

  

On March 29, 2018 the Company issued 75,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $7,117.

 

On March 29, 2018 the Company issued 663,856 shares to related parties for conversion of accrued compensation of $63,000, recorded at the fair market value of the share price.

 

On April 5, 2018 the Company issued 250,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $19,750.

 

On April 9, 2018 the Company issued 250,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $17,500.

 

On April 27, 2018 the Company issued 300,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $10,050.

 

On May 2, 2018, the Company issued 840,336 shares, at $0.0119 per share, to Power Up Lending Group Ltd., an unrelated party, as reduction of $10,000 in principal toward its convertible note payable. The shares were issued at a discount to the market. Fair Market Value on May 2, 2018 was $0.035 per share.

 

On May 7, 2018 the Company issued 1,1000,000 shares to non-related parties for services, recorded at the fair market value of the share price, in the amount of $34,100.

 

On May 14, 2018, the Company issued 943,396 shares, at $0.0106 per share, to Power Up Lending Group Ltd., an unrelated party, as reduction of $10,000 in principal toward its convertible note payable. The shares were issued at a discount to the market. Fair Market Value on May 14, 2018 was $0.028 per share.

 

On May 24, 2018, the Company issued 1,041,667 shares, at $0.0096 per share, to Power Up Lending Group Ltd., an unrelated party, as reduction of $10,000 in principal toward its convertible note payable. The shares were issued at a discount to the market. Fair Market Value on May 24, 2018 was $0.0161 per share.

 

On June 4, 2018, the Company issued 2,341,176 shares, at $0.0068 per share, to Power Up Lending Group Ltd., an unrelated party, as reduction of $14,600 in principal and $1,320 in accrued interest toward its convertible note payable. The shares were issued at a discount to the market. Fair Market Value on June 4, 2018 was $0.03 per share.

 

On June 6, 2018, the Company issued 1,738,235 shares, at $0.0068 per share, to Power Up Lending Group Ltd., an unrelated party, as reduction of $11,820 in principal toward its convertible note payable. The shares were issued at a discount to the market. Fair Market Value on Jun 6, 2018 was $0.0127 per share.

 

On June 12, 2018, the Company issued 1,703,125 shares, at $0.0064 per share, to Power Up Lending Group Ltd., an unrelated party, as reduction of $9,580 in principal and $1,320 in accrued interest toward its convertible note payable. The shares were issued at a discount to the market. Fair Market Value on June 12, 2018 was $0.0113 per share.

 

PREFERRED STOCK

 

The Company has been authorized to issue 750,000,000 shares of $.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.

 

 
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THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

 

On October 10, 2013, the Company issued fifty million (50,000,000) shares of our Series “A” Convertible Preferred Stock (the “Preferred Stock”) to Hadronic Technologies Press, Inc. (“Hadronic”), a Florida corporation maintaining its principal place of business at 35246 US Highway 19 North, Suite #215, Palm Harbor, Florida 34684. Our Directors, Dr. Ruggero M. Santilli and Mrs. Carla Santilli each own fifty percent of the equity in Hadronic. The Series “A” Convertible Preferred Stock has 15 votes per share and is convertible into 10 shares of our common stock at the election of the shareholder. Shares were valued at the par value of the common stock equivalents, $500,000.

 

At June 30, 2018 and December 31, 2017, there were Fifty million (50,000,000) shares of Series A Convertible Preferred Stock issued and outstanding, respectively.

 

OPTIONS AND WARRANTS

 

In accordance with employment agreements, common stock options are issued annually to the officers of the Company. The number of shares is determined by the number of shares outstanding at the end of the year at a percentage per the employment agreements, as described below. The strike price is the fair value trading price as of the anniversary date of the employment agreements. The options are based on the number of shares outstanding of the Company at the year end, at an exercise price at market price at the employment agreements annual anniversary, July 25 th . As of June 30, 2018, the officers are entitled to 14,265 options, at an average exercise price of $0.3498. There is no expiration date to these options and only vest upon a change in control. The options were valued at $4,540, however no expense has been recognized with the associated options, as no options have vested or are considered by management to probable vest. The options were valued using the Black Scholes Method, using the following assumptions:

 

Weighted Average:

 

 

 

Risk-free interest rate

 

 

1.24 %

Expected lives (years)

 

 

10.0

 

Expected price volatility

 

 

161.40 %

Dividend rate

 

 

0.0 %

Forfeiture Rate

 

 

0.0 %

 

There are no other warrants or options outstanding to acquire any additional shares of common stock of the Company as of June 30, 2018.

 

NOTE 8– RELATED PARTY TRANSACTIONS

 

ADVANCES, PAYABLES AND ACCRUALS

 

Amounts included in accruals represent amounts due to the officers and directors for corporate obligations under the employment agreements. Payments on behalf of the Company and accruals made under contractual obligation are accrued (see below). As of June 30, 2018 and December 31, 2017 accrued expenses were $63,000 and $0, respectively.

 

NOTE PAYABLE

 

In support of the Company’s efforts and cash requirements, it has relied on advances from the majority shareholders until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. All advances made in support of the Company are formalized by demand notes, at a 2.15% interest rate.

 

For the six months ended June 30, 2018 and 2017 our Chief Executive Officer, Dr. Ruggero M. Santilli and immediate family members have loaned the company $27,000 and $29,500, respectively for operations. For the six months ended June 30, 2018 and 2017 the Company repaid the principal amounts by $25,500 and $30,000, respectively.

 

At June 30, 2018 and December 31, 2017 the demand notes accumulative balances were $521,500 and $520,000, respectively. Accrued interest at June 30, 2018 and December 31, 2017 was $37,627 and $32,597, respectively.

 

 
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THUNDER ENERGIES CORPORATION

Notes to Condensed Financial Statements

For the period ending June 30, 2018

(Unaudited)

 

EQUITY TRANSACTIONS

 

On June 8, 2017 the Company issued 16,530,769 shares to related parties for conversion of accrued compensation of $991,846, recorded at the fair market value of the share price.

 

On December 21, 2017 the Company issued 1,260,000 shares to related parties for conversion of accrued compensation of $126,000, recorded at the fair market value of the share price.

 

On March 29, 2018 the Company issued 663,856 shares to related parties for conversion of accrued compensation of $63,000, recorded at the fair market value of the share price.

 

EMPLOYMENT CONTRACTS

 

The Company has employment contracts with its key employees, the controlling shareholders, who are its officers and directors of the Company.

 

 

· Dr. Santilli, 5 year contract, annual salary of $180,000 and annual common stock options for .01% of the outstanding stock per calendar year at the average trading price of the anniversary date, July 25 th

 

 

 

 

· Carla Santilli, 5 year consulting contract, annual salary of $72,000 and annual common stock options for .005% of the outstanding stock per calendar year at the average trading price of the anniversary date, July 25 th .
 
 

OTHER

 

The Company does not own or lease property or lease office space. At the current time, the office space used by the Company was arranged by the majority shareholders of the Company to use at no charge. It is anticipated that the Company will enter into formal lease arrangements in the near future.

 

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

 

NOTE 9 – COMMITMENTS AND CONTINGENCIES

 

From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

 

NOTE 10– SUBSEQUENT EVENTS

 

On August 6, 2018, the Company issued 2,181,818 shares, at $0.0055 per share, to Power Up Lending Group Ltd., an unrelated party, as reduction of $12,000 in principal toward its convertible note payable. The shares were issued at a discount to the market. Fair Market Value on August 6, 2018 was $0.0124 per share.

 

Management has evaluated subsequent events through the date the financial statements were available to be issued, considered to be the date of filing with the Securities and Exchange Commission. Based on our evaluation no events have occurred requiring adjustment to or disclosure in the financial statements.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Special Note Regarding Forward Looking Statements.

 

This quarterly report on Form 10-Q of Thunder Energies Corporation for the period ended June 30, 2018 contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition, involve risks and uncertainties. In particular, statements under the Sections; Description of Business, Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward looking statements. Where in any forward-looking statements, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.

 

The following are factors that could cause actual results or events to differ materially from those anticipated and include but are not limited to: general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in tax laws; and the cost and effects of legal proceedings.

 

You should not rely on forward looking statements in this quarterly report. This quarterly report contains forward looking statements that involve risks and uncertainties. We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report. Our actual results could differ materially from those anticipated in these forward-looking statements.

 

Our Business Overview.

 

 Thunder Energies Corporation f/k/a Thunder Fusion Corporation and CCJ Acquisition Corp. (“we”, “us”, “our”, (“TEC” or the “Company”) was incorporated in the State of Florida on April 21, 2011. The Company selected December 31 as its fiscal year end.

 

On July 25, 2013, Dr. Ruggero M. Santilli acquired from Company’s existing shareholders, a control block of stock in the Company consisting of two million nine hundred forty thousand (2,940,000) shares of restricted common stock of the Company, in a private equity transaction. As a result of this acquisition, Dr. Ruggero M. Santilli owned 98% of the issued and outstanding shares of common stock of the Company.

 

On August 10, 2013, the Company entered into an Asset Assignment Agreement (the “IBR Assignment Agreement”) with Institute For Basic Research, Inc., a Florida corporation (“IBR”) that also is beneficially controlled by our Chief Executive Officer, Dr. Ruggero M. Santilli. Pursuant to the IBR Assignment Agreement, IBR irrevocably assigned to the Company all rights, title, ownership and interests in all of IBR’s internet website domain name assets, owned and hereinafter acquired by IBR including, but not limited to, all physical and intangible assets and intellectual property related to the assets.

 

On August 11, 2013, Thunder Energies Corporation (the “Company”) entered into an Asset Assignment Agreement (the “Assignment Agreement”) with HyFuels, Inc., a Florida corporation (“HyFuels”) beneficially controlled by our Chief Executive Officer, Dr. Ruggero M. Santilli. Pursuant to the Assignment Agreement, HyFuels irrevocably assigned to the Company all physical assets, intangible assets, accounts receivable, intellectual property, accounting software, billing software, client lists, client prospects, trade secrets, proprietary property, the intellectual and physical property known as intermediate nuclear fusion without radiation, the physical property consisting of seven (7) Hadronic reactors, all copyrights, patents, patent applications, patent assignments, trademarks and anything having commercial or exchange value and the like.

 

Consideration for the assignment agreements consisted of one million (1,000,000) shares of our common stock that were issued to Dr. Ruggero M. Santilli, as designee for IBR and HyFuels. Company management determined the amount of consideration based upon ASC 845-10-S99 pertaining to transfer of non-monetary assets. According to ASC 845-10-S99, transfers of non-monetary assets to a company by its promoters or shareholders in exchange for stock prior to or at the time of the entity’s initial public offering should be recorded at the transferors’ historical cost basis determined under Generally Accepted Accounting Principles. As such, the cost basis carried on the books and records of HyFuels and IBR was minimal or essentially zero. Therefore, the accounting principles in ASC 845-10-S99 were followed and the Company recorded the intellectual and physical properties at its historical cost basis, which was at the historical cost basis of a nominal amount. In connection with the aforementioned assignment agreements, 1,000,000 shares of our common stock were transferred in exchange for the assets. The transfer was valued at one thousand dollars ($1,000.00), the value of the shares issued at par ($0.001) in exchange for the assets. This amount was determined by the Company to be de-minimus to the value received in the exchange and approximates the basis of those assets.

 

 
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The Company has recorded the property and intangibles (7 reactors, intellectual property rights to develop the technology, and website) as an intangible asset. The valuation of the properties will be the par value of the stock received in exchange for the rights and assets. The Company’s filings will include a disclosure in the MD&A section and notes to the financial statement under the heading “Non-Monetary Transaction”. Management believes that the $1,000.00 valuation is reflective of the salvage value of the physical property, at a minimum. Our Company purchased internet website domain name assets owned by IBR and the intellectual and physical property known as intermediate nuclear fusion without radiation, the physical property consisting of seven (7) Hadronic reactors, all copyrights, patents, patent applications, patent assignments, trademarks and anything having commercial or exchange value owned by HyFuels as related to the reactors. None of the assets purchased had ever generated revenue for IBR or HyFuels. Although the Asset Assignment Agreements were more comprehensive in their description of “assets”, the aforementioned items were the only assets assigned to the Company.

 

Our Company purchased internet website domain name assets owned by IBR and the intellectual and physical property known as intermediate nuclear fusion without radiation, the physical property consisting of seven (7) Hadronic reactors, all copyrights, patents, patent applications, patent assignments, trademarks and anything having commercial or exchange value owned by HyFuels as related to the reactors. None of the assets purchased had ever generated revenue for IBR or HyFuels. Although the Asset Assignment Agreements were more comprehensive in their description of “assets”, the aforementioned items were the only assets assigned to the Company.

 

A further description of the assignors, IBR and HyFuels, follows. IBR is a Florida Corporation whose only business operations are the publication of an internet blog relating to scientific and academic matters. IBR does not generate revenue and has no expenses. Furthermore, IBR has never maintained a checking account. This status has been consistent over the last several years. Our Chief Executive Officer and Director, Dr. Ruggero M. Santilli is president and a director for IBR. IBR does not have any ownership interest in any of our securities.

 

HyFuels is a Florida corporation that utilized research and development funds to create the seven Hadronic reactors, but otherwise has no business operations since its inception. Its sole purpose is to serve as a patent holding company. Our Chief Executive Officer and Director, Dr. Ruggero M. Santilli is president and a director for HyFuels. HyFuels also does not have any ownership interest in any of our securities.

 

Neither IBR nor HyFuels has made any effort to commercialize the assets for purposes of generating revenue. Both IBR and HyFuels continue to exist as Florida corporations separate and distinct from the Company. Though they are deemed “related” entities through a common officer and director with our Company, they remain otherwise “unaffiliated” with our Company.

 

IBR maintains its principal place of business at 90 East Winds Court, Palm Harbor, Florida 34689. HyFuels maintains its principal place of business at 35246 US Highway 19 North, #215, Palm Harbor, Florida 34684. There is no continuity of facilities with the Company.

 

Neither IBR nor HyFuels had an employee base, a distribution system, a sales force, a customer base, production techniques or trade names associated with the assets. Their ownership rights may arguably be referred to as operating rights but there were essentially no operations associated with the assets.

 

The only activities of the assignors involved the creation of the Internet website domain names and the creation of the seven Hadronic reactors and associated patents pending. These assets did not generate revenue prior to the assignment, so there is essentially no financial data to report regarding “revenue producing activity previously associated with the acquired assets”. Furthermore, there is no “sufficient continuity of operations with our Company so that disclosure of prior financial information regarding IBR or HyFuels is material to an understanding of future operations regarding our Company.

 

 
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Description of Business, Principal Products, Services

 

Thunder Energies Corp. is a developer of new technologies that are being brought to market by three divisions: 1) Division of Nuclear Instruments (TEC-DNI) 2) Division of Optical Instruments (TEC-DOI); and 3) Division of Fuel Combustion (TEC--DFC). Each Division is protected by patent applications on which no royalties are due. Out of the three divisions, the Division of Nuclear Instruments and the Division of Optical Instruments have initiated sale of their products.

 

The Division of Nuclear Instruments is producing, selling and servicing new equipment producing on demand a flux of low energy neutrons synthesized from a hydrogen gas called Directional Neutron Source (DNS). This equipment is particularly suited to scan suitcases in airports for the detection of concealed nuclear materials such as Uranium 235. The equipment is also particularly suited to identify the existence and the concentration of precious metals in mining operations, for the test of large naval welds and other applications. One Directional neutron Source has been sold to a European customer and the company is now organizing its production and sale. The Company has filed research grant applications to the Defense Threat reduction Agency and DARPA for the completion of the available Directional neutron Source into a Nuclear Weapon detection Station. Funds expected from this filing are primarily intended to continue the development of this new neutron technology for the advancement of our national security. The Division of Optical Equipment is producing, selling and servicing a basically new telescope with concave lenses, known as the Santilli telescope, for the detection of images produced by antimatter light known as isodual light. In particular, TEC-DOE is producing, selling and servicing pairs of 70 mm, 100 mm, 150 mm and 200 mm Galileo and Santilli telescopes where the Galileo telescope is needed to focus images in the Santilli telescope. Besides new astrophysical detections, TEC pairs of Galileo and Santilli telescopes are useful for a comprehensive surveillance of civilian, industrial and military installations since they can identify images produced by all possible forms of light, the conventional light and the new isodual light. Three TEC Surveillance Stations are now operational, one in the USA and two in Europe.

 

Additionally, the business of Thunder Energies Corporation ("TEC") is focused on the development of a new clean combustion of fossil fuels (oil, diesel, coal, etc.) with controlled minimal contaminants in the exhaust. Our business objective is achieved via new forms of processing fossil fuels, new additives to the combustion and the assistance of a high voltage electric discharges (patents pending) that burn combustible contaminants in fossil fuel exhaust while providing added on clean energy. The expected principal product, depending on funding, is a new type of furnace for the clean combustion of fossil fuel that will be available in various type and sizes and various type of energy application, from home heating to large plants for the clean production of electricity. The expected services are to be rendered by providing technical assistance to the market consisting of existing fossil fuel electric power plants for their decrease of pollutants in the exhaust and their verification of EPA regulations on the release of contaminants in the atmosphere. A prototype new furnace is expected to be available within one year following the availability of the necessary funds. As we are a development stage company, we have not yet generated any revenue from the assets that were recently assigned to and acquired by the Company, including the Hadronic reactors. The Hadronic reactors have been utilized to test and confirm the technology for ultimate inclusion in the new furnaces.

 

Distribution Methods Of The Products and Services

 

For this first division TEC-DOE we have initiated advertisement via direct e-mail and public news releases. Initially, we anticipate marketing via large advertisements on the internet, such as via PRWeb and PRNewswire Releases. For the other two divisions we expect to market through contacts that we are able to generate, and via direct contacts of potential buyers of TEC new fossil fuel furnaces or TEC services for the improvement of existing fossil fuel burning plants.

 

Status of Any Publicly Announced New Product Or Service

 

Regarding the sale of telescopes, we have made several news releases and radio interviews. In addition, we have presented all TEC technologies to investors’ conferences. For the other two divisions TEC-DNE and TEC-DFC the company contemplates no advertisement until the availability of production equipment. We have, however, published scientific papers on the new sciences underlying the Combustion and Nuclear Divisions. One Directional Neutron Source of the DNE has been manufactured, sold and serviced to a buyer from Europe. Pairs of the Galileo and Santilli telescopes have been manufactured, sold and serviced to customers in the U.S.A. and Europe.

 

 
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Competitive Business Conditions And The Smaller Reporting Company’s Competitive Position In The Industry And Methods Of Competition

 

There are no known competitors for the new telescopes with concave lenses produced and sold by TEC-DOE. TEC new telescopes for the detection of isodual light are the only one in existence and no competition is known. There exist many types of furnaces for the combustion of fossil fuels but they are all based on conventional combustion of fossil fuels and then the removal of contaminants in the exhaust. By contrast, the main function of TEC furnaces is that of improving the combustion with consequential reduction of contaminants in the exhaust while increasing the energy output for the same fossil fuel. There is no known competition for the detection of fissionable material via a thermal neutron source under development by TEC-DNE. TEC Directional Neutron Source has no competition because it is the only available equipment producing on demand “low energy” neutrons in the needed direction and energy. Other commercially available sources produce neutrons at high energy, thus not being usable in civilian facilities as well as in all directions.

 

Sources And Availability Of Raw Materials And The Names Of Principal Suppliers

 

The Company has selected qualified manufacturers for the telescopes of TEC-DOE. All components for the new telescope are readily available on the open market. Suppliers are available for the other two technologies and will be selected following completion of their development. The raw material needed by the TEC furnaces is given by conventional fossil fuels all available in the U.S.A. by a large number of suppliers. All needed material have been purchased from the U. S. companies McMaster and/or Granger.

 

Dependence On One Or A Few Customers

 

There are many potential customers for the pair of telescopes produced by the TEC-DOE division. Our marketing analysis has identified the potential customers in all individuals and associations interested in sky watching. For the other two technologies, we have not yet performed market analysis. TEC has no need for such a dependence.

 

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements Or Labor Contracts, Including Duration

 

Each of the above indicated three divisions has been the subject of a patent application as follows:

 

Title: “Method and Apparatus for Intermediate Controlled Fusion Processes”

U.S. serial no. 13/197836

Atty Docket no. TEC-0101

Inventor: Dr. Ruggero Maria Santilli

 

Title: “Novel Optical Instruments with Concave Lenses”

U.S. serial no. 62/144,268 (conf. no. 8850)

Atty Docket no. TEC-0102

Inventor: Dr. Ruggero Maria Santilli

 

Title: “Directional Production of Composite Particles”

U.S. serial no. 62/518,047

Atty Docket no. TEC-0103

Inventor: Dr. Ruggero Maria Santilli

 

Trademarks are expected to be applied for depending on funding. No franchisee or license is expected during the first three years of operation. Labor contracts for employees are planned for implementation following legal assistance and decisions by our Board of Directors.

 

 
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Need For Any Government Approval Of Principal Products Or Services

 

No governmental approval or permits are necessary for the telescopes. No governmental approval or permits is expected for the development of the new furnaces for the clean combustion of fossil fuels. Following their availability, the TEC furnaces will be subject to and must comply with applicable EPA requirements for permitted levels of contaminants in the exhaust. Regarding the neutron source, we need to further analyze the requirements

 

Effect Of Existing Or Probable Governmental Regulations On The Business

 

There are no governmental regulations affecting the sale of the telescope technology. Due to its novel conception, a principal objective of TEC furnaces is that of surpassing current EPA requirements for the contaminants in the combustion exhaust released in the atmosphere. We expect that the neutron source technology will be government regulated and we are in the process of analyzing and assessing the impact of such regulations on the business. TEC has filed research grant applications to DARPA, the Defense Threat Reduction Agency and the U. S. AIR FORCE for the completion of the available Directional Mention Source into a Nuclear Weapon Detection Station (NWDT,) under full Governmental control. No outcome of these grant applications is known at this time. 

 

Estimate Of The Amount Of Money Spent During Each Of The Last Two Fiscal Years On Research And Development

 

Related entities have spent $200K and $100K in 2014 and 2015, respectively, for the development of the Directional Neutron Source and of the Santilli telescope. All funding for the development of our products to date has been derived from related entities, IBR and HyFuels, which are beneficially controlled by our Chief Executive Officer, Dr. Ruggero M. Santilli.

 

Costs and Effects Of Compliance With Environmental Laws

 

There are no environmental laws affecting the sale of pairs of telescopes as we simply assemble telescopes, cameras and proprietary concave lenses. We are unable to estimate the costs and effects of compliance with environmental laws prior to completion of a TEC prototype furnace.

 

Number Of Total Employees And Number Of Full-Time Employees

 

At this time, the Company has two full time employees and five persons working part time in various functions.

 

Implications of Being an Emerging Growth Company

 

We qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

 

 

·

A requirement to have only two years of audited financial statements and only two years of related MD&A;

 

 

·

Exemption from the auditor attestation requirement in the assessment of the emerging growth company’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002;

 

 

·

Reduced disclosure about the emerging growth company’s executive compensation arrangements; and

 

 

·

No non-binding advisory votes on executive compensation or golden parachute arrangements.

 

We have already taken advantage of these reduced reporting burdens in this Form S-1, which are also available to us as a smaller reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. We are choosing to utilize the extended transition period for complying with new or revised accounting standards under Section 102(b)(2) of the JOBS Act. This election allows our Company to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

 

 
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We could remain an emerging growth company for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

We are a reporting company and file all reports required under sections 13 and 15d of the Exchange Act.

 

Results of Operations and Critical Accounting Policies and Estimates.

 

The results of operations are based on preparation of financial statements in conformity with accounting principles generally accepted in the United States. The preparation of financial statements requires management to select accounting policies for critical accounting areas as well as estimates and assumptions that affect the amounts reported in the financial statements. The Company’s accounting policies are more fully described in Note 3 to the Notes of Financial Statements.

 

Results of Operations for the three months ended June 30, 2018 and 2017.

 

Revenues.

 

Total Revenue. Total revenues for the three months ended June 30, 2018 and 2017 were $0 and $0 respectively.

 

Expenses.

 

Total Operating Expenses. Total operating expenses for the three months ended June 30, 2018 and June 30, 2017 were $187,575 and $184,160, respectively. Total operating expenses consisted of research and development of $12,106 and $15,795, respectively; professional fees of $119,865 and $95,337, respectively and selling, general and administrative expenses of $55,604 and $73,028, respectively. Research and development expense decreased by approximately 23% due development of the Neutron Source Directional equipment. Professional fees increased by approximately 26% due to the increase in shares issued for consulting services. Selling, general and administrative expenses decreased by approximately 24% due to operations.

 

Other Income Expense : Total other income expense for the three months ended June 30, 2018 and 2017 was $19,703 and $149,544, respectively. Other income expense consisted of interest expense of $5,733 and $4,052, respectively; interest expense related to derivative liability of ($2,249) and $26,794, respectively and change in derivatives of $16,219 and $118,698, respectively. Interest expense decreased by approximately 42% due to reduction of notes payable. Interest expense related to derivative liability and change in derivative decreased by approximately 91% due to a reduction of convertible notes payable and derivative liability.

 

Results of Operations for the six months ended June 30, 2018 and 2017.

 

Revenues.

 

Total Revenue. Total revenues for the six months ended June 30, 2018 and 2017 were $0 and $0 respectively.

 

Expenses.

 

Total Operating Expenses. Total operating expenses for the six months ended June 30, 2018 and June 30, 2017 were $445,537 and $337,137, respectively. Total operating expenses consisted of research and development of $37,593 and $25,581, respectively; professional fees of $288,602 and $182,397, respectively and selling, general and administrative expenses of $119,342 and $129,159, respectively. Research and development expense increased by approximately 47% due development of the Neutron Source Directional equipment. Professional fees increased by approximately 58% due to the increase in shares issued for consulting services. Selling, general and administrative expenses decreased by approximately 8% due to operations.

 

Other Income Expense : Total other income expense for the six months ended June 30, 2018 and 2017 was $76,738 and $157,647, respectively. Other income expense consisted of interest expense of $10,591 and $7,194, respectively; interest expense related to derivative liability of $50,740 and $31,800, respectively and change in derivatives of $15,407 and $118,698, respectively. Interest expense increased by approximately 47% due to borrowings for operations. Interest expense related to derivative liability and change in derivative decreased by 66% due to reduction of convertible notes payable and derivative liability.

 

 
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Financial Condition.

 

Total Assets. Total assets at June 30, 2018 and December 31, 2017 were $1,528 and $26,552, respectively. Total assets consist of cash of $1,428 and $1,883, respectively; accounts receivable of $0 and $24,469, respectively and intangible assets, net of accumulated amortization and impairment, of $100 and $200, respectively. Total assets decreased by approximately 94%. The main reason for the decrease was the collection all outstanding accounts receivable at June 30, 2018.

 

Total Liabilities. Total liabilities at June 30, 2018 and December 31, 2017 were $908,259 and $686,782, respectively. Total liabilities consist of accounts payable of $25,780 and $0, respectively; accrued interest of $41,214 and $33,262, respectively; derivative liability of $189,159 and $116,654, respectively; convertible note payable, net of discount of $67,606 and $16,866, respectively; note payable to related parties of $521,500 and $520,000, respectively and accrued compensation, related party of $63,000 and $0, respectively. Total liabilities increased by approximately 32%. Accounts payable increased by 100% due to the expenses associated with the annual audit. Accrued interest increased by approximately 24% due to increase borrowings for operations. Convertible note payable increased by approximately 301% due to the execution of notes payable and proceeds were used for operations. Derivative liability increased by approximately 62% due to executing a convertible note payable. Accrued compensation related party increased by approximately 100% because the accrued compensation was not converted into common shares as previously done.

 

Liquidity and Capital Resources.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business.

 

The Company sustained a loss of $522,275 for the six months ended June 30, 2018 and $494,829 for the six months ended June 30, 2017. The Company has accumulated losses totaling $3,513,851 at June 30, 2018. Because of the absence of positive cash flows from operations, the Company will require additional funding for continuing the development and marketing of products. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

We are presently able to meet our obligations as they come due through the support of our shareholders. At June 30, 2018 we had a working capital deficit of $906,731. Our working capital deficit is due to the results of operations.

 

Net cash used in operating activities for the six months ended June 30, 2018 and 2017 were ($97,955) and $6,630, respectively. Net cash used in operating activities includes our net loss, amortization, impairment, Derivative convertible note, stock issued for services, accounts receivable, accrued salaries and accrued interest.

 

Net cash provided by financing activities for the six months ended June 30, 2018 and 2017 were $97,500 and $52,500, respectively. Net cash provided by financing activities includes proceeds from notes payable- related party of $1,500 and ($500), respectively; proceeds from convertible notes payable of $96,000 and $53,000, respectively.

 

We anticipate that our future liquidity requirements will arise from the need to fund our growth from operations, pay current obligations and future capital expenditures. The primary sources of funding for such requirements are expected to be cash generated from operations and raising additional funds from the private sources and/or debt financing. However, we can provide no assurances that we will be able to generate sufficient cash flow from operations and/or obtain additional financing on terms satisfactory to us, if at all, to remain a going concern. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability. Our Plan of Operation for the next twelve months is to raise capital to implement our strategy. We do not have the necessary cash and revenue to satisfy our cash requirements for the next twelve months. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then we may not be able to expand our operations. If adequate funds are not available, we believe that our officers and directors will contribute funds to pay for some of our expenses. However, we have not made any arrangements or agreements with our officers and directors regarding such advancement of funds. We do not know whether we will issue stock for the loans or whether we will merely prepare and sign promissory notes. If we are forced to seek funds from our officers or directors, we will negotiate the specific terms and conditions of such loan when made, if ever. Although we are not presently engaged in any capital raising activities, we anticipate that we may engage in one or more private offering of our company’s securities after the completion of this offering. We would most likely rely upon the transaction exemptions from registration provided by Regulation D, Rule 506 or conduct another private offering under Section 4(a)(2) of the Securities Act of 1933. See “Note 2 – Going Concern” in our financial statements for additional information as to the possibility that we may not be able to continue as a “going concern.”

 

We are not aware of any trends or known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in material increases or decreases in liquidity.

 

 
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Capital Resources.

 

We had no material commitments for capital expenditures as of June 30, 2018.

 

Off-Balance Sheet Arrangements

 

We have made no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 4. Controls and Procedures .

 

(a) Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures.

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

 

With respect to the period ending June 30, 2018, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.

 

Based upon our evaluation regarding the period ending June 30, 2018, the Company’s management, including its Principal Executive Officer and Principal Financial Officer, has concluded that its disclosure controls and procedures were not effective due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. Material weaknesses noted are lack of an audit committee, lack of a majority of outside directors on the board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; and management is dominated by two individuals, without adequate compensating controls. Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.

 

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. However, the Company’s management, including its Principal Executive Officer and Principal Financial Officer, does not expect that its disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

 

(b) Changes in Internal Controls.

 

There have been no changes in the Company’s internal control over financial reporting during the period ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

 

For a full discussion of controls and procedures refer to Item 9A, Controls and Procedures, in our 2017 Annual Report on Form 10-K.

 

 
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Part II. Other Information

 

Item 1. Legal Proceedings.

 

None.

 

Item 1A. Risk Factors

 

We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the period ending June 30, 2018, the Company engaged in the sale of its unregistered securities as described below. The shares of our common stock were issued pursuant to an exemption from registration in Section 4(a)(2) of the Securities Act of 1933. These shares of our common stock qualified for exemption under Section 4(a)(2) of the Securities Act of 1933 since the issuance of shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(a)(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. We did not undertake an offering in which we sold a high number of shares to a high number of investors. In addition, these shareholders had necessary investment intent as required by Section 4(a)(2) since they agreed to receive shares certificates bearing a legend stating that such shares are restricted pursuant to Rule 144 of the 1933 Act. This restriction ensures that these shares would not be immediately redistributed into the market and therefore not be part of a “public offering.” All shareholders are “sophisticated investors” and are family members, friends or business acquaintances of our officers and directors. Based on an analysis of the above factors, we believe we have met the requirements to qualify for exemption under section 4(a)(2) of the Securities Act of 1933 for this transaction.

 

During the three months ended June 30, 2018, the Company issued 765,000 shares to a non-related party for services, recorded at the fair market value of the share price, in the amount of $89,834. During the three months ended June 30, 2018 the Company issued 663,856 shares to related parties for accrued compensation, recorded at a fair market value of $63,000. Additional shares of our common stock were issued at fair market value of the share price as set forth in the table below.

 

Date

 

Name

 

Shares

 

 

Fair Market Value

 

 

Amount

 

1/12/18

 

Brian Buckley

 

 

100,000

 

 

 

0.1500

 

 

 

15,000

 

1/12/18

 

Robert W Debries

 

 

100,000

 

 

 

0.1500

 

 

 

15,000

 

1/16/18

 

Valerie Eagle

 

 

150,000

 

 

 

0.1500

 

 

 

22,500

 

2/12/18

 

Jeremy James Bonczkiewics

 

 

40,000

 

 

 

0.0804

 

 

 

3,216

 

2/15/18

 

Brian Buckley

 

 

100,000

 

 

 

0.1000

 

 

 

10,000

 

2/23/18

 

Max and Veronica Fomitchev

 

 

100,000

 

 

 

0.0850

 

 

 

8,500

 

3/15/18

 

Brian Buckley

 

 

100,000

 

 

 

0.0850

 

 

 

8,500

 

3/29/18

 

Ruggero Santilli

 

 

474,183

 

 

 

0.0949

 

 

 

45,000

 

3/29/18

 

Carla Santilli

 

 

189,673

 

 

 

0.0949

 

 

 

18,000

 

3/29/18

 

Valerie Eagle

 

 

75,000

 

 

 

0.0949

 

 

 

7,118

 

04/05/2018

 

Margaret M. Haberlin Currey

 

 

100,000

 

 

 

0.0790

 

 

 

7,900

 

04/05/2018

 

Geraldo Deippa Jr.

 

 

100,000

 

 

 

0.0790

 

 

 

7,900

 

04/05/2018

 

James Bonczkiewics

 

 

50,000

 

 

 

0.0790

 

 

 

3,950

 

04/09/2018

 

Simone Beghella-Bertoli

 

 

100,000

 

 

 

0.0700

 

 

 

7,000

 

04/09/2018

 

Robert W deVries

 

 

150,000

 

 

 

0.0700

 

 

 

10,500

 

04/27/2018

 

Timothy Scott Wainwright

 

 

300,000

 

 

 

0.0335

 

 

 

10,050

 

05/02/2018

 

Power Up Lending Group

 

 

840,336

 

 

 

0.0119

 

 

 

10,000

 

05/07/2018

 

Keith Buckley

 

 

600,000

 

 

 

0.0310

 

 

 

18,600

 

05/07/2018

 

Simone Beghella-Bertoli

 

 

500,000

 

 

 

0.0310

 

 

 

15,500

 

05/14/2018

 

Power Up Lending Group

 

 

943,396

 

 

 

0.0106

 

 

 

10,000

 

05/24/2018

 

Power Up Lending Group

 

 

1,041,667

 

 

 

0.0096

 

 

 

10,000

 

06/04/2018

 

Power Up Lending Group

 

 

635,294

 

 

 

0.0068

 

 

 

4,320

 

06/04/2018

 

Power Up Lending Group

 

 

1,705,882

 

 

 

0.0068

 

 

 

11,600

 

06/06/2018

 

Power Up Lending Group

 

 

1,738,235

 

 

 

0.0068

 

 

 

11,820

 

06/12/2018

 

Power Up Lending Group

 

 

1,703,125

 

 

 

0.0064

 

 

 

10,900

 

04/05/2018

 

Power Up Lending Group

 

 

100,000

 

 

 

0.0790

 

 

 

7,900

 

 

 

26

 

Table of Contents

  

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits

 

Exhibit Number and Description

 

Location Reference

 

 

(a)

Financial Statements

 

Filed herewith

 

 

(b)

Exhibits required by Item 601, Regulation S-K;

 

 

 

(3.0)

Articles of Incorporation

 

 

 

(3.1)

Initial Articles of Incorporation filed with Form 10 Registration Statement on July 21, 2011

 

See Exhibit Key

 

 

(3.2)

Amendment to Articles of Incorporation dated July 29, 2013

 

See Exhibit Key

 

 

(3.3)

Amendment to Articles of Incorporation dated October 7, 2013

 

See Exhibit Key

 

 

(3.4)

Amendment to Articles of Incorporation dated April 25, 2014

 

File herewith

 

 

(3.5)

Bylaws filed with Form 10 Registration Statement on July 21, 2011.

 

See Exhibit Key

 

 

(10.1

Stock Purchase Agreement with Northbridge Financial, Inc.

 

See Exhibit Key

 

 

(11.1)

Statement re: computation of per share Earnings.

 

Note 3 to Financial Stmts.

 

 

(14.1)

Code of Ethics

 

See Exhibit Key

 

 

(31.1)

Certificate of Chief Executive Officer And Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

 

 

(32.1)

Certification of Chief Executive Officer And Principal Financial and Accounting Officer Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

 

 

(101.INS)

XBRL Instance Document

 

Filed herewith

(101.SCH)

XBRL Taxonomy Ext. Schema Document

 

Filed herewith

(101.CAL)

XBRL Taxonomy Ext. Calculation Linkbase Document

 

Filed herewith

(101.DEF)

XBRL Taxonomy Ext. Definition Linkbase Document

 

Filed herewith

(101.LAB)

XBRL Taxonomy Ext. Label Linkbase Document

 

Filed herewith

(101.PRE)

XBRL Taxonomy Ext. Presentation Linkbase Document

 

Filed herewith

 

 
27
 
Table of Contents

 

Exhibit Key

 

3.1

Incorporated by reference herein to the Company’s Form 10 Registration Statement filed with the Securities and Exchange Commission on July 21, 2011.

 

3.2

Incorporated by reference herein to the Company’s Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on November 15, 2013.

 

3.3

Incorporated by reference herein to the Company’s Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on November 15, 2013.

 

3.5

Incorporated by reference herein to the Company’s Form 10 Registration Statement filed with the Securities and Exchange Commission on July 21, 2011.

 

10.0

Incorporated by reference herein to the Company’s Form S-1 Registration Statement filed with the Securities and Exchange Commission on March 2, 2018.

 

14.0

Incorporated by reference herein to the Company’s Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on January 17, 2012.

 

 
28
 
Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

THUNDER ENERGIES CORPORATION

 

NAME

 

TITLE

 

DATE

 

/s/ Dr. Ruggero M. Santilli

 

Principal Executive Officer,

 

August 13, 2018

Dr. Ruggero M. Santilli

Principal Accounting Officer, Chief Financial Officer, Chairman of the Board of Directors

 

 

 

29

 

EXHIBIT 3.4

 

 

 

EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

Certification of Principal Executive Officer, Principal Financial Officer and

Principal Accounting Officer

 

I, Dr. Ruggero M. Santilli, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Thunder Energies Corporation;

 

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

 

 

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

 

 

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

 

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

 

 

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date: August 13, 2018

 

Thunder Energies Corporation

 

/s/: Dr. Ruggero M. Santilli                                         

Dr. Ruggero M. Santilli

Principal Executive Officer

Principal Financial Officer

Principal Accounting Officer

 

EXHIBIT 32.1

 

Certification of Principal Executive Officer,

Principal Financial Officer and Principal Accounting Officer

Pursuant to 18 U.S.C. SECTION 1350

 

In connection with the Quarterly Report of Thunder Energies Corporation, (the “Company”) on Form 10-Q for the period ending June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dr. Ruggero M. Santilli, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer of the Company, certify, to my knowledge that:

 

(i) the accompanying Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “Act”); and

 

 

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

THUNDER ENERGIES CORPORATION

 

/s/: Dr. Ruggero M. Santilli                                         

Dr. Ruggero M. Santilli

Principal Executive Officer

Principal Financial Officer

Principal Accounting Officer

 

August 13, 2018