THUNDER ENERGIES CORP - 10-K/A - Management's Discussion and Analysis of Financial Condition and Results of Operations.
(Edgar Glimpses Via Acquire Media NewsEdge) The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contain forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including
those set forth under "Risk Factors" and elsewhere in this report. The
management's discussion, analysis of financial condition, and results of
operations should be read in conjunction with our financial statements and notes
thereto contained elsewhere in this prospectus.
Our Business Overview.
Thunder Energies Corporation f/k/a Thunder Fusion Corporation and CCJ
Acquisition Corp. ("we", "us", "our", or the "Company") was incorporated in the
State of Florida on April 21, 2011. Since inception, the Company has been
engaged in organizational efforts and obtaining initial financing. The Company
was formed as a vehicle to pursue a business combination and had made no efforts
to identify a possible business combination. The business purpose of the Company
has been to seek the acquisition of or merger with, an existing company. The
Company selected December 31 as its fiscal year end.
As of July 1, 2013, the Company, based on proposed business activities, was a
"blank check" company. The U.S. Securities and Exchange Commission (the "SEC")
defines those companies as "any development stage company that is issuing a
penny stock, within the meaning of Section 3 (a)(51) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and that has no specific business
plan or purpose, or has indicated that its business plan is to merge with an
unidentified company or companies." Under SEC Rule 12b-2 under the Exchange Act,
the Company also qualified as a "shell company," because it had no or nominal
assets (other than cash) and no or nominal operations. Many states have enacted
statutes, rules and regulations limiting the sale of securities of "blank check"
companies in their respective jurisdictions.
The Company was organized as a vehicle to investigate and, if such investigation
warrants, acquire a target company or business seeking the perceived advantages
of being a publicly held corporation. As of July 31, 2013, the Company had not
entered into any definitive agreement with any party, nor had there been any
specific discussions with any potential business combination candidate regarding
business opportunities for the Company. Subsequent to our year-end we were
subject to a change in control which has resulted in the new majority
shareholder and our board of director members causing assets to be assigned to
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.
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
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.
Description of Business, Principal Products, Services
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
available in any desired size for any 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
Distribution Methods Of The Products and Services
Initially, we anticipate marketing via large advertisements on the internet,
such as via PRWeb Releases. We expect to market through contacts that we are
able to generate, and then via direct contacts of potential buyers of TEC new
fossil fuel furnaces or TEC services for the improvement of existing fossil fuel
Status of Any Publicly Announced New Product Or Service
We have not yet made any public announcement regarding our products or services.
We do not contemplate making any such announcements until the availability of a
prototype furnace for the clean combustion of fossil fuels as described above.
We have only published announcements regarding the new sciences underlying the
new clean combustion of fossil fuels as disclosed on our corporate website,
Competitive Business Conditions And The Smaller Reporting Company's Competitive
Position In The Industry And Methods Of Competition
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.
Sources And Availability Of Raw Materials And The Names Of Principal Suppliers
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.
Dependence On One Or A Few Customers
We do not presently have any committed customers for our TEC furnaces. However,
upon completion of the manufacture and testing of our prototype, we believe that
there will be a large market that will be interested in our products and
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements Or
Labor Contracts, Including Duration
A first patent application is pending, while additional patent applications are
expected depending on funding. 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
Need Form Any Government Approval Of Principal Products Or Services
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.
Effect Of Existing Or Probable Governmental Regulations On The Business
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.
Estimate Of The Amount Of Money Spent During Each Of The Last Two Fiscal Years
On Research And Development
There have been no funds expended by the Company on research and development in
the last two fiscal years. 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
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
• 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
• No non-binding advisory votes on executive compensation or golden parachute
We have already taken advantage of these reduced reporting burdens in this
amendment to our Current Report on Form 8-K, 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
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 2 to the Notes of Financial
Results of Operations for the development stage, April 21, 2011 (date of
inception) through December 31, 2013.
The Company was organized as of April 21, 2011. Due to the limited operations
and the date of inception of April 21, 2011, the results of operations for the
year ended December 31, 2013 are not comparable to a prior period.
Total Revenue. Total revenues for the development stage April 21, 2011 (date of
inception) through December 31, 2013 were $-0-.
Total Expenses. Total operating expenses for the development stage April 21,
2011 (date of inception) through December 31, 2013 were $674,659. Total expenses
consisted of advertising of $55; research and development of $4,047; stock based
compensation of $500,000; professional fees of $51,156; selling, general and
administrative expenses of $119,057; and interest expense of $344.
Total Assets. Total assets at December 31, 2013 were $5,522. Total assets
consist of cash of $3,913; prepaid expenses of $609 and intangible assets of
Total Liabilities. Total liabilities at December 31, 2013 were $179,181. Total
liabilities consist of accounts payable of $40,375; accrued interest of $344;
note payable to the CEO of $60,000 and accrued salaries of $78,462.
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
The Company sustained a loss of $674,659 for the year ended December 31, 2013.
The Company has an accumulated loss of $674,659 during the development stage,
April 21, 2011 (date of inception) through December 31, 2013. 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 December 31, 2013 we had a working capital
deficit of $174,659. Our working capital deficit is due to the results of
Net cash used in operating activities for the development stage April 21, 2011
(date of inception) through December 31, 2013 was ($56,087). Net cash used in
operating activities includes our net loss, stock based compensation, prepaid
expense, accounts payable, accrued salaries and accrued interest.
Net cash used in investing activities for the year ended December 31, 2013 was
($1,000). Net cash used in investing activities for the development stage April
21, 2011 (date of inception) through December 31, 2013 was ($1,000). Net cash
used in investing activities includes the assignment of intangible assets of
Net cash provided by financing activities for the year ended December 31, 2013
was $61,000. Net cash provided by financing activities for the development stage
April 21, 2011 (date of inception) through December 31, 2013 was $61,000. Net
cash provided by financing activities includes the issuance of common stock for
intangible assets of $1,000 and proceeds from notes payable- related party of
We anticipate that our future liquidity requirements will arise from the need to
fund our growth from operations, pay current obligations and future capital
expenditures. The primary sources of funding for such requirements are expected
to be cash generated from operations and raising additional funds from the
private sources and/or debt financing. However, we can provide no assurances
that we will be able to generate sufficient cash flow from operations and/or
obtain additional financing on terms satisfactory to us, if at all, to remain a
going concern. Our continuation as a going concern is dependent upon our ability
to generate sufficient cash flow to meet our obligations on a timely basis and
ultimately to attain profitability. Our Plan of Operation for the next twelve
months is to raise capital to implement our strategy.We do not have the
necessary cash and revenue to satisfy our cash requirements for the next twelve
months. We cannot guarantee that additional funding will be available on
favorable terms, if at all. If adequate funds are not available, then we may not
be able to expand our operations. If adequate funds are not available, we
believe that our officers and directors will contribute funds to pay for some of
our expenses. However, we have not made any arrangements or agreements with our
officers and directors regarding such advancement of funds. We do not know
whether we will issue stock for the loans or whether we will merely prepare and
sign promissory notes. If we are forced to seek funds from our officers or
directors, we will negotiate the specific terms and conditions of such loan when
made, if ever. Although we are not presently engaged in any capital raising
activities, we anticipate that we may engage in one or more private offering of
our company's securities after the completion of this offering. We would most
likely rely upon the transaction exemptions from registration provided by
Regulation D, Rule 506 or conduct another private offering under Section 4(2) of
the Securities Act of 1933. See "Note 2 - Going Concern" in our financial
statements for additional information as to the possibility that we may not be
able to continue as a "going concern."
We are not aware of any trends or known demands, commitments, events or
uncertainties that will result in or that are reasonably likely to result in
material increases or decreases in liquidity.
We had no material commitments for capital expenditures as of December 31, 2013.
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