Thunder Energies: Financial Statements For The Year Ended12-31-19

The following excerpt is from the company's SEC filing.
Exhibit 99.1
ITEM 9.01(a)
NATURE CONSULTING LLC
Index to Financial Statements
CONTENTS
Report of Independent Registered Public Accounting Firm
Balance Sheet
Statement of Operations
Statement of Changes in Members’ Deficit
Statement of Cash Flows
Notes to Financial Statements
Report of Independent Registered Public
Accounting Firm
To the Board of Directors and
Stockholders of Nature Consulting LLC
Opinion on the Financial Statements
We have audited the accompanying balance
sheet of Nature Consulting LLC (the “Company”) for the period January 19, 2019 (date of formation ) to December 31,
2019, and the related statements of income, comprehensive income, members’ deficit, and cash flows for the period January
19, 2019 (date of formation) to December 31, 2019, and the related notes and schedules (collectively referred to as the financial
statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
for the period January 19, 2019 (date of formation) to December 31, 2019, and the results of its operations and its cash flows
for the period January 19, 2019 (date of formation) to December 31, 2019, in conformity with accounting principles generally accepted
in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based
on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required
to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable
basis for our opinion.
/s/ Benjamin & Ko
We have served as the Company’s auditor since 2020.
Santa Ana, CA
arch 5, 2021
BALANCE SHEET
ASSETS
Current assets:
36,060
Accounts receivable, net of allowance of doubtful accounts of
$29,548
111,011
Inventories, net
57,364
Prepaid expenses
19,382
Total current assets
223,817
Property and equipment, net
14,117
Operating lease right-of-use asset, net
292,320
Total assets
530,254
LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
Accounts payable
233,082
Customer advanced payments
73,836
Loan payable to shareholder
20,000
Current portion of operating lease liability
107,388
Other current liabilities
Total current liabilities
440,125
Operating lease liability, less current portion
187,441
Total liabilities
627,566
Commitments and contingencies
Members' deficit
Accumulated deficit
(97,312
Total members' deficit
Total liabilities and members' deficit
See accompanying notes to financial statements
STATEMENT OF OPERATION
Net revenues
2,204,316
Cost of Sales
1,729,020
Gross Profit
475,296
Advertising and marketing expenses
293,601
General and administrative
279,007
Net loss
STATEMENT OF CHANGES
IN MEMBERS’ DEFICIT
Balance as of January 19, 2019 (date of formation)
Balance as of December 31, 2019
STATEMENT OF CASH FLOW
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense
Bad debt expense
Changes in operating assets and liabilities:
(140,559
(57,364
(19,382
Net cash provided by operating activities
31,800
Cash flows from investing activities:
Purchases of property and equipment
(15,740
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from loan payable to shareholder
23,000
Repayments of loan payable to shareholder
(3,000
Net cash provided by financing activities
Net increase in cash
Cash at beginning of period
Cash at end of period
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest
Income taxes
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 –
ORGANIZATION
AND PRINCIPAL ACTIVITIES
Corporate History and Background
Nature Consulting LLC (“Nature” or the “Company”)
is the premier source of turnkey CBD and Hemp extract solutions, providing high quality products, comprehensive services and a
process that its clients trust. The Company was formed on January 19, 2019.
The Company specializes in hemp extract manufacturing and distribution
and a network of over 1,000 premium US CBD and hemp brands suppliers. The Company has become one of the nation’s leading
suppliers of quality CBD products and the USA’s premiere source for turnkey white and private label hemp extract product
solutions.
Nature Consulting LLC’s Mission
Our mission is to be the leading seed-to-sale manufacturer and
supplier of high-quality CBD products in the industry. We have identified the following issues as our critical drivers:
Strong Research and Development- Nature’s team is
focused on delivering cutting edge, innovative research and development practices that keep it ahead of the competition while
it focuses on creating new and exciting formulations, extraction methods, and product categories.
Quality Products & Processes- Nature’s products are manufactured using only the best ingredients meeting the highest specifications for purity, potency, and quality, ensuring consistency in its premium CBD and hemp.
Supply Chain Control- Nature controls the entire production process, from the farm to the final process. By handling every step along the way, the Company ensures a streamlined, seamless, reliable supply chain.
Nature Consulting LLC’s Product Portfolio
Nature is an innovative leader in quality extraction and sourcing,
expert brand building, and targeted marketing for retailers and wholesalers throughout the world. From customization to order fulfillment
to brand development and label design, the Company provides guided support every step of the way through tailored business strategy.
It features the largest collection of customizable CBD and hemp products on the market.
The Company has begun its planned principal
operations, and accordingly, the Company has prepared its financial statements in accordance with accounting principles generally
accepted in the United States of America (“GAAP”).
NOTE 2 – BASIS OF PRESENTATION
The accompanying financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America and include all adjustments
necessary for the fair presentation of the Company’s financial position for the periods presented.
The Company currently operates in one
business segment. The Company is not organized by market and is managed and operated as one business. A single management team
reports to the chief operating decision maker, the Chief Executive Officer, who comprehensively manages the entire business. The
Company does not currently operate any separate lines of businesses or separate business entities.
Going Concern
The accompanying financial statements have
been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of
assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of approximately
$97,000 at December 31, 2019, had a working capital deficit of approximately $216,000 at December 31, 2019, had a net loss of approximately
$97,000 from January 19, 2019 (date of formation) to December 31, 2019, and net cash provided by operating activities of approximately
$32,000 from January 19, 2019 (date of formation) to December 31, 2019, with limited revenue earned since inception, and a lack
of operational history. These matters raise substantial doubt about the Company’s ability to continue as a going concern.
While the Company is attempting to expand
operations and increase revenues, the Company’s cash position may not be significant enough to support the Company’s
daily operations. Management intends to raise additional funds by way of a private offering or an asset sale transaction. Management
believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity
for the Company to continue as a going concern. While management believes in the viability of its strategy to generate revenues
and in its ability to raise additional funds or transact an asset sale, there can be no assurances to that effect or on terms acceptable
to the Company. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further
implement its business plan and generate revenues.
The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
This summary of significant accounting
policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements
and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These
accounting policies conform to GAAP and have been consistently applied in the preparation of the financial statements.
Use of Estimates
The preparation of these financial statements
in accordance with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the dates of the financial statements and the reported amounts of net sales and expenses during the reported periods. Actual
results may differ from those estimates and such differences may be material to the financial statements. The more significant
estimates and assumptions by management include among others: inventory valuation, allowance for doubtful accounts, and depreciation
on property and equipment. The current economic environment has increased the degree of uncertainty inherent in these estimates
and assumptions.
The Company’s cash is held in bank
accounts in the United States and is insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The Company has
not experienced any cash losses.
Income Taxes
The Company is
treated as a partnership for income tax purposes; accordingly, income taxes have not been provided for in the accompanying financial
statements. All of the Company’s income or losses are passed through to its members.
Advertising and Marketing Expenses
Advertising and marketing expenses are
recorded as marketing expenses when they are incurred. Advertising and marketing expense was approximately $293,601 from January
19, 2019 (date of formation) to December 31, 2019.
Revenue Recognition
On October 29, 2019, the Company adopted
Accounting Standards Codification ASC 606 (“ASC 606”),
Revenue from Contracts with Customers,
using the modified
retrospective approach for all contracts not completed as of the date of adoption. Results for the reporting periods beginning
on October 29, 2019 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance
with accounting under ASC 605,
. As a result of adopting ASC 606, amounts reported under ASC 606 were
not materially different from amounts that would have been reported under the previous revenue guidance of ASC 605, as such, there
was no cumulative adjustment to retained earnings.
The Company generates all of its revenue
from contracts with customers. The Company recognizes revenue when we satisfy a performance obligation by transferring control
of the promised services to a customer in an amount that reflects the consideration that we expect to receive in exchange for those
services. The Company determines revenue recognition through the following steps:
Identification of the contract, or contracts, with a customer.
Identification of the performance obligations in the contract.
Determination of the transaction price.
Allocation of the transaction price to the performance obligations in the contract
Recognition of revenue when, or as, we satisfy a performance obligation.
At contract inception, the Company assesses
the services promised in our contracts with customers and identifies a performance obligation for each promise to transfer to the
customer a service (or bundle of services) that is distinct. To identify the performance obligations, the Company considers all
of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business
practices. The Company allocates the entire transaction price to a single performance obligation.
The following conditions must be met before
revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) (iii) the price is fixed or determinable,
and (iv) collection is reasonably assured. The Company provides for an allowance for doubtful account based history and experience
considering economic and industry trends. The Company does not expect to have any off-Balance Sheet exposure related to its customers.
The Company evaluates whether it is appropriate
to record the gross amount of product sales and related costs or the net amount earned as commissions. Generally, when the Company
is primarily obligated in a transaction, are subject to inventory risk, have latitude in establishing prices and selecting suppliers,
or have several but not all of these indicators, revenue is recorded at the gross sale price. The Company generally records the
net amounts as commissions earned if we are not primarily obligated and do not have latitude in establishing prices.
Revenue is recognized when the product
is shipped to the customer, provided that collection of the resulting receivable is reasonably assured. The Company primarily provides
for no credit terms as it collects a deposit of 50% upon order and requires the remaining 50% be paid before the order is shipped.
When credit terms are granted, terms of up to 120 days are provided, based on credit evaluations. No allowance has been provided
for uncollectible accounts. Management has evaluated the receivables and believes they are collectible based on the nature of the
receivables, historical experience of credit losses, and all other currently available evidence. Discounts are recorded as a reduction
of the transaction price. Revenue excludes any amounts collected on behalf of third parties, including sales taxes.
Accounts Receivable
Accounts receivable consists mainly of
receivables from CBD and hemp product purchasers. Accordingly, the Company’s CBD and hemp product sales are generally collected,
and the Company has minimal bad debts.
Although diversified among many customers,
collectability is dependent upon the financial wherewithal of each individual customer and is influenced by the general economic
conditions of the industry. Receivables are not collateralized, and the Company therefore establishes an allowance for doubtful
accounts equal to the portions of its accounts receivable for which collectability is not reasonably assured. The Company
had an allowance for doubtful accounts of $29,548 as of December 31, 2019.
Customer Advance Payments
Customer advance payments consists of customer
orders paid in advance of the delivery of the order. Customer advance payments are classified as short-term as the typical order
ships within approximately three weeks of placing the order. Customer advance payments are recognized as revenue when the product
is shipped to the customer and all other revenue recognition criteria have been met. Customer advance payments as of December 31,
2019 were $73,836, which was recognized as revenue during fiscal year 2020. Customer advance payments are included in current liabilities
in the balance sheet.
The Company purchases finished goods
and when packaged are shipped to the customer. The Company's inventories are valued by the first-in, first-out
("FIFO") cost method and are stated at the lower of cost or net realizable value. The Company had inventories of
$57,364, mostly consisting of finished goods, as of December 31, 2019.
Property and Equipment
Property and equipment are carried at cost
and are depreciated on a straight-line basis over the estimated useful lives of the assets, generally five years. The cost of repairs
and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed
of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income
in the year of disposition. Fixed assets are examined for the possibility of decreases in value when events or changes in circumstances
reflect the fact that their recorded value may not be recoverable.
Impairment of Long-lived Assets
We periodically evaluate whether the carrying
value of property and equipment has been impaired when circumstances indicate the carrying value of those assets may not be recoverable.
 The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of the asset.  If the carrying value is not recoverable, the impairment loss is measured as the excess
of the asset’s carrying value over its fair value. There are no impairments as of December 31, 2019.
Our impairment analyses require management
to apply judgment in estimating future cash flows as well as asset fair values, including forecasting useful lives of the assets,
assessing the probability of different outcomes, and selecting the discount rate that reflects the risk inherent in future cash
flows. If the carrying value is not recoverable, we assess the fair value of long-lived assets using commonly accepted techniques,
and may use more than one method, including, but not limited to, recent third-party comparable sales and discounted cash flow models.
 If actual results are not consistent with our assumptions and estimates, or our assumptions and estimates change due to new
information, we may be exposed to an impairment charge in the future.
In accordance
with ASC 842,
Leases
, the Company determines whether an arrangement contains a lease at inception. A lease is a contract
that provides the right to control an identified asset for a period of time in exchange for consideration. For identified leases,
the Company determines whether it should be classified as an operating or finance lease. Operating leases are recorded in the
balance sheet as: right-of-use asset (“ROU asset”) and operating lease liability. ROU asset represents the Company’s
right to use an underlying asset for the lease term and lease liability represents the Company’s obligation to make lease
payments arising from the lease. ROU assets and operating lease liabilities are recognized at the commencement date of the lease
and measured based on the present value of lease payments over the lease term. The ROU asset also includes deferred rent liabilities.
The Company’s lease arrangement generally do not provide an implicit interest rate. As a result, in such situations the
Company uses its incremental borrowing rate based on the information available at commencement date in determining the present
value of lease payments. The Company includes options to extend or terminate the lease when it is reasonably certain that it will
exercise that option in the measurement of its ROU asset and liability. Lease expense for the operating lease is recognized on
a straight-line basis over the lease term. The Company has a lease agreement with lease and non-lease components, which are accounted
for as a single lease component.
Fair Value of Financial Instruments
The provisions of accounting guidance,
FASB Topic ASC 825 requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized
and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of December
31, 2019, the fair value of cash, accounts receivable, accounts payable, accrued expenses, and notes payable approximated carrying
value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates.
Fair Value Measurements
Fair value is defined as the exchange price
that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market
for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques
used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value
hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:
Level
1 – Quoted prices in active markets for identical assets or liabilities.
Level
2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or liabilities.
Level
3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of
the fair value of the assets or liabilities
The carrying value of financial assets
and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured
on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. There were no financial assets
or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured
on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. There have been no
transfers between levels.
Concentrations, Risks, and Uncertainties
Business Risk
Substantial business risks and uncertainties
are inherent to an entity, including the potential risk of business failure.
The Company is headquartered and operates
in the United States. To date, the Company has generated limited revenues from operations. There can be no assurance that the Company
will be able to successfully continue to produce its products and failure to do so would have a material adverse effect on the
Company’s financial position, results of operations and cash flows. Also, the success of the Company’s operations is
subject to numerous contingencies, some of which are beyond management’s control. These contingencies include general economic
conditions, price of raw material, competition, and governmental and political conditions.
Interest rate risk
Financial assets and liabilities do not
have material interest rate risk.
Credit risk
The Company is exposed to credit risk from
its cash in banks and accounts receivable. The credit risk on cash in banks is limited because the counterparties are recognized
financial institutions.
There was one customer that accounted for
10%, comprising 19.2%, or more of total revenue for the fiscal year ended December 31, 2019. There were two customers that comprised
10%, comprising 80.8%, or more of accounts receivable at December 31, 2019.
Seasonality
The business is not subject to seasonal
fluctuations.
Major Suppliers
The Company purchases manufactured products
from its suppliers as of December 31, 2019.
In the event that the Company were to
discontinue purchasing its own products, it is believed that alternate suppliers could be identified which would be able to
provide it with sufficient levels of products at terms similar to those of us.
There were two suppliers that accounted
for 10%, comprising 65%, or more of total expenditures for the fiscal year ended December 31, 2019. There were two vendors that
comprised 95% or more of accounts payable at December 31, 2019.
Recently Issued Accounting Updates
In
August 2018, the FASB issued ASU No. 2018-13, 
Fair Value Measurements (Topic 820): Disclosure Framework—Changes to
the Disclosure Requirements for Fair Value Measurement.
 This standard removes, modifies, and adds certain disclosure requirements
for fair value measurements. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years,
beginning after December 15, 2019, with early adoption permitted. The Company plans to adopt ASU No. 2018-13 in the first quarter
of fiscal 2020, coinciding with the standard’s effective date, and expects the impact from this standard to be immaterial.
In
December 2019, the FASB issued ASU No. 2019-12, 
Simplifying the Accounting for Income Taxes.
 This standard simplifies
the accounting for income taxes by removing certain exceptions to the general principles in ASC 740, 
,
while also clarifying and amending existing guidance, including interim-period accounting for enacted changes in tax law. This
standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with
early adoption permitted. The Company plans to adopt ASU No. 2019-12 in the first quarter of fiscal 2021, coinciding with the standard’s
effective date, and expects the impact from this standard to be immaterial.
Other recently issued accounting updates
are not expected to have a material impact on the Company’s consolidated financial statements.
NOTE 4 – PROPERTY AND
Property and equipment consisted of the
following:
Estimated Life
Office equipment
5 years
Computer equipment
3 years
Accumulated depreciation
(1,623
Depreciation expense was $1,623 from January
19, 2019 (date of formation) to December 31, 2019 and is classified in general and administrative expenses in the Statements of
Operations.
NOTE 5 –
LOAN
PAYABLE
The Company borrows funds from third parties
from time to time for working capital purposes. From January 19, 2019 (date of formation) to December 31, 2019, the Company had
borrowings of $23,000 and made repayments of $3,000 for a balance of $20,000 at December 31, 2019. Advances are non-interest bearing
and due on demand. The Company had no additional borrowings and made repayments of $20,000 for a balance of $0 as of the date of
this filing.
NOTE 6 –
MEMBERS’
CAPITAL
On January 19, 2019, the members of the
Company entered into the Partnership Agreement and agreed to form and become the sole owners and members of Nature to be organized
under the laws of the State of Florida. Nature was created for the sole purpose of manufacturing, marketing, distributing and selling
proprietary consumer products.
Each member would receive fifty percent
(50%) ownership of Nature and any and all of its current or future subsidiary companies. The members are the sole partners and
control persons of Nature and all of its related entities, now and in the future, and that no other parties shall hold any ownership
interest in Nature.
The Partnership Agreement also states the
Agreement may not be amended except in writing and signed both members.
NOTE 7 – OPERATING LEASE
The Company adopted ASC 842 as of December
31, 2019.
The Company has an operating lease for the Company’s warehouse and office
and accounts for this lease in accordance with ASC 842. Adoption of the standard resulted in the initial recognition of operating
lease ROU asset of $
344,203
and operating lease liability of $344,203 as of December
31, 2019.
Effective July 1, 2019, the
Company’s customer service and distribution facility is located at 3017 Greene Street, Hollywood, Florida 33020. This
facility is leased in monthly installments of approximately $10,319 plus Florida Sales Tax. The monthly rent shall be
increased by four percent (4%) per annum each succeeding lease year.
Operating lease right-of-use (“ROU”)
assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make
lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and
the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental
borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset
includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and
other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities
and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to
extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease
payments is recognized on a straight-line basis over the lease term.
We have a lease agreement with lease
and non-lease components. We have elected to account for these lease and non-lease components as a single lease component. We
are also electing not to apply the recognition requirements to short-term leases of twelve months or less and instead will
recognize lease payments as expense on a straight-line basis over the lease term.
The components of lease expense and supplemental
cash flow information related to leases for the period are as follows:
Lease Cost
Year ended December 31,
Operating lease expense
64,422
Total lease expense
In accordance with ASC 842, other information related to leases was as follows:
Operating cash flows from operating leases
61,913
Cash paid for amounts included in the measurement of lease liability
Weighted-average remaining lease term—operating lease
 2.5 years
Weighted-average discount rate—operating lease
In accordance with ASC 842, maturities of the operating
lease liability as of December 31, 2019 were as follows:
Year ending:
126,302
131,354
66,965
Total undiscounted cash flows
324,620
Reconciliation of lease liability:
Weighted-average remaining lease terms
Present values
292,877
Lease liability—current
106,677
Lease liability—long-term
186,200
Lease liability—total
Difference between undiscounted and discounted cash flows
31,742
NOTE 8 – COMMITMENTS AND CONTINGENCIES
From time to time, various lawsuits and
legal proceedings may arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an
adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of
any legal proceedings or claims that it believes will have a material adverse effect on its business, financial condition or operating
results except as disclosed in Note 9, Subsequent Events.
NOTE 9 – SUBSEQUENT EVENTS
The Company evaluated all events or transactions
that occurred after December 31, 2019 up through the date the financial statements were available to be issued. During this period,
the Company did not have any material recognizable subsequent events required to be disclosed as of and for the year ended December
31, 2019 except for the following:
Effective July 1, 2020, the Company
entered into a forty-two (42) month lease for its sales office is located at 3323 NE 163
Street, North Miami
Beach, Florida 33160. This facility is leased in monthly installments of approximately $8,266 plus Florida Sales Tax. The
monthly rent shall be increased by three percent (3%) per annum each succeeding lease year.
Effective August 1, 2020, the Company entered
into a fifteen (15) month lease for a forklift. This forklift is leased in monthly installments of approximately $392 plus Florida
Sales Tax.
Members’ Capital
On March 1, 2020, the members of the Company
entered into the Ownership Interest Purchase Agreement (“Ownership Agreement”) whereby Yogev Shvo, a member of the
Company, acquired the remaining 50% member ownership (“Seller”) giving Mr. Shvo 100% member ownership of the Company.
As consideration for the Ownership Agreement, the Seller received a Promissory Note of $750,000. The Promissory Note bears interest
at 15% per annum and matures March 1, 2021. As of the date of this filing, the Company has made repayments of $461,757 for a balance
of $288,243.
The Note is secured with the assets of the Company pursuant to a security agreement
dated March 1, 2020. In addition, the Company’s CEO has personally guaranteed the Note.
Acquisition of TNRG Preferred Stock
On July 1, 2020, Yogev Shvo, an individual
and the member of Nature (“Purchaser”) personally acquired 100% of the issued and outstanding shares of preferred stock
(the “Preferred Stock”) of TNRG from Saveene Corporation, a Florida corporation (the “Seller”) (The “Purchase”).

The purchase price of $250,000 for the Preferred Stock was paid in cash and
was provided
from the individual private funds of Purchaser.
The Preferred Stock acquired by the Purchaser
consisted of:
50,000,000 shares of Series A Convertible Preferred Stock wherein 
each share is entitled to fifteen (15) votes and converts into ten (10) shares of the Company’s common stock.
5,000 shares of Series B Convertible Preferred Stock wherein each share is entitled to one thousand (1,000) votes and converts into one thousand (1,000) shares of the Company’s common stock.
10,000 shares of Series C Non-Convertible Preferred Stock wherein each share is entitled to one thousand (1,000) votes and is non-convertible into shares of the Company’s common stock.
As a result of the Purchase, the Purchaser
owns approximately 100% of the fully diluted outstanding equity securities of TNRG and approximately 100% of the voting rights
for the outstanding equity securities.
Acquisition of Assets of Nature
On August 14, 2020 (the “Closing
Date”), TNRG and the member of Nature entered into an Interest Purchase Agreement (the “Interest Purchase Agreement”),
which closed on the same date.  Pursuant to the terms of the Interest Purchase Agreement, the member of Nature sold
all of his membership interests in Nature to TNRG in exchange for sixty million (60,000,000) shares of TNRG’s Common Stock.
 As a result of this transaction, Nature became a wholly owned subsidiary of TNRG.
The Interest Purchase Agreement contained
customary representations and warranties and pre- and post-closing covenants of each party and customary closing conditions.  Breaches
of the representations and warranties will be subject to customary indemnification provisions, subject to specified aggregate limits
of liability.
The membership Interest Purchase Agreement
will be treated as an asset acquisition by the Company for financial accounting purposes.  TNRG will be considered the acquirer
for accounting purposes, and the historical financial statements of Nature, before the membership exchange will replace the historical
financial statements of TNRG before the membership exchange and in all future filings with the SEC. There was no significant tax
consequence to this exchange.
Lawsuit
On November 3, 2020, First Capital Venture Co., a subsidiary
of the client, d/b/a Diamond CBD, filed a civil complaint against Thunder Energies Corporation (the “Defendants”),
in the pending 17
Judicial Circuit Court in and for Broward County, Florida, (the “Florida Court”), Case
Number CACE-20-019111 (the “Complaint”).
On January 26, 2021 Plaintiffs were erroneously granted an Order
of Default to which the Defendants immediately pointed out to the Court and on February 23, 2021 an Order Vacating the Default
was granted in favor of the Defendants. The Plaintiff knew, or should have known, that the Order of Default was not valid but they
proceeded on February 9, 2021 to publish false and misleading press releases.
Thunder Energies Corporation is proceeding through discovery
and is of the belief the suit will be decided in their favor. A pending Motion to Dismiss is before the Court. Plaintiff’s
Complaint is based on a claim for tortious interference and misappropriation of trade secrets. Neither claim is supported by the
Complaint.
Thunder Energies Corporation has issued a cease and desist to
the Plaintiff and is considering a counter claim concerning the false information and disclosures made by the Plaintiff that may
have affected the Company’s business and shareholders.
The Company is unable to predict the financial outcome of this
matter at this time, and any views formed as to the viability of these claims or the financial exposure which could result may
change from time to time as the matter proceeds through its course. Accordingly, adjustments, if any, that might result from the
resolution of this matter have not been reflected in the consolidated financial statements. However, no assurance can be made that
this matter together with the potential for reputational harm, will not result in a material financial exposure, which could have
a material adverse effect on the Company's financial condition, results of operations, or cash flows.
Paycheck Protection Program Loan 
On May 7, 2020, the Company executed
a note (the “PPP Note”) for the benefit of TD Bank, N.A. in the aggregate amount of $51,065 under the Paycheck
Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES
Act”). The Company has made repayments of $51,065 in December 2020.
Economic Injury Disaster Loan 
On May 14, 2020,
the Company executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the SBA under
its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the
Company’s business. The Company borrowed an aggregate of $150,000. In connection therewith, the Company also received
a $7,000 grant, which does not have to be repaid and was recorded in Other Income in the Statements of Operations.
Loans Payable
The Company borrows funds from related
parties from time to time for working capital purposes. As of the date of this filing, the Company had borrowings of $167,244 and
made repayments of $60,000 for a balance of $107,244. Advances are non-interest bearing and due on demand.
Advances from Members
The Company borrows funds from the Company’s
members for working capital purposes from time to time. As of the date of this filing, the Company had borrowings of $155,000 and
made repayments of $45,000 for a balance of $110,000. Advances are non-interest bearing and due on demand.
There were no other events subsequent to
December 31, 2019, and up to the date of this filing that would require disclosure.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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