Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

~~March~~December 31, 2014

(Unaudited)

Summary of Notes Issued

(as of December 31, 2014)

~~(B) Convertible Debt – Secured – Derivative Liabilities~~

~~Fife Note~~

~~On February 15, 2011, the Company issued convertible notes, totaling $300,000, to John Fife with the following provisions:~~

Date of Issuance	Original Amount		Conversions through December 31, 2014		Accrued Original Issue Discount, if any		Gross Amount outstanding at December 31, 2014		Remaining Discount		Net Amount		Shares to be issued upon full conversion at September 30, 2014		Type of Note

2-Apr-13		5,000						5,000		0		5,000		400,000	a
31-May-13		5,500						5,500		1,138		4,362		440,000	a
31-May-13		5,500						5,500		0		5,500		440,000	a
23-Feb-11		300,000		300,000				0		0		0		0	a
1-Oct-12		165,000		165,000				0		0		0		0	b
1-Aug-13		25,000		14,400				10,600		0		10,600		848,000	b
1-Sep-13		25,000		25,000				0		0		0		0	b
1-Oct-13		25,000		25,000				0		0		0		0	b
1-Nov-13		25,000						25,000		0		25,000		2,000,000	b
1-Dec-13		25,000						25,000		0		25,000		2,000,000	b
1-Jan-14		25,000						25,000		0		25,000		2,000,000	b
1-Feb-14		25,000		25,000				0		0		0		0	b
1-Mar-14		25,000						25,000		0		25,000		2,000,000	b
1-Aug-13		12,500		40,000		27,500		0		0		0		0	a
27-Aug-13		12,500				1,250		13,750		0		13,750		916,667	a
10-Oct-13		15,000				1,500		16,500		0		16,500		1,000,000	a
19-Nov-13		10,000				1,000		11,000		0		11,000		733,333	a
27-Sep-13		25,000						25,000		0		25,000		2,000,000	a
13-Dec-13		20,000		8,725				8,530		0		8,530		682,410	a
27-Feb-14		20,000		20,000				0		0		0		0	a
17-Mar-14		25,000		7,613		990		23,122		15,103		8,019		1,849,738	a
2-Apr-14		32,500		25,660		5,000		11,840		273		11,567		741,715	a
21-Mar-14		30,000						21,275		0		21,275		1,702,000	a
14-Apr-14		35,000						35,000		3,716		31,284		2,800,000	a
5-May-14		50,000						50,000		16,667		33,333		2,904,444	a
21-May-14		35,000						35,000		2,059		32,941		2,033,111	a
2-Jun-14		27,500						27,500		1,704		25,796		1,722,734	a
23-Jun-14		27,500						27,500		1,878		25,622		1,833,333	a
1-Apr-14		25,000						25,000		0		25,000		2,000,000	b
1-May-14		25,000						25,000		0		25,000		2,000,000	b
1-Jun-14		25,000						25,000		0		25,000		2,000,000	b
1-Jul-14		25,000						25,000		0		25,000		2,000,000	b
1-Aug-14		25,000						25,000		163		24,837		2,000,000	b
1-Sep-14		25,000						25,000		5,229		19,771		2,000,000	b
7-Jul-14		37,500						37,500		1,622		35,878		1,996,805	a
14-Jul-14		25,000						25,000		1,902		23,098		1,566,122	a
22-Aug-14		27,500						27,500		7,147		20,353		2,200,000	a
26-Aug-14		10,000						10,000		7,419		2,581		800,000	a
26-Aug-14		10,000						10,000		7,419		2,581		800,000	a
8-Sep-14		10,000						10,000		1,094		8,906		800,000	a
15-Sep-14		20,000						20,000		9,712		10,288		1,161,778	a
15-Sep-14		10,000						10,000		7,733		2,267		800,000	a
19-Sep-14		10,000						10,000		7,799		2,201		800,000	a
1-Oct-14		25,000						25,000		12,500		12,500		2,000,000	b
1-Nov-14		25,000						25,000		16,713		8,287		2,000,000	b
1-Dec-14		25,000						25,000		20,879		4,121		2,000,000	b

Totals		1,443,500		656,398		37,240		817,617		149,866		667,751		59,972,190

●	~~Interest rate 6%;~~

●	~~Default interest rate of 12%;~~

●	~~Notes are due 48 months from the issuance date of February 23, 2011;~~

●

Conversion rates equal to 70% or 80% of the market price on date of conversion by applying a specified formula that utilizes the average of the 3 lowest quoted closing prices 20 days immediately preceding the conversion date, and then takes the higher of the average 3 lowest closing prices or $0.12 floor price; and

●	~~Secured by the Chief Executive Officer’s 15,000,000 shares of the Company common stock.~~

The investor is entitled at its option to convert all or part of the principal and accrued interest into shares of the Company’s common stock at a conversion price as discussed above. The Company classified the embedded conversion feature as a derivative liability due to management’s assessment that the Company may not have sufficient authorized number of shares of common stock required to net-share settle.

Legend:

a- Note for cash

b- Note for ten months. No additional draw downs occurred during the year ended September 30, 2011. In January 2012, the Company received $22,000 from a lender for an additional investment, under the same terms above, which is convertible to shares pursuant to the terms described below. See Note 9(A) related to conversions of this $300,000 note.consulting services

The number of shares of common stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the higher of (i) the Market Price or (ii) the Floor Price. Where “Market Price” is defined as 80% of the average of the closing bid price for the three (3) days with the lowest closing bids during the twenty trading days immediately preceding the conversion date, provided, however, that if the market prices fall below $0.05 per share of common stock the conversion factor shall be reduced by 10 percentage points. The “Floor Price” is defined as $.012. The trading data used to compute the closing bid shall be as reported by Bloomberg, LP or if such information is not then being reported by Bloomberg, then as reported by such other data information sources as may be selected by the Lender.

The note also contains language that removes the $0.12 floor if certain “triggering events” occur during the life of the note. Since the floor price can be removed upon any one of these events occurring, the conversion feature of this note has two elements: normal conversion and conversion upon a triggering event.

Upon each occurrence of any of the following triggering events , (a) the conversion factor shall be reduced by 10 percent points (i.e., if the conversion factor were 80% immediately prior to the occurrence of the triggering event, it shall be reduced to 70% upon the occurrence of a triggering event), (b) the conversion price shall be computed without regard to the Floor Price, and (c) this note shall accrue interest at the rate of 1% per month, whether before or after judgment; provided, however, that (1) in no event shall the triggering effects be applied more than two times, and (2) notwithstanding any provisions to the contrary herein, in no event shall the applicable interest rate at any time exceed the maximum interest rate allowed under applicable law:

On October 4, 2012, Mr. Fife foreclosed on his note to us because we were in default. According to the terms of the indenture, Mr. Fife was issued 15 million shares to forestall on his claim against the firm. At the time, the common stock of the Company was trading at $.0039. Therefore, a corresponding expense of $58,500 was recorded at that time and included in General and Administrative Expense.

~~As of March 31, 2014, as a result of the triggering events (a) and (b), the Company computes the exercise price related to convertible debt, without regard to the floor price.~~

~~The normal conversion resulted in a debt discount under ASC 470-25-8 since the calculated market price as of the date of the note was higher ($0.145) than the conversion floor of $0.12.~~

~~At the balance sheet date, $115,450 of the debt has been converted leaving a principal balance of $184,550.~~

1315

The following is a summary of the notes issued for cash and issued for consulting services:

	Original Amount	Conversions through December 31, 2014	Accrued Original Issue Discount, if any	Gross Amount outstanding at December 31, 2014	Remaining Discount		Net Amount		Shares to be issued upon full conversion at September 30, 2014

Notes for Cash	853,500	401,998	37,240	482,017		94,382		387,635	33,124,190
Notes for Consulting Services	590,000	254,400	0	335,600		55,484		280,116	26,848,000

Totals	1,443,500	656,398	37,240	817,617		149,866		667,751	59,972,190

As a result of the Hydra Acquisition, the Company acquired an additional $984,008 in debt as follows

Investor	Amount		Interest Rate
Golden State Equity Investors	$	350,000		7.5	%
St. George Investments, LLC	$	415,000		7.75	%
Bullivant Houser Bailey LLP	$	219,008		-0-

During the Fiscal fourth quarter, $2,500 of the Bullivant Houser Bailer LLP Note was retired. Therefore, the remaining balance at September 30, 2014 is $981,508

All of the notes are currently past due and are payable on demand

(D) Debt Issue Costs

Deferred Issue costs relate to additional expenses associated with a financing that are amortized into expense over the length of the instrument. As of December 31, 2014, the value of these debt issue costs is $4,550 as follows:

	Original Balance		Issue Date	Maturity Date	Total Days		Days Remaining as of December 31, 2014		Percentage of Days as of December 31, 2014		Unamortized Balance

	$	2,500	2-Apr-14	7-Jan-15		280		7		3%	$	63
	$	7,375	5-May-14	30-Apr-15		360		120		33%	$	2,458
	$	5,500	21-May-14	14-Jan-15		238		14		6%	$	324
	$	2,500	2-Jun-14	14-Jan-15		226		14		6%	$	155
	$	2,500	23-Jun-14	14-Jan-15		205		14		7%	$	171
	$	12,500	7-Jul-14	8-Jan-15		185		8		4%	$	541
	$	2,500	14-Jul-14	14-Jan-15		184		14		8%	$	190
	$	2,500	22-Aug-14	15-Feb-15		177		46		26%	$	650
Total	$	37,875									$	4,550

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

~~March~~December 31, 2014

(Unaudited)

(E) Debt Discount

~~Lucosky Brookman LLP Note~~

Effective on January 10, 2012, the Company issued to Lucosky Brookman LLP (“Lucosky”) a convertible promissory note ( the “Lucosky Note”) for legal services provided since February 1, 2011 of $53,727. The Lucosky Note bears interest at twelve percent (12%) per annum and has a term of six months. Should the Lucosky Note not be paid by the Maturity Date, an event of Default occurs and the interest rate becomes eighteen percent (18%) per annum. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price. The “Market Price” is defined as 50% of the average of the closing price for the five (5) days immediately preceding the conversion date.

During the ~~quarter ended March 31, 2014, the remaining blance of the Lucosky note was converted, and no principal balance remains~~

~~Consulting Notes~~

Starting in Fiscal 2013, the Company incurred a liability to a consultant for $165,000. $165,000 of the Notes bear interest at twelve percent (12%) per annum and matures on June 30, 2014. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price. The “Market Price” is defined as 50% of the low closing bid price for the five (5) days immediately preceding the conversion date.

~~As of the Balance sheet date, $118,203 of principal on this note has been converted into common shares, leaving a remaining balance of $46,797.~~

The Company signed a new consulting agreement in August 2013 at a rate of $25,000 per month. Since that time, the Company issued notes totaling $200,000 to the consultant. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price. The “Market Price” is defined as 50% of the low closing bid price for the thirty (30) days immediately preceding the conversion date. As of the Balance sheet date, $39,400 of principal has been converted leaving a balance of $160,600

~~St. George Notes~~

On August 27, 2013, St. George Investments LLC (“St. George”) advanced the Company $12,500 (“St. George Note”). The St. George Note has a one year term, an interest rate of ten percent and a ten percent original issue discount (“OID”). An OID represents the difference between the amount received and the face value of the note. The St. George Note has a face value of $13,750, and the OID will be amortized into expense pro-rata over the term of the Note. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price. The “Market Price” is defined as 60% of the average of the two (2) low closing bid prices for the ten (10) days immediately preceding the conversion date. The full principal balance is outstanding.

On October 10, 2013, St. George Investments LLC (“St. George”) advanced the Company $15,000 (“St. George Note”). The St. George Note has a one year term, an interest rate of ten percent and a ten percent original issue discount (“OID”). An OID represents the difference between the amount received and the face value of the note. The St. George Note has a face value of $13,750, and the OID will be amortized into expense pro-rata over the term of the Note. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price. The “Market Price” is defined as 60% of the average of the two (2) low closing bid prices for the ten (10) days immediately preceding the conversion date. The full principal balance is outstanding.

On November 19, 2013, St. George Investments LLC (“St. George”) advanced the Company $10,000 (“St. George Note”). The St. George Note has a one year term, an interest rate of ten percent and a ten percent original issue discount (“OID”). An OID represents the difference between the amount received and the face value of the note. The St. George Note has a face value of $13,750, and the OID will be amortized into expense pro-rata over the term of the Note. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price. The “Market Price” is defined as 60% of the average of the two (2) low closing bid prices for the ten (10) days immediately preceding the conversion date. The full principal balance is outstanding.

~~Hydrogen Future Corp.~~

~~(A Development Stage Company)~~

~~Notes to Financial Statements~~

~~March 31, 2014~~

~~(Unaudited)~~

~~Other Notes~~

The Company has received another $186,000 in proceeds from multiple investors. Interest on the notes varies from 0% to ten percent. Shares of Common Stock to be issued upon conversion of each tranche shall be determined by dividing (a) the conversion amount by (b) the Market Price.

~~Market price is defined as follows:~~

Debt Amount Discount Conversion Mechanism
$20,000 51% low trade price over prior 30 days

$25,000 60% low trade price over prior 25 days

$141,000 50% low bid price over prior 30 days

~~(C) Debt Issue Costs~~

~~In connection with the issuance of the $300,000 note discussed above, the Company incurred debt issue costs as follows:~~

●	~~8% cash – which is equivalent to $24,000, and~~

●	~~8% warrants – having a fair value of $26,901, which was computed as follows;~~

	~~Commitment Date~~
~~Expected dividends~~	0%
~~Expected volatility~~	~~180%~~
~~Expected term: conversion feature~~	~~2 years~~
~~Risk free interest rate~~	~~1.73%~~

~~In January 2012, we raised an additional $22,000 as discussed above, and the Company incurred debt issue costs as follows:~~

●	~~8% cash – which is equivalent to $1,760, and~~

●	~~8% warrants – having a fair value of $154, which was computed as follows;~~

	~~Commitment Date~~
~~Expected dividends~~	0%
~~Expected volatility~~	~~364%~~
~~Expected term: conversion feature~~	~~2 years~~
~~Risk free interest rate~~	~~0.65%~~

~~The debt issue costs have been capitalized and are being amortized over the life of the note.~~

Debt issue costs paid, September 30, 2011 $ 50,901
Amortization of debt issue costs, September 30, 2011 (11,833 )
Amortization of debt issue costs, September 30, 2012 (9,833 )
Amortization of debt issue costs, September 30, 2013 (13,199 )
Amortization of debt issue costs, March 31, 2014 (7,156 )
Debt issue costs - net $ 8,828

~~Hydrogen Future Corp.~~

~~(A Development Stage Company)~~

~~Notes to Financial Statements~~

~~March 31, 2014~~

~~(Unaudited)~~

~~(D)~~

~~Debt Discount~~

~~During the six~~three months ended ~~March~~December 31, 2014 and 2013 , the company recorded debt discounts of ~~$320,000~~$75,000 and ~~$300,000~~$170,000 respectively

The debt discount ~~recorded in the current quarter~~ pertains to convertible debt containing embedded conversion options that are required to bifurcated and reported at fair value.

During the ~~six~~three months ended ~~March~~December 31, ~~2013,~~2014, the Company amortized ~~$225,023~~ $152,780 in debt discount.

~~Note 8- Liability for Common Stock to be Issued~~

On March 28, 2014, a debt conversion for 8,350,000 shares was filed. The shares were not issued until subsequent to the balance sheet. The price of the stock on that date was $.05, resulting in a liability of $41,750. The shares were issued in April, and the liability was extinguished.

Note 9 Stockholders’ Equity ~~(Deficit)~~

(A) Common Stock

Stock Issued in Three months ended December 31, 2014

During the ~~six~~three months ended ~~March~~December 31, 2014, the Company issued ~~154,287,985~~ 1,030,061 shares of common stock for the conversion of ~~shares~~$4,745 of ~~common stock.~~debt and $8,131 of accrued interest.

~~On January 27, 2014 the Company issued 100,000,000 shares of common stock to its management team for compensation in lieu of cash.~~

Stock Issued in ~~2013~~

~~On February 19, 2013, the Company issued 5,954, 252 shares for the conversion of $15,000 of debt plus accrued interest.~~

~~On March 31, 2012, the Company issued 15,000,000 shares of common stock to John Fife for the default on his Note. See Footnote 6~~Fiscal year ended September 30, 2014

The Company issued ~~32,061,360 shares for compensation to Directors and Officers~~

~~Stock issued in 2012~~

~~On October 2, 2011,~~8,910,823 (on a ~~lender converted $50,000 pertaining to a note it held with an original principal of $300,000, for 3,000,000~~split-adjusted basis) shares of common stock ~~($0.0166667/share). The quantity of shares issued is based upon~~during the ~~formula described above pertaining to the effect of the triggering event (see Note 7(B)).~~year as follows:

Shares issued for conversion of debt accrued interest and related expenses associated with conversions			7,867,943

Shares issued to Management for compensation			402,880

Shares issued for settlement of a previously unrecorded liability for equipment purchase			120,000

Shares issued for consulting services			200,000

Sales of common shares			320,000

1617

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

~~March~~December 31, 2014

(Unaudited)

~~On January 3, 2012, the Company issued 2,307,692 shares of common stock for $30,000 ($0.013/share) for services rendered.~~

On March 4, 2012, a lender converted $21,494 pertaining to a note it held with an original principal of $300,000, for 3,800,000 shares of common stock ($0.00566/share). The quantity of shares issued is based upon the formula described above pertaining to the effect of the triggering event (see Note 7(B)).

~~Stock issued 2011~~

~~During November and December 2010, the Company issued 312,500 shares of common stock for $100,000 ($0.32/share).~~

~~On June 14, 2011, the Company issued 75,000 shares of common stock for $15,000 ($0.20/share).~~

On September 2, 2011, a lender converted $24,990 pertaining to a note it held with an original principal of $300,000, for 1,120,000 shares of common stock ($0.022313/share). The quantity of shares issued is based upon the formula described above pertaining to the effect of the triggering event (see Note 7(B)).

~~Stock issued in 2010~~

On March 9, 2010, the Company’s board of directors authorized a 10-for-1 forward split of its common stock effective April 8, 2010. Each stockholder of record on April 7, 2010 received ten new shares of the Company’s $0.001 par value common stock for every one old share outstanding. The effects of the split have been retroactively applied to all periods presented in the accompanying financial statements.

~~On June 3, 2010, the Company issued 250,000 shares of common stock for $162,500 ($0.65/share).~~

On July 20, 2010, the Company issued 1,569,177 shares of common stock, having a fair value of $1,380,876 ($0.88/share), based upon the closing trading price, to acquire software from an affiliate of the Company’s Chief Executive Officer.

On July 30, 2010, the Company issued 125,000 shares of common stock for $100,000 ($0.80/share). In addition, the stockholder received a 2-year warrant for 125,000 shares with an exercise price of $1.20.

On August 18, 2010, the Company issued 125,000 shares of common stock for $100,000 ($0.80/share). In addition, the stockholder received a 2-year warrant for 125,000 shares with an exercise price of $1.20.

On August 23, 2010, the Company issued 20,000 shares of common stock to a consultant, having a fair value of $16,000 ($0.80/share), based upon the closing trading price. At September 30, 2010, the Company expensed this stock issuance as a component of general and administrative expense.

On September 17, 2010, the Company issued 150,000 shares of common stock to a consultant, having a fair value of $135,000 ($0.90/share), based upon the closing trading price. At September 30, 2010, the Company expensed this stock issuance as a component of general and administrative expense.

~~Stock issued in 2007~~

~~During 2007, the Company issued 20,500,000 shares of common stock for $82,000 ($0.004/share).~~

~~Hydrogen Future Corp.~~

~~(A Development Stage Company)~~

~~Notes to Financial Statements~~

~~March 31, 2014~~

~~(Unaudited)~~

~~Stock Issued in 2006~~

~~On June 21, 2006 (Inception), the Company issued 10,000,000 shares of common stock for $5,000 ($0.0005/share) to directors and officers of the Company.~~

~~On August 1, 2006, the Company issued 15,000,000 shares of common stock for $15,000 ($0.0001/share) to directors and officers of the Company.~~

(B) Stock Warrants

All warrants issued by the Company have expired or were cancelled except for those issued to John Fife, which are discussed in Note 7 (B). After adjustment for the split, Mr. Fife owned ~~14,989~~63 warrants which are convertible at ~~$100~~$25,000 per share. These warrants expire on February 15, ~~2015 and have a derivative liability associated with them of $42.~~2015.

On September 5, 2013, the Company held a special meeting of shareholders (the “Meeting.”). At the Meeting, shareholders approved that the aggregate number of shares that the Corporation will have the authority to issue is Ten Billion Two hundrerd million (10,200,000,000), of which Ten Billion (10,000,00,000) shall be common stock, with a $.001 par value, and Two hundred million (200,000,000) shares will be preferred stock, with a par value of $.001. Prior to the Meeting, the Company was authorized to issue up to Two hundred million (200,000,000) shares, of which One hundred million (100,00,000) shall be common stock, with a $.001 par value, and One hundred million (100,000,000) shares will be preferred stock with a par value of $.001

(D) Preferred Stock

On June 21, 2013 (“Grant Date”), the Company granted One hundred million (100,000,000) shares of Series A Preferred stock (the “Series A”), with a par value of $.001. Fifty million (50,000,000) of the Series A were issued to Frank Neukomm, its Chief Executive Officer, and Robert Farr, its Chief Operating Officer. The shares are convertible into common stock on a 1:1 basis and do not carry any dividend. On the Grant Date, the price of the company’s common stock was $.0031. As such, the Company recorded $310,000 of compensation expense under General and Administrative Expenses.

On April 26, 2014, the Company issued one share of Series B Preferred Stock for the Hydra Fuel Cell Acquisition, with a par value of $.001 to American Security Research Corporation. The share is convertible into common stock equivalent to 50.1% ownership of the common stock of the Company.

Note 10 Commitments and Contingencies

~~(A) Contingencies~~

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

~~(B) Facility Lease – Related Party~~

~~The Company had subleased office space from a company controlled by the Company’s former Chief Executive. This lease has expired and the company no longer leases this space.~~

~~Rent expense for the Six months ended March 31, 2014 and 2013 was $-0-.~~

~~(C) Equipment Lease~~

~~The Company had agreed to rent equipment from its former Chief Executive.~~

~~Rental equipment expense for the six months ended~~ ~~March 31, 2014 and 2013 was $-0- and $-0-, respectively~~.

Note 11 Derivative Liabilities

The Company identified conversion features embedded within convertible debt securities as defined in Note 7.8. The Company has determined that the features associated with the embedded conversion option should be accounted for at fair value as a derivative liability.

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

~~March~~December 31, 2014

(Unaudited)

As a result of the application of ASC No. 815, the fair value of the conversion feature is summarized as follows:

Derivative liability balance at September 30, 2013 $ 1,337,315
Derivative liability Fair value at the commitment date for convertible notes issued
Fair value mark to market adjustment – March 31, 2014 2,119,601
Derivative liability associated with new issuances through March 31, 2012 (3,258,449 )

Derivative liability balance at March 31, 2014 $ 198,467

Derivative liability balance at September 30, 2014
Derivative liability Fair value at the commitment date for convertible notes issued	$	243,809
Fair value mark to market adjustment – December 31, 2014		295,968
Derivative liability associated with new issuances through June 30, 2012		81,651
Elimination of derivative liability upon conversion of debt		(1,331)

Derivative liability balance at December 31, 2014	$	620,097

The Company recorded the derivative liability to debt discount to the extent of the gross proceeds raised, and expensed immediately the remaining value of the derivative as it exceeded the gross proceeds of the note. The Company recorded a derivative expense of ~~$1,067,424 and $2,119,601~~$81,651 for the three months ~~and nine months~~ ended ~~March~~December 31, ~~2014, respectively.~~2014.

Note 12 Other Related Party Transactions

The Company accrues consulting and rental fees to its former Chief Executive Officer as follows:

Balance at September 30, ~~2013~~2014 and ~~March~~December 31, 2014

415,719

The consulting and rental fees are components of general and administrative expenses.

Note 13 Segment Reporting

The Company operates in two operating segments which are consistent with its internal organization. The major segments are Contract Research and Laboratory services and Alternative Energy. The government contracting segment became inactive during the three months ended September 30, 2013. Where applicable, “Unallocated” represents items necessary to reconcile to the consolidated financial statements, which generally include corporate activity at the parent level and eliminations.

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2014

(Unaudited)

The Company evaluates performance of individual operating segments based on operating income (loss). On a consolidated basis, this amount represents total net loss as shown in the consolidated statement of operations. Reconciling items represent executive compensation costs that are not allocated to the operating segments. Such costs have not been allocated from the parent to the subsidiaries.

	Three Months Ended December 31, 2014
	Alternative Energy			Contracted Research and Laboratory Services			Corporate Overhead			Total

Revenues	$	-		$	-		$	-		$	-

Cost of Revenues		-			-			-			-

Gross Profits		-			-			-			-
Operating Expenses											-
Selling General and Administrative Expenses		8,268		$	8,533		$	100,430			117,231

Total Operating Expenses		8,268			8,533			100,430			117,231

Operating Income (Loss)		(8,268	)		(8,533	)		(148,027	)		(164,828	)

Other Income (Expense)
Interest expense		-			-			(185,844	)		(163,263	)

Net loss		(8,268	)		(8,533	)		(680,457	)		(697,258	)

Total Assets		3,402,192			171,314			10,180			3,583,686

	Three Months Ended December 31, 2013
	Alternative Energy		Contracted Research and Laboratory Services			Corporate Overhead			Total
Revenues	$	-	$	-		$	-		$	-

Cost of Revenues		-		-			-			-

Gross Profits		-		-			-			-
Operating Expenses										-
Selling General and Administrative Expenses			$	8,533		$	221,453			229,986

Total Operating Expenses		-		8,533			221,453			229,986

Operating Income (Loss)		-		(8,533	)		(221,453	)		(229,986	)

Other Income (Expense)
Interest expense		-		-			(103,510	)		(103,510	)

Net income (loss)		-		(8,533	)		789,150			780,617

Total Assets		-		191,034			15,600			206,634

Note 14 Subsequent Events

The Company has evaluated events subsequent to the balance sheet date through the issuance date of these financial statements in accordance with FASB ASC 855 and has determined the following would require disclosure in, the financial statements;

Reverse stock split and change in Ticker Symbol

~~Issuance~~

Effective January 12, 2015, there was a reverse stock split of ~~shares of Common stock and conversion of convertible debt~~

~~From the Balance Sheet date until the date of this report, the Company issued 77,104,417 shares of common stock.~~

~~64,529,792 shares of~~our outstanding common stock on the basis of one for one two hundred fifty (1:250).

Our authorized shares were ~~issued for~~also reverse split and there are now 40,000,000 common shares authorized.

The new symbol is HFCOD. The "D" will be removed in 20 business days and the ~~conversion of $111,440 of convertible debt, $703 of accrued interest and $925 in legal fees.~~symbol will revert to HFCO.

~~12,574,625 shares of common stock issued resulted from prior conversions.~~

Issuance of Convertible Debt

From the Balance Sheet date until the date of this report, the Company issued the following convertible debt securities

On April 7, 2014, the Company received $30,000 from an institutional investor. In consideration for the cash, the Company issued a convertible promissory note for the same amount. The promissory note has an eight percent interest rate, an eight month term and converts at the market price. The market price is defined as 51% of the low closing trade price for the thirty (30) days prior to conversion.

On April 14, 2014, the Company received $35,000 from an institutional investor. In consideration for the cash, the Company issued a convertible promissory note for the same amount. The promissory note has an eight percent interest rate, matures on January 31, 2015 and converts at the market price. The market price is defined as 50% of the low closing bid price for the thirty (30) days prior to conversion.

On May 6, 2014, the Company received $42,625 from an institutional investor. In consideration for the cash, the Company issued a convertible promissory note for $50,000. The promissory note has an eight percent interest rate, matures on April 30, 2015 and converts at the market price. The market price is defined as 55% of the low closing trade price for the ten (10) days prior to conversion. The difference between the convertible promissory note and the proceeds received shall be amortized into interest expense over the life of the promissory note

~~Hydrogen Future Corp.~~

~~(A Development Stage Company)~~

~~Notes to Financial Statements~~

~~March 31, 2014~~

~~(Unaudited)~~

~~Reverse Split of Shares~~

On March 31, 2013, the Company approved a one for five hundred (1:500) reverse split of the outstanding shares of the Company’s common stock. The Amendment to the Company’s Articles of Incorporation was filed on January 10, 2014, with the Secretary of state of Nevada. The reverse split became effective on January 27, 2014 Please see our form 8-K filed on January 24, 2014 for more detail.

~~Issuance of Shares~~

On January 27, 2014, the Company issued to Management one hundred million (100,000,000) shares of post-split common shares to Management. Please see our Form 8-K filed on January 28, for more detail.

~~Conversion of Debt~~

~~From the balance sheet date until the date of this report, the Company issued 77,104,387 shares of common stock for the conversion of about $100,000 in debt.~~

On January 1, 2015 the Company issued a Convertible Promissory Note in the principal amount of Twenty Five Thousand Dollars ($25,000), with ten percent, 10%, interest and a maturity date of July 1, 2015. The Principal plus any interest shall be convertible into common stock of the Company at fifty percent (50%) of the lowest closing bid prices for the thirty (30) trading days prior to conversion of the Note.

On February 1, 2015 the Company issued a Convertible Promissory Note in the principal amount of Twenty Five Thousand Dollars ($25,000), with ten percent, 10%, interest and a maturity date of August 1, 2015. The Principal plus any interest shall be convertible into common stock of the Company at fifty percent (50%) of the lowest closing bid prices for the thirty (30) trading days prior to conversion of the Note

Issuance of Common stock

Subsequent to the Balance Sheet, the Company issued the following shares:

16 shares for fractional issuances pursuant to the reverse split

2,455,495 shares for the conversion of $7,341 of convertible debt, $685 of accrued interest and $-0- of associated fees.

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

Forward Looking Statements

This quarterly report on Form 10-Q and other reports filed by the Company from time to time with the U.S. Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements (collectively the “Filings”) and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate”, “believe”, “estimate”, “expect”, “future”, “intend”, “plan”, or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2013,~~2014 filed with the SEC, relating to the Company’s industry, the Company’s operations and results of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Plan of Operation

AtWe were incorporated in the ~~balance sheet date,~~State of Nevada on June 21, 2006, as El Palenque Nercery, Inc. On June 30, 2006, we changed our name to El Palenque Vivero, Inc., and on March 23, 2010, we changed our name to A5 Laboratories Inc. On April 8, 2010, we effectuated a forward split of our issued shares of common stock on the basis of 10-for-1. On October 10, 2013, we changed our name to Hydrogen Future ~~Corporation~~Corporation. On December 27, 2013, our stock trading symbol was changed from AFLB.OB to HFCO.OB, and on January 27, 2015, we effectuated a ~~development stage company concentrating~~reverse split of our common stock on ~~contract research and laboratory services.~~

~~New Business Opportunity~~

~~Based upon~~ a ~~review by the Board of Directors and Management, the Company has decided to enter a new line of business, fuel cell technology. In this regard, and subsequent to the Balance sheet, on~~1:500 basis . On April 21, 2014, ~~Hydrogen Future Corporation~~the Company completed the acquisition of Hydra Fuel Cell Corporation (“Hydra”) from American Security Resources Corporation (Pink Sheets: ARSC). On January 12. 2015, we effectuated a reverse split of our common stock on a 1:250 basis. Hydra has developed advanced hydrogen fuel cell technology which it initially intends to deploy as residential and small commercial grid replacement for electric generation. Our business offices are located at 2525 Robinhood Street, Suite 1100, Houston TX and our telephone number is (713) 465-1001.

~~Under~~The Company intended to provide contract research and laboratory services to the ~~agreement to acquire Hydra, HFCO acquired 100%~~pharmaceutical industry. This part of the ~~common stock of Hydra in exchange for a convertible preferred share issued to ARSC. The preferred share~~Company is convertible into an amount equal to 100.2% of the then outstanding common stock of HFCO at the time of conversion, which is at the sole discretion of ARSC. This gives ARSC an effective 50.1% equity interest in HFCO.

Although an all stock transaction, HFCO was required to have secured sufficient funding commitments to fund Hydra’s production startup before it could close the acquisition. Such commitments were completed just recently.

~~Frank Neukomm, HFCO’s Chief Executive Officer~~currently inactive, and ~~Chairman of the Board, and Robert Farr, HFCO’s President, Chief Operations Officer and Director of HFCO~~we are ~~also officers and directors of ARSC.~~

~~Please see~~concentrating on our ~~Form~~fuel cell operation. We strongly suggest you read our 8-K ~~issued on~~filed April 28, 2014 asabout the Hydra acquisition and our form 10-K for the year ended September 30, 2013 filed on January 21, 2015 in addition to this filing to better understand the Company’s new direction. Both filings were with the Securities and Exchange Commission ~~for a fuller description of our new business model.~~and can be found at www.SEC.gov.

Management's Discussion and Analysis of Results of Operations

Three Months Ended December 31, 2014 Compared to the Three Months Ended December 31, 2013

Our results of operations are summarized below:

	Quarter Ended March 31, 2014 ($)		Quarter Ended March 13, 2013 ($)		Quarter Ended December 31, 2014 ($)			Quarter Ended December 31, 2013 ($)
Revenue		0.00		0.00		-0-			-0-
Expenses		(5,349,454)		(12,015)		(117,231	)		(229,986	)
Other Income (Expenses)		(2,151,139)		(1,487,214)		(580,027	)		1,010,603
Net Income (Loss)		(7,500,593)		(1,499,229)		(697,258	)		780,617
Income (Loss) Per Share-Basic		(.07)		(12.33)		(.08	)		385.98
Income (Loss) Per Share- Fully diluted		(.04)		(12.33)		(.07	)		276.58

~~Three Months Ended March 31, 2014 Compared to the Three Months Ended March 31, 2013~~

During the three months ended ~~March~~December 31, 2014, we did not earn any revenues. We have not earned any revenues since our inception and there is no assurance that we will be able to earn any revenues in the future.

Our ~~General and Administrative~~ expenses for the three months ended ~~March~~December 31, 2014 and 2013 can be summarized as follows:

	For the Three Months Ended March 31,						For the Three Months Ended December 31,
	2014 ($)		2013 ($)		Difference ($)		2014 ($)		2013 ($)		Difference ($)
Management Compensation		5,210,000		-0-		5,210,000
Consulting Fees		75,000		-0-		75,000		75,000		75,000		-0-
Other General and administrative expenses		54,376		12,015		42,265		42,231		154,986		(110,455)

Our net loss for the three month period ended ~~March~~December 31, 2014 was ~~$7,500,593,~~($580,027), compared to a net ~~loss~~income of ~~$1,499,229~~$1,010,603 for the three month period ended ~~March 13, 2013,~~December 31, 2014, an increased loss of ~~$6,001,364.~~$1,590,630.

During the three month period ended ~~March~~December 31, 2014, we incurred operating expenses (and respective net operating losses) of ~~$5,349,454,~~$117,231, compared to operating expenses of ~~$12,105~~$229,986 incurred during the three month period ended ~~March 13,~~June 30, 2013, an increase of ~~$ 5,337,439.~~$125,627. The operating expenses incurred during the three month period ended ~~March~~December 31, 2014 and 2013 consisted of (i) ~~$5,210,000 and $-0-, respectively of Management compensation (ii)~~ $75,000 and ~~$-0-~~$75,000 in fees paid to consultants; and ~~(iii) $45,843~~(ii) $42,231 and ~~$12,015~~$154,986 in other general and administrative expenses ~~respectively.~~

~~Management compensation increased $5,210,000 due to the issuance of 100 million shares of common stock to our Management team. See Footnote 9 for more detail.~~ Consulting fees ~~increased by $75,000~~were flat due to the quarterly accrual for consulting services, which existed in the same quarter as last year. Other General and administrative expenses decreased by $110,455. $45,000 of the decrease was due to the issuance of $45,000 in common stock to our management team in December 2013. The remaining increase was due to greater operating expenses at the parent company level of $73,723 (mostly for professional fees) partially offset by the operating expenses of the Hydra Fuel Cell subsidiary of $8,268 which did not exist in the same quarter ~~as last~~of the prior fiscal year. General and administrative expenses increased by $33,832 principally due to greater (i)contract employee expense (ii) transfer agent fees associated with the reverse split, (iii) increased SEC filing fees and (iv) an overall greater level of corporate expenses.

Other income/(expense) incurred during the three month periods ended ~~March~~December 31, 2014 and ~~March 31,~~June 30, 2013 was as follows:

	2014 ($)			2013 ($)			Difference ($)			2014 ($)			2013 ($)			Difference ($)
Interest Expense		(176,507	)		(102,074	)		(74,433	)		(185,844	)		(103,510)			(82,334	)
Derivative Expense		(1,067,424	)		-0-			(1,067,424	)		(81,651	)		(1,052,177	)		970,526
Change in the Fair Value of Derivative liabilities		917,897			(1,182,780	)		2,100,677			(295,968	)		2,340,552			(2,636,520	)
Loss on Retirement of Debt		(1,825,104	)		(202,360	)		(1,622,745	)		(16,564	)		(174,263)			157,699

During the three month period ended ~~March~~December 31, 2014, we incurred other income/(expense) of ~~$(2,151,139)~~$(580,027), compared to other income ~~(expense)~~ of ~~$(1,487,214)~~$1,010,603 incurred during the three month period ended ~~March 13,~~December 31, 2013, an increased expense of ~~$663,925.~~$1,590,630. Other income/(expense)incurred during the three month period ended ~~March~~December 31, 2014 and 2013 consisted of (i) ~~$(176,507)~~$(185,844) and ~~$(102,074)~~$(103,510), respectively of Interest expense; (ii) ~~$(1,067,424)~~$(81,651) and ~~$-0-~~$(1,052,177) in derivative expense; (iii) ~~$917,897~~$(259,968) and ~~$(1,182,780),respecitvely~~$2,340,552 ,respectively in Change in the Fair Value of Derivative liabilities, and (iv) ~~$(1,825,104)~~$(16,564) and ~~$(202,360)~~$(174,263) in Loss on Retirement of Debt .

Interest expense increased ~~$74,433~~$82,334 due principally to ~~greater debt levels and~~ increased amortization of debt ~~discounts.~~discounts of $71,318. Derivative ~~Expense increased by $1,067,424~~expense decreased $970,526 due to ~~greater issuances~~the reduced issuance of debt ~~and increased stock price volatility.~~during the quarter ended December 31, 2014 then the same quarter in the prior year. Change in the Fair Value of Derivative liabilities ~~increased $2,100,677~~decreased $2,636,520 due to ~~increased~~decreased stock price volatility ~~and~~partially offset greater outstanding debt levels. Loss on Retirement of Debt ~~increased $1,622,745~~decreased $157,699 due to ~~a greater level of~~fewer debt conversions ~~and increased stock price volatility.~~than in the same quarter of the prior year.

Therefore, our basic net loss and net loss per share during the three month period ended ~~March~~December 31, 2014, was ~~$7,500,593~~($697,258) or ~~$0.07~~($0.08) per share, compared to a net ~~loss and loss~~income of ~~$1,49,229~~$780,617 or ~~$12.33~~$385.98 per basic share during the three month period ended ~~March~~December 31, 2013. The weighted average number of basic shares outstanding was ~~102,394,456~~8,943,450 for the three month period ended ~~March~~December 31, 2014, compared to ~~121,558~~2,022 for the three month period ended ~~March 13,~~December 31, 2013. Our fully diluted net ~~loss~~income (loss) per share was ~~$.04~~($.07) and ~~$12.33~~$276.58 for the ~~six~~three months ended ~~March~~December 31, 2014 and 2013, respectively. The weighted average number of fully-diluted shares outstanding was ~~202,394,546~~9,343,450 for the three month period ended ~~March~~December 31, 2014, compared to ~~121,558~~2,822 for the three month period ended ~~March~~December 31, 2013.

2322

~~Six Months Ended March 31, 2014 Compared to the Six Months Ended March 31, 2013~~

During the six months ended March 31, 2014, we did not earn any revenues. We have not earned any revenues since our inception and there is no assurance that we will be able to earn any revenues in the future.

~~Our General and Administrative expenses for the three months ended March 31, 2014 and 2013 can be summarized as follows:~~

For the Six Months
Ended March 31,

2014 ($) 2013 ($) Difference ($)
Management Compensation 5,255,000 -0- 5,210,000
Consulting Fees 150,000 165,000 (15,000)
Other General and administrative expenses 179,440 82,107 97,333

~~Our net loss for the six month period ended March 31, 2014 was $6,719,976, compared to a net loss of $1,763,579 for the six month period ended March 13, 2013, an increased loss of $4,956,397.~~

During the six month period ended March 31, 2014, we incurred operating expenses (and respective net operating losses) of $5,579,440, compared to operating expenses of $247,107 incurred during the three month period ended March 13, 2013, an increase of $5,332,332 . The operating expenses incurred during the three month period ended March 31, 2014 and 2013 consisted of (i) $5,255,000 and $-0-, respectively of Management compensation (ii) $150,000 and $165,000 in fees paid to consultants; and (iii) $194,440 and $12,015 in other general and administrative expenses, respectively.

Management compensation increased $5,255,000 due to the issuance of 100 million shares of common stock to our Management team on January 27, 2014 and another 720,000 shares which were issued in December 2013 with a value of $45,000. See Footnote 9 for more detail. Consulting fees decreased by $15,000 due to the accrual of a consulting liability for the first quarter of the last fiscal year partially offset by six monthly accruals for consulting services associated with a new consulting agreement. General and administrative expenses increased by $97,333 principally due to greater (i)contract employee expense (ii) transfer agent fees associated with the reverse split, (iii) increased SEC filing fees and (iv) an overall greater level of corporate expenses.

~~Other income/(expense) incurred during the three month periods ended March 31, 2014 and March 31, 2013 was as follows:~~

2014 ($) 2013 ($) Difference ($)
Interest Expense (280,017 ) (216,851 ) (63,165 )
Derivative Expense (2,119,601 ) (137,631 ) (1,981,971 )
Change in the Fair Value of Derivative liabilities 3,258,449 (959,630 ) 4,218,079
Loss on Retirement of Debt (1,999,367 ) (202,360 ) (1,797,008 )

During the three month period ended March 31, 2014, we incurred other income/(expense) of $(1,140,536), compared to other income (expense) of $(1,516,472) incurred during the three month period ended March 13, 2013, an improvement of $375,396. Other income/(expense)incurred during the three month period ended March 31, 2014 and 2013 consisted of (i) $(280,017) and $(216,851), respectively of Interest expense; (ii) $(2,119,601) and $(137,631) in derivative expense; (iii) $3,258,449 and $(959,630),respectively in Change in the Fair Value of Derivative liabilities, and (iv) $(1,999,367) and $(202,360) in Loss on Retirement of Debt .

Interest expense increased $63,165 due to greater debt levels and increased amortization of debt discounts. Derivative Expense increased by $1,981,971 due to greater issuances of debt and increased stock price volatility. Change in the Fair Value of Derivative liabilities increased $4,218,079 due to increased stock price volatility and greater outstanding debt levels. Loss on Retirement of Debt increased $1,797,008 due to a greater level of debt conversions and increased stock price volatility.

Therefore, our basic net loss and net loss per share during the six month period ended March 31, 2014, was $6,719,976 or $0.08 per share, compared to a net loss and loss of $1,763,579 or $14.43 per basic share during the six month period ended March 31, 2013. The weighted average number of basic shares outstanding was 87,295,771 for the six month period ended March 31, 2014, compared to 122,218 for the three month period ended March 31, 2013. Our fully diluted net loss per share was $.04 and $14.43 for the six months ended March 31, 2014 and 2013, respectively. The weighted average number of fully-diluted shares outstanding was 187,295,771 for the three month period ended March 31, 2014, compared to 122,218 for the three month period ended March 13, 2013.

Liquidity and Capital Resources

As of ~~March~~December 31, 2014, our current assets were ~~$32,351~~$4,856 and our current liabilities were ~~$1,666,079,~~$3,271,152, which resulted in a working capital deficiency of ~~$1,633,728.~~$3,266,296. As of ~~March~~December 31, 2014, current assets were comprised of: (i) ~~$29,157~~$2,825 in cash; and (ii) ~~$3,194~~$2,031 in ~~receivables from a company controlled by our Chief Executive Officer.~~receivables. As of ~~March~~December 31, 2014, current liabilities were comprised of: (i) ~~$122,610~~$156,985 in accounts payable and accrued liabilities; (ii) $415,719 in accounts payable due to a related party; (iii) ~~$104,465~~$401,919 in accrued interest payable; (iv) $27,173 in notes payable due to a related party; (v) ~~$41,750 in common stock to be issued; (vi)~~ a derivative liability of ~~$198,467~~$620,097 resulting from convertible notes payable and ~~warrants and~~ (vii) ~~$755,895~~$667,751 in convertible debt (net of ~~$207,314~~$149,866 of discount);., and (vii) non-convertible debt of $981,508.

As of ~~March~~December 31, 2014, our total assets of ~~$223,680~~$3,583,686 were comprised of: (i) ~~$32,351~~$4,856 in current assets; (ii) ~~$8,828 in debt issue costs (net of $42,073 of amortization); and (iii) $182,501~~$174,119 in property and equipment (net of ~~$106,342~~$478,640 of depreciation).; (iii) $47,005 in Notes Receivable; (iv) $4,550 in debt issue costs and (v) Goodwill of $3,353,156. As of ~~March~~December 31, 2014, our total liabilities of ~~$1,660,079~~$3,271,152 were comprised of current liabilities of the same amount.

Stockholders’ ~~deficit improved $907,658~~Equity decreased $665,017 from ~~($2,350,057)~~$977,551 as of September 30, ~~2013~~2014 to ~~($1,442,399)~~$312,534 as of ~~March~~December 31, 2014. The change in Stockholder’s deficit was comprised of (i) ~~issuance of shares for Management compensation of $5,255,000; (ii)~~ issuances of shares for conversion of debt totaling ~~$2,372,634, partially offset by (iii)~~$32,241 and (ii) net loss of ~~$6,719,976.~~$7,968,659.

Cash Flows from Operating Activities

We did not generate positive cash flows from operating activities. For the ~~nine~~three months ended ~~March~~December 31, 2014, net cash flows provided by operations was ~~$(290,843)~~$(100,403). Net cash flows used in operating activities for the ~~six~~three months ended ~~March~~December 31, 2014 consisted of (i) net loss of ~~$(6,719,976)~~$(697,258), ~~and~~ (ii) the change in the fair value of the derivative liability of ~~$(3,258,449) adjusted by:~~$295,968 (iii) ~~share based payments of $5,255,000 (iv)~~ derivative expense of ~~$2,119,601; (v)~~$81,651; (iv) loss on retirement of debt of ~~$1,999,367; (vi) $225,023~~$16,564; (v) $152,780 in amortization of debt ~~discount,~~discount; (vi) depreciation expense of $9,945 and (vii) ~~$17,066 in depreciation expense.~~amortization expense of deferred financing costs of $15,738. Net cash flows used by operating activities ~~was~~were further changed by ~~an increase~~changes in ~~accrued interest~~working capital accounts related, of ~~$30,218.~~$12,501.

Cash Flows from Investing Activities

For the ~~nine~~three months ended ~~March~~December 31, 2014, net cash flows provided by investing activities was ~~$0.~~$(2,805) due to purchases of property, plant and equipment at our Hydra subsidiary.

Cash Flows from Financing Activities

We have financed our operations primarily from debt or the issuance of equity instruments. For ~~the six~~thethree months ended ~~March~~December 31, 2014, net cash flows provided from financing activities was ~~$320,000. This was~~$75,000 from the issuance of ~~notes for cash of $170,000 and notes for professional services of $150,000.~~notes.

We anticipate that we will meet our ongoing cash requirements by selling our equity securities or through shareholder loans. Our management has changed our business focus to the acquisition of operating assets and we estimate that our expenses over the next 12 months will be approximately ~~$600,000~~$800,000 for our new venture in fuel cell technology.

2523

Material Commitments

As of the date of this Quarterly Report, we do not have any material commitments other than as described below.

Convertible Debt

~~Fife~~Please see Note 8 above for a discussion of our outstanding indebtedness.

~~On February 15, 2011, the Company issued convertible notes, totaling $300,000, to John Fife with the following provisions:~~

●	~~Interest rate 6%;~~

●	~~Default interest rate of 12%;~~

●	~~Notes are due 48 months from the issuance date of February 23, 2011;~~

●

●	~~Secured by the Chief Executive Officer’s 15,000,000 shares of the Company common stock.~~

On February 23, 2011, the Company entered into a secured convertible promissory note between the Company and a third party (the “Lender”). The note balance totaled $300,000. The Lender expects to contribute funds in tranches, the first tranche being equal to $300,000, and an additional ten tranches equal to $200,000 each commencing on October 23, 2011, and continuing each subsequent month for ten months. No additional draw downs occurred during the year ended September 30, 2011. In January 2012, the Company received $22,000 from a lender for an additional investment, under the same terms above, which is convertible to shares pursuant to the terms described below. See Note 9(A) related to conversions of this $300,000 note.

~~As of March 31, 2014, as a result of the triggering events (a) and (b), the Company computes the exercise price related to convertible debt, without regard to the floor price.~~

~~The normal conversion resulted in a debt discount under ASC 470-25-8 since the calculated market price as of the date of the note was higher ($0.145) than the conversion floor of $0.12.~~

~~At the balance sheet date, $115,450 of the debt has been converted leaving a principal balance of $184,550.~~

~~Lucosky Brookman LLP Note~~

~~During the quarter ended March 31, 2014, the entire principal value on this note was converted and there is no outstanding balance at March 31, 2014.~~

~~Consulting Notes~~

~~As of the Balance sheet date, $118,203 of principal on this note has been converted into common shares, leaving a remaining balance of $46,797.~~

~~St. George Notes~~

~~Other Notes~~

~~Market price is defined as follows:~~

Debt Amount Discount Conversion Mechanism
$ 20,000 51 % low trade price over prior 30 days
$ 25,000 60 % low trade price over prior 25 days
$ 141,000 50 % low bid price over prior 30 days

Off-Balance Sheet Arrangements

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

Inflation

The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires 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 the reported amounts of revenues and expenses during the reporting period.

Such estimates for the quarter ended ~~March~~December 31, 2014 and 2013, and assumptions affect, among others, the following:

●

estimated carrying value, useful lives and related impairment of property and equipment;


	●	estimated fair value of derivative liabilities;


	●	estimated valuation allowance for deferred tax assets, due to continuing losses; and


	●	estimated fair value of share based payments.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.

Derivative Liabilities

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

2824

Debt Issue Costs and Debt Discount

The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense. ~~If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.~~

Original Issue Discount

For certain convertible debt issued, the Company provides the debt holder with an original issue discount (“OID”). An OID is the difference between the original cash proceeds and the amount of the note upon maturity. The Note is originally recorded for the proceeds received. The OID is expensed into interest expense pro-rata over the term of the Note, and upon maturity, the book value of the Note shall equal the proceeds due.

Share-based Payments

Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. During the three months ended December 31, 2014, there were no payments of this kind.

Earnings per Share

In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

Since the Company reflected a net loss in 2011 and 2010, respectively, the effect of considering any common stock equivalents, if exercisable, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.

Fair Value of Financial Instruments

ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

●

Level 1 inputs: Quoted prices for identical instruments in active markets.


	●	Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.


	●	Level 3 inputs: Instruments with primarily unobservable value drivers.

Foreign Currency Transactions

The Company’s functional currency is the Canadian Dollar. The Company’s reporting currency is the U.S. Dollar. All transactions initiated in Canadian Dollars are translated to U.S. Dollars in accordance with ASC 830-10-20~~“Foreign~~ “Foreign Currency Translation” as follows:

(i)

Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;


	(ii)	Equity at historical rates; and


	(iii)	Revenue and expense items at the average exchange rate prevailing during the period.

2925

Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity (deficit) as a component of comprehensive income (loss). Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income (loss).

For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income for the period.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We do not hold any derivative instruments and do not engage in any hedging activities.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s principal executive officer (“PEO”) and principal financial officer (“PFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the PEO and PFO concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective to ensure that information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the PEO and PFO, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3026

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2013,~~2014, as filed with the SEC on January ~~2, 2014.~~21, 2015.

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

Not applicable.

~~Not applicable.~~

Item 3. Defaults upon Senior Securities.

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default not cured within 30 days, with respect to any indebtedness of the Company.

Item 4. Mine Safety Disclosures.

Not applicable.

~~Not applicable.~~

Item 5. Other Information.

~~See Form 8K filed on~~None.

Item 6. Exhibits.

(d) Exhibits.

Exhibit No.		Description

31.1		Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))*

31.2		Certification by the Principal Accounting Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a))*

32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2		Certification by the Principal Accounting Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

* filed herewith

3127

SIGNATURES

Pursuant to the requirements 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.

Nevada	20-5277531
(State or other Jurisdiction of	~~(I.R.S. Employer~~
incorporation or organization)	(I.R.S. Employer Identification Number)

Large Accelerated Filer	¨o	Accelerated Filer	¨
			o
Non-Accelerated Filer	¨o	Smaller Reporting Company	þ

	March 31,			September 30,			September 30,			September 30,
	2014			2013			2014			2014
	(Unaudited)						(unaudited)
Assets

Current assets
Cash	$	29,157		$	(0	)	$	2,825		$	31,033
Other receivables		3,194			3,194
Inventory								2,031			712
Total current assets		32,351			3,194			4,856			31,745

Non-current assets
Property and equipment - net		182,501			199,567			174,119			181,259
Note Receivable								47,005			47,005
Debt issue costs - net		8,828			15,983			4,550			20,288
Goodwill								3,353,156			3,353,156
Total Non-Current Assets								3,578,830			3,601,708

Total assets	$	223,680		$	218,744		$	3,583,686		$	3,633,453

Liabilities and Stockholders' (Deficit)

Current Liabilities
Accounts payable and accrued liabilities	$	122,610		$	122,610		$	156,985		$	165,991
Accounts payable - related party		415,719			415,719			415,719			415,719
Accrued interest payable		104,465			74,247			401,919			379,092
Notes/Advances payable - related party		27,173			27,173			27,173			27,173
Common stock to be issued		41,750			-
Derivative liability		198,467			1,337,315			620,097			243,809
Convertible debt - net		755,895			591,738			667,751			442,609
Non-convertible debt from Hydra Acquistion								981,508			981,508
Total current liabilities		1,666,079			2,568,801			3,271,152			2,655,901

Stockholders' (Deficit)
Preferred stock, $0.001 par value, 200,000,000 shares authorized; 100,000,000 issued and outstanding		100,000			100,000
Common stock, $0.001 par value, 10,000,000,000 shares authorized; 255,178,013 and 200,000 issued and outstanding at march 31, 2014 aned June 30, 2013, respectively		255,178			200
Stockholders' Equity
Preferred stock, Series A, $0.001 par value, 200,000,000 shares authorized; 100,000,000 issued and outstanding at December 31, 2014 and September 30, 2014								100,000			100,000
Preferred stock,Series B, $0.001 par value, 1 share authorized; 1 share and 0 shares issued and outstanding at December 31, 2014 and September 30, 2014, respectively								-			-
Common stock, $0.001 par value, 40,000,000 shares authorized; 9,941,728 and 8,911,263 issued and outstanding at December 31, 2014 and September 30, 2014, respectively								9,942			8,912
Additional paid-in capital		10,082,033			2,709,377			13,863,758			13,832,548
Deficit accumulated during the development stage		(11,880,115	)		(5,160,139	)		(13,661,672	)		(12,964,414	)
Accumulated other comprehensive income		505			505			505			505
Total stockholders' (deficit)		(1,442,399	)		(2,350,057	)
Total S+C15tockholders' Equity								312,534			977,551

Total liabilities and stockholders' (deficit)	$	223,679		$	218,744		$	3,583,686		$	3,633,452

	Six Months Ended March 31,						June 21, 2006 (Inception) to March 31,
	2013			2012			2014

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(6,719,976	)	$	694,279		$	(12,660,733	)
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities:
Share based payments		5,255,000			30,000			5,907,549
Impairment of Software								1,035,027
Derivative expense		2,119,601			144,581			3,687,492
Depreciation		17,066			34,130			452,148
Amortization of debt issue cost		7,156			9,886			42,073
Amortization of debt discount		225,023			169,512			659,326
Amortization of Original Issue Discount		17,250						17,366
Change in fair value of derivative liabilities		(3,258,449	)		(1,386,527	)		(4,002,623	)
Accrued interest on Retired debt								779
Legal fees on debt conversions		9,375						9,375
Common stock to be issued								-
Accrued interest on Retired debt		7,526
Loss on Retirement of Debt		1,999,367						2,201,727

Changes in operating assets and liabilities:
(Increase) decrease in other receivables		-			77,321			(3,194	)
Increase (decrease) in accounts payable and accrued expense		-			(18,054	)		122,610
Increase in accounts payable - related party					133,249			415,719
Increase in accrued interest		30,218			26,624			104,465
Net cash provided by (used in) operating activities		(290,843	)		(85,000	)		(2,010,895	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		-						(288,799	)
Net cash used in investing activities		-			-			(288,799	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party notes/advances		-						31,586
Proceeds from convertible notes payable		170,000			40,303			538,803
Notes Issued for Professional services		150,000			53,727			418,727
Repayment of related party notes/advances		-						(968	)
Cash paid as debt offering costs		-						(24,000	)
Proceeds from issuance of common stock		-						579,500
Net cash provided by financing activities		320,000			94,030			1,543,648

Net (Decrease) in Cash		29,157			9,030			(756,046	)
Effect of Exchange Rates on Cash					(9,096	)		(2,941	)

Cash - Beginning of Period/Year		(0	)		854			-

Cash - End of Period/Year	$	29,157		$	788		$	(758,987	)

SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid during the period/year for:
Interest	$	-		$	-		$	-
Income Taxes	$	-		$	-		$	-


SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Debt converted to common shares	$	389,618		$	-		$	501,108
Common stock issued to acquire software	$	-		$	-		$	1,380,876
Preferred stock issued to officers	$	310,000					$	310,000
Debt discount recorded on convertible debt accounted for as a derivative liability	$	320,000		$	300,000		$	620,000
Debt discount recorded on convertible debt accounted for as a derivative liability - original issue discount				$	27,122		$	27,122
Debt issue costs - warrants	$	-		$	26,901		$	26,901

	Common Stock, $0.001 Par Value						Series A Preferred Stock, $0.001 Par Value				Series B Preferred Stock, $0.001 Par Value				Additional Paid-In			Deficit Acquired During Development			Accumulated Other Comprehensive Income			Total Stockholders' Equity
	Shares			Amount			Shares		Amount		Shares		Amount		Capital			Stage			(Loss)			(Deficit)

Proceeds from the Issuance of founders stock- ($62.50/share)		80		$	0			-	$	-		-	$	-		5,000		$	-		$	-		$	5,000

Proceeds from the Issuance of founders stock- ($62.50/share)		120			0			-		-		-		-		15,000			-						15,000

Net loss- Inception (June 21, 2006) to September 30, 2006		-			-			-		-		-		-		-			(2,631	)		-			(2,631	)

Balance- September 30, 2006		200			0			-		-		-		-		20,000			(2,631	)		-			17,369

Proceeds from the Issuance of common stock- ($500/share)		164			0			-		-		-		-		82,000			-			-			82,000

Net loss for the year ended September 30, 2007		-			-			-		-		-		-		-			(16,960	)		-			(16,960	)

Balance- September 30, 2007		364			0			-		-		-		-		102,000			(19,591	)		-			82,409

Net loss for the year ended September 30, 2008		-			-			-		-		-		-		-			(18,199	)		-			(18,199	)

Balance- September 30, 2008		364			0			-		-		-		-		102,000			(37,790	)		-			64,210

Net loss for the year ended September 30, 2009		-			-			-		-		-		-		-			(19,076	)		-			(19,076	)

Balance- September 30, 2009		364			0			-		-		-		-		102,000			(56,866	)		-			45,134

Proceeds from the Issuance of common stock- ($81,250/share)		2			0			-		-		-		-		162,500			-			-			162,500

Common stock issued to acquire software ($110,000/share)		13			0			-		-		-		-		1,380,876			-			-			1,380,876

Proceeds from the Issuance of common stock- ($100,000/share)		2			0			-		-		-		-		200,000			-			-			200,000

Common stock issued for consulting services ($100,000/share)		0			0			-		-		-		-		16,000			-			-			16,000

Common stock issued for consulting services ($112,500/share)		1			0			-		-		-		-		135,000			-			-			135,000

Net loss for the year ended September 30, 2010		-			-			-		-		-		-		-			(351,790	)		-			(351,790	)

Foreign Currency translation adjustment		-			-			-		-		-		-		-			-			(3,079	)		(3,079	)

Balance- September 30, 2010		382			0			-		-		-		-		1,996,376			(408,656	)		(3,079	)		1,584,641

Proceeds from the Issuance of common stock- ($40,000/share)		3			0			-		-		-		-		99,999			-			-			100,000

Proceeds from the Issuance of common stock- ($25,000/share)		1			0			-		-		-		-		15,000			-			-			15,000

Debt discount on convertible notes- Original Issue Discount		-			-			-		-		-		-		27,122			-			-			27,122

Debt issue costs- warrants		-			-			-		-		-		-		26,901			-			-			26,901

Common stock issued for conversion of Note ($2,789/share)		9			0			-		-		-		-		24,990			-			-			24,990

Net loss for the year ended September 30, 2011		-			-			-		-		-		-		-			(3,024,617	)		-			(3,024,617	)

Foreign Currency translation adjustment		-			-			-		-		-		-		-			-			9,234			9,234

Balance- September 30, 2011		394			0			-		-		-		-		2,190,388			(3,433,273	)		6,155			(1,236,729	)

Share Rescission		(22	)		(0	)										(89,936	)								(89,936	)

Net income for the year ended September 30, 2012		-			-			-		-		-		-		-			694,279			-			694,279

Foreign Currency translation adjustment		-			-			-		-		-		-		-			-			(5,650	)		(5,650	)

Balance- September 30, 2012		372			0			-		-		-		-		2,100,452			(2,738,994	)		505			(638,037	)

Share Issuance upon default of debt- ($488/share)		120			0			-		-		-		-		58,500			-			-			58,500

Issuance of Shares to Officers for Compensation- ($400/share)		256			0			-		-		-		-		102,596			-						102,596

Shares issuance upon conversion of debt- ($4,988/share)		48			0			-		-		-		-		237,575			-			-			237,575

Common stock issued upon conversion of insider debt		3			0			-		-		-		-		(0	)		-			-			0

Shares issued for consulting services- ($388/share)		1			0			-		-		-		-		452			-			-			452

Issuance of 100,000,000 shares of Preferred Stock to Officers- ($.0031/share)		-			-			100,000,000		100,000		-		-		210,000			-			-			310,000

Net loss for the year ended September 30, 2013		-			-			-		-		-		-		-			(2,421,145	)		-			(2,421,145	)

Balance- September 30, 2013		800			1			100,000,000		100,000		-		0		2,709,575			(5,160,139	)		505			(2,350,058	)

Shares issuance upon conversion of debt, accrued interest and related share issuance expenses		7,867,943			7,868			-		-		-		-		3,616,231			-			-			3,624,098

Shares issued to Management for Compensation on December 26, 2013 at $.065		2,880			3			-		-		-		-		44,997			-			-			45,000

Shares issued to Management for Compensation on January 27, 2014 at $.0521		400,000			400			-		-		-		-		5,209,600			-			-			5,210,000

Shares issued in settlement for prior unrecorded obligation for equipment purchase		120,000			120			-		-		-		-		116,880									117,000

Shares issued for consulting services		200,000			200											39,800									40,000

Debt Issue Costs																37,875									37,875

Sale of common shares		320,000			320											7,670									7,990

Issuance of 1 shares of Preferred Stock, Series B to American Security Research Company								-		-		1		-		2,049,920									2,049,920

Net loss for the year ended September 30, 2014		-			-			-		-		-		-		-			(7,804,274	)		-			(7,804,274	)

Balance- September 30, 2014		8,911,623			8,912			100,000,000	$	100,000		1		-		13,832,548			(12,964,414	)		505			977,551

Shares issuance upon conversion of debt, accrued interest and related share issuance expenses		1,030,061			1,030			-		-		-		-		31,211									32,241

Fractional shares issued in accordance with reverse split		44			-			-		-		-		-		-			-			-			-

Net loss for the period ended December 31, 2014								-		-		-		-					(697,258	)					(697,258	)

		9,941,728		$	9,942			100,000,000	$	100,000		1	$	-	$	13,863,758		$	(13,661,672	)	$	505		$	312,533

		Page
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	21	27

Item 3. Quantitative and Qualitative disclosures about Market Risk.	30	38

Item 4. Controls and Procedures.	30	38

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.	31	39

Item 1A. Risk Factors.	31	39

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	31	39

Item 3. Defaults Upon Senior Securities.	31	39

Item 4. Mine Safety Disclosures.	31	39

Item 5. Other Information.	31	39

Item 6. Exhibits.	31	39

Signatures	32	40

	Three Months Ended March 31						Three Months Ended December 31						June 21, 2006 (inception) through December 30,
	2014			2013			2014			2013			2014

Expenses
General and Administrative Expenses	$	5,349,454		$	12,015		$	117,231		$	229,986		$	8,769,057
Issuance of Common Stock to settle a prior liability								-			-			117,000
Impairment of software		-			-			-			-			1,035,027
Total		5,349,454			12,015			117,231			229,986			9,921,084

Other Income/(Expense)
Interest expense		(176,507	)		(102,074	)		(185,844	)		(103,510	)		(1,029,881	)
Derivative expense		(1,067,424	)		-			(81,651	)		(1,052,177	)		(4,334,976	)
Change in fair value of derivative liability		917,897			(1,182,780	)		(295,968	)		2,340,552			3,956,869
Loss on Retirement of Debt		(1,825,104	)		(202,360	)		(16,564	)		(174,263	)		(2,368,671	)
Tax refunds								-			-			36,071
Total Other (Expense) - net		(2,151,139	)		(1,487,214	)		(580,027	)		1,010,602			(3,740,588	)

Net Income (Loss)	$	(7,500,593	)	$	(1,499,229	)	$	(697,258	)	$	780,617		$	(13,661,672	)

Net loss per common share - basic	$	(0.07	)	$	(12.33	)	$	(0.08	)	$	385.98

Net loss per common share - diluted	$	(0.04	)	$	(12.33	)	$	(0.07	)	$	276.58

Weighted average number of common shares outstanding
during the period/year - basic		102,394,546			121,558
Weighted average number of common shares outstanding during the period/year - basic								8,943,450			2,022

Weighted average number of common shares outstanding
during the period/year - diluted		202,394,546			121,558
Weighted average number of common shares outstanding during the period/year - diluted								9,343,450			2,822

	Three Months Ended December 31,						June 21, 2006 (Inception) to December 31,
	2014			2013			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(697,258	)	$	780,617		$	(13,661,672	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Share based payments		-			-			5,907,549
Impairment of Software					-			1,035,027
Derivative expense		81,651			1,052,177			4,334,976
Depreciation		9,945			8,533			479,159
Amortization of debt issue cost		15,738			3,578			84,226
Amortization of debt discount		152,780			81,462			735,685
Amortization of Original Issue Discount		2,107			899			38,250
Change in fair value of derivative liabilities		295,968			(2,340,582	)		(3,956,869	)
Accrued interest on Retired debt		8,131			2,875			44,206
Fees on debt conversions		1,470			174,263			21,614
Common Stock tobe Issued		-			45,000
Loss on Retirement of Debt		16,564			-			2,368,670
Loss on Issuance of Common Stock to settle a prior liability		-			-			117,000
Issuance of Common stock for consulting agreements		-			-			48,000
Changes in operating assets and liabilities:
(Increase) decrease in other receivables		-			-			-
(Increase) decrease in Inventory		(1,319	)					(2,031	)
Increase (decrease) in accounts payable and accrued expense		(9,006	)		-			156,985
Increase in accounts payable - related party					-			415,719
Increase in working capital from acquisition					-			(319,630	)
Increase in accrued interest		22,826			21,149			401,919
Net cash provided by (used in) operating activities		(100,403	)		(170,000	)		(1,751,217	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Note receivable Acquired in Acquistion								(47,005	)
Cash acquired in Acquisition								402
Purchase of property and equipment		(2,805	)					(307,428	)
Net cash used in investing activities		(2,805	)		-			(354,031	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party notes/advances		-			-			31,586
Proceeds from convertible notes payable		-			95,000			873,178
Notes Issued for Professional services		75,000			75,000			643,727
Repayment of related party notes/advances		-			-			(968	)
Cash paid as debt offering costs		-			-			(24,000	)
Proceeds from issuance of common stock					-			587,490
Net cash provided by financing activities		75,000			170,000			2,111,013

Net (Decrease) in Cash		(28,208	)		0			5,766
Effect of Exchange Rates on Cash								(2,941	)

Cash - Beginning of Period/Year		31,033			(0	)		-

Cash - End of Period/Year	$	2,825		$	0		$	2,825

SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid during the period/year for:
Interest	$	-		$	-		$	-
Income Taxes	$	-		$	-		$	-

SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Debt converted to common shares	$	4,745		$	-			855,322
Common stock issued to acquire software	$	-		$	-			1,380,876
Notes payable acquired in acquisition								984,008
Preferred stock issued to officers								310,000
Debt discount recorded on convertible debt accounted for as a derivative liability	$	75,000		$	170,000			1,122,875
Debt discount recorded on convertible debt accounted for as a derivative liability - original issue discount				$	-			27,122
Debt issue costs - warrants	$	-		$	-			26,901

	March 31, 2014		September 30, 2013		December 31, 2014		September 30, 2014

Warrants ~~(1)~~		14,989		14,989		63		63
Convertible debt (1)		270,376,629		212,611		9,931,803		9,931,803
Total common stock equivalents ~~(2)~~		270,391,618		227,600		9,931,864		9,931,864


	●	Level 2: Inputs reflect: quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.


	●	Level 3: Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

	March 31, 2013		September 30, 2013		December 31, 2014		September 30, 2014
Level 1	$	-	$	-	$	-	$	-
Level 2 – Derivative Liability		198,467		1,337,315		620,097		243,809
Level 3		-		-		-		-
Total	$	198,467	$	1,337,315	$	620,097	$	243,809


	March 31, 2014			September 30, 2013			Estimated Useful Lives
As of December 31,									2014			2013			Estimated Useful Lives

Software	$	-		$	1,380,876			3	$	1,380,876			1,380,876			3
Leasehold improvements (1)		144,802			144,802			10		144,802			144,802			10
Lab equipment (2)		106,062			106,705			10		106,705			106,705			10
Technical equipment (3)										15,824			15,824			5
Office equipment		37,336			37,336			5		40,141			37,336			5
		288,843			1,669,719					1,688,348			1,685,543

Less: Accumulated depreciation		(106,342	)		(435,125	)				(478,640	)		(468,695	)
Less: Impairment		-			(1,035,027	)				(1,035,027	)		(1,035,027	)
Property and equipment – net	$	182,501		$	199,567				$	174,119			181,259

Assets acquired:
Cash	$	402
Other receivables		3,529
Total	$	3,931
Liabilities acquired:
Promissory note payable	$	984,008
Accrued interest payable		235,972
Other current liabilities		87,187
Additional paid-in capital		2,049,920
Total	$	3,357,087
Goodwill	$	3,353,156

	March 31, 2013			September 30, 2013			June 30, 2013			September 30, 2013
Notes payable (1)	$	20,915		$	20,915		$	20,915		$	20,915
Advances (2)		7,226			7,226			7,226			7,226
Less: payments		(968	)		(968	)		(968	)		(968	)
Total related party liabilities	$	27,173		$	27,173		$	27,173		$	27,173

2010	$	79,765
2011		24,357
	$	104,122

Debt Amount	Discount	Conversion Mechanism
$20,000	51%	low trade price over prior 30 days

$25,000	60%	low trade price over prior 25 days

$141,000	50%	low bid price over prior 30 days

Debt issue costs paid, September 30, 2011	$	50,901
Amortization of debt issue costs, September 30, 2011		(11,833	)
Amortization of debt issue costs, September 30, 2012		(9,833	)
Amortization of debt issue costs, September 30, 2013		(13,199	)
Amortization of debt issue costs, March 31, 2014		(7,156	)
Debt issue costs - net	$	8,828

	For the Six Months Ended March 31,
	2014 ($)		2013 ($)		Difference ($)
Management Compensation		5,255,000		-0-		5,210,000
Consulting Fees		150,000		165,000		(15,000)
Other General and administrative expenses		179,440		82,107		97,333

HYDROGEN FUTURE CORP.

Dated: ~~May 15, 2014~~

February 10, 2015

/s/ Frank Neukomm

Name: Frank Neukomm

Title: Chief Executive Officer
(Principal Executive Officer)