Hydrogen Future 10Q 2015 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2015

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 333-138927

HYDROGEN FUTURE CORP.

(Exact Name of registrant as specified in its charter)

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

2525 Robinhood Street, Suite 1100

Houston, TX 77005

(Address of principal executive offices)

(713) 465-1001

(Registrant’s telephone number, including area code)

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

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

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

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

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

As of May 13, 2015, there were 674,553,006 shares outstanding of the registrant’s common stock.

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		30

Item 3. Quantitative and Qualitative disclosures about Market Risk.		36

Item 4. Controls and Procedures.		36

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.		37

Item 1A. Risk Factors.		37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		37

Item 3. Defaults Upon Senior Securities.		37

Item 4. Mine Safety Disclosures.		37

Item 5. Other Information.		37

Item 6. Exhibits.		37

Signatures		38

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Hydrogen Future Corp.

(A Development Stage Company)

Balance Sheets

	March 31,			September 30,
	2015			2014
	(unaudited)
Assets

Current assets
Cash	$	9,810		$	31,033
Inventory		2,031			712
Total current assets		11,841			31,745

Non-current assets
Property and equipment - net		164,173			181,259
Note Receivable		47,005			47,005
Debt issue costs - net		1,020			20,288
Goodwill		3,353,156			3,353,156
Total Non-Current Assets		3,565,354			3,601,708

Total assets	$	3,577,195		$	3,633,453

Liabilities and Stockholders' (Deficit)

Current Liabilities
Accounts payable and accrued liabilities	$	156,985		$	165,991
Accounts payable - former Officer		415,719			415,719
Accrued interest payable		410,133			379,092
Notes/Advances payable - related party		27,173			27,173
Derivative liability		1,989,528			243,809
Convertible debt - net		733,793			442,609
Non-convertible debt from Hydra Acquistion		981,508			981,508
Total current liabilities		4,714,840			2,655,901

Stockholders' Equity
Preferred stock, Series A, $0.001 par value, 200,000,000 shares authorized; 100,000,000 issued and outstanding at March 31, 2015 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 March 31, 2015 and September 30, 2014, respectively		-			-
Common stock, $0.001 par value, 10,000,000,000 shares authorized; 234,657,616 and 8,911,263 issued and outstanding at March 31, 2015 and September 30, 2014, respectively		234,658			8,912
Additional paid-in capital		13,834,427			13,832,548
Deficit accumulated during the development stage		(15,307,235	)		(12,964,414	)
Accumulated other comprehensive income		505			505
Total Stockholders' Equity		(1,137,645	)		977,552

Total liabilities and stockholders' (deficit)	$	3,577,195		$	3,633,453

Hydrogen Future Corp.

(A Development Stage Company)

Statements of Operations

(Unaudited)

	Three Months Ended March 31						June 21, 2006 (inception) through
	2015			2014			March 31, 2015

Expenses
General and Administrative Expenses	$	134,175		$	5,349,454		$	8,903,232
Issuance of Common Stock to settle a prior liability		-			-			117,000
Impairment of software		-			-			1,035,027
Total		134,175			5,349,454			10,055,256

Other Income/(Expense)
Interest expense		(156,055	)		(176,507	)		(1,185,936	)
Derivative expense		(159,390	)		(1,067,424	)		(4,494,367	)
Change in fair value of derivative liability		(1,127,383	)		917,897			2,829,486
Loss on Retirement of Debt		(68,560	)		(1,825,104	)		(2,437,230	)
Tax refunds		-			-			36,071
Total Other (Expense) - net		(1,511,388	)		(2,151,139	)		(5,251,976	)

Net Income (Loss)	$	(1,645,563	)	$	(7,500,593	)	$	(15,307,235	)

Net loss per common share - basic	$	(0.03	)	$	(18.31	)

Net loss per common share - diluted	$	(0.03	)	$	(9.26	)

Weighted average number of common shares outstanding
during the period/year - basic		55,656,550			409,578

Weighted average number of common shares outstanding
during the period/year - diluted		56,056,550			809,578

Hydrogen Future Corp.

(A Development Stage Company)

Statements of Operations

(Unaudited)



		Six Months Ended March 31						June 21, 2006 (inception)
		2015			2014			through December 30, 2014

Expenses
General and Administrative Expenses		$	251,406		$	5,579,440		$	8,903,232
Issuance of Common Stock to settle a prior liability			-			-			117,000
Impairment of software			-			-			1,035,027
Total	��		251,406			5,579,440			10,055,259

Other Income/(Expense)
Interest expense			(341,899	)		(280,017	)		(1,185,936	)
Derivative expense			(241,041	)		(2,119,601	)		(4,494,367	)
Change in fair value of derivative liability			(1,423,351	)		3,258,449			2,829,486
Loss on Retirement of Debt			(85,124	)		(1,999,367	)		(2,437,230	)
Tax refunds			-			-			36,071
Total Other (Expense) - net			(2,091,415	)		(1,140,537	)		(5,251,976	)

Net Income (Loss)		$	(2,342,821	)	$	(6,719,977	)	$	(15,307,235	)

Net loss per common share - basic		$	(0.07	)	$	(19.24	)

Net loss per common share - diluted		$	(0.07	)	$	(8.97	)

Weighted average number of common shares outstanding
during the period/year - basic			32,043,335			349,183

Weighted average number of common shares outstanding
during the period/year - diluted			32,443,335			749,183

Hydrogen Future Corp.

Statement of Stockholder's Equity

From the Period of Inception to March 31, 2015

(Unaudited)


	Common Stock, $0.001 Par Value				Series A Preferred Stock, $0.001 Par Value				Series B Preferred Stock, $0.001 Par Value
	Shares		Amount		Shares		Amount		Shares		Amount		Additional Paid-In Capital		Deficit Acquired During Development Stage			Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity (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
	225,745,933		225,746	-		-	-		-		1,879							227,625

Issuance of fractional shares associated with the reverse split	60		0	-		-	-		-		-		-					0

Net loss for the six months ended March 31, 2015				-		-	-		-				(2,342,821	)				(2,342,821	)

	234,657,616	$	234,658	100,000,000	$	100,000	1	$	-	$	13,834,427	$	(15,307,235	)	$	505	$	(1,137,646	)

Hydrogen Future Corp.

(A Development Stage Company)

Statements of Cash Flows

(Unaudited)

							June 21, 2006
	Six Months Ended March 31,						(Inception) to
	2015			2014			March 31, 2015

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,342,821	)	$	(6,719,976	)	$	(15,307,235	)
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities:
Share based payments		-			5,255,000			5,907,549
Impairment of Software					-			1,035,027
Derivative expense		241,041			2,119,601			4,494,367
Depreciation		19,890			17,066			489,104
Amortization of debt issue cost		19,768			7,156			88,256
Amortization of debt discount		279,356			225,023			862,261
Amortization of Original Issue Discount		(85	)		17,250			36,058
Change in fair value of derivative liabilities		1,423,351			(3,258,449	)		(2,829,486	)
Accrued interest on Retired debt		31,587			-			67,661
Fees on debt conversions		10,154			9,375			30,299
Loss on Retirement of Debt		85,124			1,999,367			2,437,230
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		31,041			30,218			410,133
Net cash provided by (used in) operating activities		(211,918	)		(290,843	)		(1,862,731	)

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		44,000			170,000			917,178
Notes Issued for Professional services		150,000			150,000			718,727
Repayment of related party notes/advances		-			-			(968	)
Cash paid as debt offering costs		(500	)		-			(24,500	)
Proceeds from issuance of common stock					-			587,490
Net cash provided by financing activities		193,500			320,000			2,229,513


Net (Decrease) in Cash		(21,223	)		29,157			12,751
Effect of Exchange Rates on Cash								(2,941	)

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

Cash - End of Period/Year	$	9,810		$	29,157		$	9,810

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	$	63,087		$	-			913,644
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	$	193,500		$	320,000			1,241,375
Debt discount recorded on convertible debt accounted for as a derivative liability - original issue discount	$	500		$	27,122			38,375
Debt issue costs - warrants	$	0		$	0			26,901

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

Note 1 Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information.

The financial information as of September 30, 2014 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the years ended September 30, 2014 and 2013. The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the years ended September 30, 2014 and 2013.

Certain information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the three months ended March 31, 2015 are not necessarily indicative of results for the full fiscal year.

Note 2 Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Company History

We were incorporated in the 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. On December 27, 2013, our stock trading symbol was changed from AFLB.OB to HFCO.OB, and on January 27, 2015, we effectuated a reverse split of our common stock on a 1:500 basis . On April 21, 2014, 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.

The Company intended to provide contract research and laboratory services to the pharmaceutical industry. This part of the Company is currently inactive, and we are concentrating on our fuel cell operation. We strongly suggest you read our 8-K filed April 28, 2014 about 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 and can be found at www.SEC.gov .

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2014

(Unaudited)

At the end of this quarter, the company therefore had two segments, 1) Fuel cell technology and 2) Contract research and laboratory services. See Note 13 for Segment reporting. See Note 7 for the accounting for Goodwill.

The Company’s fiscal year end is September 30.

Development Stage

The Company's financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include equity based financing and further implementation of the business plan.

Risks and Uncertainties

The Company intends to operate in an industry that is subject to rapid change. The Company’s operations will be subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks, including the potential risk of business failure.

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 periods ended March 31, 2015 and 2014, and assumptions affect, among others, the following:

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

●	estimated fair value of derivative liabilities;

●	estimated valuation allowance for deferred tax assets; 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.

Cash and Cash Equivalents

The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. At March 31, 2015 and September 30, 2014, the Company had no cash equivalents.

At March 31, 2015, the Company had $9,810 in cash.

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At March 31, 2015 and September 30, 2014, there were no balances that exceeded the federally insured limit.

Property and Equipment

Property and equipment (including related party purchases) is stated at cost, less accumulated depreciation computed on a straight-line basis over the estimated useful lives. Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized when deemed material. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations.

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2014

(Unaudited)

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company recognized an impairment of $1,035,027 during the year ended September 30, 2011. See Note 6.

Beneficial Conversion Feature

For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.

When the Company records a BCF, the relative fair value of the BCF would be recorded as a debt discount against the face amount of the respective debt instrument. The discount would be amortized to interest expense over the life of the debt.

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 a Change in 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.

Debt Issue Costs and Debt Discount

The Company paid debt issue costs, and recorded debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt. Debt issue costs are included in general and administrative expense and debt discount amortization is included in interest expense.

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 back 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 payment 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. The expense resulting from share-based payments are recorded as a component of general and administrative expense. During the six months ended March 31, 2015, there were no payments of this kind.

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2014

(Unaudited)

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.

Prior to the issuance of the Company’s Preferred Stock during the calendar year ending September 30, 2013, the Company did not have any dilutive securities. As such, a separate computation of diluted earnings (loss) per share was not presented. Commencing with the issuance of the Preferred Stock, the Company now has dilutive securities, and a separate computation of diluted earnings (loss) per share is now presented.

The Company had the following potential common stock equivalents at March 31, 2015 and September 30, 2014:

	December 31, 2014		September 30, 2014

Warrants		63		63
Convertible debt (1)		87,538,367		9,931,803
Total common stock equivalents		187,538,430		9,931,864

(1)	The Company has identified eight and ten debt holders as of March 31, 2015 and September 30, 2014, respectively, who cannot exceed ownership in the Company of 9.99%. Each investor is limited to 23,465,762 and 993,180 shares at March 31, 2015 and September 30, 2014 respectively.

Fair Value of Financial Instruments

The carrying amounts of the Company’s short-term financial instruments, other receivables, accounts payable and accrued liabilities, approximate fair value due to the relatively short period to maturity for these instruments.

Foreign Currency Transactions

The Company’s functional currency had been the Canadian dollar and its reporting currency was the U.S. Dollar. All transactions which had been initiated in Canadian Dollars were translated to U.S. Dollars in accordance with ASC 830-10-20 “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.

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).

Currently, the Company’s functional and reporting currency is the U.S. dollar, and there are no more financial currency transactions, which require separate accounting.

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2014

(Unaudited)

Comprehensive Income (Loss)

Comprehensive income or loss is comprised of net earnings or loss and other comprehensive income or loss, which includes certain changes in equity, excluded from net earnings, primarily foreign currency translation adjustments.

Recent Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The guidance in ASU 2011-04 changes the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements, including clarification of the FASB's intent about the application of existing fair value and disclosure requirements and changing a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments in this ASU should be applied prospectively and are effective for interim and annual periods beginning after December 15, 2011. Early adoption by public entities is not permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial position or results of operations.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The guidance in ASU 2011-05 applies to both annual and interim financial statements and eliminates the option for reporting entities to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. This ASU also requires consecutive presentation of the statement of net income and other comprehensive income. Finally, this ASU requires an entity to present reclassification adjustments on the face of the financial statements from other comprehensive income to net income. The amendments in this ASU should be applied retrospectively and are effective for fiscal year, and interim periods within those years, beginning after December 15, 2011. The Company has adopted this guidance in these financial statements.

Note 3 Going Concern

As reflected in the accompanying financial statements, the Company had a net loss of $2,342,821 for the six months ended December 31, 2014, and utilized $211,918 in cash for operations. The Company also has a working capital deficit of $4,702,999 and a deficit accumulated during the development stage of $13,661,672 at March 31, 2015. In addition, the Company is in the development stage and has not yet generated any revenues. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue its operations is dependent on Management's plans, which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing to raise funds through debt or equity raises. The Company will likely rely upon equity financing in order to ensure the continuing existence of the business.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

Note 4 Fair Value of Financial Assets and Liabilities

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

The following are the hierarchical levels of inputs to measure fair value:

●	Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

●	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.

At March 31, 2015, the fair value of financial instruments measured on a recurring basis includes derivative liabilities, determined based on level two inputs consisting of quoted prices in active markets for identical assets. The carrying amount reported for accounts payable, accrued liabilities, and notes payable approximates fair value because of the short-term maturity of these financial instruments.

The Company has a derivative liability measured at fair market value on a recurring basis. Consequently, the Company had changes in fair value reported in the statements of operations, which were attributable to the change in market value relating to the liability for the six months ended March 31, 2015.

The following is the Company’s derivative liability measured at fair value on a recurring basis at:

	December 31, 2014		September 30, 2014
Level 1	$	-	$	-
Level 2 – Derivative Liability		1,989,528		243,809
Level 3		-		-
Total	$	1,989,528	$	243,809

Note 5 Receivables

(A) Note Receivables- Non-current

On the closing of the purchase of Hydra, the Company paid on behalf of the seller ,American Security Research Company, to the State of Nevada $47,005 to execute the transfer. This expense will ultimate be borne by the seller and the Company has recorded a receivable to reflect this.

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

Note 6 Property and Equipment

Property and equipment consists of the following:

	March 2015			September 2014			Estimated Useful Lives

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

Less: Accumulated depreciation		(489,148	)		(469,257	)
Less: Impairment		(1,035,027	)		(1,035,027	)
Property and equipment – net	$	164,173			181,259

(1) See Note 8(B) – related party

(2) See below related to related party purchases

(3) Technical equipment- This represents equipment used to test fuel cell viability

Note 7 Goodwill

The Company recorded goodwill as a result of its business acquisition of Hydra(“Hydra Acquisition”) . Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible assets acquired. In the Hydra Acquisition , the objective was to expand the Company’s product offerings and customer base by entering into a new line of business. The Company determined the value of the goodwill by analyzing comparable companies with similar product lines. Based upon that analysis, the Company determined that the value of the Goodwill was $3,353,156 as follows:

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

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

The Company tests goodwill for impairment on a quarterly basis. At March 31, 2015, the company determined that there was no impairment.

Note 8 Notes Payable

(A) Related Party

The following is a summary of the Company’s related party liabilities:

	March 31, 2015			September 30, 2013
Notes payable (1)	$	20,915		$	20,915
Advances (2)		7,226			7,226
Less: payments		(968	)		(968	)
Total related party liabilities	$	27,173		$	27,173

(1) The note is non-interest bearing, unsecured, and due on demand.

(2) The advances are non-interest bearing, unsecured, and due on demand.

(B) Convertible debt-net

The following is a summary of the Company's outstanding convertible debt as of March 31, 2015:

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

Summary of Notes Issued

(as of March 31, 2015)





Date of Issuance	Original Amount		Conversions through March 31, 2015		Accrued Original Issue Discount, if any		Gross Amount outstanding at March 31, 2015		Remaining Discount		Net Amount			Type of Note

2-Apr-13		5,000		0				5,000		0		5,000			a
31-May-13		5,500		0				5,500		460		5,040			a
31-May-13		5,500		0				5,500		0		5,500			a
23-Feb-11		300,000		300,000				0		0		0			a
1-Oct-12		165,000		165,000				0		0		0			b
1-Aug-13		25,000		14,400				10,600		0		10,600			b
1-Sep-13		25,000		25,000				0		0		0			b
1-Oct-13		25,000		25,000				0		0		0			b
1-Nov-13		25,000		0				25,000		0		25,000			b
1-Dec-13		25,000		0				25,000		0		25,000			b
1-Jan-14		25,000		0				25,000		0		25,000			b
1-Feb-14		25,000		25,000				0		0		0			b
1-Mar-14		25,000		7,527				17,473		0		17,473			b
1-Aug-13		12,500		40,000		27,500		0		0		0			a
27-Aug-13		12,500				1,250		13,750		0		13,750			a
10-Oct-13		15,000				1,500		16,500		0		16,500			a
19-Nov-13		10,000				1,000		11,000		0		11,000			a
27-Sep-13		25,000		0				25,000		0		25,000			a
13-Dec-13		20,000		11,470				8,530		0		8,530			a
27-Feb-14		20,000		20,000				0		0		0			a
17-Mar-14		25,000		2,868		1,298		23,430		12,021		11,409			a
2-Apr-14		30,000		32,500		2,500		0		363		(363	)		a
21-Mar-14		30,000		8,725				21,275		0		21,275			a
14-Apr-14		35,000		0				35,000		0		35,000			a
5-May-14		50,000		3,513				46,487		4,167		42,320			a
21-May-14		35,000		0				35,000		0		35,000			a
2-Jun-14		27,500		21,015				6,485		0		6,485			a
23-Jun-14		27,500		0				27,500		0		27,500			a
1-Apr-14		25,000		0				25,000		0		25,000			b
1-May-14		25,000		0				25,000		0		25,000			b
1-Jun-14		25,000		0				25,000		0		25,000			b
1-Jul-14		25,000		0				25,000		0		25,000			b
1-Aug-14		25,000		0				25,000		0		25,000			b
1-Sep-14		25,000		0				25,000		0		25,000			b
7-Jul-14		37,500		5,267				32,233		0		32,233			a
14-Jul-14		25,000		0				25,000		0		25,000			a
22-Aug-14		27,500		0				27,500		0		27,500			a

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

26-Aug-14	10,000		0			10,000		5,589		4,411		a
26-Aug-14	10,000		10,000			0		5,589		(5,589	)	a
8-Sep-14	10,000		1,680			8,320		0		8,320		a
15-Sep-14	20,000		0			20,000		1,058		18,942		a
15-Sep-14	10,000		0			10,000		5,826		4,174		a
19-Sep-14	10,000		0			10,000		5,876		4,124		a
1-Oct-14	25,000		0			25,000		137		24,863		b
1-Nov-14	25,000		0			25,000		4,282		20,718		b
1-Dec-14	25,000		0			25,000		8,516		16,484		b
1-Jan-15	25,000		0			25,000		12,707		12,293		b
1-Feb-15	25,000		0			25,000		16,989		8,011		b
6-Feb-15	14,500		0			14,500		11,755		2,745		b
1-Mar-15	25,000		0			25,000		20,924		4,076		a
3-Mar-15	29,500		0			29,500		26,029		3,471		a



Totals	1,560,000		718,965		35,048	876,083		142,289		733,793


Legend:
a- Note for cash
b- Note for consulting services


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


	Original Amount	Conversions through March 31, 2015		Accrued Original Issue Discount, if any		Gross Amount outstanding at March 31, 2015	Remaining Discount		Net Amount


Notes for Cash	905,500		457,038		35,048	429,010		40,949		388,061
Notes for Consulting Services	654,500		261,927		0	447,073		101,340		345,732

Totals	1,560,000		718,965		35,048	876,083		142,289		733,793

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

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 March 31, 2015 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 March 31, 2015, the value of these debt issue costs is $1,020 as follows:

	Original Balance		Issue Date	Maturity Date	Total Days		Days Remaining as of March 31, 2015		Percentage of Days as of March 31, 2015			Unamortized Balance

	$	2,500	2-Apr-14	7-Jan-15		280		0		0	%	$	0
		7,375	5-May-14	30-Apr-15		360		30		8	%		615
		5,500	21-May-14	14-Jan-15		238		0		0	%		0
		2,500	2-Jun-14	14-Jan-15		226		0		0	%		0
		2,500	23-Jun-14	14-Jan-15		205		0		0	%		0
		12,500	7-Jul-14	8-Jan-15		185		0		0	%		0
		2,500	14-Jul-14	14-Jan-15		184		0		0	%		0
		2,500	22-Aug-14	15-Feb-15		177		0		0	%		0
		500	6-Feb-15	13-Nov-15		280		227		81	%		405
Total	$	38,375										$	1,020

For the six months ended March 31, 2015 and March 31, 2014, amortization expense of debt issue costs were $19,768 and $7,156, respectively.

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

(E) Debt Discount

During the six months and three months ended March 31, 2015, the Company recorded debt discounts of $194,000 and $119,000, respectively.

During the six months and three months ended March 31, 2014, the Company recorded debt discounts of $170,000 and $75,000 respectively.

The debt discount pertains to convertible debt containing embedded conversion options that are required to bifurcated and reported at fair value.

During the six and three months ended March 31, 2015, the Company amortized $279,356 and $152,780 in debt discount, respectively.

Note 9 Stockholders’ Equity

(A) Common Stock

Stock Issued in Six months ended March 31, 2015

During the six months ended March 31, 2015, the Company issued 225,745,933 shares of common stock for the conversion of $63,088 of debt, $31,587 of accrued interest and $10,154 of expenses.

Stock Issued in Fiscal year ended September 30, 2014

The Company issued 8,910,823 (on a split-adjusted basis) shares of common stock during the 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

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

(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 63 warrants which are convertible at $25,000 per share. These warrants expire on February 15, 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.

(E) Reverse Split

Effective January 12, 2015, there was a reverse stock split of our outstanding common stock on the basis of one for one two hundred fifty (1:250).

Note 10 Commitments and 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.

Note 11 Derivative Liabilities

The Company identified conversion features embedded within convertible debt securities as defined in Note 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 31, 2015

(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, 2014
Derivative liability Fair value at the commitment date for convertible notes issued	$	243,809
Fair value mark to market adjustment – March 31, 2015		1,423,351
Derivative liability associated with new issuances through March 31, 2015		241,041
Face value of debt issued		119,000
Elimination of derivative liability upon conversion of debt		(37,672)
Derivative liability balance at March 31, 2015	$	1,989,528

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 $241,041 for the six months ended March 31, 2015.

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, 2014 and March 31, 2015

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 Fuel Cell technology and Contract Research and Laboratory services. 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

March 31, 2015

(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 March 31, 2015


	Fuel Cell Technology			Contracted Researchand Laboratory Services			Corporate Overhead			Total


Revenues	$	-		$	-		$	-		$	-

Cost of Revenues		-			-			-			-

Gross Profits		-			-			-			-
Operating Expenses										#REF!
Selling General and Administrative Expenses		5,592		$	8,533		$	120,050			134,175

Total Operating Expenses		5,592			8,533			120,050			134,175

Operating Income (Loss)		(5,592	)		(8,533	)		(120,050	)		(134,175	)

Other Income (Expense)
Interest expense		-			-			(156,055	)		(156,055	)

Net loss		(5,592	)		(8,533	)		(1,631,438	)		(1,645,563	)

Total Assets		3,402,192			164,173			10,830			3,577,195




		Three months Ended March 31, 2014


		Fuel Cell Technology		Contracted Research and Laboratory Services			Corporate Overhead			Total


Revenues	$	-		$	-		$	-		$	-

Cost of Revenues		-			-			-			-

Gross Profits		-			-			-			-
Operating Expenses										#REF!
Selling General and Administrative Expenses				$	8,533		$	5,340,921			5,349,454

Total Operating Expenses		-			8,533			5,340,921			5,349,454

Operating Income (Loss)		-			(8,533	)		(5,340,921	)		(5,349,454	)

Other Income (Expense)
Interest expense		-			-			(176,507	)		(176,507	)

Net income (loss)		-			(8,533	)		(7,492,060	)		(7,500,593	)

Total Assets		-			214,852			8,828			223,680

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

	Six Months Ended March 31, 2015


	Fuel Cell Technology			Contracted Research and Laboratory Services			Corporate Overhead			Total


Revenues	$	-		$	-		$	-		$	-

Cost of Revenues		-			-			-			-

Gross Profits		-			-			-			-
Operating Expenses
Selling General and Administrative Expenses		13,860			17,066			220,480			251,406

Total Operating Expenses		13,860			17,066			220,480			251,406

Operating Income (Loss)		(13,860	)		(17,066	)		(220,480	)		(251,406	)

Other Income (Expense)
Interest expense		-			-			(341,899	)		(341,899	)

Net loss		(13,860	)		(17,066	)		(1,614,637	)		(1,645,563	)

Total Assets		3,402,192			164,173			10,830			3,577,195




		Six months Ended March 31, 2014


	Fuel Cell Technology			Contracted Research and Laboratory Services			Corporate Overhead			Total


Revenues	$	-		$	-		$	-		$	-

Cost of Revenues		-			-			-			-

Gross Profits		-			-			-			-
Operating Expenses
Selling General and Administrative Expenses		-			17,066			5,562,374			5,579,440

Total Operating Expenses		-			17,066			5,562,374			5,579,440

Operating Income (Loss)		-			(17,066	)		(5,562,374	)		(5,579,440	)

Other Income (Expense)
Interest expense		-			-			(280,017	)		(280,017	)

Net income (loss)		-			(17,066	)		(6,702,911	)		(6,719,977	)

Total Assets		-			214,852			8,828			223,680

Hydrogen Future Corp.

(A Development Stage Company)

Notes to Financial Statements

March 31, 2015

(Unaudited)

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;

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 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 October 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 May 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 November 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:

439,895,390 shares for the conversion of approximately $16,000 of convertible debt, $100 of accrued interest and $2,500 of associated fees.

Change in Certifying Accounting

On May 11, 2015, the Company announced a change in its certifying accountant.

The Company has appointed John Scrudato, CPA as its auditor for the year ending September 30, 2015.

Mr. Scrudato’s offices are in Califon, NJ.

Mr. Scrudato replaces Thomas Bravos, CPA, who resigned as the Company’s auditor.

There were no disagreements between The Company and Mr. Bravos.

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, 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

Management's Discussion and Analysis of Results of Operations

Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

Our results of operations are summarized below:

	Quarter Ended March 31, 2015 ($)			Quarter Ended March 31, 2014 ($)
Revenue		-0-			-0-
Expenses		(134,175	)		(5,349,454	)
Other (Expenses)		(1,511,388	)		(2,151,139)
Net (Loss)		(1,645,563	)		(7,500,593)
(Loss) Per Share-Basic		(.07	)		(18.31)
(Loss) Per Share- Fully diluted		(.04	)		(9.26)

During the three months ended March 31, 2015, 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 expenses for the three months ended March 31, 2015 and 2014 can be summarized as follows:

	2015 ($)		2014 ($)		Difference ($)
Management Compensation		-0-		5,210,000		(5,210,000)
Consulting Fees		75,000		75,000		-0-
Other General and administrative expenses		59,175		64,454		(5,279)
Total Expenses		134,175		5,349,354		(5,215,279)

During the three month period ended March 31, 2015, we incurred operating expenses (and respective net operating losses) of $134,175, compared to operating expenses of $5,349,454 incurred during the three month period ended March 13, 2014, a deccrease of ($5,215,279.) The operating expenses incurred during the three month period ended March 31, 2015 and 2014 consisted of (i) $-0- and $5,210,000 respectively of Management compensation (ii) $75,000 and $75,000 in fees paid to consultants; and (iii) $59,175 and $64,454 in other general and administrative expenses, respectively.

Management compensation decreased $5,210,000 due to the issuance of 100 million shares of common stock to our Management team. See Statement of Shareholders Equity for more detail. Consulting fees totaled $75,000 due to the quarterly accrual for the consulting contract during each period. General and administrative expenses decreased by $5,279. These expenses include the following: (i) transfer agent fees of $17,214 (ii) depreciation and amortization expense of $13,976, (iii) professional fees and contracted services of $10,573, (iv) expenses associated with debt conversion of $8,684 and (v) rent expense of $3,556

Other income/(expense) incurred during the three month periods ended March 31, 2015 and March 31, 2014 was as follows:

	2015 ($)		2014 ($)		Difference ($)
Interest Expense		(156,055)		(176,507)	20,452
Derivative Expense		(159,390)		(1,067,424)	908,034
Change in the Fair Value of Derivative liabilities		(1,127,383)		917,897	(2,045,280)
Loss on Retirement of Debt		(68,560)		(1,825,104)	1,756,545
Total Other income/(expense)		(1,511,388)		(2,151,139)	639,751

Interest expense decreased $20,452 due principally to reduced amortization of debt discounts of $16,984.

Derivative expense decreased $908,034 principally due to greater stock price volatility.

Change in the Fair Value of Derivative liabilities decreased $2,045,280 due to increased stock price volatility at quarter end.

Loss on Retirement of Debt was 1,756,545 lower due to fewer conversions of debt.

Therefore, our basic net loss and net loss per share during the three month period ended March 31, 2015, was ($1,645,563) or ($0.03) per share, compared to a net loss of ($7,500,593) or $18.31 per basic share during the three month period ended March 31, 2014. The weighted average number of basic shares outstanding was 55,656,550 for the three month period ended March 31, 2015, compared to 409,578 for the three month period ended March 31, 2015. Our fully diluted net income (loss) per share was ($.03) and ($9.26) for the three months ended March 31, 2015 and 2014, respectively. The weighted average number of fully-diluted shares outstanding was 56,056,550 for the three month period ended March 31, 2015, compared to 809,578 for the three month period ended March 31, 2014.

Six Months Ended March 31, 2015 Compared to the Six Months Ended March 31, 2014

Our results of operations are summarized below:

	Quarter Ended March 31, 2015 ($)			Quarter Ended March 31, 2014 ($)
Revenue		-0-			-0-
Expenses		(251,506	)		(5,579,440	)
Other (Expenses)		(2,091,415	)		(1,140,537)
Net (Loss)		(1,645,563	)		(7,500,593)
(Loss) Per Share-Basic		(.07	)		(18.31)
(Loss) Per Share- Fully diluted		(.04	)		(9.26)

During the six months ended March 31, 2015, 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 expenses for the six months ended March 31, 2015 and 2014 can be summarized as follows:

	2015 ($)		2014 ($)		Difference ($)
Management Compensation		-0-		5,210,000		(5,210,000)
Consulting Fees		150,000		150,000		-0-
Other General and administrative expenses		101,406		219,440		(118,034)
Total Expenses		251,406		5,579,440		(5,328,034)

During the six month period ended March 31, 2015, we incurred operating expenses (and respective net operating losses) of $251,506, compared to operating expenses of $5,579,440 incurred during the three month period ended March 13, 2014, a deccrease of ($5,328,034.) The operating expenses incurred during the six month period ended March 31, 2015 and 2014 consisted of (i) $-0- and $5,210,000, respectively of Management compensation (ii) $150,000 and $150,000 in fees paid to consultants; and (iii) $251,406 and $64,454 in other general and administrative expenses, respectively.

Management compensation decreased $5,210,000 due to the issuance of 100 million shares of common stock to our Management team. See Statement of Shareholders Equity for more detail. Consulting fees totaled $150,000 due to two quarterly accruals for the consulting contract during each period. Other General and administrative expenses decreased by $118,034. $45,000 of the decrease was due to the issuance of common stock to our management team in December 2013. The remaining decrease was due to reduced operating expenses at the parent company level of $85,482 partially offset by the operating expenses of the Hydra Fuel Cell subsidiary of $12,448 which did not exist in the same quarter of last year.

Other income/(expense) incurred during the three month periods ended March 31, 2015 and March 31, 2014 was as follows:

	2015 ($)		2014 ($)		Difference ($)
Interest Expense		(341,899)		(280,077)	(61,882)
Derivative Expense		(241,041)		(2,119,601)	(1,878,560
Change in the Fair Value of Derivative liabilities		(1,423,351)		3,258,449	(4,681,800)
Loss on Retirement of Debt		(85,124)		(1,999,367)	1,914,243
Total Other income/(expense)		(2,091,415)		(1,140,537)	(950,879)

Interest expense increased $61,882 due principally to increased amortization of debt discounts of $54,333.

Derivative expense decreased $1,878,560 principally due to greater stock price volatility.

Change in the Fair Value of Derivative liabilities decreased $4,681,800 due to increased stock price volatility at quarter ends.

Loss on Retirement of Debt was 1,914,243 lower due to fewer conversions of debt.

Therefore, our basic net loss and net loss per share during the six month period ended March 31, 2015, was ($2,342,821) or ($0.07) per share, compared to a net loss of ($6,719,977) or ($19.24) per basic share during the three month period ended March 31, 2014. The weighted average number of basic shares outstanding was 32,043,335 for the six month period ended March 31, 2015, compared to 349,183 for the six month period ended March 31, 2015. Our fully diluted net income (loss) per share was ($.07) and ($8.97) for the six months ended March 31, 2015 and 2014, respectively. The weighted average number of fully-diluted shares outstanding was 32,443,335 for the three month period ended March 31, 2015, compared to 749,183 for the six month period ended March 31, 2014.

Liquidity and Capital Resources

As of March 31, 2015, our current assets were $11,841 and our current liabilities were $4,714,840, which resulted in a working capital deficiency of ($4,702,999). As of March 31, 2015, current assets were comprised of: (i) $9,810 in cash; and (ii) $2,031 in Inventory. As of March 31, 2015, current liabilities were comprised of: (i) $156,985 in accounts payable and accrued liabilities; (ii) $415,719 in accounts payable due to a related party; (iii) $410,133 in accrued interest payable; (iv) $27,173 in notes payable due to a related party; (v) a derivative liability of $1,989,528 resulting from convertible notes payable and (vii) $733,793 in convertible debt (net of $142,289 of discount), and (vii) non-convertible debt of $981,508.

As of March 31, 2015, our total assets of $3,577,195 were comprised of: (i) $11,841 in current assets; (ii) $164,173 in property and equipment (net of $478,640 of depreciation); (iii) $47,005 in Notes Receivable; (iv) $1,020 in debt issue costs and (v) Goodwill of $3,353,156. As of March 31, 2015, our total liabilities of $4,714,840 were comprised of current liabilities of the same amount.

Stockholders’ Equity decreased $2,115,196 from $977,551 as of September 30, 2014 to ($1,137,645) as of March 31, 2015. The change in Stockholder’s deficit was comprised of (i) issuances of shares for conversion of debt totaling $227,625 and (ii) net loss of $2,342,821.

Cash Flows from Operating Activities

We did not generate positive cash flows from operating activities. For the six months ended March 31, 2015, net cash flows provided by operations was $(211,918). Net cash flows used in operating activities for the three months ended March 31, 2015 consisted of (i) net loss of $(2,342,821), (ii) the change in the fair value of the derivative liability of $1,423,351 (iii) derivative expense of $241,041; (iv) loss on retirement of debt of $85,124; (v) $279,356 in amortization of debt discount; (vi) depreciation expense of $19,890 and (vii) amortization expense of deferred financing costs of $19,768. Net cash flows used by operating activities were positively impacted by changes in working capital accounts related, of $20,716.

Cash Flows from Investing Activities

For the six months ended March 31, 2015, net cash flows provided by investing activities was $(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 months ended March 31, 2015, net cash flows provided from financing activities was $194,000 from the issuance of notes, partially offset by $500 of debt financing costs.

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 $800,000 for our new venture in fuel cell technology.

Material Commitments

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

Convertible Debt

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

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

Such estimates for the three months and six months ended March 31, 2015 and 2014, 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.

Derivative Liabilities

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.

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.

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 March 31, 2015, 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.

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 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.

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.

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, 2014, as filed with the SEC on January 21, 2015.

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

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.

Item 5. Other Information.

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

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.

	HYDROGEN FUTURE CORP.

Dated: May ____, 2015	By:	/s/ Frank Neukomm
	Name:	Frank Neukomm
	Title:	Chief Executive Officer
		(Principal Executive Officer)

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

Hydrogen Future (HFCO) Inactive 10-Q2015 Q2 Quarterly report

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