UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM 10-QSB/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2006
Commission File Number 033-19411-C
TETRIDYN SOLUTIONS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada |
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20-5081381 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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1651 Alvin Ricken Drive, Pocatello, ID 83201 | ||
(Address of principal executive offices) | ||
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(208) 232-4200 | ||
(Issuer’s telephone number) | ||
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N/A | ||
(Former name, former address and former fiscal year, if changed since last report) |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 x NO o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). NO x YES o
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of August 11, 2006, issuer had 20,009,350 outstanding shares of common stock, par value $0.001.
Transitional Small Business Disclosure Format (check one): YES o NO x
Explanatory Note
We are filing this amendment on Form 10-QSB/A to restate our unaudited condensed consolidated financial statements for the six months ended June 30, 2006, as described in Note 2 of the Notes to the Unaudited Condensed Consolidated Financial Statements. While performing its audit of our financial statements for the year ended December 31, 2006, Webb & Company advised us that it believed that the shares paid to a consultant for services related to the 2006 reverse acquisition needed to be valued at the time of the reverse acquisition rather than at the time of the agreement due to contingencies in the agreement based upon completion of the reverse acquisition. The restatement caused the general and administrative expense for the six months ended June 30, 2006, to be increased by $360,000, resulting in the net loss for the same six-month period being increased by $360,000. We are also filing amendments to our quarterly reports on Form 10-QSB for the quarters ended March 31 and September 30, 2006, to correct this error.
Unless otherwise indicated, this report speaks only as of the date that the original report was filed. No attempt has been made in this Form 10-QSB/A to update other disclosures presented in the original report on Form 10-QSB, except as required to reflect the effects of the restatement. This Form 10-QSB/A does not reflect events occurring after the filing of the original Form 10-QSB or modify or update those disclosures, including the exhibits to the Form 10-QSB affected by subsequent events; however, this Form 10-QSB/A includes as Exhibits 31.01 and 32.01 new certifications by our principal executive officer and principal financial officer as required by Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended. Accordingly, this Form 10-QSB/A should be read in conjunction with our filings made with the Securities and Exchange Commission subsequent to the filing of the original Form 10-QSB, including any amendments to those filings. The following items have been amended as a result of the restatement:
Part I – Item 1 – Financial Statements
Part I – Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part I – Item 3 – Controls and Procedures
2
TABLE OF CONTENTS
Page
PART I – FINANCIAL INFORMATION
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Item 1. |
Financial Statements. |
4 |
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Condensed Consolidated Balance Sheets (Unaudited) |
4 |
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Condensed Consolidated Statements of Operations (Unaudited) |
5 |
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Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited) |
6 |
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Condensed Consolidated Statements of Cash Flows (Unaudited) |
7 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
8 |
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Item 2. |
Management’s Discussion and Analysis or Plan of Operation. |
15 |
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Item 3. |
Controls and Procedures |
19 |
PART II – OTHER INFORMATION
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Item 1. |
Legal Proceedings. |
19 |
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Item 4. |
Submission of Matters to a Vote of Security Holders |
19 |
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Item 6. |
Exhibits |
20 |
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Signature |
20 |
3
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TETRIDYN SOLUTIONS INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, 2006 (Restated - See Note 2) |
December 31, 2005 | |||||||
---|---|---|---|---|---|---|---|---|
Assets | ||||||||
Current Assets | ||||||||
Cash | $ | 81,864 | $ | 108,311 | ||||
Accounts receivable, less allowance for doubtful accounts of $0 and $8,500 | - | 2,219 | ||||||
Inventory | 263 | 263 | ||||||
Total Current Assets | 82,127 | 110,793 | ||||||
Property and Equipment | 184,918 | 179,000 | ||||||
Less: Accumulated depreciation | (144,664 | ) | (126,493 | ) | ||||
Net Property and Equipment | 40,254 | 52,507 | ||||||
Total Assets | $ | 122,381 | $ | 163,300 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities | ||||||||
Trade accounts payable | $ | 123,167 | $ | 94,325 | ||||
Accounts payable to related parties | 5,947 | 5,947 | ||||||
Accrued liabilities | 67,683 | 72,411 | ||||||
Deferred revenue | 15,194 | 15,677 | ||||||
Notes payable, current portion | 269,417 | 590,359 | ||||||
Notes payable to related parties, current portion | - | 93,001 | ||||||
Capital lease obligations, current portion | 5,523 | 17,636 | ||||||
Total Current Liabilities | 486,931 | 889,356 | ||||||
Long-Term Liabilities | ||||||||
Notes payable, net of current portion | 295,452 | 246,886 | ||||||
Notes payable to related parties, net of current portion | 77,751 | - | ||||||
Series A non-voting redeemable preferred stock - no par value; no shares | ||||||||
and 250,000 shares authorized, respectively; no shares and 219,512 shares | ||||||||
outstanding respectively | - | 696,110 | ||||||
Total Long-Term Liabilities | 373,203 | 942,996 | ||||||
Stockholders' Deficit | ||||||||
Preferred stock - $0.001 par value; 5,000,000 shares authorized; no shares outstanding | - | - | ||||||
Series B convertible preferred stock - no par value; no shares and 5,000,000 shares authorized, | ||||||||
respectively; no shares and 249,020 shares outstanding | - | 291,350 | ||||||
Common stock - $0.001 par value and no par value, respectively; | ||||||||
200,000,000 shares authorized; 20,009,350 shares and 15,152,903 shares | ||||||||
outstanding, respectively | 20,009 | 15,153 | ||||||
Additional paid-in capital | 2,124,430 | 275,971 | ||||||
Deficit accumulated during the development stage | (2,882,192 | ) | (2,251,526 | ) | ||||
Total Stockholders' Deficit | (737,753 | ) | (1,669,052 | ) | ||||
Total Liabilities and Stockholders' Deficit | $ | 122,381 | $ | 163,300 | ||||
See the accompanying notes to condensed consolidated financial statements.
4
TETRIDYN SOLUTIONS INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
For the Period from October 3, 2000 (Date of Inception) through | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2006 |
2005 |
2006 (Restated - See Note 2) |
2005 |
June 30, 2006 (Restated - See Note 2) | |||||||||||||
Revenue | $ | 240,382 | $ | 69,800 | $ | 271,821 | $ | 159,677 | $ | 1,097,879 | |||||||
Cost of Revenue | 89,719 | 9,612 | 107,009 | 54,364 | 431,345 | ||||||||||||
Gross Profit | 150,663 | 60,188 | 164,812 | 105,313 | 666,534 | ||||||||||||
Operating Expenses | |||||||||||||||||
General and administrative | 109,211 | 75,571 | 576,245 | 103,087 | 2,699,115 | ||||||||||||
Selling and marketing | 66,301 | 15,121 | 121,036 | 41,523 | 237,498 | ||||||||||||
Research and development | 44,296 | 59,512 | 89,478 | 103,158 | 367,013 | ||||||||||||
Consulting services | 4,619 | - | 4,619 | - | 4,619 | ||||||||||||
Total Operating Expenses | 224,427 | 150,204 | 791,378 | 247,768 | 3,308,245 | ||||||||||||
Interest Expense | 13,603 | 43,497 | 41,600 | 55,544 | 305,481 | ||||||||||||
Employment Grant Income | 37,500 | - | 37,500 | - | 65,000 | ||||||||||||
Net Loss | $ | (49,867 | ) | $ | (133,513 | ) | $ | (630,666 | ) | $ | (197,999 | ) | $ | (2,882,192 | ) | ||
Basic and Diluted Loss | |||||||||||||||||
Per Common Share | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.02 | ) | |||||
Basic and Diluted Weighted- | |||||||||||||||||
Average Common Shares | |||||||||||||||||
Outstanding | 20,009,350 | 10,627,239 | 18,061,299 | 10,497,598 | |||||||||||||
See the accompanying notes to condensed consolidated financial statements.
5
TETRIDYN SOLUTIONS INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLDIATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Unaudited)
For the Period from October 3, 2000 (Date of Inception) through December 31, 2004, for the
Year Ended December 31, 2005 and for the Six Months Ended June 30, 2006
Series B Preferred Stock |
Common Stock |
Additional Paid In |
Deficit Accumulated During the Development |
Total Stockholders' | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares |
Amount |
Shares |
Amount |
Capital (Restated - See Note 2) |
Stage (Restated - See Note 2) |
Deficit (Restated - See Note 2) | |||||||||||||||||
Balance, October 3, 2000 | |||||||||||||||||||||||
(Date of Inception) | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
Issuance for cash, July 2002, | |||||||||||||||||||||||
$0.004 per share | - | - | 2,073,591 | 2,074 | 1,926 | - | 4,000 | ||||||||||||||||
Issuance for intellectual property, October | |||||||||||||||||||||||
2002, $0.00 per share | - | - | 82,944 | 83 | (83 | ) | - | - | |||||||||||||||
Issuance for cash, July 2004, $0.015 per share | - | - | 8,211,422 | 8,211 | 51,189 | - | 59,400 | ||||||||||||||||
Issuance for cash, August through December | |||||||||||||||||||||||
2004, $1.00 per share | 85,000 | $ | 85,000 | - | - | - | - | 85,000 | |||||||||||||||
Net loss for the period from inception | - | - | - | - | - | (1,617,435 | ) | (1,617,435 | ) | ||||||||||||||
Balance, December 31, 2004 | 85,000 | 85,000 | 10,367,957 | 10,368 | 53,032 | (1,617,435 | ) | (1,469,035 | ) | ||||||||||||||
Issuance to employees and advisors for services, | |||||||||||||||||||||||
$0.10 per share, May through November 2005 | - | - | 2,711,355 | 2,711 | 126,345 | - | 129,056 | ||||||||||||||||
Issuance for cash at $1.00 per share, and 3,250 | |||||||||||||||||||||||
shares and $2,250 cash issued to placement | |||||||||||||||||||||||
agent, June through December 2005 | 189,750 | 184,250 | - | - | - | - | 184,250 | ||||||||||||||||
Issuance to a director for services, $1.00 per | |||||||||||||||||||||||
share, August 2005 | 2,000 | 2,000 | - | - | - | - | 2,000 | ||||||||||||||||
Issuance for marketing and consulting services, | |||||||||||||||||||||||
$0.88 per share, August through November 2005 | 5,765 | 5,100 | - | - | - | - | 5,100 | ||||||||||||||||
Issuance for conversion of notes payable to | |||||||||||||||||||||||
related parties, August 2005, $0.10 per share | - | - | 2,073,591 | 2,074 | 96,594 | - | 98,668 | ||||||||||||||||
Issuance for conversion of note payable, December | |||||||||||||||||||||||
2005, $1.00 per share | 15,000 | 15,000 | - | - | - | - | 15,000 | ||||||||||||||||
Net loss | - | - | - | - | - | (634,091 | ) | (634,091 | ) | ||||||||||||||
Balance, December 31, 2005 | 297,515 | 291,350 | 15,152,903 | 15,153 | 275,971 | (2,251,526 | ) | (1,669,052 | ) | ||||||||||||||
Issuance for conversion of note payable and related accrued | |||||||||||||||||||||||
interest, March 2006, $1.01 per share, | 250,000 | 252,356 | - | - | - | - | 252,356 | ||||||||||||||||
Issuance for cash, March 2006, $1.00 per share | 161,500 | 161,500 | - | - | - | - | 161,500 | ||||||||||||||||
Issuance for legal services, March 2006, $0.67 per share | 495 | 330 | - | - | - | - | 330 | ||||||||||||||||
Conversion of Series B preferred stock into common stock, | |||||||||||||||||||||||
March 2006, $0.48 per share | (709,510 | ) | (705,536 | ) | 1,471,234 | 1,471 | 704,065 | - | - | ||||||||||||||
Issuance to employees for services, January 2006, | |||||||||||||||||||||||
$0.48 per share | - | - | 91,248 | 91 | 43,914 | - | 44,005 | ||||||||||||||||
Conversion of Series A redeemable preferred stock, | |||||||||||||||||||||||
March 2006, $1.56 per share | - | - | 455,178 | 455 | 707,819 | - | 708,274 | ||||||||||||||||
Issuance for services to a consultant, March 2006, | |||||||||||||||||||||||
$0.48 per share | - | - | 829,437 | 830 | 399,170 | - | 400,000 | ||||||||||||||||
Issuance in acquisition of Creative Vending Corp., | |||||||||||||||||||||||
March 2006, $(0.00) per share | - | - | 2,009,350 | 2,009 | (6,509 | ) | - | (4,500 | ) | ||||||||||||||
Net loss | - | - | - | - | - | (630,666 | ) | (630,666 | ) | ||||||||||||||
Balance, June 30, 2006 | - | $ | - | 20,009,350 | $ | 20,009 | $ | 2,124,430 | $ | (2,882,192 | ) | $ | (737,753 | ) | |||||||||
See the accompanying notes to condensed consolidated financial statements.
6
TETRIDYN SOLUTIONS INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended June 30, | ||||||||
---|---|---|---|---|---|---|---|---|
2006 (Restated - See Note 2) |
2005 | |||||||
Cash Flows from Operating Activities | ||||||||
Net Loss | $ | (630,666 | ) | $ | (197,999 | ) | ||
Adjustments to reconcile net loss to net cash used in | ||||||||
operating activities: | ||||||||
Depreciation | 18,171 | 17,900 | ||||||
Interest expense from accretion of Series A preferred stock | 12,164 | 30,000 | ||||||
Series B preferred stock issued for services | 330 | 2,990 | ||||||
Common stock issued for services | 443,345 | 17,159 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 2,219 | 2,929 | ||||||
Inventory | - | 5,977 | ||||||
Accounts payable and accrued liabilities | 21,969 | 33,404 | ||||||
Deferred revenue | (483 | ) | - | |||||
Other | - | (2,250 | ) | |||||
Net Cash Used in Operating Activities | (132,951 | ) | (89,890 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Purchase of property and equipment | (5,918 | ) | (300 | ) | ||||
Net Cash Used in Investing Activities | (5,918 | ) | (300 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Change in bank overdraft | - | (16,626 | ) | |||||
Proceeds from borrowing under notes payable | - | 84,887 | ||||||
Principal payments on notes payable | (22,376 | ) | (57,765 | ) | ||||
Proceeds from notes payable to related parties | - | 47,462 | ||||||
Principal payments on notes payable to related parties | (15,250 | ) | - | |||||
Principal payments on capital lease obligations | (12,112 | ) | (11,196 | ) | ||||
Proceeds from issuance of common stock | 660 | 3,075 | ||||||
Proceeds from issuance of Series A redeemable preferred stock | - | - | ||||||
Proceeds from issuance of Series B preferred stock | 161,500 | 45,000 | ||||||
Net Cash Provided by Financing Activities | 112,422 | 94,837 | ||||||
Net Increase in Cash | (26,447 | ) | 4,647 | |||||
Cash at Beginning of Period | 108,311 | - | ||||||
Cash at End of Period | $ | 81,864 | $ | 4,647 | ||||
Schedule of Noncash Investing and Financing Activities: | ||||||||
Conversion of note payable into Series B preferred stock | $ | 252,356 | $ | - | ||||
Conversion of Series B preferred stock into common stock | 705,536 | - | ||||||
Conversion of Series A redeemable preferred stock into | ||||||||
common stock | 708,274 | - | ||||||
Common stock issued in exchange for liabilities of Creative | ||||||||
Vending Corp. | 4,500 | - | ||||||
See the accompanying notes to condensed consolidated financial statements.
7
TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 1 – Organization and Summary of Significant Accounting Policies
Nature of Business – TetriDyn Solutions, Inc. (“TetriDyn”) and its wholly-owned subsidiary are a development stage company that develops and markets wireless technology and proprietary software, provides software consulting services, and resells third-party software focused in the healthcare industry.
Organization – TetriDyn Solutions, Inc. (“TetriDyn-Idaho”) was organized under the laws of the State of Idaho on October 3, 2000. On March 22, 2006, TetriDyn-Idaho and its shareholders completed a stock exchange agreement with Creative Vending Corp., a Florida corporation (Creative). Under the terms of the agreement, the TetriDyn-Idaho shareholders exchanged all of the outstanding TetriDyn-Idaho common stock for 17,170,563 shares of Creative common stock. Creative also issued 829,437 shares to a finder for services rendered in connection with the agreement. Creative had 2,009,350 shares of common stock outstanding prior to the reorganization that remained outstanding after the transaction. The members of the board of directors of TetriDyn-Idaho and its management became the board of directors and management of Creative.
Due to the TetriDyn-Idaho shareholders controlling TetriDyn-Idaho before and after the completion of the agreement, TetriDyn-Idaho was considered the accounting acquirer. The transaction was therefore recognized as a 1-to-2.07 stock split of the common stock of TetriDyn-Idaho and the reverse acquisition of Creative by TetriDyn-Idaho. Creative did not meet the definition of a business under Emerging Issues Task Force Issue 98-3, Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business; accordingly, the acquisition of Creative was recognized as a nonmonetary exchange whereby the 2,009,350 shares of common stock constructively issued to the Creative shareholders were recorded at $4,500, which was the value of the liabilities assumed. The accompanying condensed consolidated financial statements are those of TetriDyn-Idaho for all periods prior to the reorganization and have been restated for the effects of the stock split for all periods presented.
On June 1, 2006, Creative changed its domicile to the State of Nevada through a merger with and into a newly-formed subsidiary, TetriDyn Solutions, Inc., a Nevada corporation (“TetriDyn”). The reorganization of Creative into TetriDyn was accomplished by a 1-for-1 share exchange by the shareholders. Under Nevada law, TetriDyn’s authorized capital consists of 5,000,000 shares of preferred stock, $0.001 par value, and 100,000,000 shares of common stock, $0.001 par value. The accompanying condensed consolidated financial statements have been restated for all periods presented for the effects of the change in the par value of the common stock from no-par to $0.001 per share.
Condensed Consolidated Financial Statements – The accompanying consolidated financial statements are condensed and do not include all disclosures normally required by generally accepted accounting principles. These condensed consolidated financial statements should be read in conjunction with TetriDyn’s annual financial statements included in the Company’s Current Report on Form 8-K dated March 22, 2006. In particular, the Company’s organization, nature of operations, and significant accounting principles were presented in Note 1 to the financial statements included in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements for the three and six months ended June 30, 2006, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2006.
8
TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Principles of Consolidation - The accompanying condensed consolidated financial statements include the accounts and transactions of TetriDyn on a reorganized basis as discussed above and include the accounts and transactions of Creative, now TetriDyn, from the date of its acquisition on March 22, 2006. Intercompany accounts and transactions have been eliminated in consolidation. TetriDyn and its wholly-owned subsidiary, TetriDyn-Idaho, are referred to herein as “the Company.”
Business Condition – The Company is in the development stage and has yet to generate any significant revenues from its technology solutions. During the year ended December 31, 2005, the six months ended June 30, 2006, and the three months ended June 30, 2006, the Company suffered losses of $634,091, $270,666, and $49,867, respectively. During the year ended December 31, 2005, and the six months ended June 30, 2006, the Company used $300,739 and $132,951 of cash in its operating activities, respectively. At June 30, 2006, the Company had a working capital deficit of $404,804 and a capital deficit of $737,753. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management is attempting to obtain debt and equity financing for use in the Company’s operations. In addition, management is trying to expand the Company’s sales and obtain profitable operations. Realization of profitable operations or proceeds from the financing is not assured. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
Stock-Based Compensation - On July 19, 2004, the Company adopted the 2004 Stock Option Plan for employees, officers, directors, and consultants of the Company, under which 6,220,774 shares of common stock were authorized for issuance. Through December 31, 2005, the Company had granted 2,711,355 stock options under the plan that had been exercised and had granted 91,248 stock options that were outstanding at December 31, 2005, and that were exercised during January 2006. As a result of the reorganization of TetriDyn-Idaho into Creative on March 22, 2006, the 2004 Stock Option Plan was terminated.
On May 15, 2006, at a special shareholders meeting, the Company’s shareholders approved the 2006 Long-Term Incentive Plan under which up to 4,000,000 shares of common stock may be issued. The 2006 plan is to be administered either by the Board of Directors or by the appropriate committee to be appointed from time to time by such Board of Directors. Awards granted under the 2006 plan may be incentive stock options (“ISOs”) (as defined in the Internal Revenue Code), appreciation rights, options that do not qualify as ISOs, or stock bonus awards that are awarded to employees, officers, and directors who, in the opinion of the board or the committee, have contributed or are expected to contribute materially to the Company’s success. In addition, at the discretion of the Board of Directors or the committee, options or bonus stock may be granted to individuals who are not employees, officers or directors, but contribute to the Company’s success.
Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards, or SFAS, No. 123R, Share-Based Payment (“SFAS 123R”), for its stock-based compensation plan. The Company previously accounted for stock options granted under the 2004 plan under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”), and related interpretations and disclosure requirements established by SFAS No. 123, Accounting for Stock-based Compensation (“SFAS 123”) as amended by SFAS No. 148, Accounting for Stock Based Compensation—Transition and Disclosure.
9
TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Under SFAS 123R, all employee stock-based compensation is measured at the grant date, based on the fair value of the option or award, and is recognized as an expense over the requisite service, which is typically through the date the options or awards vest. The Company adopted SFAS 123R using the modified prospective method. Under this method, for all stock-based options and awards granted prior to January 1, 2006, that remain outstanding as of that date, compensation cost is recognized for the unvested portion over the remaining requisite service period, using the grant-date fair value measured under the original provisions of SFAS 123 for pro forma and disclosure purposes. Furthermore, compensation costs will also be recognized for any awards issued, modified, repurchased, or cancelled after January 1, 2006.
As the result of adoption of SFAS 123R, the Company recognized $44,005 of compensation during January 2006 relating to stock options previously granted and that were outstanding at December 31, 2005. The Company did not issue any stock options or awards under the 2006 plan through June 30, 2006.
Stock options granted during the six months ended June 30, 2005 were exercised at the date of grant, which resulted in the stock options having no fair value at the date of grant in excess of the intrinsic value recognized in the June 30, 2005 financial statements. Accordingly, had the Company recognized compensation under SFAS 123R during the three and six months ended June 30, 2005, the pro forma effect on net loss and basic and diluted loss per share would not have been materially different from those amounts presented in the accompanying June 30, 2005 financial statements.
Net Loss Per Common Share - Basic loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding. Diluted loss per common share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common share equivalents outstanding. At June 30, 2005, the Company had outstanding 219,512 shares of Series A convertible, redeemable preferred stock and 131,750 shares of Series B convertible preferred stock that were excluded from the calculation of diluted loss per common share as their effects would have been antidilutive. There were no potential common share equivalents outstanding at June 30, 2006.
Note 2 - Restatement
The unaudited condensed consolidated financial statements for the six months ended June 30, 2006, have been restated. While performing its audit of the Company’s financial statements for the year ended December 31, 2006, Webb & Company advised the Company that it believed that the shares paid to a consultant for services related to the 2006 reverse acquisition needed to be valued at the time of the reverse acquisition rather than at the time of the agreement due to contingencies in the agreement based upon completion of the reverse acquisition. The restatement caused the general and administrative expense for the six months ended June 30, 2006, to be increased by $360,000, resulting in the net loss for the same six-month period being increased by $360,000.
10
TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The following table sets forth the effects of the restatement on certain line items within the Company’s previously reported balance sheet:
|
|
June 30, 2006 | ||||
|
|
As previously |
|
|
|
|
|
|
reported |
|
Adjustments |
|
As restated |
Common stock - $0.001 par value and no par value, respectively; 200,000,000 shares authorized; 20,009,350 shares and 15,152,903 shares outstanding, respectively |
|
$ 1,764,430 |
|
$ 360,000 |
|
$ 2,124,430 |
Deficit accumulated during the development stage |
|
(2,522,192) |
|
(360,000) |
|
(2,882,192) |
The following table sets forth the effects of the restatement on certain line items within the Company’s previously reported statement of operations:
Six Months Ended June 30, 2006 |
For the Period from October 3, 2000 (Date of Inception) through June 30, 2006 | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As previously reported |
Adjust- ments |
As restated |
As previously reported |
Adjust- ments |
As restated | |||||||||||||||
General and administrative | $ | 216,245 | $ | 360,000 | $ | 576,245 | $ | 2,339,115 | $ | 360,000 | $ | 2,699,115 | ||||||||
expenses | ||||||||||||||||||||
Total operating expenses | 431,378 | 360,000 | 791,378 | 2,948,245 | 360,000 | 3,308,245 | ||||||||||||||
Net loss | (270,666 | ) | (360,000 | ) | (630,666 | ) | (2,522,192 | ) | (360,000 | ) | (2,882,192 | ) | ||||||||
Basic and diluted loss per | ||||||||||||||||||||
common share | (0.01 | ) | (0.02 | ) | (0.03 | ) |
The following table sets forth the effects of the restatement on certain line items within the Company’s previously reported statements of stockholders’ deficit:
Additional Paid In Capital |
Deficit Accumulated During the Development Stage |
Total Stockholders' Deficit | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
As prev'ly reported |
Adjust- ments |
As restated |
As prev'ly reported |
Adjust- ments |
As restated |
As prev'ly reported |
Adjust- ments |
As restated | |||||||||||||||||||||
Issuance for services to a | |||||||||||||||||||||||||||||
consultant, March 2006 | $ | 39,171 | $ | 360,000 | $ | 399,171 | $ | - | $ | - | $ | - | $ | 40,000 | $ | 360,000 | $ | 400,000 | |||||||||||
Net loss | - | - | - | (270,666 | ) | (360,000 | ) | (630,666 | ) | (270,666 | ) | (360,000 | ) | (630,666 | ) | ||||||||||||||
Balance, June 30, 2006 | 1,764,430 | 360,000 | 2,124,430 | (2,522,192 | ) | (360,000 | ) | (2,882,192 | ) | (737,753 | ) | - | (737,753 | ) |
11
TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
The following table sets forth the effects of the restatement on certain line items within the Company’s previously reported statements of cash flows:
|
|
Six Months Ended | ||||
|
|
June 30, 2006 | ||||
|
|
As |
|
|
|
|
|
|
previously |
|
Adjust- |
|
As |
|
|
reported |
|
ments |
|
restated |
Net loss |
$ |
(270,666) |
$ |
(360,000) |
$ |
(630,666) |
Common stock issued for services |
|
83,345 |
|
360,000 |
|
443,345 |
Note 3 – Note Payable to Related Party
The Company had amounts due to a shareholder for funds loaned to the Company and for Company expenditures covered by the shareholder. The balances due to the shareholder at June 30, 2006, and December 31, 2005, were $77,751 and $93,001, respectively. The notes payable bear interest at 6% per annum. During May 2006, the shareholder and the Company agreed to modify the terms of the notes payable such that they are payable by May 30, 2008.
Note 4 – Notes Payable and Revolving Credit Agreements
During 2003, the Company entered into revolving line of credit agreements with a bank providing for short-term borrowing. At December 31, 2003, the available lines of credit totalled $200,000 under the terms of notes that matured during April and June 2004. The notes bore interest at the bank’s prime rate plus 2% per annum and were payable monthly. At December 2003, the Company had borrowed $200,000 under the terms of the credit agreements. During 2004, the Company entered into a non-revolving line of credit agreement with a bank for up to $50,000 and a revolving credit agreement for up to $50,000. The new notes payable were due during 2005 and bore interest at the bank’s prime rate plus 3% per annum with payments due monthly. During 2005, the Company and the bank restructured $50,000 of the revolving credit line into a fixed term loan and entered into other borrowing arrangements. At December 31, 2005, the Company had borrowed an aggregate $265,692 under the terms of these new bank credit agreements.
To finance operations, the Company used credit cards held in the name of the Company, and guaranteed by a shareholder and officer of the Company, to finance operations. Aggregate amounts payable under the revolving credit card agreements total $97,092 at June 30, 2006, with required monthly payments of $2,459 as of June 30, 2006. Interest charged on the credit cards ranges from 6% to 17% per annum.
12
TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Notes payable are summarized as follows:
June 30, 2006 |
December 31, 2005 | |||||||
---|---|---|---|---|---|---|---|---|
Note payable to third party, due in monthly payments of $17,433 through | ||||||||
October 2005, bears interest at 10% per annum, secured by certain | ||||||||
assets and shares of common stock, in default | $ | 125,000 | $ | 125,000 | ||||
Note payable to third party, due in monthly payments of $1,167 through | ||||||||
September 2008, bears interest at 6.25% per annum, secured by assets | 58,670 | 58,670 | ||||||
Note payable to bank, bearing interest at 10.75%, due June 2008, guaranteed | ||||||||
by two shareholders, secured by the shareholders' personal property | 204,429 | - | ||||||
Note payable to bank, bearing interest at 6.25%, due May 2006, guaranteed | ||||||||
by two shareholders, secured by the shareholders' personal property | - | 215,964 | ||||||
Note payable to economic development entity, non-interest bearing, due in | ||||||||
June 2006, unsecured | 30,000 | 30,000 | ||||||
Note payable to redevelopment agency, bears interest at 8.0%, payable | ||||||||
in monthly payments of $3,896 through December 2012, guaranteed by | ||||||||
two shareholders, unsecured | - | 250,000 | ||||||
Line of credit agreements with a bank, interest at prime plus 3% | 49,678 | 49,728 | ||||||
Revolving credit card loans payable, due on demand, interest at 6% to | ||||||||
17% per annum, unsecured, guaranteed by a shareholder | $ | 97,092 | $ | 107,883 | ||||
Total Notes Payable | 564,869 | 837,245 | ||||||
Less: Current Portion | 269,417 | 590,359 | ||||||
Long-Term Notes Payable | 295,452 | 246,886 | ||||||
Note 5 – Stockholders’ Equity
Through the reverse acquisition of Creative on March 22, 2006, the Company’s common stock was reverse split on a 1-for-2.07 basis. The accompanying condensed consolidated financial statements and related notes have been restated on a retroactive basis for all periods presented for the effects of the stock split, including basic and diluted loss per common share and preferred stock conversion ratios.
Series A Redeemable Preferred Stock – On September 25, 2002, the Company issued 219,512 shares of Series A redeemable preferred stock (the Series A preferred stock) for cash proceeds of $486,100, or $2.21 per share, which is net of $13,900 of offering costs. The Company had the right at any time toredeem all or any portion of the Series A preferred stock for the related pro rata portion of the total value of $500,000 plus an 8% annual simple rate of return. The holder of the Series A preferred stock was issued a put option with a redemption price to be the greater of the pro rata portion of (i) $500,000 increased at an 8% annual simple rate of return or (ii) the then fair value of the Series A preferred stock, determined by a qualified business appraiser, but not in excess of $500,000 increased at a 12% annual simple rate of return.
13
TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
In accordance with Statement of Financial Accounting Standard No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, the Series A preferred stock was a conditional obligation and was therefore classified as a liability. This liability was classified as long-term based upon the terms that redemption could occur.
The future fair value of the Series A preferred stock at the dates the put option could have been exercised was not determinable at the date of issuance. The estimated fair value of the Series A preferred stock at the date of issuance and at the end of each reporting period has been determined based on a 12% annual simple rate of return. The increase in the fair value has been recognized as interest expense. The estimated amount that would have been paid to the holder of the Series A preferred stock if redemption had occurred on December 31, 2005 and March 22, 2006 was $696,110 and $708,274, respectively. The amount of interest expense recognized from the change in the fair value of the Series A preferred stock was $12,164 during 2006 through March 22, 2006.
On March 22, 2006, the holder of the Series A redeemable preferred stock converted the 219,512 shares of Series A redeemable preferred stock into 455,178 shares of common stock at $1.56 per common share. Upon conversion, the redemption rights and the put option held by the holder of the Series A redeemable preferred stock expired.
Series B Convertible Preferred Stock – During March 2006, a $250,000 note payable and $2,356 of related accrued interest were converted into 250,000 shares of Series B preferred stock at $1.01 per share. During March 2006, the Company issued 495 shares of Series B preferred stock in payment of $330 of legal services, or $0.67 per share. During February and March 2006, the Company issued 161,500 shares of Series B preferred stock for $161,500 of cash in a private placement offering at $1.00 per share.
Under its original terms, each share of Series B preferred stock was convertible at any time into one share of common stock, at a conversion price of $0.48 per share.
On March 22, 2006, the holders of the Series B preferred stock converted all of the 709,510 outstanding shares of Series B preferred stock into 1,471,234 shares of common stock. The Series B preferred stock was carried at $705,536. The conversion into common stock was at $0.48 per share. No beneficial conversion option was recognized at the date of the conversion.
Common Stock – On March 22, 2006, the Company issued 829,437 shares of common stock to a finder for services rendered to Creative in connection with the acquisition of TetriDyn. The services primarily related to Creative, the acquired shell company. Management has determined that the value of the services rendered to TetriDyn in connection with the acquisition of Creative were $40,000. Accordingly, the Company valued the issuance of the common shares at $40,000, or $0.05 per share.
During January 2006, the Company issued 91,248 shares of common stock to employees upon exercise of stock options, recognized as stock issued for services. The common shares issued were valued at $44,005, or $0.48 per share.
14
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report.
Certain information included herein contains statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, such as statements relating to our anticipated revenues, gross margin and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity, and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include those relating to our liquidity requirements, the continued growth of the mobility software industry, the success of our product-development, marketing, and sales activities, vigorous competition in the software industry, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, the inherent uncertainty and costs of prolonged arbitration or litigation, and changes in federal or state tax laws or the administration of such laws.
Overview
We provide software consulting services, develop wireless technology and products, and resell third-party software focused in the healthcare industry. Our business was founded as an Idaho corporation, TetriDyn Solutions, Inc. On March 22, 2006, we completed a share exchange with Creative Vending Corp., then inactive, that resulted in TetriDyn Solutions, Inc. becoming a wholly-owned subsidiary of the Florida corporation, the legal acquirer. For accounting purposes, the Idaho corporation was the accounting acquirer because its management and controlling shareholders continued to manage and control the consolidated enterprise following the exchange. In June 2006, we changed our corporate domicile from Florida to Nevada.
The objectives of our software are to integrate technology and data and to increase professional or worker productivity through the use of customized data input screens and wireless technologies. We have developed and are offering on a limited basis our AeroMD electronic medical records, or EMR, software product. AeroMD EMR is a turnkey, healthcare industry software product that provides medical practitioners with the ability to create, store, and access mobile electronic medical records. AeroMD EMR provides (i) high efficiency encryption and rapid secure wireless transmission of data, (ii) customized medical specialization specific on-screen input forms, and (iii) integration of stored data with third-party technologies. In addition, we are in the process of designing and developing our DBFusion software product, which is intended to provide integration of data from multiple locations and sources, as well as other products.
Accounting Policies
Our unaudited condensed consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Management’s estimates and assumptions may also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates upon subsequent resolution of identified matters.
15
Revenue Recognition
Our AeroMD EMR software is provided as turnkey software that has been customized for specific medical specializations. We typically install the software at the customer’s location for a fee and charge the customer a monthly license fee, based on the number of operating workstations, under a one- or two-year usage agreement. The customer is entitled to all systems upgrades during the one- or two-year license. At the end of two years, customers may continue using Aero MD by entering into a new license with us. We also sell installation and post-contract telephone support service contracts on an hourly basis. We do not provide any rights of return or warranties on our AeroMD EMR software.
Revenue from software licenses and related installation and support services is recognized when earned and realizable, which is when persuasive evidence of an arrangement exists, services, if requested by the customers, have been rendered and are determinable, and collectibility is reasonably assured. Amounts billed to customers prior to these criteria being met are deferred. Revenue from the sale of software is recognized when delivered to the customer or upon installation of the software if an installation contract exists. Revenue from post-contract telephone support service contracts is recognized as the services are provided, determined on an hourly basis. Revenue applicable to multiple-element fee arrangements is divided among the software, the installation, and post-contract support service contracts using vendor-specific objective evidence of fair value. Fair value is evidenced by the prices charged when the software and the services are sold as separate products or arrangements.
We also provide information technology management consulting services. To date, these services have been primarily in the hospital industry. These services are paid for on a monthly basis and for a flat-fee, which is not cancelable or refundable. Revenue for these services is recognized in the month in which it is received.
Description of Expenses
General and administrative expenses consist primarily of professional fees, salaries, and related costs for accounting, administration, finance, human resources, information systems, and legal personnel.
Selling and marketing expenses consist primarily of advertising, promotional activities, trade shows, travel, and personnel-related expenses.
Research and development expenses consist of payroll and related costs for software engineers, management personnel, and the costs of materials used by these employees in the development of new or enhanced product offerings.
Consulting services expenses consist of non-payroll expenses (e.g., benefits) for personnel who are supporting consulting service contracts.
In accordance with Financial Accounting Standards Board SFAS No. 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed, development costs incurred in the research and development of new software products to be sold, leased, or otherwise marketed are expensed as incurred until technological feasibility in the form of a working model has been established. Internally-generated capitalizable software development costs have not been material to date. We have charged our software development cost to research and development expense in our statements of operations.
16
Property and equipment are recorded at cost. Maintenance, repairs, and renewals that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Property and equipment are depreciated using the straight-line method over the estimated useful lives of the assets. Gains or losses on dispositions of property and equipment are included in the results of operations when realized.
Results of Operations
Comparison of Six and Three Months Ended June 30, 2006 and 2005
Revenues
Our revenue was $271,821 and $240,382 for the six and three months ended June 30, 2006, respectively, compared to $159,677 and $69,800 for the six and three months ended June 30, 2005, respectively, representing an increase of $112,144, or 70%, and $170,582, or 244%, for the six- and three-month periods, respectively. The increase in revenues was due to a consulting services contract with a regional hospital and increased AeroMD and third-party software sales principally during the quarter ended June 30, 2006.
Cost of Revenue
Our cost of revenue was $107,009 and $89,719 for the six and three months ended June, 2006, respectively, compared to $54,364 and $9,612 for the six and three months ended June 30, 2005, respectively, representing an increase of $52,645, or 97%, and $80,107, or 833%, for the six- and three-month periods, respectively. The gross margin percentage on revenue was 61% and 63% for the six and three months ended June 30, 2006, respectively, and 66% and 86% for the six and three months ended June 30, 2005, respectively. The increased cost of revenue was due to the initiation of a consulting service contract, which we performed by reassigning some personnel from administrative and research and development functions. This reassignment increased cost of revenue and correspondingly decreased operating costs, which also affected the gross margin percentage in 2006.
Although the net changes and percent changes with respect to our revenues and our cost of revenue for the six and three months ended June 30, 2006 and 2005, are summarized above, the trends contained therein are limited and should not be viewed as a definitive indication of our future results.
Operating Expenses
General and Administrative — General and administrative expenses, including noncash compensation expense, were $576,245 and $109,211 for the six and three months ended June 30, 2006, respectively, compared to $103,087 and $75,571 for the six and three months ended June 30, 2005, respectively, representing an increase of $473,158, or 4590%, and $33,640, or 45%, for the six- and three-month periods, respectively. The increase in our general and administrative expenses from the six- and three-month periods ended June 30, 2006, as compared to the six and three months ended June 20, 2005, reflects legal, accounting, administration, and other consulting fees incurred in 2006 directly related to the reverse acquisition of TetriDyn Solutions, Inc. by Creative Vending Corp., the name and domicile change to Nevada, and Securities and Exchange Commission filing requirements.
17
Selling and Marketing — Selling and marketing expenses, including noncash compensation expense, were $121,036 and $66,301 for the six and three months ended June 30, 2006, respectively, compared to $41,523 and $15,121 for the six and three months ended June 30, 2005, respectively, representing an increase of $79,513, or 191%, and $51,180, or 338%, for the six- and three-month periods, respectively. The increase in our selling and marketing expenses from the six and three months ended June 30, 2006, as compared to the six and three months ended June 30, 2005, reflects our increased focus on marketing, including increased sales staff, advertising, and customer contact.
Research and Development Expenses — Research and development expenses were $89,478 and $44,296 for the six and three months ended June 30, 2006, respectively, compared to $103,158 and $59,512 for the six and three months ended June 30, 2005, respectively, representing a decrease of $13,680, or 13%, and $15,216, or 26%, for the six- and three-month periods, respectively. The decrease in research and development expenses reflects our increased focus on consulting services contract and sales and marketing activities while reducing our focus on research and development activities.
Interest expense was $41,600 and $13,603 for the six and three months ended June 30, 2006, respectively, as compared to $55,544 and $43,497 for the six and three months ended June 30, 2005 respectively, a decrease of $13,944, or 25%, and $29,894, or 69%, for the six- and three-month periods, respectively. The decrease in interest expense related primarily to our conversion of outstanding debt to common stock in connection with the reverse acquisition, thereby reducing our interest expense.
Liquidity and Capital Resources
At June 30, 2006, our principal sources of liquidity consisted of $81,864 of cash, as compared to $108,311 of cash December 31, 2005. In addition, our stockholders’ deficit was $737,753 at June 30, 2006, compared to stockholders’ deficit of $1,669,052 at December 31, 2005, a decrease in the deficit of $931,299. The increase in value reflects the conversion of pre-acquisition Series A redeemable preferred stock to common stock and the conversion of a $250,000 loan to common stock in connection with the reverse acquisition completed in March 2006.
Our operations used net cash of $132,951 during the six months ended June 30, 2006, as compared to $89,890 of net cash used during the six months ended June 30, 2005. The $43,061 increase in the net cash used by our operating activities primarily resulted from acquisition expenses and increased advertising and marketing efforts.
Investing activities for the six months ended June 30, 2006, used $5,918 of net cash, as compared to $300 of net cash used during the six months ended June 30, 2005. The increase in net cash used related primarily to the purchase of additional computer equipment in support of the consulting services contract personnel engaged in 2006.
Financing activities provided $112,422 during the six months ended June 30, 2006, compared to providing net cash of $94,837 during the six months ended June 30, 2005. The increase of $17,585 of net cash provided in financing activities primarily resulted from increased sales of Series B preferred stock during the first quarter of 2006.
We have no significant contractual obligations or commercial commitments not reflected on our balance sheet as of this date.
18
ITEM 3. CONTROLS AND PROCEDURES
Restatement of Previously Issued Financial Statements
We had previously carried out an evaluation of the effectiveness of the design and operation of the disclosure controls and procedures and had previously concluded that such disclosure controls and procedures were effective. Subsequent to our original 10-QSB filing, we have restated our condensed consolidated financial statements for the six months ended June 30, 2006, as discussed in Note 2 to the unaudited condensed consolidated financial statements included within Part I, Item 1 of this report.
As a result, we have reassessed our evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon our reassessed evaluation, management, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report (June 30, 2006).
In an effort to remediate the material weakness in our internal control over financial reporting described above, management has subsequently implemented a revised process to recognize stock value tied to an agreement at the time all contingencies associated with an agreement have been met. Accordingly, management believes this process has remediated the material weakness discussed above.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are, from time to time, a party to legal proceedings arising out of our business. We believe that there are no proceedings pending or threatened against us which, if determined adversely, would have a material adverse effect on our business, financial condition, and results of operations or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 15, 2006, at a special meeting of our shareholders, the shareholders voted as indicated on the following matters submitted to them for consideration:
|
(a) |
to approve the change of our domicile from Florida to Nevada through a merger with our Nevada subsidiary, which survived the merger, with the effect of changing our name to TetriDyn Solutions, Inc. and adopting the articles of incorporation and bylaws of our Nevada subsidiary, as shown below: |
|
For |
16,362,024 |
Against |
0 |
Abstain |
0 |
|
(b) |
to approve our 2006 Long-Term Incentive Plan as shown below: |
|
For |
16,361,974 |
Against |
50 |
Abstain |
0 |
No other business was presented.
19
ITEM 6. EXHIBITS
The following exhibits are filed as a part of this report:
Exhibit Number* |
|
Title of Document |
|
Location |
|
|
|
|
|
Item 3 |
|
Articles of Incorporation and Bylaws |
|
|
Item 3.01 |
|
Articles of Incorporation of TetriDyn Solutions, Inc. dated May 15, 2006 |
|
Incorporated by reference from the current report on Form 8-K for June 1, 2006, filed June 7, 2006. |
Item 3.02 |
|
Bylaws of TetriDyn Solutions, Inc. adopted May 26, 2006 |
|
Incorporated by reference from the current report on Form 8-K for June 1, 2006, filed June 7, 2006. |
Item 31 |
|
Rule 13a-14(a)/15d-14(a) Certifications |
|
|
31.01 |
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14 |
|
Attached |
Item 32 |
|
Section 1350 Certifications |
|
|
32.01 |
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief Financial Officer) |
|
Attached |
_______________
* |
All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document. |
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
TETRIDYN SOLUTIONS, INC. | ||
|
(Registrant) |
| |
Date: June 14, 2007 |
By: /s/ David W. Hempstead |
David W. Hempstead, President, Chief Executive Officer, and Chief Financial Officer
20