UNITED STATES SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2016
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ___________ to ___________
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Commission File Number 033-19411-C
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TetriDyn Solutions, Inc.
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(Exact name of registrant as specified in its charter)
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Nevada
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20-5081381
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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800 South Queen Street, Lancaster, PA 17603
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(Address of principal executive offices, including zip code)
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(717) 715-0238
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(Registrant’s telephone number, including area code)
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n/a
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(Former name, former address and former fiscal year, if changed since last report)
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Yes
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x
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No
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o
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Yes
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x
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No
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o
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Large accelerated filer o
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Accelerated filer ¨
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Non-accelerated filer o
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Smaller reporting company x
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Yes
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o
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No
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x
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Item
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Description
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Page
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PART I—FINANCIAL INFORMATION
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Item 1
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Financial Statements
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Condensed Consolidated Balance Sheets (Unaudited)
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3
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Condensed Consolidated Statements of Operations (Unaudited)
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4
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Condensed Consolidated Statements of Cash Flows (Unaudited)
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5
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Notes to the Condensed Consolidated Financial Statements (Unaudited)
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6
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Item 2
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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11
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Item 3
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Quantitative and Qualitative Disclosures about Market Risk
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15
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Item 4
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Controls and Procedures
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15
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PART II—OTHER INFORMATION
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Item 3
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Defaults upon Senior Securities
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16
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Item 6
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Exhibits
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17
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Signature
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18
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TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
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CONDENSED CONSOLIDATED BALANCE SHEETS
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March 31,
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December 31,
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2016
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2015
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(Unaudited)
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ASSETS
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Current Assets
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Cash
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$ 365
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$ 4,667
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Prepaid Expenses
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-
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2,478
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Total Current Assets
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365
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7,145
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Total Assets
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$ 365
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$ 7,145
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LIABILITIES
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Current Liabilities
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Accounts payable
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$ 443,525
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$ 473,732
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Accrued liabilities
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338,340
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321,827
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Notes payable
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299,612
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299,612
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Convertible notes payable to and cash advances from related party, net of debt discount
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548,900
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467,628
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Total Current Liabilities
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1,630,377
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1,562,799
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Total Liabilities
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$ 1,630,377
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$ 1,562,799
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COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS' DEFICIT
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Preferred stock - $0.001 par value
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Authorized:
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5,000,000 shares
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Issued and outstanding:
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0 shares and 0
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shares, respectively
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-
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-
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Common stock - $0.001 par value
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Authorized:
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100,000,000 shares
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Issued and outstanding:
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53,404,140 shares and
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53,404,140 shares, respectively
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53,404
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53,404
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Additional paid-in capital
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3,168,324
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3,164,991
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Accumulated deficit
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(4,851,740)
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(4,774,049)
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Total Stockholders' Deficit
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(1,630,012)
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(1,555,654)
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Total Liabilities and Stockholders' Deficit
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$ 365
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$ 7,145
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See the accompanying notes to condensed consolidated unaudited financial statements.
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TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
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For the Three Months Ended
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March 31,
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2016
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2015
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Revenue
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$ 49
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$ 1,690
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Cost of Revenue
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-
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-
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Gross Profit
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49
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1,690
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Operating Expenses
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General and administrative
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21,167
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8,895
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Professional fees
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25,076
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35,510
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Total Operating Expenses
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46,243
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44,405
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Net Loss from Operations
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(46,194)
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(42,715)
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Other Expenses
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Interest Expense
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(31,497)
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(11,798)
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Total Other Expenses
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(31,497)
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(11,798)
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Net Loss from Operations before
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Provision for Income Taxes
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(77,691)
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(54,513)
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Provision for Income Taxes
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-
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-
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Net Loss
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(77,691)
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(54,513)
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Total Basic and Diluted Loss Per Common Share
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$ -
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$ -
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Basic and Diluted Weighted-Average
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Common Shares Outstanding
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53,404,140
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30,348,482
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See the accompanying notes to condensed consolidated unaudited financial statements.
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TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
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For the Three Months Ended
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March 31,
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2016
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2015
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Cash Flows from Operating Activities
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Net Loss
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$ (77,691)
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$ (54,513)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Amortization of note discount
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17,105
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-
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Changes in operating assets and liabilities:
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Prepaid expenses
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2,478
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-
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Accrued expenses
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16,513
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7,092
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Accounts payable
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(30,207)
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40,215
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Customer deposits
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-
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(1,555)
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Net Cash Used in Operating Activities
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(71,802)
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(8,761)
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Cash Flows from Investing Activities | - | - | |
Cash Flows from Financing Activities
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Proceeds from related party debt
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67,500
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-
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Proceeds from sale of common stock
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-
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100,000
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Net Cash Provided by Financing Activities
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67,500
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100,000
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Net Increase (Decrease) in Cash
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(4,302)
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91,239
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Cash at Beginning of Period
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4,667
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178
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Cash at End of Period
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$ 365
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$ 91,417
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Supplemental Disclosure of Cash Flow Information:
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Cash paid for income taxes
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$ -
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$ -
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Cash paid for interest expense and lines of credit
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$ 4,256
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$ 4,703
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Noncash Transactions:
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Convertible note payable issued in exchange for existing convertible notes payable
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$ -
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$ 394,380
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Cancellation of preferred stock
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$ -
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$ 1,200
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Beneficial Conversion Feature on Convertible Notes Payable
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$ 3,333
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$ -
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See the accompanying notes to condensed consolidated unaudited financial statements.
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Level 1
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Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
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Level 2
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Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
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Level 3
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Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
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●
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Control Environment—We did not maintain an effective control environment for internal control over financial reporting.
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●
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Segregation of Duties—As a result of limited resources and staff, we did not maintain proper segregation of incompatible duties. The effect of the lack of segregation of duties potentially affects multiple processes and procedures.
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●
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Entity Level Controls—We failed to maintain certain entity-level controls as defined by the framework issued by COSO. Specifically, our lack of staff does not allow us to effectively maintain a sufficient number of adequately trained personnel necessary to anticipate and identify risks critical to financial reporting. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, due to lack of adequate staff with such expertise.
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●
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Access to Cash—One executive had the ability to transfer from our bank accounts.
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Exhibit
Number*
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Title of Document
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Location
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Item 10
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Material Contracts
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10.25
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Promissory Note dated February 25, 2016
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Incorporated by reference from the current report on Form 8-K filed March 1, 2016.
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10.28
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TetriDyn Solutions, Inc. 2016 Incentive Plan
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Incorporated by reference from the registration statement on Form S-8 filed April 7, 2016.
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Item 31
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Rule 13a-14(a)/15d-14(a) Certifications
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31.01
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Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14
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Attached.
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Item 32
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Section 1350 Certifications
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32.01
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Attached.
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Item 101
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Interactive Data
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101
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Interactive Data files
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Attached
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*
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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. Omitted numbers in the sequence refer to documents previously filed as an exhibit.
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TETRIDYN SOLUTIONS, INC.
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Date: May 16, 2016
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By:
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/s/ Jeremy P. Feakins | |
Jeremy P. Feakins
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Chief Executive Officer and
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Chief Financial Officer
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(1)
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the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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Document And Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2016 |
May. 13, 2016 |
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Document And Entity Information | ||
Entity Registrant Name | TETRIDYN SOLUTIONS INC | |
Entity Central Index Key | 0000827099 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | Yes | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 60,404,140 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2016 |
Dec. 31, 2015 |
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Statement of Financial Position [Abstract] | ||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued (in shares) | 0 | 0 |
Preferred Stock, Shares Outstanding (in shares) | 0 | 0 |
Common Stock, Par Value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized (in shares) | 100,000,000 | 100,000,000 |
Common Stock, Shares Issued (in shares) | 53,404,140 | 53,404,140 |
Common Stock, Shares Outstanding (in shares) | 53,404,140 | 53,404,140 |
Consolidated Statements of Operations and Comprehensive Income - USD ($) |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Income Statement [Abstract] | ||
Revenue | $ 49 | $ 1,690 |
Cost of Revenue | 0 | 0 |
Gross Profit | 49 | 1,690 |
Operating Expenses | ||
General and administrative | 21,167 | 8,895 |
Professional fees | 25,076 | 35,510 |
Total Operating Expenses | 46,243 | 44,405 |
Net Loss from Operations | (46,194) | (42,715) |
Other Expenses | ||
Interest Expense | (31,497) | (11,798) |
Total Other Expenses | (31,497) | (11,798) |
Net Loss before Provision for Income Taxes | (77,691) | (54,513) |
Provision for Income Taxes | 0 | 0 |
Net Loss | $ (77,691) | $ (54,513) |
Total Basic and Diluted Loss Per Common Share | $ 0.00 | $ 0.00 |
Basic and Diluted Weighted-Average Common Shares Outstanding | 53,404,140 | 30,348,482 |
1. Nature of Business and Basis of Presentation |
3 Months Ended |
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Mar. 31, 2016 | |
Nature Of Business And Basis Of Presentation | |
Nature of Business and Basis of Presentation | Nature of BusinessTetriDyn Solutions, Inc. (the Company), optimizes business and information technology (IT) processes by using systems engineering methodologies, strategic planning, and system integration to develop radio-frequency identification products to address location tracking issues in the healthcare industry, including issues surrounding patient care; optimization of business processes for healthcare providers; improved reporting of incidents; and increased revenues for provided services.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.
It is managements opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made that are necessary for a fair financial statements presentation. The results for any interim period are not necessarily indicative of the results to be expected for the year. The interim condensed consolidated financial statements should be read in conjunction with the Companys annual report on Form 10-K for the year ended December 31, 2015, including the financial statements and notes thereto. |
2. Organization and Summary of Significant Accounting Policies |
3 Months Ended | |||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||
Notes To Financial Statements | ||||||||||||||||
Organization and Summary of Significant Accounting Policies | Principles of ConsolidationThe condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, an Idaho corporation also named TetriDyn Solutions, Inc. Intercompany accounts and transactions have been eliminated in consolidation.
Business SegmentsThe Company had only one business segment for the three months ended March 31, 2016 and 2015.
Use of EstimatesIn preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from these estimates.
Cash and Cash EquivalentsFor purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
Revenue RecognitionRevenue from software licenses, related installation, and support services is recognized when earned and realizable. Revenue is earned and realizable when persuasive evidence of an arrangement exists; services, if requested by the customers, have been rendered and are determinable; and collectability is reasonably assured. Amounts received from customers before 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 support service is recognized as the services are provided, which is determined on an hourly basis. The Company recognizes the revenue received for unused support hours under support service contracts that have had no support activity after two years. 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, as evidenced by the prices charged when the software and the services are sold as separate products or arrangements.
The Company had one customer that represented 100% of its sales for the three-month periods ended March 31, 2016, and 2015.
Going ConcernThe accompanying unaudited condensed consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern. As reflected in the accompanying condensed consolidated financial statements, the Company had a net loss of $77,691 and used $71,802 of cash in operating activities for the three months ended March 31, 2016. The Company had a working capital deficiency of $1,630,012 and a stockholders deficit of $1,630,012 as of March 31, 2016. These factors raise substantial doubt about the Companys ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on its ability to increase sales and obtain external funding for its product development. The financial statements do not include any adjustments that may result from the outcome of this uncertainty.
Income TaxesThe Company accounts for income taxes under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740-10-25, Income Taxes. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Companys recent equity raises, and possibly past restructuring events, have resulted in the occurrence of a triggering event as defined in Section 382 of the Internal Revenue Code of 1986, as amended, which could limit the use of the Companys net operating loss carryforwards. The Company has yet to undertake a study to quantify any limitations on the use of its net operating loss carryforwards.
Fair Value of Financial InstrumentsASC 820, Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
The Companys financial instruments consist of accounts receivable, prepaid expenses, accounts payable, accrued liabilities, customer deposits, notes payable, and related-party convertible note payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments, the fair value of the Companys cash equivalents is determined based on Level 1 inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate fair value due to the relatively short period to maturity for these instruments.
Property and EquipmentProperty 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 life of the asset, which is set at five years for computing equipment and vehicles and seven years for office equipment. Gains or losses on dispositions of property and equipment are included in the results of operations when realized.
Net Loss per Common ShareBasic and diluted net loss per common share are computed based upon the weighted-average stock outstanding as defined by ASC 260, Earnings Per Share. As of March 31, 2016 and 2015, 1,033,585 and 0, respectively, of common share equivalents for granted stock options were antidilutive and not used in the calculation of diluted net loss per share. Additionally, as of March 31, 2016 and 2015, 21,528,176 and 15,856,613, respectively, of common share equivalents for convertible note payables were antidilutive and not used in the calculation of diluted net loss per share. |
3. Recent Accounting Pronouncements |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | In June 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The update gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35, Revenue RecognitionConstruction-Type and Production-Type Contracts. The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This updated guidance is not expected to have a material impact on the Companys results of operations, cash flows, or financial condition.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial StatementsGoing Concern, which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entitys ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early application is permitted. The adoption of ASU 2014-15 is not expected to have a material effect on the Companys consolidated financial statements.
In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in ASU No. 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on its results of operations, cash flows, or financial condition.
All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable. |
4. Accounts Payable and Accrued Liabilities |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Notes To Financial Statements | |
Accounts Payable and Accrued Liabilities | As of March 31, 2016, the Company had $443,525 in accounts payable, $261,609 of which was due on multiple revolving credit cards under the name of the Companys former chief executive officer (now deceased) or the name of the Companys former president. These amounts represent advances to the Company from funds borrowed on credit cards in the names of these officers as an accommodation to the Company at a time when it was unable to obtain advances on its own credit. The obligations bear varying rates of interest between 5.25% and 27.24%. The Company agreed to reimburse these officers for these liabilities.
As of March 31, 2016, the Company had $338,340 in accrued liabilities. The accrued liabilities included $213,436 in unpaid salaries to two of its former officers, which were assigned by the officers to JPF Venture Group, Inc. (JPF), pursuant to an Investment Agreement dated March 12, 2015. |
5. Convertible Notes Payable and Advances Owed to Related Parties and Office Rental |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Notes To Financial Statements | |
Convertible Notes Payable and Advances Owed to Related Parties and Office Rental | On March 19, 2015, the Company exchanged convertible notes issued in 2010, 2011, and 2012, payable to its officers and directors in the aggregate principal amount of $320,246, plus accrued but unpaid interest of $74,134, into a single, $394,380 consolidated convertible note. The consolidated convertible note was assigned to JPF Venture Group, Inc. (JPF), the Companys principal stockholder and an investment entity that is majority-owned by Jeremy Feakins, the Companys director, chief executive officer, and chief financial officer. The new consolidated note is convertible to common stock at $0.025 per share, the approximate market price of the Companys common stock as of the date of issuance. The note bears interest at 6% per annum and is due and payable within 90 days after demand. As of March 31, 2016, accrued but unpaid interest on this note was $24,588.
On June 23, 2015, the Company borrowed $50,000 from its principal stockholder JPF pursuant to a promissory note. The Company received $25,000 on July 31, 2015, and the remaining $25,000 on August 18, 2015. The terms of the note are as follows: (i) interest is payable at 6% per annum; (ii) the note is payable 90 days after demand; and (iii) the payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of the Companys common stock at the rate of one share each for $0.03 of principal amount of the note. As of March 31, 2016, the outstanding balance was $50,000, plus accrued interest of $1,958. The Company recorded a debt discount of $50,000 for the fair value of the beneficial conversion feature. As of March 31, 2016, the Company amortized $50,000 of the debt discount.
On November 23, 2015, the Company borrowed $50,000 from its principal stockholder JPF pursuant to a promissory note. The Company received $37,500 before December 31, 2015, and the remaining $12,500 was received after the year-end. The terms of the note are as follows: (i) interest is payable at 6% per annum; (ii) the note is payable 90 days after demand; and (iii) the payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of the Companys common stock at the rate of one share each for $0.03 of principal amount of the note. As of March 31, 2016, the outstanding balance was $50,000, plus accrued interest of $969. The Company recorded a debt discount of $24,667 for the fair value of the beneficial conversion feature of the $37,500 received before December 31, 2015. As of March 31, 2016, the Company amortized $24,667 of the debt discount on that debt. The Company recorded a debt discount on the remaining $12,500 of $3,333. As of March 31, 2016, the company amortized $2,851 of the debt discount. On February 25, 2016, the Company borrowed $50,000 and $5,000 from its principal stockholder JPF pursuant to promissory notes. The terms of the notes are as follows: (i) interest is payable at 6% per annum; (ii) the note is payable 90 days after demand; and (iii) the payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of our common stock at the rate of one share for each $0.03 of principal amount of the note. As of March 31, 2016, the total outstanding balance was $55,000, plus accrued interest of $249. No beneficial conversion feature existed as the stock price on the date of issuance was equal to the conversion price. On March 30, 2016, the Companys principal stockholder JPF advanced $5,000, payable on demand. As of March 31, 2016, the Company had $548,900 in convertible notes and a cash advance payable due to related parties, with $27,764 in accrued interest and debt discount of $482. On March 1, 2015, the Company entered into a lease agreement with a company whose managing partner is the Companys Chief Executive Officer, and rents space on a month-to-month basis with no long-term commitment. The monthly rent is $2,500 per month and commenced on April 1, 2015, when the Company began occupying the space. Rent expense per this agreement is $7,500 for the three months ended March 31, 2016.
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6. Notes Payable in Default |
3 Months Ended |
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Mar. 31, 2016 | |
Notes To Financial Statements | |
Notes Payable in Default | As of October 25, 2011, a loan from one economic development entity was in default. The loan principal was $50,000 with accrued interest of $13,787 through March 31, 2016. The Company plans to work with the entity to arrange for an extension on the loan.
As of March 31, 2016, the Company was delinquent in payments on two loans to a second economic development entity. The Company owed this economic entity $73,470 in late payments, with an outstanding balance of $163,791 and accrued interest of $31,978 as of March 31, 2016. Both loans were guaranteed by two of the Companys officers. One loan is secured by liens on intangible software assets, and the other loan is secured by the officers personal property. The Company is working with this entity to bring the payments current as soon as cash flow permits.
As of March 31, 2016, the Company was delinquent in payments on a loan to a third economic development entity. The Company owed the third economic entity $82,070 in late payments, with an outstanding balance of $85,821 and accrued interest of $22,706 as of March 31, 2016. This loan is secured by a junior lien on all the Companys assets and shares of founders common stock. The Company is working with this entity to bring the payments current as soon as cash flow permits. |
7. Subsequent Events |
3 Months Ended |
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Mar. 31, 2016 | |
Notes To Financial Statements | |
Subsequent Events | Stock-Based CompensationOn April 6, 2016, the Companys board of directors approved the 2016 Long-Term Incentive Plan under which up to 12,000,000 shares of common stock may be issued. On April 6, 2016, 7,000,000 shares of common stock were issued to officers and advisors in accordance with the 2016 Long-Term Incentive Plan. The 2016 plan is to be administered either by the board of directors or by the appropriate committee to be appointed from time to time by the board of directors. Awards granted under the 2016 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 Companys 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 Companys success. The 2016 plan must be approved by the stockholders within one year of board adoption in order to permit the grant of incentive stock options.
Equity instruments issued to other than employees are recorded on the basis of the fair value of the instruments, as required by ASC 505, Share-Based Payment. Emerging Issues Task Force, or EITF, Issue 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, defines the measurement date and recognition period for such instruments. In general, the measurement date is when either: (a) a performance commitment, as defined, is reached; or (b) the earlier of: (i) the nonemployee performance is complete; or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the EITF.
Effective January 1, 2006, the Company adopted the provisions of ASC 505 for its stock-based compensation plan. Under ASC 505, 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 period, which is typically through the date the options or awards vest. The Company adopted ASC 505 using the modified prospective method. Under this method, for all stock-based options and awards granted before 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 ASC 505 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.
Related-Party AdvanceOn April 27, 2016, the Companys principal stockholder JPF advanced $10,000, payable on demand. |
2. Organization and Summary of Significant Accounting Policies (Policies) |
3 Months Ended | |||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||
Organization And Summary Of Significant Accounting Policies Policies | ||||||||||||||||
Nature of Business | TetriDyn Solutions, Inc. (the Company), optimizes business and information technology (IT) processes by using systems engineering methodologies, strategic planning, and system integration to develop radio-frequency identification products to address location tracking issues in the healthcare industry, including issues surrounding patient care; optimization of business processes for healthcare providers; improved reporting of incidents; and increased revenues for provided services.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.
It is managements opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made that are necessary for a fair financial statements presentation. The results for any interim period are not necessarily indicative of the results to be expected for the year. The interim condensed consolidated financial statements should be read in conjunction with the Companys annual report on Form 10-K for the year ended December 31, 2015, including the financial statements and notes thereto. |
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Principles of Consolidation | The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, an Idaho corporation also named TetriDyn Solutions, Inc. Intercompany accounts and transactions have been eliminated in consolidation. |
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Business Segments | The Company had only one business segment for the three months ended March 31, 2016 and 2015. |
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Use of Estimates | In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from these estimates. |
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Cash and Cash Equivalents | For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. |
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Revenue Recognition | Revenue from software licenses, related installation, and support services is recognized when earned and realizable. Revenue is earned and realizable when persuasive evidence of an arrangement exists; services, if requested by the customers, have been rendered and are determinable; and collectability is reasonably assured. Amounts received from customers before 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 support service is recognized as the services are provided, which is determined on an hourly basis. The Company recognizes the revenue received for unused support hours under support service contracts that have had no support activity after two years. 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, as evidenced by the prices charged when the software and the services are sold as separate products or arrangements.
The Company had one customer that represented 100% of its sales for the three-month periods ended March 31, 2016, and 2015. |
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Going Concern | The accompanying unaudited condensed consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern. As reflected in the accompanying condensed consolidated financial statements, the Company had a net loss of $77,691 and used $71,802 of cash in operating activities for the three months ended March 31, 2016. The Company had a working capital deficiency of $1,630,012 and a stockholders deficit of $1,630,012 as of March 31, 2016. These factors raise substantial doubt about the Companys ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on its ability to increase sales and obtain external funding for its product development. The financial statements do not include any adjustments that may result from the outcome of this uncertainty. |
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Income Taxes | The Company accounts for income taxes under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740-10-25, Income Taxes. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Companys recent equity raises, and possibly past restructuring events, have resulted in the occurrence of a triggering event as defined in Section 382 of the Internal Revenue Code of 1986, as amended, which could limit the use of the Companys net operating loss carryforwards. The Company has yet to undertake a study to quantify any limitations on the use of its net operating loss carryforwards. |
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Fair Value of Financial Instruments | ASC 820, Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
The Companys financial instruments consist of accounts receivable, prepaid expenses, accounts payable, accrued liabilities, customer deposits, notes payable, and related-party convertible note payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments, the fair value of the Companys cash equivalents is determined based on Level 1 inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate fair value due to the relatively short period to maturity for these instruments. |
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Property and Equipment | 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 life of the asset, which is set at five years for computing equipment and vehicles and seven years for office equipment. Gains or losses on dispositions of property and equipment are included in the results of operations when realized. |
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Net Loss per Common Share | Basic and diluted net loss per common share are computed based upon the weighted-average stock outstanding as defined by ASC 260, Earnings Per Share. As of March 31, 2016 and 2015, 1,033,585 and 0, respectively, of common share equivalents for granted stock options were antidilutive and not used in the calculation of diluted net loss per share. Additionally, as of March 31, 2016 and 2015, 21,528,176 and 15,856,613, respectively, of common share equivalents for convertible note payables were antidilutive and not used in the calculation of diluted net loss per share. |
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Recent Accounting Pronouncements | In June 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The update gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35, Revenue RecognitionConstruction-Type and Production-Type Contracts. The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This updated guidance is not expected to have a material impact on the Companys results of operations, cash flows, or financial condition.
In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial StatementsGoing Concern, which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entitys ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early application is permitted. The adoption of ASU 2014-15 is not expected to have a material effect on the Companys consolidated financial statements.
In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU No. 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU No. 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in ASU No. 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. The Company is currently reviewing the provisions of this ASU to determine if there will be any impact on its results of operations, cash flows, or financial condition.
All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable. |
2. Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Notes To Financial Statements | |||
Net Loss | $ (77,691) | ||
Net Cash Provided by (Used in) Operating Activities | (71,802) | $ (8,761) | |
Working Capital | (1,630,012) | ||
Stockholders' Equity Attributable to Parent | $ (1,630,012) | $ (1,555,654) | |
Antidilutive shares excluded from calculation of earnings per share | 21,528,176 | 15,856,613 |
4. Accounts Payable and Accrued Liabilities (Details Narrative) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Notes To Financial Statements | ||
Accounts payable, net | $ 443,525 | $ 473,732 |
Revolving Credit Arrangements | 261,609 | |
Accrued liabilities | 338,340 | $ 321,827 |
Unpaid salaries | $ 213,436 |
5. Convertible Notes Payable and Advances Owed to Related Parties and Office Rental (Details Narrative) - USD ($) |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Notes To Financial Statements | ||
Convertible notes payable to related party | $ 548,900 | $ 467,628 |
Related Party Note Payables Accrued Interest | 27,764 | |
Debt discount | $ 482 |
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