Ocean Thermal Energy Corp - FORM 10-Q/A

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EX-31.01 - Ocean Thermal Energy Corp	ex3101qa063010.htm
EX-32.01 - Ocean Thermal Energy Corp	ex3201qa063010.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

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

For the quarterly period ended June 30, 2010

Commission File Number 033-19411-C

TetriDyn Solutions, Inc.
(Exact name of registrant as specified in its charter)

Nevada	20-5081381
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1651 Alvin Ricken Drive, Pocatello, ID 83201
(Address of principal executive offices, including zip code)

(208) 232-4200
(Registrant’s telephone number, including area code)

n/a
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

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

Large accelerated filer o	Accelerated filer ¨
Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 12, 2010, issuer had 21,881,863 outstanding shares of common stock, par value $0.001.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS

		June 30,		December 31,
		2010		2009
		(Unaudited)
ASSETS
Current Assets
Cash		$	32,151	$	123,784
Accounts receivable, current portion			22,652		132,706
Inventory			63,432		739
Prepaid expenses			4,328		16,806
Total Current Assets			122,563		274,035
Property and Equipment, net			45,455		43,005
Accounts receivable, net of current portion			3,006		3,088
Total Assets		$	171,024	$	320,128

LIABILITIES
Current Liabilities
Accounts payable		$	243,764	$	217,135
Accrued liabilities			53,312		64,970
Unearned revenue			26,902		33,084
Notes payable, current portion			79,360		113,181
Total Current Liabilities			403,338		428,370
Long-Term Liabilities
Notes payable, net of current portion			316,635		322,905
Convertible notes payable to related party			50,000		-
Total Long-Term Liabilities			366,635		322,905
Total Liabilities			769,973		751,275

COMMITMENTS AND CONTINGENCIES			-		-

STOCKHOLDERS' DEFICIT
Preferred stock - $0.001 par value
Authorized:	5,000,000 shares
Issued and outstanding:	1,200,000 shares and
	1,200,000 shares, respectively		1,200		1,200
Common stock - $0.001 par value
Authorized:	100,000,000 shares
Issued and outstanding:	21,881,863 shares and
	21,881,863 shares, respectively		21,882		21,882
Additional paid-in capital			2,810,330		2,810,330
Accumulated deficit			(3,432,361)		(3,264,559)
Total Stockholders' Deficit			(598,949)		(431,147)

Total Liabilities and Stockholders' Deficit		$	171,024	$	320,128


See the accompanying notes to condensed consolidated unaudited financial statements.

TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
Revenue	$	110,736	$	310,479	$	272,997	$	614,257
Cost of Revenue		45,319		110,980		120,366		213,889
Gross Profit		65,417		199,499		152,631		400,368
Operating Expenses
General and administrative		68,632		99,048		145,039		181,134
Professional fees		6,290		15,510		31,133		36,017
Selling and marketing		17,617		30,870		36,627		54,261
Research and development		38,816		35,170		79,710		64,099
Total Operating Expenses		131,355		180,598		292,509		335,511
Net Profit (Loss) from Operations		(65,938)		18,901		(139,878)		64,857
Other Income (Expenses)
Other Income		-		-		61		64
Interest Income		26		260		122		415
Interest Expense		(14,327)		(4,753)		(28,107)		(10,711)
Total Other Income (Expenses)		(14,301)		(4,493)		(27,924)		(10,232)
Net Profit (Loss) from Continuing Operations before
Provision for Income Taxes		(80,239)		14,408		(167,802)		54,625
Provision for Income Taxes		-		-		-		-
Net Income (Loss) from Continuing Operations	$	(80,239)	$	14,408	$	(167,802)	$	54,625
Discontinued Operations
Loss from Operations of Discontinued Subsidiary	$	-	$	(106,404)	$	-	$	(179,922)
Loss from Discontinued Operations	$	-	$	(106,404)	$	-	$	(179,922)
Net Loss	$	(80,239)	$	(91,996)	$	(167,802)	$	(125,297)

Basic and Diluted Loss Per Common Share
Continuing operations	$	-	$	-	$	(0.01)	$	-
Discontinued operations	$	-	$	-	$	-	$	(0.01)
Total Basic and Diluted Loss Per Common Share	$	-	$	-	$	(0.01)	$	(0.01)

Basic and Diluted Weighted-Average
Common Shares Outstanding		21,881,863		21,381,863		21,881,863		21,381,863

See the accompanying notes to condensed consolidated unaudited financial statements.

TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		For the Six Months Ended
	June 30,
	2010		2009
Cash Flows from Operating Activities
Net Loss	$	(167,802)	$	(125,297)
Less: Net loss from discontinued operations	$	-	$	(179,922)
Profit (Loss) from Continuing Operations	$	(167,802)	$	54,625
Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities from continuing operations:
Depreciation		7,550		6,702
Changes in operating assets and liabilities:
Accounts receivable		36,704		15,224
Inventory		739		-
Prepaid expenses		12,478		8,586
Accrued expenses		(11,658)		37,570
Accounts payable		26,629		(86,256)
Unearned revenue		(6,182)		(32,726)
Net Cash Provided by (Used in) Operating Activities from Continuing Operations		(101,542)		3,725
Net Cash Used in Operating Activities from Discontinued Operations		-		(163,451)
Net Cash Used in Operating Activities		(101,542)		(159,726)
Cash Flows from Investing Activities
Purchase of property and equipment		-		(11,124)
Net Cash Used in Investing Activities from Continuing Operations		-		(11,124)
Net Cash Used in Investing Activities from Discontinued Operations		-		-
Net Cash Used in Investing Activities		-		(11,124)
Cash Flows from Financing Activities
Proceeds from borrowing under related party notes payable		50,000		-
Principal payments on notes payable		(40,091)		(50,708)
Net Cash Provided by (Used in) Financing Activities from Continuing Operations		9,909		(50,708)
Net Cash Provided by (Used in) Financing Activities from Discontinued Operations		-		-
Net Cash Provided by (Used in) Financing Activities		9,909		(50,708)
Net Decrease in Cash		(91,633)		(221,558)
Cash at Beginning of Period		123,784		357,157
Cash at End of Period	$	32,151	$	135,599

Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	-	$	-
Cash paid for interest expense and lines of credit	$	11,116	$	9,975
Supplemental Noncash Investing and Financing:
During the six months ending June 30, 2010, the Company received from a former
subsidiary inventory worth $63,432 and equipment worth $10,000, reducing the
accounts receivable balance from the former subsidiary by $73,432

See the accompanying notes to condensed consolidated unaudited financial statements.

TETRIDYN SOLUTIONS, INC. AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of Presentation

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 management’s 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 the 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 Company’s annual report on Form 10-K for the year ended December 31, 2009, including the financial statements and notes thereto.

Note 2 – Organization and Summary of Significant Accounting Policies

Nature of Business – TetriDyn Solutions, Inc. (the “Company”), specializes in providing business information technology (IT) solutions to its customers. The Company optimizes business and IT processes by utilizing systems engineering methodologies, strategic planning, and system integration to add efficiencies and value to its customers’ business processes and to help its customers identify critical success factors in their business.

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. (“TetriDyn-Idaho”), and results of discontinued operations of its partially owned variable interest entity, Southfork Solutions, Inc., from January 1, 2009, through June 30, 2009. Intercompany accounts and transactions have been eliminated in consolidation.

Business Segments – In 2009, the Company’s services were broadly classified into two principal segments: the business IT solutions segment and the livestock segment. The business IT solutions segment provides business IT solutions within the healthcare industry, although the segment is in the process of expanding the solutions to other select industries. The livestock segment was focused on providing business IT solutions specifically within the livestock industry. The Company’s involvement in the livestock segment ended in the fourth quarter of 2009, and the Company currently has only one segment.

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 and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from these estimates.

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.

Revenue Recognition – The Company’s AeroMD EMR, electronic medical records software, is provided as turnkey software that has been customized for specific medical specializations. The Company installs the software at the customer’s location for a fee and charges 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 term of the agreement. At the end of their contracts, customers may continue using AeroMD by entering into a new license with the Company. The Company also sells installation and post-contract support service contracts on an hourly basis. The Company does not provide any rights of return or warranties on its AeroMD EMR software or on its support service contracts.

Revenue from software licenses and 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 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 support service contracts is recognized as the services are provided, 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 also provides IT management consulting services. These services are paid for on a project basis and on a contracted payment schedule, which is not cancelable or refundable. Revenue for these services is recognized over the contract period.

The Company had two customers that represented more than 10% of sales for either the three- or six-month period ended June 30, 2010 and one customer that represented more than 10% of sales for the three- and six-month periods ended June 30, 2009, as follows:

	Three Months Ended June 30, 2010	Six Months Ended June 30, 2010	Three Months Ended June 30, 2009	Six Months Ended June 30, 2009

Customer A	--	21%	--	--
Customer B	37%	18%	--	--
Customer C	--	--	78%	79%

Going Concern– The accompanying 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 $80,239 and $167,802 for the three and six months ended June 30, 2010, respectively. The Company used $101,542 of cash in operating activities for the six months ended June 30, 2010. The Company had a working capital deficiency of $280,775 and a stockholders’ deficiency of $598,949 as of June 30, 2010. 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 Taxes – The Company utilizes the liability method of accounting for income taxes. Under the liability method, deferred tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities and on the amount of operating loss carryforwards, and are measured using the enacted tax rates and laws that will be in effect when the temporary differences and carryforwards are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.

Fair Value of Financial Instruments – The carrying amounts of the Company’s current portion of accounts receivable, prepaid expenses, accounts payable, accrued liabilities, unearned revenue, notes payable, and notes payable to related parties approximate fair value due to the relatively short period to maturity for these instruments.

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.

Inventory – Inventory is recorded at cost and the Company utilizes the First-In, First-Out (FIFO) cost flow method. Gains or losses on dispositions of inventory are included in the results of operations when realized.

Net Profit (Loss) per Common Share – Basic and diluted net profit (loss) per common share is computed based upon the weighted-average stock outstanding as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 260, “Earnings Per Share.” As of June 30, 2010 and 2009, 3,465,000 and 3,520,500, respectively, of common share equivalents were antidilutive and not used in the calculation of diluted net loss per share.

Stock-Based Compensation – On June 17, 2009, at the Company’s annual shareholders’ meeting, the Company’s shareholders approved the 2009 Long-Term Incentive Plan under which up to 4,000,000 shares of common stock may be issued. The 2009 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 2009 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 that, 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 that are not employees, officers, or directors, but contribute to the Company’s success.

Equity instruments issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB 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 non-employee 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 FASB ASC 505 for its stock-based compensation plan. Under FASB 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 FASB ASC 505 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 FASB 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.

Reclassifications – Certain amounts in the 2009 information have been reclassified to conform to the 2010 presentation. These reclassifications had no impact on the Company’s net loss or cash flows.

Note 3 – Inventory

The Company’s inventory is comprised of regular inventory and direct materials to be used in the manufacture of new products. The Company had no regular inventory as of June 30, 2010, and its inventory as of December 31, 2009, consisted of one piece of equipment valued at $739. During the six months ended June 30, 2010, the Company received direct materials in exchange for reduction of a former variable interest subsidiary’s debt to the Company by $63,462.

Note 4 – Notes Payable

In February 2010, the Company paid the balance of $19,035 in full for its note payable to a bank that was due April 2010.

Effective in June 2010, one economic development lender agreed to suspend all loan payments toward principal and interest for six months on two separate loans. The balances of the two loans were $27,045 and $145,645 as of June 30, 2010.

Note 5 – Convertible Notes Payable to Related Party

On June 1, 2010, the Company borrowed $50,000 from two of its officers and directors, repayable pursuant to a promissory note. The terms of the note are as follows: (a) no interest will accrue if the note is repaid within 60 days; (b) if the note is not repaid within 60 days, the Company is obligated to pay $5,000 for costs associated with securing the funds; (c) if the loan is repaid within one year, no annual interest rate will be charged; however, if the loan is not repaid within one year, the note will accrue interest at 6% per annum, beginning on the one-year anniversary date of the note; (d) the lenders are authorized to convert part or all of the note balance and accrued interest, if any, into the Company’s common stock at its fair value at any time while the note is outstanding; and (e) the loan’s due date for full repayment is December 31, 2013.

Note 6 – Investments

Until the fourth quarter of 2009, the Company was engaged in providing business IT solutions to the livestock segment through a variable interest subsidiary, Southfork Solutions, Inc., which is developing electronic livestock tracking systems, in which the Company had an approximately 39% interest at December 31, 2009. Effective October 2009, the Company is no longer in management or financial control of this entity, although as of June 30, 2010, it holds an approximately 38% minority interest. Effective September 30, 2009, the Company changed from the variable interest consolidation method of accounting for this entity to the cost method of accounting for this entity.

Note 7 – Subsequent Events

In August 2010, the Company borrowed $50,000 from two of its officers and directors, repayable pursuant to a promissory note. The terms of the note are as follows: (a) no interest will accrue if the note is repaid within 60 days; (b) if the note is not repaid within 60 days, the Company is obligated to pay $5,000 for costs associated with securing the funds; (c) if the loan is repaid within one year, no annual interest rate will be charged; however, if the loan is not repaid within one year, the note will accrue interest at 6% per annum, beginning on the one-year anniversary date of the note; (d) the lenders are authorized to convert part or all of the note balance and accrued interest, if any, into the Company’s common stock at its fair value at any time while the note is outstanding; and (e) the loan’s due date for full repayment is December 31, 2013.

ITEM 4T. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officers (whom we refer to in this periodic report as our Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our Certifying Officers, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) as of June 30, 2010, pursuant to Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2010, our disclosure controls and procedures were effective at the reasonable assurance level.

There were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management, including our chief executive officer and chief financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of control must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the control can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

PART II – OTHER INFORMATION

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
3.03	Designation of Rights, Privileges, and Preferences of Series A Preferred Stock	Incorporated by reference from the annual report on Form 10-K for the year ended December 31, 2009, filed March 31, 2010

Item 10	Material Contracts
10.08	Promissory Note dated June 1, 2010	Incorporated by reference from the current report on Form 8-K filed June 2, 2010

10.09	Promissory Note dated August 12, 2010	Incorporated by reference from the quarterly report on Form 10-Q for the three months ended June 30, 2010, filed August 16, 2010


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. Omitted numbers in the sequence refer to documents previously filed as an exhibit.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned thereunto duly authorized.

	TETRIDYN SOLUTIONS, INC.
		(Registrant)


Date: October 22, 2010	By:	/s/ David W. Hempstead
		David W. Hempstead, President, Chief Executive Officer, and Principal Financial Officer

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