Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Act.
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.
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Website, 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).
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 definitions of “large accelerated
filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
The aggregate market value of the voting
and non-voting common equity held by non-affiliates of the registrant was $1,812,124.20 as of June 30, 2016, the last business
day of the registrant’s most recently completed second fiscal quarter.
At March 30, 2017, there were 246,616 shares of the registrant’s
common stock outstanding.
Throughout this report, unless otherwise
designated, the terms “we,” “us,” “our,” “the Company” and “our company”
refer to TetriDyn Solutions, Inc., a Nevada corporation. All amounts in this report are in U.S. Dollars, unless otherwise indicated.
This Annual Report on Form 10-K contains
“forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995. The
use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans”
and “believes,” among others, generally identify forward-looking statements. These forward-looking statements are based
on our management's expectations and assumptions about future events as of the date of this Annual Report on Form 10-K, which are
inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements
include statements about our expectations, beliefs or intentions regarding our product offerings, business, financial condition,
results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do
not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events,
activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not
yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ
materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual
activities or results to differ materially from the activities and results anticipated in forward-looking statements. These forward-looking
statements are only predictions and reflect our views as of the date they are made with respect to future events and financial
performance. We undertake no obligation to update, and we do not have a policy of updating or revising, these forward-looking statements.
PART I
ITEM 1. BUSINESS.
THE BUSINESS
Recent Acquisitions
On December 8, 2016,
the Company completed the purchase (the “EcoVillage Acquisition”) of all of the assets of JPF Venture Group, Inc.,
a Delaware corporation (“JPF”), used primarily in connection with the business of JPF consisting of the development
of a sustainable living community by creating an ecologically sustainable “EcoVillage” powered by 100% fossil-fuel
free electricity, buildings cooled by energy efficient and chemical free systems, and on-site water produced for drinking, aquaculture
and agriculture (the “JPF Assets”), pursuant to the terms of an Asset Purchase Agreement by and between the Company
and JPF dated December 8, 2016 (the “JPF Purchase Agreement”). The JPF Assets purchased, primarily used in the Company’s
business, includes designs, conceptual plans, blueprints, drawings, sketches, outlines, maps, plots, diagrams, drafts, representations,
schemes, models and other similar items related to the business. JPF is an entity owned and controlled by Jeremy Feakins, the Chief
Executive Officer and Chief Financial Officer of the Company and a member of the Board of Directors of the Company. Please see
the Company’s Current Report on Form 8-K filed on December 12, 2016 for more information.
On March 1, 2017, the
Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Ocean Thermal Energy Corporation,
a Delaware corporation (“OTE”). OTE is engaged in the business of developing deep-water hydrothermal technologies to
provide renewable energy and drinking water. OTE’s Ocean Thermal Energy Conversion (“OTEC”) and Sea Water Air
Conditioning (“SWAC”) technologies are designed to take advantage of the difference between cold deep water and warmer
surface water to produce hydrothermal energy without requiring fossil fuels. Pursuant to the terms of the Merger Agreement, and
subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, a newly-created Delaware corporation
that is wholly-owned by TetriDyn (“TetriDyn Merger Sub”) will merge with and into OTE (the “Merger”) with
OTE continuing as the surviving corporation and a wholly-owned subsidiary of TetriDyn. Please see the Company’s Current Report
on Form 8-K filed on March 10, 2017 for more information.
Nature of the Business
We currently are in
the business of facilitating the development of sustainable living communities by creating ecologically sustainable “EcoVillages”
powered by 100% fossil-fuel free electricity, buildings cooled by energy efficient and chemical free systems, and on-site water
produced for drinking, aquaculture and agriculture. Upon consummation of the Merger with OTE, we also expect to expand our business
to engage in the development of OTEC and SWAC:
|
|
·
|
Ocean Thermal Electrical Conversion
, known in our industry as OTEC, power plants are designed
to produce electricity. In addition, some of the seawater running through an OTEC plant can be desalinated efficiently, producing
fresh water for agriculture and human consumption.
|
|
|
·
|
Seawater Air Conditioning
, known in our industry as SWAC, plants are designed to use cold
water from ocean depths to provide air conditioning for large commercial buildings or other facilities. This same technology can
also use deep cold water from lakes, known as Lake Water Air Conditioning or LWAC.
|
We expect to use OTE’s
technology in the development of our EcoVillages, which we expect will add significant value to our existing line of business.
Prior to the EcoVillage
Acquisition, the Company specialized in providing business information technology (IT) solutions to our customers through the optimization
of business and IT processes by using systems engineering methodologies, strategic planning, and system integration to add efficiency
and value to our customers’ business processes and to help our customers identify critical success factors in their business.
Services and Products
We are currently focusing
our efforts on developing and commercializing our EcoVillages, as well as working to develop or acquire new complementary assets.
Subject to the consummation of the OTE Merger, we expect that OTE’s OTEC/SWAC technologies will be used in the development
of our EcoVillages and will add significant value to our existing line of business.
EcoVillages
Ecovillages are communities
whose goal is to become more socially, economically and ecologically sustainable. Ecovillages are communities whose inhabitants
seek to live according to ecological principles, causing as little impact on the environment as possible. We expect that our EcoVillage
communities will range from a population of 50 to 150 individuals, although some may be smaller. We may also form larger EcoVillages
of up to 2,000 individuals that will be formed as networks of smaller sub-communities. We expect that our EcoVillages will grow
by the addition of individuals, families, or other small groups.
Our EcoVillages will
offer small-scale communities with minimal ecological impact, or regenerative impacts as an alternative. We are targeting “ecovillagers”
that are united by shared ecological, social-economic and cultural-spiritual values to become members of our EcoVillage communities.
Specifically, our targeted ecovillagers are those that seek alternatives to ecologically destructive electrical, water, transportation,
and waste-treatment systems, as well as the larger social systems that mirror and support them. We believe that many people see
the breakdown of traditional forms of community, wasteful consumerist lifestyles, the destruction of natural habitat, urban sprawl,
factory farming, and over-reliance on fossil fuels as trends that must be changed to avert ecological disaster and create richer
and more fulfilling ways of life. We intend to design our EcoVillages to provide an alternative to traditional forms of community
and attract ecovillagers who share in our belief in intentional living.
The Company is in the
process of evaluating, and intends to acquire and operate, mixed-use, commercial and/or residential real estate properties located
throughout the United States, the Caribbean and elsewhere as sites for the development of our EcoVillages. In addition to our acquisition
of OTE and the OTEC/SWAC technology, the Company is evaluating potential target assets and may pursue other acquisition opportunities
thereafter in order to strengthen its existing line of business.
Research and Development
We incurred no costs
for research and development for our operations during the years ended December 31, 2016 and 2015, respectively.
Intellectual Property
We believe our intellectual
properties will be critical to our business and growth. We rely on trade secret protection; confidentiality agreements with employees,
consultants, customers, and others with whom we interact; and patent laws to protect our proprietary rights. However, we do not
believe that our EcoVillages business segment is dependent upon, or obtains a competitive advantage from, any patents or that the
expiration of any patent would materially affect our business, notwithstanding the SWAC technology we expect to acquire from OTE
upon consummation of the Merger.
We frequently review
our research and development efforts and product identification needs to consider whether we should seek additional patent or trademark
protection for new developments or product offerings. We may seek patent protection for any novel enhancements we may invent.
We do not believe that
any of our products or other proprietary rights infringe upon the rights of third parties. However, we cannot assure that others
may not assert infringement claims against us in the future and recognize that any such assertion may require us to incur legal
and other defense costs, enter into compromise royalty arrangements, or terminate the use of some technologies. Further, we may
be required to incur legal and other costs to protect our proprietary rights against infringement by third parties.
Employees
As of December 31,
2016, we had one employee, Jeremy P. Feakins, who is employed as our chief executive officer and chief financial officer.
Government Regulation; Environmental
Compliance
Our activities are
not subject to present or expected probable material governmental regulation, including environmental laws.
Competition
While many firms exist
in the residential community development market, ultimately how well the Company succeeds is directly related to its own investments
and not to the competition. The Company will seek to first serve a niche market that most companies might not otherwise consider,
namely the “ecovillage” market. Larger firms tend to focus on larger projects. While the returns may not be as great,
they are able to enter the market segment by spending larger amounts of capital, generally not available to the small and medium
sized investor. There are relatively few firms targeting customers in our niche demographic; provided, however, some of our competitors
include but are not limited to “Dancing Rabbit Ecovillage,” located in Missouri, “Ecovillage at Ithaca,”
located in New York, “Twin Oaks Community,” located in Virginia, and “Living Roots Ecovillage,” located
in Indiana.
Potential competitors
may have substantially greater research and product development capabilities and financial, technical, marketing, and human resources
than we have. As a result, these competitors may:
|
|
·
|
succeed in developing communities that are equal to or superior to our communities or that achieve
greater market acceptance than our communities;
|
|
|
·
|
devote greater resources to developing, marketing, or selling their communities;
|
|
|
·
|
respond more quickly to new or emerging technologies and technical advances and changes in customer
requirements, which could render our technologies and communities obsolete;
|
|
|
·
|
introduce products that make the continued development of our current and future communities uneconomical;
|
|
|
·
|
obtain patents that block or otherwise inhibit our ability to develop and commercialize our communities;
|
|
|
·
|
withstand price competition more successfully than we can;
|
|
|
·
|
establish cooperative relationships among themselves or with third parties that enhance their ability
to address the needs of our prospective customers; and
|
|
|
·
|
take advantage of acquisition and other opportunities more readily than we can.
|
Other Opportunities
To diversify risk and
provide additional potential sources of revenue while we continue efforts to commercialize our products, principally our EcoVillages
at this time, we may seek to identify other opportunities for possible expansion or acquisition. We believe that we may be able
to increase the commercial value of other products, technologies, and operations that we may seek through the application of the
entrepreneurial, fundraising, management, marketing, and other skills of our management and executives we may recruit. Other than
OTE, we have not identified any such target products, technologies, or operations at this time.
If we do identify other
products, technologies, or operations, we may seek a commercial arrangement through a joint venture or strategic relationship,
acquisition, or other arrangement. We may issue common stock and other securities to acquire and fund any such transaction, which
may dilute the interests of current stockholders. We cannot assure that our efforts to identify, acquire, and operate any acquired
products, technologies, or operations will be successful.
Activities in 2016
On February 25, 2016,
the Company issued a convertible note in the principal amount of $50,000, payable to JPF, an investment entity that is majority-owned
by Jeremy P. Feakins, the Company’s chief executive officer and director. 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) payee is authorized to convert part or all
of the note balance and accrued interest, if any, into shares of the Company’s common stock at the rate of one share each
for $0.03 of principal amount of the note. Please see the Company’s Current Report on Form 8-K filed on March 1, 2016 for
more information.
Effective as of April
6, 2016, the Company established an equity incentive plan, known as the “TetriDyn Solutions, Inc. 2016 Incentive Plan”
(the “2016 Plan”), and registered the shares authorized for issuance under the 2016 Plan on Form S-8. Under the 2016
Plan, the Company is authorized to issue 48,000 shares of its common stock, after adjustment based on the Company’s December
2016 Reverse Stock Split (and subject to further adjustment by reason of any additional stock dividend, stock split, recapitalization
or similar transaction), at a proposed maximum offering price of $7.50 per share, the average of the high and low prices reported
in the over-the-counter market for April 4, 2016, after accounting for adjustments by reason of the December 2016 Reverse Stock
Split. Please see the Company’s Registration Statement on Form S-8 filed on April 7, 2016 for more information.
On May 20, 2016, the
Company issued a convertible note in the principal amount of $50,000, payable to JPF, an investment entity that is majority-owned
by Jeremy P. Feakins, the Company’s chief executive officer and director. 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) payee is authorized to convert part or all
of the note balance and accrued interest, if any, into shares of the Company’s common stock at the rate of one share each
for $0.03 of principal amount of the note. Please see the Company’s Current Report on Form 8-K filed on May 24, 2016 for
more information.
On May 23, 2016, the
Company received a signed letter of intent (the “Weston LOI”) to pursue possible transactions involving the Weston
Group, which operates senior residential healthcare facilities in Allentown, Pennsylvania (“Weston”). However, to date,
the Company has not pursued any of the transactions contemplated by the Weston LOI.
On October 20, 2016,
the Company borrowed $12,500 from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. As of December 31, 2016, the outstanding balance was $12,500, plus accrued interest of $154.
On October 20, 2016,
the Company borrowed $12,500 from its independent director pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. As of December 31, 2016, the outstanding balance was $12,500, plus accrued interest of $154.
On October 20, 2016,
the Company borrowed $25,000 from a stockholder pursuant to a promissory note. 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 our common stock at the rate of one share for each $0.03 of
principal amount of the note. As of December 31, 2016, the outstanding balance was $25,000, plus accrued interest of $310.
On December 5, 2016,
the Board of Directors of the Company approved an action to effectuate a reverse stock split of the issued and outstanding shares
of common stock of the Company on a 1-for-250 basis (the “December 2016 Reverse Stock Split”). The December 2016 Stock
Split was effected by the Company filing a Certificate of Change pursuant to Nevada Revised Statutes Section 78.209 (the “Certificate
of Change”) with the Secretary of State of the State of Nevada on December 6, 2016, and a Certificate of Correction (the
“Certificate of Correction”) to the Certificate of Change with the Secretary of State of the State of Nevada on December
15, 2016. The Certificate of Correction was filed in order to provide for an effective date of the Certificate of Change and provide
for a proportionate decrease in the Company’s authorized shares of common stock in connection with the Stock Split, whereby
the Company’s total number of authorized shares of common stock shall decrease from 100,000,000 shares of common stock to
400,000 shares of common stock. The December 2016 Reverse Stock Split became effective at 12:01 am on December 31, 2016 and became
effective with FINRA (the Financial Industry Regulatory Authority) and in the marketplace at the open of business on March 28,
2017 (the “Effective Date”), whereupon the shares of common stock began trading on a split-adjusted basis. The Company
had also requested a new ticker symbol in connection with the purchase of the JPF Assets and the Company’s new business direction.
Please see the Company’s Current Report on Form 8-K filed on December 12, 2016 and Form 8-K/A filed on December 20, 2016
for more information.
On December 8, 2016,
the Company completed the purchase (the “EcoVillage Acquisition”) of all of the assets of JPF Venture Group, Inc.,
a Delaware corporation (“JPF”), used primarily in connection with the business of JPF consisting of the development
of a sustainable living community by creating an ecologically sustainable “EcoVillage” powered by 100% fossil-fuel
free electricity, buildings cooled by energy efficient and chemical free systems, and on-site water produced for drinking, aquaculture
and agriculture (the “JPF Assets”), pursuant to the terms of an Asset Purchase Agreement by and between the Company
and JPF dated December 8, 2016 (the “JPF Purchase Agreement”). The JPF Assets purchased, primarily used in the Company’s
business, includes designs, conceptual plans, blueprints, drawings, sketches, outlines, maps, plots, diagrams, drafts, representations,
schemes, models and other similar items related to the business. JPF is an entity owned and controlled by Jeremy Feakins, the Chief
Executive Officer and Chief Financial Officer of the Company and a member of the Board of Directors of the Company. Please see
the Company’s Current Report on Form 8-K filed on December 12, 2016 for more information.
On December 21, 2016,
the Company borrowed $25,000 from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. As of December 31, 2016, the outstanding balance was $25,000, plus accrued interest of $42.
Events Subsequent to the End of the
2016 Fiscal Year
Effectiveness of Reverse Stock Split
with FINRA
On December 5, 2016,
the Board of Directors of the Company approved an action to effectuate a reverse stock split of the issued and outstanding shares
of common stock of the Company on a 1-for-250 basis (the “December Reverse Stock Split”). The December Reverse Stock
Split was effected by the Company filing a Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209 (the “Certificate
of Change”) with the Secretary of State of the State of Nevada on December 6, 2016, and a Certificate of Correction (the
“Certificate of Correction”) to the Certificate of Change with the Secretary of State of the State of Nevada on December
15, 2016. The Certificate of Correction was filed in order to provide for an effective date of the Certificate of Change and provide
for a proportionate decrease in the Company’s authorized shares of common stock in connection with the December Reverse Stock
Split, whereby the Company’s total number of authorized shares of common stock shall decrease from 100,000,000 shares of
common stock to 400,000 shares of common stock.
.
The December Reverse
Stock Split and decrease in authorized shares became effective with the Secretary of State of Nevada at 12:01 am on December 31,
2016 and the Company received FINRA (the Financial Industry Regulatory Authority) approval on March 28, 2017. Per share and weighted
average amounts have been retroactively restated in the accompanying financial statements and related notes to reflect this stock
split. The Company has also requested a new ticker symbol in connection with the purchase of the Assets and the Company’s
new business direction.
The Company was authorized
to issue 100,000,000 shares of common stock. As a result of the Stock Split, the Company will be authorized to issue 400,000 shares
of common stock. As of December 31, 2016, there were 246,616 shares (post-December Reverse Stock Split) of common stock outstanding.
The December Reverse Stock Split does not have any effect on the stated par value of the common stock.
Immediately after the
December Reverse Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power
has remain virtually unchanged except for minor changes and adjustments that will result from rounding fractional shares into whole
shares. The rights and privileges of the holders of shares of common stock will be substantially unaffected by the December Reverse
Stock Split.
Name Change
On January 6, 2017,
the Board of Directors approved an Amendment to our Articles of Incorporation to change our corporate name from TetriDyn Solutions,
Inc. to Eco Development Co. in order to better reflect the Company business subsequent to its acquisition of all assets of Seller
used primarily in connection with the business of Seller consisting of the development of sustainable living communities by creating
ecologically sustainable “EcoVillages” powered by 100% fossil-fuel free electricity, buildings cooled by energy efficient
and chemical free systems, and on-site water produced for drinking, aquaculture and agriculture (the “Assets”), pursuant
to the terms of the Purchase Agreement, as previously reported in the December Form 8-K. The principal purpose for changing our
corporate name is to convey more clearly a sense of our new business direction, which is to develop sustainable living communities
by creating ecologically sustainable “EcoVillages” powered by 100% fossil-fuel free electricity, buildings cooled by
energy efficient and chemical free systems, and on-site water produced for drinking, aquaculture and agriculture. A Preliminary
Schedule 14C was filed with the United States Securities Exchange Commission on January 31, 2017.
Approval to Increase the Number of Authorized
Common Stock Shares
As of the effective
date of the approval by FINRA, the Company will have 400,000 shares of Common Stock and 5,000,000 shares of preferred stock authorized,
of which 246,616 shares of Common Stock will be outstanding and no shares of preferred stock will be outstanding. However, on February
28, 2017, the Board of Directors approved an Amendment to the Articles of Incorporation to increase the authorized shares of Common
Stock from 400,000 to 200,000,000. On March 15, 2017, the Company filed Preliminary Schedule 14C Information with United States
Securities and Exchange Commission. The Authorized Share Increase would not change the number of authorized shares of preferred
stock.
The Authorized Share
Increase is intended to facilitate the Company’s efforts to raise capital by making more shares of Common Stock available
to the Company for future issuances in connection with the sale of shares to raise additional capital for the Company’s operating
needs.
The par value of the
Common Stock will remain unchanged at $0.001 per share and the Authorized Share Increase will not change the number of outstanding
shares of Common Stock under the Articles of Incorporation. Accordingly, the Authorized Share Increase will have the effect of
creating additional authorized and unreserved shares of our Common Stock. Although at present we have no current plans, arrangements
or understandings providing for the issuance of the additional shares that would be made available for issuance upon effectiveness
of the Authorized Share Increase, such additional shares may be used by us for various purposes in the future without further stockholder
approval. These purposes may include, among other things:
|
|
·
|
the sale of shares to
raise additional capital;
|
|
|
·
|
the issuance of equity
incentives to our employees, officers or directors;
|
|
|
·
|
establishment of strategic
relationships with other companies and suppliers; and
|
|
|
·
|
acquisition of other businesses
or products.
|
The Board of Directors
is not implementing the share increase in anticipation of any future transaction or series of transactions. Further, the Board
of Directors does not intend for this transaction to be the first step in a series of plans or proposals of a “going private
transaction” within the meaning of Rule 13e-3 of the Securities Exchange Act.
The principal effect
of the Authorized Share Increase will be to increase the number of authorized shares. As a result, Stockholders should recognize
that once the Authorized Share Increase is in effect, they will own the same number of shares that they currently own. However,
the Authorized Share Increase will affect all Stockholders uniformly and will not affect any stockholder’s percentage ownership
interest in the Company. The Authorized Share Increase will not affect proportionate voting rights and other rights and preferences
of the holders of Common Stock. For example, a holder of 2% of the outstanding shares of Common Stock immediately prior to the
Authorized Share Increase would continue to hold 2% of the outstanding shares of Common Stock immediately after the Authorized
Share Increase. The Authorized Share Increase also will not affect the number of Stockholders of record.
Merger and Name Change
In January 2017, the
Company refocused on the possible merger with Ocean Thermal Energy Corporation, a Delaware corporation, which is developing projects
for renewable power generation, desalinated water production, and air conditioning using its proprietary technologies designed
to extract energy from the temperature differences between warm surface water and cold deep water. On March 1, 2017, an Agreement
and Plan of Merger was entered into between TetriDyn Solutions Inc. and Ocean Thermal Energy Corporation. The intent of entering
into such agreement is to achieve the business goals of both companies.
In order to effect
the combination of the Parties, TetriDyn shall organize a new, wholly owned subsidiary (“MergerCo”) under the laws
of the state of Delaware that, upon the terms and subject to the conditions of this Agreement and in accordance with the laws governing
corporations under the Delaware General Corporation Law (“Delaware Law”), shall merge with and into OTE (the “Merger”)
for the purpose of making OTE a wholly owned subsidiary of TetriDyn (the “Surviving Corporation”).
In order to effect
the Merger, at the Closing TetriDyn shall effect a recapitalization that consists of a 2.1676 forward split of its 246,616 shares
of issued and outstanding stock (“TetriDyn Post-Split Stock”).
Pursuant to the terms
of the Merger, each share of common stock of OTE issued and outstanding or existing immediately prior to the Effective Time (as
defined herein) of the Merger (the “OTE Stock”) will be converted at the Effective Time into the right to receive one
newly issued share of TetriDyn Post-Split Stock (the “New TetriDyn Stock”), subject to certain restrictions on transfer
as hereinafter provided and subject to the rights of the holders of certain of such shares of OTE Stock to exercise their rights
as dissenters to seek an appraisal of the fair value thereof as provided under Delaware Law (each, a “Dissenting OTE Stockholder”).
The number of shares of New TetriDyn Stock issued to the stockholders OTE, including shares that would have been issuable to Dissenting
OTE Stockholders (as defined) had they not dissented, together with the number of shares issuable on the exercise of outstanding
warrants and the conversion of outstanding bonds of OTE shall constitute, on a fully diluted basis, 90% of the number of shares
of common stock of TetriDyn to on a fully-diluted basis after giving effect only to the Merger. The shares of common stock of TetriDyn,
par value $0.001 per share (“TetriDyn Stock”), issued and outstanding immediately prior to the Effective Time will
remain issued and outstanding. No shares of preferred stock of TetriDyn are issued and outstanding, and TetriDyn has no existing
convertible securities or stock equivalent securities convertible or exercisable for shares of TetriDyn preferred Stock.
The Board of Directors
of each of the Parties has determined that the Merger is consistent with and in furtherance of the long-term business strategies
of each of them and is fair to, and in the best interests of, each of them and each of their respective stockholders; has approved
and adopted this Agreement, the issuance of New TetriDyn Stock, and the other transactions contemplated hereby; and has recommended
approval of this Agreement and the contemplated transactions by the appropriate Party’s stockholders when such approval is
required by law.
For federal income
tax purposes, it is understood that the Merger has been structured to qualify as a so-called “tax-free reorganization”
under the provisions of Sections 368(a)1(A) and 368(a)(2)(E) of the United States Internal Revenue Code of 1986, as amended (the
“Code”), and that each Party will take all actions reasonably necessary to so qualify the Merger, although neither
Party has obtained or will be required to obtain or provide an opinion of counsel to the foregoing effect.
Upon the terms and
subject to the conditions set forth in this Agreement, and in accordance with Delaware Law, at the Effective Time, MergerCo shall
be merged with and into OTE, the separate corporate existence of MergerCo shall cease, OTE shall continue as the Surviving Corporation
of the Merger, and the OTE Stock issued and outstanding or existing immediately prior to the Effective Time of the Merger shall
be converted at the Effective Time into the right to receive shares of New TetriDyn Stock as herein provided.
In connection with
the consummation of the Merger and upon the consent of the holders of a majority of the outstanding common of TetriDyn as provided
in this Agreement, immediately following the Closing, TetriDyn shall file with the Nevada Secretary of State an amendment to its
articles of incorporation changing its name to “Ocean Thermal Energy Corporation” or such other name as may be available
and acceptable to the Parties and effecting the Recapitalization.
On March 9, 2017, a
Form 8-K was filed with the United States Securities and Exchange Commission reporting the terms of the Merger.
Convertible Notes
On February 24, 2017,
the Company, completed the amendment of certain convertible promissory notes issued to JPF to eliminate the conversation feature
of those notes.
Among other convertible promissory notes,
JPF holds:
(a) a convertible promissory
note assigned by the original creditor to JPF on March 12, 2015, in the original principal amount of Three Hundred Ninety Four
Thousand Three Hundred Eighty Dollars ($394,380) (the “$394,380 Note”), convertible at the discretion of JPF into a
total of 63,102 shares of the Company’s common stock (as adjusted for the Company’s 1-for-250 December Reverse Stock
Split);
(b) a convertible promissory
note issued by the Company to JPF on February 25, 2016, in the original principal amount of Fifty Thousand Dollars ($50,000) (the
“February Note”), convertible at the discretion of JPF into a total of 1,666,667 shares of the Company’s common
stock (per the terms of this convertible promissory note, these shares are not subject to adjustment for the Company’s 1-for-250
December Reverse Stock Split);
(c) a convertible promissory
note issued by the Company to JPF on May 20, 2016, in the original principal amount of Fifty Thousand Dollars ($50,000) (the “May
Note”), convertible at the discretion of JPF into a total of 1,666,667 shares of the Company’s common stock (per the
terms of this convertible promissory note, these shares are not subject to adjustment for the Company’s 1-for-250 December
Reverse Stock Split); and
(d) a convertible promissory
note issued by the Company to JPF on October 20, 2016 in the remaining principal amount of Twelve Thousand Five Hundred Dollars
($12,500) (the “October Note”), convertible at the discretion of JPF into a total of 416,667 shares of the Company’s
common stock (per the terms of this convertible promissory note, these shares are not subject to adjustment for the Company’s
1-for-250 December Reverse Stock Split).
The $394,380 Note, the February Note, the
May Note and the October Note are collectively referred to herein as, the “Notes”).
Pursuant
to that certain Amendment of Promissory Notes dated February 24, 2017 (the “Amendment”), the Company and JPF amended
the Notes to eliminate the conversion feature of the Notes, such that none of the principal nor interest under the Notes may be
converted into shares of the capital stock of the Company. The Amendment effectuates the elimination of JPF’s conversion
rights under the Notes to acquire shares
of the
capital stock of the Company issuable upon conversion of the Notes
Subsequent to December
31, 2016, the Company received a $34,773 non-interest bearing advance from Ocean Thermal Energy Corporation.
Appointment to the Board of Directors
On February 23, 2017,
the Board of Directors of the Company appointed Antoinette Hempstead to serve as director of the Company, effective February 24,
2017. Please see the Company’s Current Report on Form 8-K filed on March 2, 2017 for more information.
ITEM 1A. RISK FACTORS.
The Company’s independent auditors
have issued a report raising a substantial doubt of the Company’s ability to continue as a going concern.
The report of our auditors
on our consolidated financial statements for the years ended December 31, 2016 and 2015, as well as for prior years, contains an
explanatory paragraph raising substantial doubt about our ability to continue as a going concern.
We will require substantial amounts
of additional capital from external sources.
We will require substantial
additional funds to complete development and marketing of our EcoVillages. The extent of our future capital requirements will depend
on many factors, including competing technological and market developments; effective commercialization activities; establishment
of strategic alliances, joint ventures, or other collaborative arrangements; and other factors not within our control. We anticipate
that we will seek required funds from external sources.
We may seek required
funds through the sale of equity or other securities. Our ability to complete an offering on acceptable terms will depend on many
factors, including the condition of the securities markets generally and for companies such as our company at the time of an offering;
the business, financial condition, and prospects at the time of the proposed offering; our ability to identify and reach a satisfactory
arrangement with prospective underwriters; and various other factors, many of which are outside our control. Our efforts to raise
equity capital will be adversely affected by the low trading price of our common stock. We cannot assure that we will be able to
complete an offering on terms favorable to us or at all. The issuance of additional equity securities may dilute the interest of
our existing stockholders or may subordinate their rights to the superior rights of new investors.
We may also seek additional
capital through strategic alliances, joint ventures, or other collaborative arrangements. Any such relationships may dilute our
interest in any specific project and decrease the amount of revenue that we may receive from the project. We cannot assure that
we will be able to negotiate any strategic investment or obtain required additional funds on acceptable terms, if at all. In addition,
our cash requirements may vary materially from those now planned because of the results of future research and development; results
of product testing; potential relationships with our strategic or collaborative partners; changes in the focus and direction of
our research and development programs; competition and technological advances; issues related to patent or other protection for
proprietary technologies; and other factors.
If adequate funds are
not available, we may be required to delay, reduce the scope of, or eliminate our planned marketing efforts; to obtain funds through
arrangements with strategic or collaborative partners that may require us to relinquish rights to certain of our technologies,
communities, or other products that we would otherwise seek to develop or commercialize ourselves; or to license our rights to
such products or communities on terms that are less favorable to us than might otherwise be available.
The development of our technology comprises
a substantial part of our operations, and we face significant technological uncertainties
.
Our prospects must
be considered in light of the risks, expenses, delays, problems, and difficulties that we may encounter, including:
|
|
·
|
our ability to maintain and expand a sales network to expose our communities and technologies to
potential customers and to complete sales;
|
|
|
·
|
our ability to manage our limited working capital;
|
|
|
·
|
our ability to scale systems and fulfillment capabilities to accommodate any growth of our business;
|
|
|
·
|
our ability to meet competition;
|
|
|
·
|
our ability to access and obtain additional capital when required;
|
|
|
·
|
our ability to develop and maintain strategic relationships; and
|
|
|
·
|
our dependence upon key personnel.
|
We cannot be certain that our business
strategy will be successful or that it will successfully address these risks.
If we are unable to protect our intellectual
property, we may lose a valuable asset or incur costly litigation to protect our rights
.
Our success will depend,
in part, upon our intellectual property rights. Litigation to enforce intellectual property rights or to protect trade secrets
could result in substantial costs and may not be successful. Any inability to protect intellectual property rights could seriously
harm our business, operating results, and financial condition. In addition, the laws of certain foreign countries may not protect
intellectual property rights to the same extent as do the laws of the United States. Our means of protecting our intellectual property
rights in the United States or abroad may not be adequate to fully protect those intellectual property rights.
We will need to hire and retain a number
of key employees who may be difficult to find
.
Development and roll-out
of our communities may require us to hire additional personnel, including construction personnel, customer support personnel, marketing
personnel, and operational personnel. Competition for these individuals is intense, and we may not be able to attract or retain
additional highly qualified personnel in the future. The failure to attract, motivate, and retain these additional employees could
seriously harm our business.
Any substantial increase in sales will
require skilled management of growth
.
As our operations expand,
our success will depend on our ability: to manage continued growth, including integration of our executive officers, directors,
and consultants into an effective management and technical team; to formulate strategic alliances, joint ventures, or other collaborative
arrangements with third parties; to commercialize and market our proposed products and services; and to monitor and manage these
relationships on a long-term basis. If our management is unable to integrate these resources and manage growth effectively, the
quality of our products and services, our ability to retain key personnel, and the results of our operations would be materially
and adversely affected.
We are authorized to issue substantial
additional shares of stock, which would dilute the ownership of our stockholders
.
At December 31, 2016,
we had 100,000,000 shares of common stock and 5,000,000 shares of preferred stock authorized for issuance. Of these, 241,616 shares
of common stock (as adjusted per the December Reverse Stock Split) were issued and outstanding as of December 31, 2016. Our board
of directors also has authority, without action or vote of the stockholders, to issue all or part of the authorized but unissued
shares. Any such issuance will dilute the percentage ownership of stockholders and may further dilute the book value of the shares
of common stock.
Penny stock regulations will impose
certain restrictions on resales of our securities, which may cause an investor to lose some or all of its investment
.
The Securities and
Exchange Commission (SEC) has adopted regulations that generally define a “penny stock” to be any equity security that
has a market price (as defined) of less than $5.00 per share that is not traded on a national securities exchange or that has an
exercise price of less than $5.00 per share, subject to certain exceptions. As a result, our common stock is subject to rules that
impose additional sales practice requirements on broker-dealers that sell these securities to persons other than established customers
and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000
together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination
for the purchase of these securities and have received the purchaser’s written consent to the transaction before the purchase.
Further, if the price of the stock is below $5.00 per share and the issuer does not have $2.0 million or more net tangible assets
or is not listed on a registered national securities exchange, sales of such stock in the secondary trading market are subject
to certain additional rules promulgated by the SEC. These rules generally require, among other things, that brokers engaged in
secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of
penny stocks, disclosure of the bid and asked prices, and disclosure of the compensation to the broker-dealer and the salesperson
working for the broker-dealer in connection with the transaction. These rules and regulations may affect the ability of broker-dealers
to sell our common stock, thereby effectively limiting the liquidity of our common stock. These rules may also adversely affect
the ability of persons that acquire our common stock to resell their securities in any trading market that may exist at the time
of an intended sale.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
Our principal executive
offices are located at 800 South Queen Street, Lancaster, Pennsylvania 17603, telephone number (717) 715-0238, where we share fully
furnished offices with JPF and obtain miscellaneous clerical services for $2,500 per month under an oral arrangement.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS
AND CORPORATE GOVERNANCE.
The following table sets forth information
concerning our executive officers and directors.
|
Name
|
Age
|
Position
|
|
Jeremy P. Feakins
|
63
|
Chairman of the Board, Chief Executive Officer, Chief Financial Officer and Secretary/Treasurer
|
|
Peter H. Wolfson
|
52
|
Director
|
|
Antoinette K. Hempstead
|
52
|
Director
|
Jeremy P. Feakins
has served as
our chief executive officer, chief financial officer, and secretary/treasurer since March 2015. Mr. Feakins is also the chairman,
chief executive officer, and principal financial officer for Ocean Thermal Energy Corporation, a Nevada corporation that develops
projects for renewable power generation, desalinated water production, and air conditioning using its proprietary technologies
designed to extract energy from the temperature differences between warm surface water and cold deep water. Mr. Feakins has over
35 years of experience as an entrepreneur and investor, having founded two technology-based companies. Between 1990 and 2006, Mr.
Feakins was the chairman and chief executive officer of Medical Technology & Innovations, Inc. (MTI), a developer and manufacturer
of a microprocessor-based, vision-screening device and other medical devices located in Lancaster, PA. In 1996, he managed the
public listing of MTI on the over-the-counter markets and subsequently structured the sale of the rights to MTI’s vision-screening
product to a major international eyewear company. Between 1998 and 2006, he was a managing member of Growth Capital Resources LLC,
a venture capital company located in Lancaster, PA, where he successfully managed the public listings for four small companies
on the over-the-counter market. Between 2005 and 2008, he served as executive vice chairman and member of the board of directors
of Caspian International Oil Corporation (OTC: COIC), an oil exploration and services company located in Houston, TX and Almaty,
KZ, where he managed its public listing. Since 2008, Mr. Feakins has been the chairman and managing partner of the JPF Venture
Fund 1, LP, an early-stage venture capital company located in Lancaster, PA, focused on companies involved with humanitarian and/or
sustainability projects. Since 2014, Mr. Feakins has been chairman and chief executive officer of JPF Venture Group, Inc. JPF Venture
Group, Inc., provides strategic and operational business assistance to start-up, early-stage, and middle-market high-growth businesses
and is a principal shareholder of our stock. Mr. Feakins graduated from the Defence College of Logistics and Personnel Administration,
Shrivenham, UK, and served seven years in the British Royal Navy. He is a member of the Institute of Directors in the United Kingdom
and the British American Business Council in the United States. Based on his background in the technology industry and his financial
and management background, the board has concluded that Mr. Feakins is qualified to serve as a member of our board.
Peter Wolfson
has served as one
of our directors since March 2015. Mr. Wolfson is also the founder, president, and chief executive officer of Hans Construction,
a developer and builder of upscale homes located in Lancaster, PA. Mr. Wolfson is a qualified commercial pilot at a major U.S.-owned
international airline company and has over 30 years’ experience in the aviation business. He also has 10 years’ experience
as a financial consultant with a subsidiary of Mass Mutual, developing financial strategies and tax planning. Based on his financial
background, the board has concluded that Mr. Wolfson is qualified to serve as a member of our board.
Antoinette Knapp Hempstead
was appointed
as a Director in February 2017. Prior to that, Ms. Hempstead served as our Chief Executive Officer and President from April 2013
until March 2015 and as our Deputy Chief Executive Officer and Vice President since August 2002. Ms. Hempstead has over 30 years’
experience in management, software management, software development, and finance. Ms. Hempstead has also served as adjunct faculty
for University of Idaho where she taught Computer Science courses. Ms. Hempstead has a Master’s degree in Computer Science
from the University of Idaho and a Bachelor’s of Science Degree in Applied Mathematics from the University of Idaho. Ms.
Hempstead provides to our board of directors experience in software development and project management, as well as experience in
financial statement preparation and regulatory reporting. Based on her technical background, the board has concluded that Ms. Hempstead
is qualified to serve as a member of our board.
Director Independence and Board of Directors’
Committees
Other than Peter Wolfson,
none of our directors is considered to be an independent member of our board of directors under NASD Rule 4200(a)(15) during 2016.
Our board as a whole
has acted as our audit committee, compensation committee, and nominating committee.
Committees and Terms
The Board of Directors
(the “Board”) has not established any committees.
Legal Proceedings
There are no legal
proceedings regarding the Company.
Code of Ethics
We have adopted a code
of ethics that applies to all of our employees, including our executive officers, a copy of which is included as an exhibit to
this report.
Corporate Governance Matters
We have not adopted
any material changes to the procedures by which security holders may recommend nominees to our board of directors.
ITEM 11. EXECUTIVE COMPENSATION
The following table
sets forth, for the fiscal years ended December 31, 2016 and 2015, the dollar value of all cash and noncash compensation earned
by any person that was our principal executive officer, or PEO, during the preceding fiscal year. No executive officer earned more
than $100,000 during the last fiscal year:
Summary Executive Compensation Table:
Name and principal position
(a)
|
|
Year ended December 31
(b)
|
|
|
Salary ($)
(c)
|
|
|
Bonus ($)
(d)
|
|
|
Stock Awards ($)
(e)
|
|
|
Option Awards ($)
(f)
|
|
|
Non-Equity Incentive Plan Compensation ($)
(g)
|
|
|
Nonqualified Deferred Compensation Earnings ($)
(h)
|
|
|
All Other Compensation ($)
(i)
|
|
|
Total ($)
(j)
|
|
|
Jeremy
|
|
|
2016
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
30,000
|
|
|
Feakins(1)
|
|
|
2015
|
|
|
|
19,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
19,000
|
|
|
Antoinette
|
|
|
2016
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Hempstead(2)
|
|
|
2015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
The table above does
not include prerequisites and other personal benefits in amounts less than 10% of the total annual salary and other compensation.
|
|
(1)
|
Jeremy Feakins is the Company’s Principal Executive Officer, Principal Financial Officer
and a Director.
|
|
|
(2)
|
Ms. Hempstead resigned as the Company’s Principal Executive Officer in December 2015, but
was reappointed as a Director in February 2017.
|
Narrative Disclosure
to Summary Compensation Table
We
currently pay our chief executive officer, Jeremy P. Feakins, $2,500 per month, under an oral arrangement. There are no other current
employment agreements between the Company and its executive officers. The compensation discussed herein addresses all compensation
awarded to, earned by, or paid to our named executive officers. There are no other stock option plans, retirement, pension, or
profit sharing plans for the benefit of our officers and directors other than as described herein.
Outstanding
Equity Awards at Fiscal Year-End
No stock option awards
were exercisable or unexercisable as of December 31, 2016, for any executive officer.
Director Compensation
Directors
who are not employees are not compensated for their services.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth, as of March
31, 2017, the outstanding shares of common stock owned of record or beneficially by each person that owned of record, or was known
by us to own beneficially, more than 5% of our issued and outstanding shares, and the name and shareholdings of each director and
all of the executive officers and directors as a group:
|
Name and Address of Person or Group(1)
|
Number of Shares of Common Stock Beneficially Owned
|
Percent of Common Stock Beneficially Owned
|
|
|
|
|
|
JPF Venture Group, Inc. (2)
|
4,289,154
|
97.18%
|
|
Antoinette Hempstead (3)
|
53,116
|
21.53%
|
|
Sawtooth Meadows, LP (4)
|
48,909
|
19.83%
|
|
Jeremy P. Feakins (5)
|
4,297,154
|
97.36%
|
|
Peter H. Wolfson (6)
|
422,046
|
63.11%
|
|
Executive Officers and Directors as a Group (3 persons):
|
221,726
|
89.90%
|
______________
*Less than 1%
|
|
|
(1)
|
|
800 South Queen Street, Lancaster, PA 17603, is the address for all stockholders in the table. Applicable percentages are based on 246,616 shares of our common stock outstanding on March 14, 2017, and are calculated as required by rules promulgated by the SEC. As previously reported in December Form 8-K, the Board of Directors of the Company approved the Reverse Stock Split, which such Reverse Stock Split was effective with the Nevada Secretary of State at 12:01 am on December 31, 2016 and a corresponding decrease in the outstanding shares of Common Stock of the Company from 60,404,140 to approximately 241,616 shares of Common Stock (subject to adjustment due to the effect of rounding fractional shares into whole shares).
|
|
|
|
(2)
|
JPF Venture Group, Inc.’s beneficial ownership is reported based on its ownership of (a) 122,489 shares owned of record, and (b) shares of common stock issuable on the conversion of a; (i) $50,000 promissory note dated June 2015, convertible at $0.03 per share into 1,666,666 shares of common stock (the “June 2015 Note”); (ii) $50,000 promissory note dated November 2015, convertible at $0.03 per share into 1,666,666 shares of common stock (the “November 2015 Note”); and (iii) $25,000 promissory note dated December 2016, convertible at $0.03 per share into 833,333 shares of common stock (the “December 2016 Note” and together with the June 2015 Note and November 2015 Note, the “Notes”). All calculations in this footnote are based on conversion of the principal only.
|
|
|
|
(3)
|
Consists of 48,909 shares owned of record by Sawtooth Meadows, LP. Antoinette Knapp Hempstead is owner of, and controls, Sawtooth Meadows, LP, and as such, is deemed to be the beneficial owner of shares owned of record by Sawtooth Meadows, LP.
|
|
|
|
|
|
|
|
|
(4)
|
Consists of 4,207 shares owned of record
by Antoinette K. Hempstead and 48,909 shares owned of record by Sawtooth Meadows, LP as set forth in footnote 3 above. Antoinette
Knapp Hempstead is owner of, and controls, Sawtooth Meadows, LP, and as such, is deemed to be the beneficial owner of shares owned
of record by Sawtooth Meadows, LP.
|
|
|
|
|
|
|
|
|
(5)
|
Consists of 8,000 shares owned of record by Jeremy Feakins and shares beneficially owned by JPF Venture Group, Inc. as set forth in footnote 2 above. JPF Venture Group, Inc. is an investment entity that is majority-owned by Jeremy P. Feakins. Jeremy Feakins also controls JPF Venture Group, Inc., and as such, is deemed to be the beneficial owner of shares owned of record by it.
|
|
|
|
|
|
|
|
|
(6)
|
Peter
H. Wolfson’s beneficial ownership is reported based on its ownership of (a) 5,380 shares owned of record, and (b) shares
of common stock issuable on the conversion of a $12,500 promissory note dated October 2016, convertible at $0.03 per share into
416,666 shares of common stock (the “October 2016 Note”).
All
calculations in this footnote are based on conversion of the principal only.
|
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTOR INDEPENDENCE.
Related-Party Loans
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 Company’s principal stockholder
and an investment entity that is majority-owned by Jeremy Feakins, the Company’s director, chief executive officer, and chief
financial officer. The new consolidated note is convertible to common stock at $6.25 per share (after adjustment by reason of the
December Reverse Stock Split), the approximate market price of the Company’s 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 December 31, 2016, accrued but unpaid
interest on this note was $42,663. Subsequent to year end the conversion feature was eliminated.
On March 12, 2015,
the Company assigned the liabilities for unpaid salaries of two of its former officers in the amount of $213,436 to the JPF Venture
Group, Inc. (“JPF”), the Company’s principal stockholder and an investment entity that is majority-owned by Jeremy
Feakins, the Company’s director, chief executive officer, and chief financial officer. The Assignment was evidenced by the
Consolidated Promissory Note dated December 31, 2014. The note does not bear any interest.
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 Company’s common stock at the rate of one share each for $0.03 of principal
amount of the note. As of December 31, 2016, the outstanding balance was $50,000, plus accrued interest of $5,417. The Company
recorded a debt discount of $50,000 for the fair value of the beneficial conversion feature. As of December 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 Company’s common stock at the rate of one share
each for $0.03 of principal amount of the note. As of December 31, 2016, the outstanding balance was $50,000, plus accrued interest
of $4,783. The Company recorded a debt discount of $28,000 for the fair value of the beneficial conversion feature. As of December
31, 2016, the Company amortized $28,000 of the debt discount on that debt.
On February 25, 2016,
the Company borrowed $50,000 from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. As of December 31, 2016, the outstanding balance was $50,000, plus accrued interest of $2,595.
Subsequent to year end the conversion feature was eliminated.
On May 20, 2016, the
Company borrowed $50,000 from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. As of December 31, 2016, the outstanding balance was $50,000, plus accrued interest of $1,747.
Subsequent to year end the conversion feature was eliminated.
On October 20, 2016,
the Company borrowed $12,500 from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. As of December 31, 2016, the outstanding balance was $12,500, plus accrued interest of $154.
Subsequent to year end the conversion feature was eliminated.
On October 20, 2016,
the Company borrowed $12,500 from its independent director pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. As of December 31, 2016, the outstanding balance was $12,500, plus accrued interest of $154.
On October 20, 2016,
the Company borrowed $25,000 from a stockholder pursuant to a promissory note. 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 our common stock at the rate of one share for each $0.03 of
principal amount of the note. As of December 31, 2016, the outstanding balance was $25,000, plus accrued interest of $310.
On November 29, 2016,
the Company received a $2,000 a non-interest bearing advance from Jeremy P. Feakins & Associates, an investment entity that
is majority-owned by Jeremy Feakins, the Company’s director, chief executive officer, and chief financial officer.
On December 21, 2016,
the Company borrowed $25,000 from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. As of December 31, 2016, the outstanding balance was $25,000, plus accrued interest of $42.
As of December 31,
2016, the Company had $669,380 in convertible notes payable due to related parties.
Related-Party Transactions
On March 1, 2015, the
Company entered into a lease agreement with a company whose managing partner is the Company’s 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 was $30,000 for the twelve months ending December
31, 2016.
On December 8, 2016,
the Company entered into an asset purchase agreement with JPF Venture Group, Inc., an investment entity that is majority-owned
by the Company’s director, chief executive officer, and chief financial officer, to acquire certain assets related to a project
comprised of the development of a sustainable living community by creating an ecologically sustainable “EcoVillage”
powered by 100% fossil-fuel free electricity, buildings cooled by energy efficient and chemical free systems, and on-site water
produced for drinking, aquaculture (the “Business”). The assets purchased, primarily used in the Business, includes
designs, conceptual plans, blueprints, drawings, sketches, outlines, maps, plots, diagrams, drafts, representations, schemes, models
and other similar items related to the business. The purchase price to be paid by the Company to JPF Venture Group, Inc. is equal
to 5,000 shares of the Company’s restricted common stock (after adjustment by reason of the December Reverse Stock Split);
however, the purchase price shall be adjusted pursuant to any stock split or reclassification occurring prior to the closing date.
The assets were recorded on the Company’s books at $0.0 value
Director Independence
Our securities are
not listed on a national securities exchange or in an inter-dealer quotation system which has requirements that directors be independent.
Therefore, we have adopted the independence standards of the American Stock Exchange, now known as the NYSE MKT LLC, to determine
the independence of our directors and those directors serving on our committees. These standards provide that a person will be
considered an independent director if he or she is not an officer of the company and is, in the view of the company’s board
of directors, free of any relationship that would interfere with the exercise of independent judgment. Our board of directors has
determined that as of the date of this Report, we had no independent directors.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES.
Audit Fees
The aggregate fees
billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of our
annual consolidated financial statement and review of consolidated financial statements included in our 10-Q reports and services
normally provided by the accountant in connection with statutory and regulatory filings or engagements were approximately $20,246
for fiscal year ended December 31, 2016, and $20,178 for fiscal year ended December 31, 2015.
Audit-Related Fees
For our fiscal years
ended December 31, 2016 and 2015, we did not incur any audit-related fees.
Tax Fees
For our fiscal years
ended December 31, 2016 and 2015, we were not billed for professional services rendered for tax compliance, tax advice, and tax
planning.
All Other Fees
We did not incur any
other fees related to services rendered by our principal accountant for the fiscal years ended December 31, 2016 and 2015.
Audit and Non-Audit Service Preapproval
Policy
In accordance with
the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, the audit committee has
adopted an informal approval policy that it believes will result in an effective and efficient procedure to preapprove services
performed by the independent registered public accounting firm.
Audit Services
. Audit
services include the annual financial statement audit (including quarterly reviews) and other procedures required to be performed
by the independent registered public accounting firm to be able to form an opinion on our consolidated financial statements. The
audit committee preapproves specified annual audit services engagement terms and fees and other specified audit fees. All other
audit services must be specifically preapproved by the audit committee. The audit committee monitors the audit services engagement
and may approve, if necessary, any changes in terms, conditions, and fees resulting from changes in audit scope or other items.
Audit-Related Services
.
Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review
of our consolidated financial statements, which historically have been provided to us by the independent registered public accounting
firm and are consistent with the SEC’s rules on auditor independence. The audit committee has approved specified audit-related
services within preapproved fee levels. All other audit-related services must be preapproved by the audit committee.
Tax Services
. The audit
committee preapproves specified tax services that the audit committee believes would not impair the independence of the independent
registered public accounting firm and that are consistent with Securities and Exchange Commission’s rules and guidance. The
audit committee must specifically approve all other tax services.
All Other Services
. Other
services are services provided by the independent registered public accounting firm that do not fall within the established audit,
audit-related, and tax services categories. The audit committee preapproves specified other services that do not fall within any
of the specified prohibited categories of services.
Procedures
. All proposals
for services to be provided by the independent registered public accounting firm, which must include a detailed description of
the services to be rendered and the amount of corresponding fees, are submitted to the chairman of the audit committee and the
Chief Financial Officer. The Chief Financial Officer authorizes services that have been preapproved by the audit committee. If
there is any question as to whether a proposed service fits within a preapproved service, the audit committee chair is consulted
for a determination. The Chief Financial Officer submits requests or applications to provide services that have not been preapproved
by the audit committee, which must include an affirmation by the Chief Financial Officer and the independent registered public
accounting firm that the request or application is consistent with the Securities and Exchange Commission’s rules on auditor
independence, to the audit committee (or its chair or any of its other members pursuant to delegated authority) for approval.
TETRIDYN SOLUTIONS, INC.
Consolidated
Balance Sheets
as of December 31, 2016 and December 31, 2015
|
|
|
2016
|
|
|
2015
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
14,343
|
|
|
$
|
4,667
|
|
|
Prepaid expenses
|
|
|
–
|
|
|
|
2,478
|
|
|
Accounts receivable
|
|
|
–
|
|
|
|
–
|
|
|
Total Current Assets
|
|
|
14,343
|
|
|
|
7,145
|
|
|
Total Assets
|
|
$
|
14,343
|
|
|
$
|
7,145
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts Payable
|
|
$
|
201,586
|
|
|
$
|
473,732
|
|
|
Accrued liabilities
|
|
|
393,794
|
|
|
|
321,827
|
|
|
Notes payable, current portion
|
|
|
294,353
|
|
|
|
299,612
|
|
|
Convertible note payable to related party, current portion
|
|
|
671,380
|
|
|
|
467,628
|
|
|
Total Current Liabilities
|
|
|
1,561,113
|
|
|
|
1,561,799
|
|
|
Total Liabilities
|
|
$
|
1,561,113
|
|
|
$
|
1,562,799
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
(See Note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
Preferred stock - $0.001 par value; Authorized: 5,000,000 shares; Issued and outstanding: 0 shares and 0 shares, respectively
|
|
|
–
|
|
|
|
–
|
|
|
Common stock - $0.001 par value: Authorized December 31, 2015 100,000,000 shares, Authorized December 31, 2016 100,000,000 shares; Issued and outstanding December 31, 2015 213,616 shares; Issued and outstanding December 31, 2016 246,616 shares
|
|
|
246
|
|
|
|
213
|
|
|
Additional paid-in capital
|
|
|
3,723,609
|
|
|
|
3,218,182
|
|
|
Accumulated deficit
|
|
|
(5,270,625
|
)
|
|
|
(4,774,049
|
)
|
|
Total Stockholders’ Deficit
|
|
|
(1,546,770
|
)
|
|
|
(1,555,654
|
)
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
14,343
|
|
|
$
|
7,145
|
|
See the accompanying notes to
consolidated financial statements.
TETRIDYN SOLUTIONS, INC.
Consolidated
Statements of Operations
for
the Years Ended December 31, 2016 and 2015
|
|
|
2016
|
|
|
2015
|
|
|
Revenue
|
|
$
|
49
|
|
|
$
|
3,856
|
|
|
Cost of Revenue
|
|
|
–
|
|
|
|
40
|
|
|
Gross Profit
|
|
|
49
|
|
|
|
3,816
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
284,347
|
|
|
|
66,692
|
|
|
Professional fees
|
|
|
136,314
|
|
|
|
172,092
|
|
|
Total Operating Expenses
|
|
|
420,661
|
|
|
|
238,784
|
|
|
Net Loss from Operations
|
|
|
(420,612
|
)
|
|
|
(234,968
|
)
|
|
Other Income (Expenses)
|
|
|
|
|
|
|
|
|
|
Interest Expense
|
|
|
(75,964
|
)
|
|
|
(111,774
|
)
|
|
Total Other Income (Expenses)
|
|
|
(75,964
|
)
|
|
|
(111,774
|
)
|
|
Net Loss before Provision for Income Taxes
|
|
|
(496,576
|
)
|
|
|
(346,742
|
)
|
|
Provision for Income Taxes
|
|
|
–
|
|
|
|
–
|
|
|
Net Loss
|
|
$
|
(496,576
|
)
|
|
$
|
(346,742
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Basic and Diluted Loss Per Common Share
|
|
$
|
(2.13
|
)
|
|
$
|
(1.88
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Weighted-Average Common Shares Outstanding
|
|
|
232,956
|
|
|
|
184,890
|
|
See the accompanying notes to
consolidated financial statements.
TETRIDYN SOLUTIONS, INC.
Consolidated
Statements of Stockholders’ Deficit
for the Years Ended December 31, 2016 and 2015
|
|
|
Preferred Stock
|
|
|
Common Stock
|
|
|
Paid in
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Deficit
|
|
|
Balance, December 31, 2014
|
|
|
1,200,000
|
|
|
$
|
1,200
|
|
|
|
96,127
|
|
|
$
|
96
|
|
|
$
|
3,042,432
|
|
|
$
|
(4,427,307
|
)
|
|
$
|
(1,383,579
|
)
|
|
Preferred stock cancelled
|
|
|
(1,200,000
|
)
|
|
|
(1,200
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
1,200
|
|
|
|
–
|
|
|
|
–
|
|
|
Discount on note payable
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
74,667
|
|
|
|
–
|
|
|
|
74,667
|
|
|
Sale of Common Stock
|
|
|
–
|
|
|
|
–
|
|
|
|
117,489
|
|
|
|
117
|
|
|
|
99,883
|
|
|
|
–
|
|
|
|
100,000
|
|
|
Net loss
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(346,742
|
)
|
|
|
(346,742
|
)
|
|
Balance, December 31, 2015
|
|
|
–
|
|
|
$
|
–
|
|
|
|
213,616
|
|
|
$
|
213
|
|
|
$
|
3,218,182
|
|
|
$
|
(4,774,049
|
)
|
|
$
|
(1,555,654
|
)
|
|
Discount on note payable
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
3,333
|
|
|
|
–
|
|
|
|
3,333
|
|
|
Stock issued for compensation (related parties)
|
|
|
–
|
|
|
|
–
|
|
|
|
16,000
|
|
|
|
16
|
|
|
|
119,984
|
|
|
|
–
|
|
|
|
120,000
|
|
|
Stock issued for compensation (non-related parties)
|
|
|
–
|
|
|
|
–
|
|
|
|
12,000
|
|
|
|
12
|
|
|
|
89,988
|
|
|
|
–
|
|
|
|
90,000
|
|
|
Stock issued for purchase of Eco Village assets (Restricted)
|
|
|
–
|
|
|
|
–
|
|
|
|
5,000
|
|
|
|
5
|
|
|
|
(5
|
)
|
|
|
–
|
|
|
|
–
|
|
|
Forgiveness of related party debt
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
292,127
|
|
|
|
–
|
|
|
|
292,127
|
|
|
Net loss
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(496,576
|
)
|
|
|
(496,576
|
)
|
|
Balance, December 31, 2016
|
|
|
–
|
|
|
$
|
–
|
|
|
|
246,616
|
|
|
$
|
246
|
|
|
$
|
3,723,609
|
|
|
$
|
(5,270,625
|
)
|
|
$
|
(1,546,770
|
)
|
See the accompanying notes to
consolidated financial statements.
TETRIDYN SOLUTIONS, INC.
Consolidated
Statements of Cash Flows
for the Years Ended December 31, 2016 and 2015
|
|
|
2016
|
|
|
2015
|
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(496,576
|
)
|
|
$
|
(346,742
|
)
|
|
Adjustments to reconcile net loss from operations to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Amortization of note discount
|
|
|
19,585
|
|
|
|
60,415
|
|
|
Gain on sale of securities
|
|
|
–
|
|
|
|
–
|
|
|
Common stock issued for services
|
|
|
210,000
|
|
|
|
–
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
2,478
|
|
|
|
(2,478
|
)
|
|
Accrued expenses
|
|
|
71,967
|
|
|
|
42,212
|
|
|
Accounts payable
|
|
|
19,981
|
|
|
|
67,027
|
|
|
Customer deposits
|
|
|
–
|
|
|
|
(3,445
|
)
|
|
Net Cash Provided by (Used in) Operating Activities
|
|
|
(172,565
|
)
|
|
|
(183,011
|
)
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Investing Activities
|
|
|
–
|
|
|
|
–
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
Repayment of debt
|
|
|
(5,259
|
)
|
|
|
100,000
|
|
|
Proceeds from related party debt
|
|
|
187,500
|
|
|
|
87,500
|
|
|
Net Cash provided by Financing Activities
|
|
|
187,241
|
|
|
|
187,500
|
|
|
Net Increase (Decrease) in Cash
|
|
|
9,676
|
|
|
|
4,489
|
|
|
Cash at Beginning of Year
|
|
|
4,667
|
|
|
|
178
|
|
|
Cash at End of Year
|
|
$
|
14,343
|
|
|
$
|
4,667
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
|
Cash paid for interest expense and lines of credit
|
|
$
|
12,709
|
|
|
$
|
14,577
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncash Transactions
|
|
|
|
|
|
|
|
|
|
Convertible note payable in exchange for existing convertible note payable
|
|
$
|
–
|
|
|
$
|
394,380
|
|
|
Forgiveness of accounts payable and accrued liabilities
|
|
$
|
292,127
|
|
|
$
|
–
|
|
|
Cancellation of preferred stock
|
|
$
|
–
|
|
|
$
|
1,200
|
|
|
Beneficial conversion feature on convertible note payable
|
|
$
|
3,333
|
|
|
$
|
50,000
|
|
See the accompanying notes to
consolidated financial statements.
TETRIDYN SOLUTIONS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2016 AND 2015
Note 1
—
Organization
and Summary of Significant Accounting 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.
Prior to 2015, as the Company’s marketing
efforts were constrained by shortages of capital and management resources, it sought to obtain management and entrepreneurial services
as well as new external funding as a bridge to marketing its
Silver Key Solutions
and
ChargeCatcher
products to both
domestic and international markets. This led to a March 2015 investment by an unrelated firm that purchased a controlling block
of the Company’s common stock and assumed management control of the Company to advance its marketing efforts. The Company
is pursuing marketing with a residential healthcare provider that is exploring the installation of
Silver Key Solutions
and
ChargeCatcher
in its combined rehabilitation services, ancillary senior care services, senior care facilities, and other
affiliates as a platform for third-party sales and installations. This provider recently agreed it will carry out a beta trial
of the
Silver Key Solutions
product line, including a peer review.
During 2015, the Company also focused on
completing a possible acquisition of Ocean Thermal Energy Corporation, a Delaware corporation, which is developing deep-water hydrothermal
technologies to provide renewable energy and drinkable water. The parties terminated the proposed merger on December 7, 2015.
See
Current Reports on Form 8-K filed June 8, 2015, and December 10, 2015, which are incorporated herein by reference.
As previously reported on the Current Report on Form 8-K filed
by the Company on December 12, 2016, on December 8, 2016 the Company completed the purchase of all assets of JPF Venture Group,
Inc. used primarily in connection with the business of the development of a sustainable living community by creating an ecologically
sustainable “EcoVillage” powered by 100% fossil- fuel free electricity, buildings cooled by energy efficient and chemical
free systems, and on-site water produced for drinking, aquaculture and agriculture, pursuant to the terms of an Asset Purchase
Agreement dated December 8, 2016 (the “EcoVillage Acquisition”). JPF Venture Group, Inc. is an entity owned and controlled
by Jeremy Feakins, the Chief Executive Officer and Chief Financial Officer of the Company and a member of the Board of Directors
of the Company. These assets were recorded at a historical cost of $0.00.
Subsequent to the “EcoVillage Acquisition”,
the Company refocused on the possible merger with Ocean Thermal Energy Corporation,
a Delaware corporation, which
is developing projects for renewable power generation, desalinated water production, and air conditioning using its proprietary
technologies designed to extract energy from the temperature differences between warm surface water and cold deep water. On March
1, 2017, an Agreement and Plan of Merger was entered into between TetriDyn Solutions Inc. and Ocean Thermal Energy Corporation.
The intent of entering into such agreement is to achieve the business goals of both companies. See Note 9 – Subsequent Events
for more details about this merger.
Principles of Consolidation
—
The
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 Segments
—
The
Company had only one business segment for the years ended December 31, 2016 and 2015.
Use of Estimates
—
In
preparing financial statements in conformity with accounting principles generally accepted in the United States, or 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. Estimates include the valuation of deferred tax assets, in-kind contribution of rent, and reserve for accounts receivable.
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
—
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 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.
Long-Lived Assets
—
The
Company accounts for long-lived assets under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
350,
Accounting for Goodwill and Other Intangible Assets
, and FASB ASC 360,
Accounting for Impairment or Disposal of
Long-Lived Assets
. In accordance with FASB ASC 350 and FASB ASC 360, long-lived assets, goodwill, and certain identifiable
intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets,
goodwill, and intangible assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived
assets.
Going Concern
—
The
accompanying consolidated financial statements have been prepared on the assumption that the Company will continue as a going concern.
As reflected in the accompanying consolidated financial statements, the Company had a net loss of $496,576 and used cash of $172,565
in operating activities for the year ended December 31, 2016. The Company had a working capital deficiency of $1,546,770 and a
stockholders’ deficit of $1,546,770 as of December 31, 2016. These factors raise substantial doubt about the Company’s
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 its 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
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
Company’s 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 Company’s 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 Instruments
—
FASB
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 instrument’s 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:
|
|
Level 1
|
|
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
|
|
|
|
|
|
|
|
Level 2
|
|
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.
|
|
|
|
|
|
|
|
Level 3
|
|
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.
|
The Company’s financial instruments
consist of accounts receivable, prepaid expenses, accounts payable, accrued liabilities, customer deposits, notes payable, and
related-party convertible notes payable. Pursuant to ASC 820,
Fair Value Measurements and Disclosures
, and FASB ASC 825,
Financial Instruments
, the fair value of the Company’s 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 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. Depreciation expense for the years ended December 31, 2016 and 2015, was $0 and $0, respectively.
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 FASB ASC 260,
Earnings Per Share
. As of December 31, 2016 and 2015, 0 and 0 respectively, of common share equivalents for granted warrants
were antidilutive and not used in the calculation of diluted net loss per share. Additionally, as of December 31, 2016 and 2015,
8,366,583 and 3,011,217, respectively, of common share equivalents for convertible note payables were antidilutive and not used
in the calculation of diluted net loss per share.
Stock-Based Compensation
—
On April 6, 2016, the Company’s board of directors approved the 2016 Long-Term Incentive Plan under which up to 48,000 shares
of common stock may be issued. On April 6, 2016, 28,000 shares of common stock were issued to officers and advisors in accordance
with the 2016 Long-Term Incentive Plan with a fair value of $210,000. 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 Company’s success. In addition,
at the discretion of the board of directors or the committee, options or bonus stock may be granted to individuals who are not
employees, officers, or directors, but contribute to the Company’s success. The stockholders must approve the 2016 plan 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 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 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 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, 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 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 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.
As the result of adoption of FASB ASC 505,
the Company recognized $0 and $0 in stock-based compensation during the years ended December 31, 2016 and 2015, respectively.
Recent Accounting Pronouncements
-
In August 2016, the Financial Accounting Standards Board issued ASU 2016-15,
Statement of Cash Flows (Topic 230): Classification
of Certain Cash Receipts and Cash Payments.
Historically, there has been a diversity in practice in how certain cash receipts/payments
are presented and classified in the statement of cash flows under Topic 230. The purpose of the update is to reduce the existing
diversity in practice by clarifying the presentation of certain types of transactions. The amendments in this update are effective
for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.
Early adoption is permitted. We note that this guidance applies to our reporting requirements and will implement the new guidance
accordingly.
We have reviewed all other recently issued,
but not yet adopted, accounting standards in order to determine their effects, if any, on our consolidated results of operations,
financial position, and cash flows. Based on that review, we believe that none of these pronouncements will have a significant
effect on current or future earnings or operations.
Note 2
—
Accounts Payable and Accrued Liabilities
As of December 31, 2016, the Company had
$201,586 in accounts payable.
As of September 30, 2016, we had $292,127 included in our accounts
payable that was related to balances due for multiple revolving credit cards under the name of our former chief executive officer
(now deceased). These amounts represent advances to us from funds borrowed on credit cards in the name of this officer as an accommodation
to us at a time when we were unable to obtain advances on our own credit. Upon his death, these obligations became debts of his
estate. Previously, we had agreed to carry these as liabilities on our financial statements until such time as the statute of limitations
for collection by the credit card companies expired. Subsequent to September 30, 2016, we were notified by the executor of our
former officer’s estate, who is also one of our former directors, that the estate would not pursue any future repayment by
us. Accordingly, we have removed these obligations from our balance sheet. Since our former director is one of our affiliates,
the removal of the obligations resulted in an increase in our additional paid-in capital.
As of December 31, 2016, we had $393,794
in accrued liabilities. This amount included $134,977 of interest expense due on outstanding loans and $213,436 in unpaid salaries
to two of our former officers, which were assigned by the officers to JPF Venture Group, Inc., pursuant to an Investment Agreement
dated March 12, 2015.
Note 3–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 Company’s principal stockholder and an investment entity
that is majority-owned by Jeremy Feakins, the Company’s director, chief executive officer, and chief financial officer. The
new consolidated note is convertible to common stock at $6.25 per share (as adjusted by reason of the Company’s 1 for 250
reverse stock split), the approximate market price of the Company’s 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 December 31, 2016, accrued but unpaid interest
on this note was $42,663. Subsequent to year end the conversion feature was eliminated (See Note 9).
On March 12, 2015, the Company assigned
the liabilities for unpaid salaries of two of its former officers in the amount of $213,436 to the JPF Venture Group, Inc. (“JPF”),
the Company’s principal stockholder and an investment entity that is majority-owned by Jeremy Feakins, the Company’s
director, chief executive officer, and chief financial officer. The Assignment was evidenced by the Consolidated Promissory Note
dated December 31, 2014. The note does not bear any interest.
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 Company’s common stock at the rate of one share each for $0.03 of principal amount of
the note. This conversion price is not required to adjust for the reverse stock split as per the note agreement. As of December
31, 2016, the outstanding balance was $50,000, plus accrued interest of $5,417. The Company recorded a debt discount of $50,000
for the fair value of the beneficial conversion feature. As of December 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 Company’s common stock at the rate of one share each
for $0.03 of principal amount of the note. This conversion price is not required to adjust for the reverse stock split as per the
note agreement. As of December 31, 2016, the outstanding balance was $50,000, plus accrued interest of $4,783. The Company recorded
a debt discount of $28,000 for the fair value of the beneficial conversion feature. As of December 31, 2016, the Company amortized
$28,000 of the debt discount on that debt.
On February 25, 2016, the Company borrowed
$50,000 from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. This conversion price is not required to adjust for the reverse stock split as per the note
agreement. As of December 31, 2016, the outstanding balance was $50,000, plus accrued interest of $2,595. Subsequent to year end
the conversion feature was eliminated (See Note 9).
On May 20, 2016, the Company borrowed $50,000
from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each $0.03 of
principal amount of the note. This conversion price is not required to adjust for the reverse stock split as per the note agreement.
As of December 31, 2016, the outstanding balance was $50,000, plus accrued interest of $1,747. Subsequent to year end the conversion
feature was eliminated (See Note 9).
On October 20, 2016, the Company borrowed
$12,500 from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. This conversion price is not required to adjust for the reverse stock split as per the note
agreement. As of December 31, 2016, the outstanding balance was $12,500, plus accrued interest of $154. Subsequent to year end
the conversion feature was eliminated (See Note 9).
On October 20, 2016, the Company borrowed
$12,500 from its independent director pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. This conversion price is not required to adjust for the reverse stock split as per the note
agreement. As of December 31, 2016, the outstanding balance was $12,500, plus accrued interest of $154.
On October 20, 2016, the Company borrowed
$25,000 from a stockholder pursuant to a promissory note. 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 our common stock at the rate of one share for each $0.03 of principal
amount of the note. This conversion price is not required to adjust for the reverse stock split as per the note agreement. As of
December 31, 2016, the outstanding balance was $25,000, plus accrued interest of $310.
On November 29, 2016, the Company received
a $2,000 a non-interest bearing advance from Jeremy P. Feakins & Associates, an investment entity that is majority-owned by
Jeremy Feakins, the Company’s director, chief executive officer, and chief financial officer.
On December 21, 2016, the Company borrowed
$25,000 from its principal stockholder JPF pursuant to a promissory note. 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 our common stock at the rate of one share for each
$0.03 of principal amount of the note. This conversion price is not required to adjust for the reverse stock split as per the note
agreement. As of December 31, 2016, the outstanding balance was $25,000, plus accrued interest of $42.
As of December 31, 2016, the Company had
$669,380 in convertible notes payable due to related parties.
On March 1, 2015, the Company entered into
a lease agreement with a company whose managing partner is the Company’s 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 was $30,000 for the twelve months ending December 31, 2016.
Note 4
—
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 $15,688 through December 31,
2016
As of December 31, 2016, the Company was
delinquent in payments on four loans to a second economic development entity. The Company owed this economic entity $90,288 in
late payments with an outstanding principal balance of $158,532 and accrued interest of $30,044 as of December 31, 2016. Both loans
are guaranteed by two of the Company’s 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 December 31, 2016, the Company was
delinquent in payments on a loan to a third economic development entity. The Company owed the third economic entity $85,821 in
late payments with an outstanding principal balance of $85,821 and accrued interest of $27,274 as of December 31, 2016. This loan
is secured by a junior lien on all the Company’s 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.
The above notes payable are summarized
as follows:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Note payable to third party, due in monthly payments of $2,000
through September 2015, bearing interest at 7% per annum, secured by a junior lien on all of the Company’s
assets and shares of founders’ common stock
|
|
$
|
85,821
|
|
|
$
|
85,821
|
|
|
Note payable to third party, due in monthly payments of $979 through
January 2013, bearing interest at 6.25% per annum, guaranteed by two shareholders, secured by liens on intangible
software assets
|
|
|
16,813
|
|
|
|
22,072
|
|
|
Note payable to third party, due in monthly payments of $1,742 through
December 2014, bearing interest at 7.00% per annum, guaranteed by two shareholders secured by shareholders' personal
property
|
|
|
141,719
|
|
|
|
141,719
|
|
|
Note payable to third party, originally due in full
September 2010, and extended during 2010 until October 2011, bearing interest up to 5.00%, unsecured , in default
|
|
|
50,000
|
|
|
|
50,000
|
|
|
Total Notes Payable
|
|
$
|
294,353
|
|
|
$
|
299,612
|
|
|
Less: Current Portion
|
|
|
294,353
|
|
|
|
299,612
|
|
|
Long-Term Notes Payable
|
|
$
|
–
|
|
|
$
|
–
|
|
Note 5
—
Stockholders’ Deficit
Common Stock
--
As
of January 1, 2015, the Company had 96,127 shares of common stock outstanding. In March 2015, the Company issued 117,489 shares
of common stock and a warrant to purchase up to 4,134 shares of its common stock, at an exercise price of $0.75 per share, to its
principal stockholder, JPF Venture Group, Inc., an investment entity that is majority-owned by the Company’s director, chief
executive officer, and chief financial officer. As per warrant agreement, these warrants expired upon termination of the merger
in 2015. No options were granted during 2016. As of December 31, 2016, the Company had 246,616 shares of common stock and no warrants
or options outstanding.
In April 2016, the company issued 28,000 shares of its common
stock awarded pursuant to its 2016 Long Term Incentive Plan (LTIP). The Company filed a Registration Statement on Form-8, no. 333-210640,
with the U.S Securities and Exchange Commission on April 7, 2016, covering 48,000 shares under the LTIP. The shares were issued
to six officers and advisers.
On December 8, 2016, the Company entered
into an asset purchase agreement with JPF Venture Group, Inc. to acquire certain assets related to a project comprised of the development
of a sustainable living community by creating an ecologically sustainable “EcoVillage” powered by 100% fossil-fuel
free electricity, buildings cooled by energy efficient and chemical free systems, and on-site water produced for drinking, aquaculture
(the “Business”). The assets purchased, primarily used in the Business, includes designs, conceptual plans, blueprints,
drawings, sketches, outlines, maps, plots, diagrams, drafts, representations, schemes, models and other similar items related to
the business. The purchase price to be paid by the Company to JPF Venture Group, Inc. is equal to Five Thousand (5,000) shares
of the Company’s restricted common stock; this purchase price was adjusted for the 250:1 reverse stock split (See Note 9).
The assets were recorded on the Company’s books at $0.0 value. As of December 31, 2016, the Company had 246,616 shares of
common stock and no options outstanding.
Preferred Stock
—
On
November 12, 2009, the Company’s compensation committee, consisting of two independent directors, authorized the issuance
of 600,000 shares Series A Preferred Stock to each of the Company’s executives (1,200,000 total shares) at a total
value of $53,455. Each share of Series A Preferred Stock is entitled to 100 votes, voting with the common stock as a single class,
except when voting as a separate class is required by law, and to 1/20 of the dividends on common stock and in distributions on
dissolution and liquidation. In 2015, the preferred stock was cancelled.
As of December 31, 2016 and 2015, no shares
of preferred stock were issued and outstanding.
Note 6
—
Concentrations
Funding –
As of December 31, 2016, the Company
had one main lender, JPF Venture Group, Inc., the Company’s principal stockholder, whose loans account for 91% of the debt.
Note 7 – Income Taxes
As of December 31, 2016, the Company has
net operating loss carryforwards of approximately $3,800,000 that expire, if not used, from 2024 through 2036. The valuation allowance
at December 31, 2016, was $1,579,806. The net change in the valuation allowance for the year ended December 31, 2016, was an increase
of $186,902. The Company paid no income taxes during the years ended December 31, 2016 and 2015. Deferred tax assets and related
valuation allowance were as follows at December 31, 2016 and 2015:
|
|
|
For the Years Ended December 31
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Accrued liabilities
|
|
$
|
83,972
|
|
|
$
|
83,972
|
|
|
Operating loss carryforwards
|
|
|
1,495,834
|
|
|
|
1,308,932
|
|
|
Total Deferred Income Tax Assets
|
|
|
1,579,806
|
|
|
|
1,392,904
|
|
|
Valuation Allowance
|
|
|
(1,579,806
|
)
|
|
|
(1,392,904
|
)
|
|
Net Deferred Income Tax Asset
|
|
$
|
–
|
|
|
$
|
–
|
|
The following is a reconciliation of the
tax benefit of pretax loss at the U.S. federal statutory rate with the benefit from income taxes:
|
|
|
For the Years Ended December 31
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Benefits at statutory rate (34%)
|
|
$
|
(168,836
|
)
|
|
$
|
(117,892
|
)
|
|
Nondeductible permanent differences
|
|
|
6,862
|
|
|
|
–
|
|
|
Change in valuation allowance
|
|
|
186,902
|
|
|
|
135,298
|
|
|
State tax Benefit
|
|
|
(24,928
|
)
|
|
|
(17,406
|
)
|
|
Benefit from Income Taxes
|
|
$
|
–
|
|
|
$
|
–
|
|
Note 8
—
Commitments
and Contingencies
Due to the nature of our business, certain
legal or administrative proceedings may arise from time to time in the ordinary course of business. In our opinion, there are no
material pending legal proceedings to which we are a party, of which any of our property is the subject, or for which an outcome
adverse to us would have a material adverse effect on our financial condition, results of operations, or cash flows.
Note 9
—
Subsequent
Events
Reverse Stock Split
- On December
5, 2016, the Board of Directors of the Company approved an action to effectuate a reverse stock split of the issued and outstanding
shares of common stock of the Company on a 1for250 basis (the “December Reverse Stock Split”). The December Reverse
Stock Split was effected by the Company filing a Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209 (the
“Certificate of Change”) with the Secretary of State of the State of Nevada on December 6, 2016, and a Certificate
of Correction (the “Certificate of Correction”) to the Certificate of Change with the Secretary of State of the State
of Nevada on December 15, 2016. The Certificate of Correction was filed in order to provide for an effective date of the Certificate
of Change and provide for a proportionate decrease in the Company’s authorized shares of common stock in connection with
the Stock Split.
The December Reverse Stock Split and decrease
in authorized shares became effective with the Secretary of State of Nevada at 12:01 am on December 31, 2016 and the Company received
FINRA (the Financial Industry Regulatory Authority) approval on March 28, 2017. Per share and weighted average amounts have been
retroactively restated in the accompanying financial statements and related notes to reflect this stock split. The Company has
also requested a new ticker symbol in connection with the purchase of the Assets and the Company’s new business direction.
The Company was authorized to issue 100,000,000
shares of common stock. As a result of the December Reverse Stock Split, the Company will be authorized to issue 400,000 shares
of common stock. As of December 31, 2016, there were 246,616 shares (post -December Reverse Stock Split) of common stock outstanding.
The December Reverse Stock Split does not have any effect on the stated par value of the common stock.
Immediately after the December Reverse
Stock Split, each stockholder’s percentage ownership interest in the Company and proportional voting power has remain virtually
unchanged except for minor changes and adjustments that will result from rounding fractional shares into whole shares. The rights
and privileges of the holders of shares of common stock will be substantially unaffected by the Stock Split.
Name Change
-
On January
6, 2017, the Board of Directors approved an Amendment to our Articles of Incorporation to change our corporate name from TetriDyn
Solutions, Inc. to Eco Development Co. in order to better reflect the Company business subsequent to its acquisition of all assets
of Seller used primarily in connection with the business of Seller consisting of the development of sustainable living communities
by creating ecologically sustainable “EcoVillages” powered by 100% fossil-fuel free electricity, buildings cooled by
energy efficient and chemical free systems, and on-site water produced for drinking, aquaculture and agriculture (the “Assets”),
pursuant to the terms of the Purchase Agreement, as previously reported in the December Form 8-K. The principal purpose for changing
our corporate name is to convey more clearly a sense of our new business direction, which is to develop sustainable living communities
by creating ecologically sustainable “EcoVillages” powered by 100% fossil-fuel free electricity, buildings cooled by
energy efficient and chemical free systems, and on-site water produced for drinking, aquaculture and agriculture. Schedule 14C
was filed with the United States Securities Exchange Commission on January 31, 2017.
Common Stock – Increase in
Authorized shares -
As of the effective date of the approval by FINRA, the Company will have 400,000 shares of Common Stock
and 5,000,000 shares of preferred stock authorized, of which 246,616 shares of Common Stock will be outstanding and no shares of
preferred stock will be outstanding. However, on February 28, 2017, the Board of Directors approved an Amendment to the Articles
of Incorporation to increase the authorized shares of Common Stock from 400,000 to 200,000,000. On March 15, 2017, the Company
filed Preliminary Schedule 14C Information with United States Securities and Exchange Commission
.
The
Authorized Share Increase would not change the number of authorized shares of preferred stock.
The Authorized Share Increase is intended
to facilitate the Company’s efforts to raise capital by making more shares of Common Stock available to the Company for future
issuances in connection with the sale of shares to raise additional capital for the Company’s operating needs.
The par value of the Common Stock will
remain unchanged at $0.001 per share and the Authorized Share Increase will not change the number of outstanding shares of Common
Stock under the Articles of Incorporation. Accordingly, the Authorized Share Increase will have the effect of creating additional
authorized and unreserved shares of our Common Stock. Although at present we have no current plans, arrangements or understandings
providing for the issuance of the additional shares that would be made available for issuance upon effectiveness of the Authorized
Share Increase, such additional shares may be used by us for various purposes in the future without further stockholder approval.
These purposes may include, among other things:
|
|
·
|
the sale of shares to raise additional
capital;
|
|
|
|
|
|
|
·
|
the issuance of equity incentives
to our employees, officers or directors;
|
|
|
|
|
|
|
·
|
establishment of strategic relationships
with other companies and suppliers; and
|
|
|
|
|
|
|
·
|
acquisition of other businesses or
products.
|
The Board of Directors is not implementing
the share increase in anticipation of any future transaction or series of transactions. Further, the Board of Directors does not
intend for this transaction to be the first step in a series of plans or proposals of a “going private transaction”
within the meaning of Rule 13e-3 of the Securities Exchange Act.
The principal effect of the Authorized
Share Increase will be to increase the number of authorized shares. As a result, Stockholders should recognize that once the Authorized
Share Increase is in effect, they will own the same number of shares that they currently own. However, the Authorized Share Increase
will affect all Stockholders uniformly and will not affect any stockholder’s percentage ownership interest in the Company.
The Authorized Share Increase will not affect proportionate voting rights and other rights and preferences of the holders of Common
Stock. For example, a holder of 2% of the outstanding shares of Common Stock immediately prior to the Authorized Share Increase
would continue to hold 2% of the outstanding shares of Common Stock immediately after the Authorized Share Increase. The Authorized
Share Increase also will not affect the number of Stockholders of record.
Merger and Name Change
-
In January 2017, the Company refocused on the possible merger with Ocean Thermal Energy Corporation,
a Delaware corporation,
which is developing projects for renewable power generation, desalinated water production, and air conditioning using its proprietary
technologies designed to extract energy from the temperature differences between warm surface water and cold deep water. On March
1, 2017, an Agreement and Plan of Merger was entered into between TetriDyn Solutions Inc. and Ocean Thermal Energy Corporation.
The intent of entering into such agreement is to achieve the business goals of both companies.
In order to effect the combination of the
Parties, TetriDyn shall organize a new, wholly owned subsidiary (“MergerCo”) under the laws of the state of Delaware
that, upon the terms and subject to the conditions of this Agreement and in accordance with the laws governing corporations under
the Delaware General Corporation Law (“Delaware Law”), shall merge with and into OTE (the “Merger”) for
the purpose of making OTE a wholly owned subsidiary of TetriDyn (the “Surviving Corporation”).
In order to effect the Merger, at the Closing
TetriDyn shall effect a recapitalization that consists of a 2.1676 forward split of its 246,616 shares of issued and outstanding
stock (“TetriDyn Post-Split Stock”). On December 15, 2016, and subject to FINRA’s approval, TetriDyn effectuated
a reverse stock split on a 1-for-250 basis and decreased its authorized common stock to 400,000 shares, par value $0.001 per share.
Pursuant to the terms of the Merger, each
share of common stock of OTE issued and outstanding or existing immediately prior to the Effective Time (as defined herein) of
the Merger (the “OTE Stock”) will be converted at the Effective Time into the right to receive one newly issued share
of TetriDyn Post-Split Stock (the “New TetriDyn Stock”), subject to certain restrictions on transfer as hereinafter
provided and subject to the rights of the holders of certain of such shares of OTE Stock to exercise their rights as dissenters
to seek an appraisal of the fair value thereof as provided under Delaware Law (each, a “Dissenting OTE Stockholder”).
The number of shares of New TetriDyn Stock issued to the stockholders OTE, including shares that would have been issuable to Dissenting
OTE Stockholders (as defined) had they not dissented, together with the number of shares issuable on the exercise of outstanding
warrants and the conversion of outstanding bonds of OTE shall constitute, on a fully diluted basis, 90% of the number of shares
of common stock of TetriDyn to on a fully-diluted basis after giving effect only to the Merger. The shares of common stock of TetriDyn,
par value $0.001 per share (“TetriDyn Stock”), issued and outstanding immediately prior to the Effective Time will
remain issued and outstanding. No shares of preferred stock of TetriDyn are issued and outstanding, and TetriDyn has no existing
convertible securities or stock equivalent securities convertible or exercisable for shares of TetriDyn preferred Stock.
The board of directors of each of the Parties
has determined that the Merger is consistent with and in furtherance of the long-term business strategies of each of them and is
fair to, and in the best interests of, each of them and each of their respective stockholders; has approved and adopted this Agreement,
the issuance of New TetriDyn Stock, and the other transactions contemplated hereby; and has recommended approval of this Agreement
and the contemplated transactions by the appropriate Party’s stockholders when such approval is required by law.
For federal income tax purposes, it is
understood that the Merger has been structured to qualify as a so-called “tax-free reorganization” under the provisions
of Sections 368(a)1(A) and 368(a)(2)(E) of the United States Internal Revenue Code of 1986, as amended (the “Code”),
and that each Party will take all actions reasonably necessary to so qualify the Merger, although neither Party has obtained or
will be required to obtain or provide an opinion of counsel to the foregoing effect.
Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law, at the Effective Time, MergerCo shall be merged with and into
OTE, the separate corporate existence of MergerCo shall cease, OTE shall continue as the Surviving Corporation of the Merger, and
the OTE Stock issued and outstanding or existing immediately prior to the Effective Time of the Merger shall be converted at the
Effective Time into the right to receive shares of New TetriDyn Stock as herein provided.
In connection with the consummation of
the Merger and upon the consent of the holders of a majority of the outstanding common of TetriDyn as provided in this Agreement,
immediately following the Closing, TetriDyn shall file with the Nevada Secretary of State an amendment to its articles of incorporation
changing its name to “Ocean Thermal Energy Corporation” or such other name as may be available and acceptable to the
Parties and effecting the Recapitalization.
On March 9, 2017, a Form 8-K was filed
with the United States Securities and Exchange Commission reporting the terms of the Merger.
Convertible Notes -
On February
24, 2017, TetriDyn Solutions, Inc., a Nevada corporation (the “Company”), completed the amendment of certain convertible
promissory notes issued to JPF Venture Group, Inc. (“JPF”) to eliminate the conversation feature of those notes.
Among other convertible promissory notes,
JPF holds:
(a) a convertible promissory note assigned
by the original creditor to JPF on March 12, 2015, in the original principal amount of Three Hundred Ninety Four Thousand Three
Hundred Eighty Dollars ($394,380) (the “$394,380 Note”), convertible at the discretion of JPFVG into a total of 63,102
shares of the Company’s common stock (as adjusted for the Company’s 1-for-250 reverse stock split as set forth in the
Company’s Current Report Form 8-K filed with the Commission on December 20, 2016);
(b) a convertible promissory note issued
by the Company to JPF on February 25, 2016, in the original principal amount of Fifty Thousand Dollars ($50,000) (the “February
Note”), convertible at the discretion of JPFVG into a total of 1,666,667 shares of the Company’s common stock (per
the terms of this convertible promissory note, these shares are not subject to adjustment for the Company’s 1 for 250 December
Reverse Stock Split) ;
(c) a convertible promissory note issued
by the Company to JPF on May 20, 2016, in the original principal amount of Fifty Thousand Dollars ($50,000) (the “May Note”),
convertible at the discretion of JPFVG into a total of 1,666,667 shares of the Company’s common stock (per the terms of this
convertible promissory note, these shares are not subject to adjustment for the Company’s 1 for 250 December Reverse Stock
Split) ; and
(d) a convertible promissory note issued
by the Company to JPF on October 20, 2016 in the remaining principal amount of Twelve Thousand Five Hundred Dollars ($12,500) (the
“October Note”), convertible at the discretion of JPFVG into a total of 416,667 shares of the Company’s common
stock (per the terms of this convertible promissory note, these shares are not subject to adjustment for the Company’s 1
for 250 December Reverse Stock Split)
(the $394,380 Note, the February Note,
the May Note and the October Note are collectively referred to herein as, the “Notes”).
Pursuant to that certain Amendment of Promissory
Notes dated February 24, 2017 (the “Amendment”), the Company and JPF amended the Notes to eliminate the conversion
feature of the Notes, such that none of the principal nor interest under the Notes may be converted into shares of the capital
stock of the Company. The Amendment effectuates the elimination of JPF’s conversion rights under the Notes to acquire shares
of the capital stock of the Company issuable upon conversion of the Notes
Subsequent to December 31, 2016, the Company
received a $34,773 non-interest bearing advance from Ocean Thermal Energy Corporation.
Ocean Thermal Energy (CE) (USOTC:CPWR)
과거 데이터 주식 차트
부터 11월(11) 2024 으로 12월(12) 2024
Ocean Thermal Energy (CE) (USOTC:CPWR)
과거 데이터 주식 차트
부터 12월(12) 2023 으로 12월(12) 2024
