Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2014 | Aug. 01, 2015 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | TETRIDYN SOLUTIONS INC | ||
Entity Central Index Key | 827,099 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | Yes | ||
Entity Current Reporting Status | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 10,241 | ||
Entity Common Stock, Shares Outstanding | 53,404,140 | ||
Document Fiscal Year Focus | 2,014 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2014 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets | ||
Cash | $ 178 | $ 11,458 |
Accounts receivable, net | 0 | 1,960 |
Total Current Assets | 178 | 13,418 |
Property and Equipment, net | 0 | 2,701 |
Total Assets | 178 | 16,119 |
Current Liabilities | ||
Accounts payable | 406,705 | 448,438 |
Accrued liabilities | 353,749 | 315,310 |
Customer deposits | 3,445 | 8,487 |
Notes payable, current portion | 299,612 | 273,822 |
Convertible note payable to related party, current portion | 320,246 | 320,246 |
Total Current Liabilities | 1,383,757 | 1,366,303 |
Long-Term Liabilities | ||
Notes payable, net of current portion | 0 | 25,790 |
Convertible note payable to related party, net of current portion | 0 | 0 |
Total Long-Term Liabilities | 0 | 25,790 |
Total Liabilities | 1,383,757 | 1,392,093 |
STOCKHOLDERS' DEFICIT | ||
Preferred stock - $0.001 par value Authorized: 5,000,000 shares, issued and outstanding: 1,200,000 shares and outstanding: 1,200,000 shares, respectively | 1,200 | 1,200 |
Common stock - $0.001 par value authorized: 100,000,000 shares, issued and outstanding: 24,031,863 shares and 24,031,863 shares, respectively | 24,032 | 24,032 |
Additional paid-in capital | 3,018,496 | 3,001,752 |
Accumulated deficit | (4,427,307) | (4,402,958) |
Total Stockholders' Deficit | (1,383,579) | (1,375,974) |
Total Liabilities and Stockholders' Deficit | $ 178 | $ 16,119 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, Par Value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued (in shares) | 1,200,000 | 1,200,000 |
Preferred Stock, Shares Outstanding (in shares) | 1,200,000 | 1,200,000 |
Common Stock, Par Value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized (in shares) | 100,000,000 | 100,000,000 |
Common Stock, Shares Issued (in shares) | 24,031,863 | 24,031,863 |
Common Stock, Shares Outstanding (in shares) | 24,031,863 | 24,031,863 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | ||
Revenue | $ 8,347 | $ 122,319 |
Cost of Revenue | 3,099 | 43,428 |
Gross Profit | 5,248 | 78,891 |
Operating Expenses | ||
General and administrative | 19,387 | 112,933 |
Professional fees | 33,759 | 18,683 |
Selling and marketing | 0 | 5,527 |
Research and development | 341 | 60,878 |
Total Operating Expenses | 53,487 | 198,021 |
Net Loss from Operations | (48,239) | (119,130) |
Other Expenses | ||
Sale of securities | 75,000 | 0 |
Gain on sale of fixed assets | 0 | 12,250 |
Interest Expense | (51,110) | (66,252) |
Total Other Expenses | 23,890 | (54,002) |
Net Loss before Provision for Income Taxes | (24,349) | (173,132) |
Provision for Income Taxes | 0 | 0 |
Net Loss | $ (24,349) | $ (173,132) |
Total Basic and Diluted Loss Per Common Share | $ 0 | $ (.01) |
Basic and Diluted Weighted-Average Common Shares Outstanding | 24,031,863 | 23,800,680 |
Shareholders Equity
Shareholders Equity - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Beginning Balance, shares at Dec. 31, 2012 | 1,200,000 | 23,031,863 | |||
Beginning Balance, amount at Dec. 31, 2012 | $ 1,200 | $ 23,032 | $ 2,899,251 | $ (4,229,826) | $ (1,306,343) |
Issuance for outside director services, shares | 550,000 | ||||
Issuance for outside director services, amount | $ 550 | 10,450 | 0 | 11,000 | |
Issuance for consultants' services, shares | 450,000 | ||||
Issuance for consultants' services, amount | $ 450 | 8,550 | 0 | 9,000 | |
In kind contribution of rent | 17,400 | 0 | 17,400 | ||
In kind contribution of salaries | 66,101 | 0 | 6,601 | ||
Net Loss | (173,132) | (173,132) | |||
Ending Balance, Shares at Dec. 31, 2013 | 1,200,000 | 24,031,863 | |||
Ending Balance, Amount at Dec. 31, 2013 | $ 1,200 | $ 24,032 | 3,001,752 | (4,402,958) | (1,375,974) |
In kind contribution of rent | 4,350 | 4,350 | |||
In kind contribution of salaries | 12,394 | 12,394 | |||
Net Loss | (24,349) | (24,349) | |||
Ending Balance, Shares at Dec. 31, 2014 | 1,200,000 | 24,031,863 | |||
Ending Balance, Amount at Dec. 31, 2014 | $ 1,200 | $ 24,032 | $ 3,018,496 | $ (4,427,307) | $ (1,383,579) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities: | ||
Net Loss | $ (24,349) | $ (173,132) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 2,701 | 5,628 |
In-kind contribution of rent | 4,350 | 17,400 |
In-kind contribution of executive salaries | 12,394 | 66,101 |
Gain on sale of fixed asset | 0 | (12,250) |
Gain on sale of securities | (75,000) | 0 |
Common stock issued for services | 0 | 20,000 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,960 | 15,754 |
Prepaid expenses | 0 | 1,404 |
Accrued expenses | 38,439 | 21,567 |
Accounts payable | (41,733) | 43,178 |
Customer deposits | (5,042) | (6,400) |
Net Cash Provided by (Used) in Operating Activities | (86,280) | (750) |
Cash Flows from Investing Activities | ||
Proceeds from sale of securities | 75,000 | 0 |
Proceeds from sale of fixed asset | 0 | 12,250 |
Net Cash Provided by Investing Activities | 75,000 | 12,250 |
Cash Flows from Financing Activities | ||
Principal payments on notes payable | 0 | (645) |
Principal payments on related party convertible note payable | 0 | (254) |
Net Cash Provided by (Used in) Financing Activities | 0 | (899) |
Net Decrease in Cash | (11,280) | 10,601 |
Cash at Beginning of Period | 11,458 | 857 |
Cash at End of Period | 178 | 11,458 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for income taxes | 0 | 0 |
Cash paid for interest expense and lines of credit | $ 12,554 | $ 29,674 |
1. Organization and Summary of
1. Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Notes To Financial Statements | |
Organization and Summary of Significant Accounting Policies | Nature of Business Principles of Consolidation Business Segments Use of Estimates Cash and Cash Equivalents Revenue Recognition Long-Lived Assets Accounting for Goodwill and Other Intangible Assets Accounting for Impairment or Disposal of Long-Lived Assets Going Concern Income Taxes Income Taxes Fair Value of Financial Instruments Fair Value Measurements and Disclosures 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 Companys financial instruments consist of accounts receivable, prepaid expenses, accounts payable, accrued liabilities, customer deposits, notes payable, and related-party convertible note payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures Financial Instruments Property and Equipment Net Loss per Common Share Earnings Per Share Stock-Based Compensation 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 Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, 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 $20,000 in stock-based compensation during the years ended December 31, 2014, and 2013, respectively ( see Recent Accounting Pronouncements Revenue from Contracts with Customers Revenue Recognition Revenue RecognitionConstruction-Type and Production-Type Contracts In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial StatementsGoing Concern In April 2015, FASB issued ASU No. 2015-03, InterestImputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs In April 2015, FASB issued ASU No. 2015-05, IntangiblesGoodwill and OtherInternal-Use Software (Subtopic 350-40): Customers Accounting for Fees Paid in a Cloud Computing Arrangement All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable. |
2. Property and Equipment
2. Property and Equipment | 12 Months Ended |
Dec. 31, 2014 | |
Property And Equipment | |
Property and Equipment | Property and equipment consisted of the following as of December 31, 2014 and 2013: December 31 2014 2013 Computer & office equipment $ - $ 51,587 Accumulated depreciation - (48,886) $ - $ 2,701 Depreciation expense during the years ended December 31, 2014 and 2013, was $2,701 and $5,628, respectively. |
3. Investments
3. Investments | 12 Months Ended |
Dec. 31, 2014 | |
Notes To Financial Statements | |
Investments | As of December 31, 2013, the Company had an approximately 40% minority interest in an entity that is developing electronic livestock tracking systems. The Company has no management or financial control over this entity and therefore accounted for the investment using the cost method. The value of the investment was $0 as of December 31, 2013, as determined based on Level 3 inputs. On August 26, 2014, the Company sold to Southfork Solutions, Inc., its 39% minority, nonoperating interest in Southfork Solutions for $75,000. This operation had been discontinued in 2009. |
4. Accounts Payable and Accrued
4. Accounts Payable and Accrued Liabilities | 12 Months Ended |
Dec. 31, 2014 | |
Notes To Financial Statements | |
Accounts Payable and Accrued Liabilities | As of December 31, 2014, the Company had $406,705 in accounts payable, $293,024 of which was due on multiple revolving credit cards under the name of the Companys former chief executive officer (now deceased) or the name of the Company's current president. These amounts represent advances to the Company from funds borrowed on credit cards in the names of these officers as an accommodation to the Company at a time when it was unable to obtain advances on its own credit. The obligations bear varying rates of interest between 5.25% and 27.24%. The Company agreed to reimburse the former chief executive officer and the current president for these liabilities ( see As of December 31, 2014, the Company had $353,749 in accrued liabilities. The accrued liabilities also included $213,436 in unpaid salaries to two of its officers and approximately $42,000 due to related parties. |
5. Convertible Notes Payable to
5. Convertible Notes Payable to Related Party | 12 Months Ended |
Dec. 31, 2014 | |
Notes To Financial Statements | |
Convertible Notes Payable to Related Party | In 2010, the Company borrowed $150,000 in three separate loans from two of its officers and directors, repayable pursuant to various convertible promissory notes. The terms of the notes are as follows: (a) no interest will accrue if the note is repaid within 60 days; (b) if the note is not repaid within 60 days, the Company is obligated to pay 10% for costs associated with securing the funds; (c) if the loan is repaid within one year, no annual interest rate will be charged; however, if the loan is not repaid within one year, the note will accrue interest at 6% per annum, beginning on the one-year anniversary date of the note; (d) the lenders are authorized to convert part or all of the note balance and accrued interest, if any, into the Companys common stock at its fair value at any time while the note is outstanding; and (e) the loans due date for full repayment is December 31, 2013. Since the loans were not paid within 60 days, the Company is obligated to pay $15,000 for costs associated with securing the funds and accrued interest. The notes were not paid when due. In 2011, the Company borrowed $125,000 in five separate loans from two of its officers and directors, repayable pursuant to various convertible promissory notes. The terms of the notes are as follows: (a) no interest will accrue if the note is repaid within 60 days; (b) if the note is not repaid within 60 days, the Company is obligated to pay 10% for costs associated with securing the funds; (c) if the loan is repaid within one year, no annual interest rate will be charged; however, if the loan is not repaid within one year, the note will accrue interest at 6% per annum, beginning on the one-year anniversary date of the note; (d) the lenders are authorized to convert part or all of the note balance and accrued interest, if any, into the Companys common stock at its fair value at any time while the note is outstanding; and (e) the loans due date for full repayment is December 31, 2014. Since the loans were not paid within 60 days, the Company is obligated to pay $12,500 for costs associated with securing the funds. The notes were not paid when due. In 2012, the Company borrowed $45,500 in three separate loans from two of its officers and directors, repayable pursuant to various convertible promissory notes. The terms of the notes are as follows: (a) no interest will accrue if the note is repaid within 60 days; (b) if the note is not repaid within 60 days, the Company is obligated to pay 10% for costs associated with securing the funds; (c) if the loan is repaid within one year, no annual interest rate will be charged; however, if the loan is not repaid within one year, the note will accrue interest at 6% per annum, beginning on the one-year anniversary date of the note; (d) the lenders are authorized to convert part or all of the note balance and accrued interest, if any, into the Companys common stock at its fair value at any time while the note is outstanding; and (e) the loans due date for full repayment is December 31, 2014. Since the loans were not paid within 60 days, the Company is obligated to pay $4,500 for costs associated with securing the funds. The notes were not paid when due. As of December 31, 2014, the Company had $320,246 in convertible notes payable due to related parties with $76,972 in accrued interest. |
6. Notes Payable in Default
6. Notes Payable in Default | 12 Months Ended |
Dec. 31, 2014 | |
Notes To Financial Statements | |
Notes Payable in Default | As of October 25, 2011, a loan from one economic development entity was in default. The loan principal was $50,000 with accrued interest of $10,664 through December 31, 2014. As of December 31, 2014, the Company was delinquent in payments on two loans to a second economic development entity. The Company owed this economic entity $73,470 in late payments with an outstanding balance of $163,791 and accrued interest of $36,694 as of December 31, 2014. Both loans are guaranteed by two of the Companys officers. One loan is secured by liens on intangible software assets and the other loan is secured by the officers personal property. The Company is working with this entity to bring the payments current as soon as cash flow permits. As of December 31, 2014, the Company was delinquent in payments on a loan to a third economic development entity. The Company owed the third economic entity $76,070 in late payments with an outstanding balance of $85,821 and accrued interest of $15,201 as of December 31, 2014. This loan is secured by a junior lien on all the Companys assets and shares of founders common stock. The Company is working with this entity to bring the payments current as soon as cash flow permits. Notes payable are summarized as follows: December 31, December 31, 2014 2013 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 Companys 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 22,072 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 $ 299,612 $ 299,612 Less: Current Portion 299,612 273,822 Long-Term Notes Payable $ -- $ 25,790 |
7. Stockholder's Deficit
7. Stockholder's Deficit | 12 Months Ended |
Dec. 31, 2014 | |
Stockholders Deficit | |
Stockholder's Deficit | Common Stock As of December 31, 2014, the Company had 24,031,863 common shares issued and outstanding. No shares or options were granted during 2014. A summary of the status of the Companys stock options as of December 31, 2014, and the changes during the period ended is presented below: Weighted Average Fixed Options Shares Exercise Price Outstanding at beginning of year 203,000 Expired (203,000) $0.09 Outstanding at December 31, 2014 -- Exercisable at December 31, 2014 -- Weighted average exercise price of options granted to employees in the year ended December 31, 2014 $ -- The aggregate intrinsic value represents the excess amount over the exercise price optionees would have received if all options had been exercised on the last business day of the period indicated, based on the Companys closing stock price of $0.01 for such day. The total intrinsic value of stock options exercised during fiscal years 2014 and 2013 was $0. A summary of the status of the Companys stock options as of December 31, 2013, and the changes during the period ended is presented below: Weighted Average Fixed Options Shares Exercise Price Outstanding at beginning of year 2,018,000 Expired (15,000) $0.10 Expired (1,800,000) $0.11 Outstanding at December 31, 2013 203,000 Exercisable at December 31, 2013 203,000 Weighted average exercise price of options granted to employees in the year ended December 31, 2013 $ -- Exercise Price Number Outstanding at Dec. 31, 2013 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Exercisable at Dec. 31, 2013 Weighted Average Exercise Price $0.09 203,000 0.46 $0.09 203,000 $0.09 203,000 203,000 Preferred Stock No preferred shares or options were granted in 2013 or 2014. In-Kind Contribution of Rent |
8. Concentrations
8. Concentrations | 12 Months Ended |
Dec. 31, 2014 | |
Concentrations | |
Concentrations | Sales Accounts Receivable |
9. Income Taxes
9. Income Taxes | 12 Months Ended |
Dec. 31, 2014 | |
Income Taxes | |
Income Taxes | As of December 31, 2014, the Company has net operating loss carryforwards of approximately $3,007,775 that expire, if not used, from 2022 through 2034. The valuation allowance at December 31, 2014, was $1,257,638. The net change in the valuation allowance for the year ended December 31, 2014, was an increase of $2,968. The Company paid no income taxes during the years ended December 31, 2014 and 2013. Deferred tax assets and related valuation allowance were as follows at December 31, 2014 and 2013: December 31 2014 2013 Accrued liabilities $ 83,972 $ 68,747 Operating loss carryforwards 1,173,634 1,185,891 Total Deferred Income Tax Assets 1,257,606 1,254,638 Valuation allowance (1,257,606) (1,254,638) 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 2014 2013 Benefit at statutory rate (34%) $ (8,279) $ (58,865) Nondeductible permanent differences 6,533 40,460 Change in valuation allowance 2,968 27,096 State tax benefit, net of federal tax (1,222) (8,691) Benefit from Income Taxes $ -- $ -- |
10. Commitments and Contingenci
10. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Notes To Financial Statements | |
Commitments and Contingencies | In March 2012, the compensation committee set the annual salary for the chief executive officer to be $50,000 through calendar year 2012 and for subsequent calendar years until otherwise modified in a subsequent compensation committee resolution. The chief executive officer voluntarily forfeited her salary for the year ended December 31, 2014, and contributed the services in-kind. |
11. Subsequent Events
11. Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Notes To Financial Statements | |
Subsequent Events | Credit Card Obligations Consolidation of Convertible Notes Payable to Related Parties See 2015 Investment and Merger Agreements Investment Agreement JPFs investment is being used principally to initiate and pursue an updated technical and commercialization review of the Companys intellectual properties with a view toward possible broadened marketing introduction and, in general, advance the Companys business activities and to bring its regulatory filings current. The terms of the Investment Agreement provide that, if the Merger (as defined below) with OTE is consummated, 100% of the JPF Stock will be cancelled and returned to the status of authorized and unissued shares. The purpose of this intended cancellation is to ensure that the Companys current shareholders (excluding JPF) retain a 5% interest in the post-Merger company. If the Merger is not consummated, the JPF Stock will remain outstanding, and JPF will maintain its position as a 55% stockholder in the Company. Concurrently with the execution of the Investment Agreement, Antoinette Knapp Hempstead the estate of her late husband, David W. Hempstead (together, the Hempsteads), JPF, and Feakins entered into an agreement whereby, among other things: (i) JPF agreed to execute supplemental guarantees for the Hempsteads in connection with certain debt obligations to economic development entities owed by the Company and guaranteed by the Hempsteads; (ii) the Hempsteads transferred to JPF the consolidated convertible note payable by the Company to the Hempsteads with an outstanding principal balance of $394,380 as of December 31, 2014, together with accrued and unpaid payroll of $213,436, for a total of $607,816; and (iii) the Hempsteads returned to the Company for cancellation 1,200,000 shares of Series A Preferred Stock, which were cancelled. The Company has filed a Certificate of Withdrawal of Certificate of Designation for the preferred stock with the Nevada Secretary of State. As required by the Investment Agreement, two designees of JPF, Feakins and Peter Wolfson, were appointed as directors of the Company to replace incumbent directors Orville J. Hendrickson and Larry J. Ybarrondo, who resigned. See Agreement and Plan of Merger Merger Terms Conditions to Completion of Merger The California application for a Fairness Hearing is now pending. The Fairness Hearing and permitting application are significant and quite technical, and the determination of whether the Merger will meet the California fairness requirements will be subject to the discretion of the hearing officer. No assurance can be given as to whether or not the hearing will result in the denial of the application, an adjustment of the terms of the Merger, the issuance of a permit meeting the conditions of the Securities Act Section 3(a)(10) exemption, or other action. If California issues a permit availing the Company of the exemption under the Securities Act Section 3(a)(10) and the other conditions to closing the Merger are met, the Merger will be completed promptly thereafter. If California does not issue the permit or the other Merger conditions are not satisfied: (i) the Merger Agreement will terminate; (ii) the Company and OTE will remain as separate companies; and (iii) JPF will continue as the 55% controlling stockholder of the Companys stock as it seeks to advance commercialization of its technologies or pursue other opportunities. Completion of the Merger is also conditioned on the continuing accuracy of the representations and warranties of the respective parties to the Merger Agreement, the satisfaction of certain conditions, and other covenants, many of which may be waived by either party. Reverse Split to Facilitate Merger As a result of the Reverse Split, each record holder of less than 4.6972 shares of the Companys common stock immediately before the Reverse Split (the Minority Stockholders) will receive from the Company, cash in the amount of $0.03 per share of the Companys common stock, without interest (which includes a 20% premium over the fair market value of $0.025 per share as of March 3, 2015, as determined by the Companys board of directors), for each share of the Companys common stock held immediately before the Reverse Split, and the Minority Stockholders will no longer be the Companys stockholders. Each record holder of 4.6972 or more shares of the Companys common stock immediately before the Reverse Split will own approximately one-fifth of the number of shares of the Companys common stock held by such stockholder immediately before the Reverse Split. Post-Merger Business of OTE and the Company OTE is interested in the commercial potential of proprietary technologies being developed by the Company as opportunities for future business diversification. Further, OTE recognizes that the Companys status as a company that is subject to the periodic reporting requirements pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended, may enhance its access to the capital markets to fund future projects. After the Merger, the combined enterprise intends to continue opportunistically to develop the lines of business of both the Company and OTE as commercial opportunities are identified for one, the other, or both, after considering funding availability, potential financial returns, and related risks. Ownership of the Company Following the Merger and Reverse Split If the Merger is completed, the JPF Stock purchased pursuant to the Investment Agreement will be cancelled and returned to the Company, and the former OTE stockholders will own 95% of the Companys outstanding common stock (after giving effect to the exercise of OTE warrants and the conversion of OTE notes). The pre-Merger company shareholders will have a 5% interest in the post-Merger company, and the officers and directors of OTE will be the officers and directors of the post-Merger company. Change in Directors and Management On March 23, 2015, in connection with the Investment Agreement, Orville J. Hendrickson and Larry J. Ybarrondo resigned their positions on the Companys board of directors, and Feakins and Peter Wolfson (as a nominee of JPF) were appointed by board consent to the Companys board. Antoinette Knapp Hempstead, who was a board member before March 23, 2015, continues as a director. The resignations of Messrs. Hendrickson and Ybarrondo are not the result of any disagreement with the Company on any matter relating to its operations, policies, or practices. See Change of Office Location In connection with the above transactions, in March 2015, the Companys offices were relocated to the facilities of JPF at 800 South Queen Street, Lancaster, Pennsylvania 17603, telephone number (717) 715-0238, where it shares offices with OTE at no charge to the Company. 2015 Convertible Note Payable to Related Party On June 23, 2015, 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) payee is authorized to convert part or all of the note balance and accrued interest, if any, into shares of the Companys common stock at their fair market value at the time of conversion. JPF is an investment entity that is majority-owned by Feakins, a director, chief executive officer, and chief financial officer of the Company. |
1. Organization and Summary o18
1. Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Organization And Summary Of Significant Accounting Policies Policies | |
Nature of Business | Nature of Business |
Principles of Consolidation | Principles of Consolidation |
Business Segments | Business Segments |
Use of Estimates | Use of Estimates |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Revenue Recognition | Revenue Recognition |
Long-Lived Assets | Long-Lived Assets Accounting for Goodwill and Other Intangible Assets Accounting for Impairment or Disposal of Long-Lived Assets |
Going Concern | Going Concern |
Income Taxes | Income Taxes Income Taxes |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair Value Measurements and Disclosures 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 Companys financial instruments consist of accounts receivable, prepaid expenses, accounts payable, accrued liabilities, customer deposits, notes payable, and related-party convertible note payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures Financial Instruments |
Property and Equipment | Property and Equipment |
Net Loss per Common Share | Net Loss per Common Share Earnings Per Share |
Stock-Based Compensation | Stock-Based Compensation 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 Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, 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 $20,000 in stock-based compensation during the years ended December 31, 2014, and 2013, respectively ( see |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue from Contracts with Customers Revenue Recognition Revenue RecognitionConstruction-Type and Production-Type Contracts In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial StatementsGoing Concern In April 2015, FASB issued ASU No. 2015-03, InterestImputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs In April 2015, FASB issued ASU No. 2015-05, IntangiblesGoodwill and OtherInternal-Use Software (Subtopic 350-40): Customers Accounting for Fees Paid in a Cloud Computing Arrangement All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable. |
2. Property and Equipment (Tabl
2. Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Property And Equipment Tables | |
Property and Equipment | December 31 2014 2013 Computer & office equipment $ - $ 51,587 Accumulated depreciation - (48,886) $ - $ 2,701 |
6. Notes Payable in Default (Ta
6. Notes Payable in Default (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Notes Payable In Default Tables | |
Summary of notes payable | December 31, December 31, 2014 2013 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 Companys 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 22,072 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 $ 299,612 $ 299,612 Less: Current Portion 299,612 273,822 Long-Term Notes Payable $ -- $ 25,790 |
7. Stockholders' Deficit (Table
7. Stockholders' Deficit (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Stockholders Deficit Tables | |
Summary of Company's stock options | A summary of the status of the Companys stock options as of December 31, 2014, and the changes during the period ended is presented below: Weighted Average Fixed Options Shares Exercise Price Outstanding at beginning of year 203,000 Expired (203,000) $0.09 Outstanding at December 31, 2014 -- Exercisable at December 31, 2014 -- Weighted average exercise price of options granted to employees in the year ended December 31, 2014 $ -- A summary of the status of the Companys stock options as of December 31, 2013, and the changes during the period ended is presented below: Weighted Average Fixed Options Shares Exercise Price Outstanding at beginning of year 2,018,000 Expired (15,000) $0.10 Expired (1,800,000) $0.11 Outstanding at December 31, 2013 203,000 Exercisable at December 31, 2013 203,000 Weighted average exercise price of options granted to employees in the year ended December 31, 2013 $ -- |
Stock option by exercise range | Exercise Price Number Outstanding at Dec. 31, 2013 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Number Exercisable at Dec. 31, 2013 Weighted Average Exercise Price $0.09 203,000 0.46 $0.09 203,000 $0.09 203,000 203,000 |
9. Income Taxes (Tables)
9. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2014 | |
Income Taxes Tables | |
Schedule of Deferred Tax Assets | December 31 2014 2013 Accrued liabilities $ 83,972 $ 68,747 Operating loss carryforwards 1,173,634 1,185,891 Total Deferred Income Tax Assets 1,257,606 1,254,638 Valuation allowance (1,257,606) (1,254,638) Net Deferred Income Tax Asset $ -- $ -- |
Schedule of Effective Income Tax Reconciliation | For the Years Ended December 31 2014 2013 Benefit at statutory rate (34%) $ (8,279) $ (58,865) Nondeductible permanent differences 6,533 40,460 Change in valuation allowance 2,968 27,096 State tax benefit, net of federal tax (1,222) (8,691) Benefit from Income Taxes $ -- $ -- |
1. Organization and Summary o23
1. Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Notes To Financial Statements | |||
Net Loss | $ (24,349) | $ (173,132) | |
Net Cash Provided by (Used in) Operating Activities | (86,280) | (750) | |
Working Capital | 1,383,579 | 1,352,885 | |
Stockholders' Equity Attributable to Parent | $ (1,383,579) | $ (1,375,974) | $ (1,306,343) |
2. Property and Equipment (Deta
2. Property and Equipment (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Property And Equipment Details | ||
Computer & office equipment | $ 0 | $ 51,587 |
Accumulated depreciation | 0 | (48,886) |
Property and Equipment, net | $ 0 | $ 2,701 |
2. Property and Equipment (De25
2. Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property And Equipment Details Narrative | ||
Depreciation expense | $ 2,701 | $ 5,628 |
3. Investments (Details Narrati
3. Investments (Details Narrative) | Dec. 31, 2013USD ($) |
Notes To Financial Statements | |
Investment Value | $ 0 |
4. Accounts Payable and Accru27
4. Accounts Payable and Accrued Liabilities (Details Narrative) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Notes To Financial Statements | ||
Accounts payable, net | $ 406,705 | $ 448,438 |
Revolving Credit Arrangements | 293,024 | 359,797 |
Accrued liabilities | $ 353,749 | $ 315,310 |
5. Convertible Notes Payable 28
5. Convertible Notes Payable to Related Party (Narrative Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Notes To Financial Statements | ||
Convertible notes payable to related party | $ 320,246 | $ 320,246 |
Related Party Note Payables Accrued Interest | $ 76,972 | $ 57,757 |
6. Notes Payable in Default (De
6. Notes Payable in Default (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Total Notes Payable | $ 299,612 | |
Less: Current Portion | 299,612 | $ 273,822 |
Long-Term Notes Payable | 0 | 25,790 |
Notes Payable 1 | ||
Total Notes Payable | 85,821 | 85,821 |
Notes Payable 2 | ||
Total Notes Payable | 22,072 | 22,072 |
Notes Payable 3 | ||
Total Notes Payable | 141,719 | 141,719 |
Notes Payable 4 | ||
Total Notes Payable | $ 50,000 | $ 50,000 |
7. Stockholders' Deficit (Detai
7. Stockholders' Deficit (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Outstanding at beginning of year | 203,000 | |
Outstanding at end of year | 203,000 | |
Exercisable at end of year | 203,000 | |
Stock Option | ||
Outstanding at beginning of year | 203,000 | 2,018,000 |
Expired | (203,000) | (1,800,000) |
Expired | (15,000) | |
Outstanding at end of year | 0 | 203,000 |
Exercisable at end of year | 0 | 203,000 |
Weighted average exercise price of options granted to employees in the year ended December 31, 2014 | $ 0 | $ 0 |
Weighted average exercise price of options expired | $ .09 | .10 |
Weighted average exercise price of options expired | $ 0.11 |
7. Stockholders' Deficit (Det31
7. Stockholders' Deficit (Details 1) - 12 months ended Dec. 31, 2013 - $.09 - $ / shares | Total |
Outstanding at end of year | 203,000 |
Exercisable at end of year | 203,000 |
Outstanding at end of year | 203,000 |
Weighted Average Remaining Contractual Life | 5 months 16 days |
Weighted Average Exercise Price, options outstanding | $ 0.09 |
Exercisable at end of year | 203,000 |
Weighted Average Exercise Price, options exercisable | $ 0.09 |
8. Concentrations (Details Narr
8. Concentrations (Details Narrative) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Customer A | ||
Percentage of sale from major customer | 54.00% | 38.00% |
Customer B | ||
Percentage of sale from major customer | 24.00% | 24.00% |
Customer C | ||
Percentage of sale from major customer | 18.00% | 18.00% |
9 Income Taxes (Details)
9 Income Taxes (Details) - USD ($) | Dec. 31, 2014 | Dec. 31, 2013 |
Income Taxes Details | ||
Accrued liabilities | $ 83,972 | $ 68,747 |
Operating loss carry forwards | 1,173,634 | 1,185,891 |
Total Deferred Income Tax Assets | 1,257,606 | 1,254,638 |
Valuation allowance | (1,257,606) | (1,254,638) |
Net Deferred Income Tax Asset | $ 0 | $ 0 |
9 Income Taxes (Details 1)
9 Income Taxes (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes Details 1 | ||
Benefit at statutory rate (34%) | $ (8,279) | $ (58,865) |
Non-deductible permanent differences | 6,533 | 40,460 |
Change in valuation allowance | 2,968 | 27,096 |
State tax benefit, net of federal tax | (1,222) | (8,691) |
Benefit from Income Taxes | $ 0 | $ 0 |