**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-KSB**

 

ANNUAL REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR            THE FISCAL YEAR ENDED DECEMBER 31, 2007

 

Commission File Number 033-19411-C

 

| **TETRIDYN SOLUTIONS, INC.**                                                                    |
|-------------------------------------------------------------------------------------------------|
| (Name of small business issuer in its                            charter)                       |
|                                                                                            |   |
| **Nevada**                                                                                      | **20-5081381** |
| (State or other jurisdiction of                                                                 | (I.R.S. Employer |
| incorporation or organization)                                                                  | Identification No.) |
|                                                                                            |   |
| **1651 Alvin Ricken Drive**

**Pocatello, ID**                                                  | **83201** |
| (Address of principal executive offices)                                                        | (Zip Code) |
|                                                                                            |
| **208-232-4200**                                                                                |
| (Issuer’s telephone number)                                                               |
|                                                                                            |   |
| Securities registered pursuant to Section 12(b) of the                            Exchange Act: |
| Title of each class                                                                             | Name of each exchange on which registered |
| **N/A**                                                                                         | **N/A** |
| Securities registered pursuant to Section 12(g) of the                            Exchange Act: |
| **Common Stock, Par Value $0.001**                                                              |
| (Title of Class)                                                                                |

 

Check whether the issuer is not required to file reports pursuant to            Section 13 or 15(d) of the Exchange Act.x

 

Check whether the issuer (1) filed all reports required to be filed            by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such            shorter period that the registrant was required to file such reports), and (2) has            been subject to such filing requirements for the past 90            days.  Yes x  No             o

 

Check if there is no disclosure of delinquent filers in response to Item            405 of Regulation S-B contained in this form, and no disclosure will be contained, to            the best of registrant’s knowledge, in definitive proxy or information statements            incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form            10-KSB.x

 

Indicate by check mark whether the registrant is a shell company (as            defined in Rule 12b-2 of the Exchange            Act).  Yes o  No x

 

State issuer’s revenues for its most recent fiscal year.**$1,151,962**

 

State the aggregate market value of the voting and nonvoting common            equity held by nonaffiliates computed by reference to the price at which the common            equity was sold, or the average bid and asked prices of such common equity, as of a            specified date within the past 60 days.**As of March 24, 2008,            the aggregate market value of the voting and nonvoting common equity held by            nonaffiliates of the issuer was $832,094.**

 

State the number of shares outstanding of each of the issuer’s            classes of common equity, as of the latest practicable date.**As of March 24, 2008, issuer had 21,011,863 shares of issued and            outstanding common stock, par value $0.001.**

 

**DOCUMENTS INCORPORATED BY REFERENCE: None.**

| Transitional Small Business Disclosure Format: Yes                            o | Nox |
|---------------------------------------------------------------------------------|-----|

 

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**TABLE OF CONTENTS**

 

| **Item** | **Description**                                                                            | **Page** |
|----------|--------------------------------------------------------------------------------------------|----------|
|     |                                                                                       |     |
|     | **Part I**                                                                                 |     |
| Item 1   | Description of Business                                                                    | 1        |
| Item 2   | Description of Property                                                                    | 15       |
| Item 3   | Legal Proceedings                                                                          | 15       |
| Item 4   | Submission of Matters to a Vote of Security                            Holders             | 15       |
|     |                                                                                       |     |
|     | **Part II**                                                                                |     |
| Item 5   | Market for Common Equity and Related Stockholder Matters                            and    |     |
|     | Small Business Issuer Purchases of Equity                            Securities            | 16       |
| Item 6   | Management’s Discussion and Analysis or Plan of                            Operation | 17       |
| Item 7   | Financial Statements                                                                       | 22       |
| Item 8   | Changes in and Disagreements with Accountants                            on                |     |
|     | Accounting and Financial Disclosure                                                        | 22       |
| Item 8A  | Controls and Procedures                                                                    | 22       |
| Item 8B  | Other Information                                                                          | 23       |
|     |                                                                                       |     |
|     | **Part III**                                                                               |     |
| Item 9   | Directors, Executive Officers, Promoters, Control                            Persons       |     |
|     | and Corporate Governance; Compliance with Section                            16(a)         |     |
|     | of the Exchange Act                                                                        | 24       |
| Item 10  | Executive Compensation                                                                     | 26       |
| Item 11  | Security Ownership of Certain Beneficial Owners and                            Management  |     |
|     | and Related Stockholder Matters                                                            | 27       |
| Item 12  | Certain Relationships and Related                            Transactions,                 |     |
|     | and Director Independence                                                                  | 27       |
| Item 13  | Exhibits                                                                                   | 28       |
| Item 14  | Principal Accountant Fees and Services                                                     | 30       |
|     | Signatures                                                                                 | 31       |
|     | Supplemental Information To Be Furnished with Reports                            Filed     |     |
|     | Pursuant to Section 15(d) of the Exchange Act                            by                |     |
|     | Nonreporting Issuers                                                                       | 32       |

 

i

 

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**PART I**

 

**ITEM 1. DESCRIPTION OF BUSINESS**

 

**Nature of Business**

 

TetriDyn Solutions, Inc. (“TetriDyn”) and our wholly owned            and controlled subsidiaries specialize in providing business information technology            (IT) solutions to our customers. We optimize business and IT processes by utilizing            systems engineering methodologies, strategic planning and guidance, and system            integration to add efficiencies and value to our customers’ business            processes.

 

To date, we have provided business IT solutions principally within the            healthcare industry. Concurrently, we are expanding into selected other industries            including education and professional services. This constitutes our business IT            solutions segment.

 

Our subsidiary, Southfork Solutions, Inc. (“Southfork”), is            developing business IT solutions specifically within the livestock industry. Our IT            solutions and software development experiences are being used to develop livestock            tracking, management, and diagnostic systems to add efficiency and value to the            commercial livestock industry. Southfork’s focus along with our management and            technical expertise constitutes our livestock segment.

 

**Organization**

 

TetriDyn Solutions, Inc. (“TetriDyn-Idaho”) was organized            under the laws of the state of Idaho on October 3, 2000. On March 22, 2006,            TetriDyn-Idaho and its shareholders completed a stock exchange agreement with Creative            Vending Corp., a Florida corporation. Under the terms of the agreement, the            TetriDyn-Idaho shareholders exchanged all of the outstanding TetriDyn-Idaho common            stock for 17,170,563 shares of Creative common stock. Creative also issued 829,437            shares to a consultant for services primarily rendered to TetriDyn-Idaho under a July            2005 agreement. Creative had 2,009,350 shares of common stock outstanding prior to the            reorganization that remained outstanding after the transaction. The members of the            board of directors of TetriDyn-Idaho and its management became the board of directors            and management of Creative.

 

Due to the TetriDyn-Idaho shareholders controlling TetriDyn-Idaho before            and after the completion of the agreement, TetriDyn-Idaho was considered the accounting            acquirer. The transaction was therefore recognized as a 1-to-2.07 stock split of the            common stock of TetriDyn-Idaho and the reverse acquisition of Creative by            TetriDyn-Idaho. Creative did not meet the definition of a business under Emerging            Issues Task Force Issue 98-3,*Determining Whether a            Nonmonetary Transaction Involves Receipt of Productive Assets or of a            Business*; accordingly, the acquisition of Creative was            recognized as a nonmonetary exchange whereby the 2,009,350 shares of common stock            constructively issued to the Creative shareholders were recorded at $4,500, which was            the value of the liabilities assumed. The accompanying consolidated financial            statements are those of TetriDyn-Idaho for all periods prior to the reorganization and            have been restated for the effects of the stock split for all periods            presented.

 

On June 1, 2006, Creative changed its domicile to the state of Nevada            through a merger with and into a newly formed subsidiary, TetriDyn Solutions, Inc., a            Nevada corporation. The reorganization of Creative into the Nevada surviving            corporation was accomplished by a 1-for-1 share exchange by the shareholders. Under            Nevada law, our authorized capital consists of 5,000,000 shares of preferred stock,            $0.001 par value, and 100,000,000 shares of common stock, $0.001 par value. The            accompanying consolidated financial statements have been restated for all periods            presented for the effects of the change in the par value of the common stock from no            par to $0.001 per share.

 

1

 

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**Business IT Solutions Segment**

 

We provide IT solutions to the healthcare industry, but we are expanding            our business IT solutions to selected other industries. The IT solutions needed by the            healthcare industry are similar to IT solutions needed by other industries. All modern            companies require a reliable network and computing infrastructure; however, many            small-to-midsize businesses cannot afford to employ a full IT department with advanced            engineering and related management capabilities to effectively use and manage such            resources. We provide a cost-effective conduit to an array of IT skills from management            to engineering to basic technical assistance.

             

Our IT solutions range from full-service IT management to the sale of            software and hardware products. We have four defined levels of provided            solutions:

 

*Enterprise IT Consulting:*The customer base            for enterprise IT consulting solutions are large organizations with existing IT            departments or organizations that need to develop IT departments. Our enterprise IT            consulting solutions are fully integrated within a customer’s site and include,            but are not limited to, the following:

             

|   | **•** | improving business and IT processes, |
|--------|------------|--------------------------------------|

|   | **•** | managing the customer’s IT personnel, |
|--------|------------|---------------------------------------------|

|   | **•** | providing additional high-level IT personnel, |
|--------|------------|-----------------------------------------------|

|   | **•** | optimizing IT budgets and contracts, and |
|--------|------------|------------------------------------------|

|   | **•** | developing IT strategic planning within the scope of the                            customer’s organizational strategic plan. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------|

             

*Business IT Consulting:*The customer base            for business IT consulting solutions are smaller enterprises that need a full-time IT            staff but do not have budgets for the senior staff that their technology requirements            demand. These organizations may have junior-level support staff that cannot meet the            enterprise-level technology and business process needs. Our business IT consulting            solutions provide senior-level guidance to the organization. Our business IT consulting            solutions include, but are not limited to, the following:

             

|   | **•** | business process and infrastructure analysis, |
|--------|------------|-----------------------------------------------|

|   | **•** | detailed IT project planning, |
|--------|------------|-------------------------------|

|   | **•** | software and hardware implementation and upgrades,                            and |
|--------|------------|-----------------------------------------------------------------------------------|

|   | **•** | network and hardware design, installation, and                            service. |
|--------|------------|------------------------------------------------------------------------------------|

             

*Software and Hardware Products:*We            developed and are selling our own proprietary AeroMD electronic medical record (EMR)            software product. We are also a value-added reseller (VAR) for four McKesson healthcare            software and service packages:

             

|   | **•** | Medisoft patient management system (PMS), |
|--------|------------|-------------------------------------------|

|   | **•** | Lytec PMS, |
|--------|------------|------------|

|   | **•** | Practice Partner PMS and EMR system, and |
|--------|------------|------------------------------------------|

|   | **•** | RelayHealth patient/physician portal. |
|--------|------------|---------------------------------------|

 

2

 

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We also resell desktop, server, and network hardware, in addition to            developing customized software for specific customers.

             

*Product Support:*The intended customers for            our product support are small businesses that have stand-alone applications that            require minimal IT intervention. Our product support provides security and peace of            mind for those customers that do not require advanced IT services, but are interested            in having reliable and cost-effective product upgrades and product support. We provide            contracts with customers for one- or two-year periods.

             

***Enterprise IT Consulting***

             

For customers whose technical needs have surpassed their technical            capabilities, we provide either the management or the outsourcing of their internal IT            department. When managing the customer’s IT department, we emphasize the            development of well-rounded skills relevant to the contemporary IT industry within the            department. We align the actions of the IT department with the vision of the            organization’s chief officers and board members. Senior team members work with            the organization’s administration team and leadership team to align the business            processes and IT investments to meet the organizational vision.

             

We provide a hybrid approach using proven methodologies born from            systems engineering, software engineering, engineering management, and project            management. The overall value proposition to our customers is based on our ability to            leverage our business process analysis, service and delivery infrastructure, our            leadership position in IT innovation, and technology expertise. Our commitment to            excellence is demonstrated in the success of our customers’ visions.

             

IT services that we provide to our customers include, but are not            limited, to the following:

             

|   | **•** | IT Infrastructure Assessment – We review, inspect,                            and test the effectiveness of our customers’ IT infrastructure,                            including computer hardware, software system integration, and network                            systems. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | IT Strategic Planning – We collaborate with our                            customers to develop their IT strategic plan to be aligned with their                            organization’s vision. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Network Optimization – We provide our customers                            with knowledge on how to optimize network equipment through design,                            implementation, and hardware configuration. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Engineering & Software Services – Some                            companies build an IT system; we engineer it. The difference is in                            planning for not only today, but for the future. To create sustainable                            services, we implement best practices from industries and top                            universities. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Systems Lifecycle Engineering –We provide the                            knowledge to our customers on how to plan for the entire life of their                            IT systems. Our Systems Lifecycle Engineering ensures an IT investment                            contributes maximum value to the organization throughout its                            life. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Technology Contract Review – We provide the                            expertise to ensure the organization’s technology contracts meet                            the needs of the organization. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

3

 

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Our approach offers the following benefits to our customers:

             

|   | **•** | Interdisciplinary Leadership Development – We                            provide leadership to our customers as part of our Enterprise IT                            Consulting. We develop training for key leadership skills necessary for                            successful partnership between business process areas and IT. The                            training includes project management, meeting facilitation, and time                            organization. Recognizing the need for leadership and direction, we                            utilize the strengths of the workforce employed by our                            customers. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Experienced Personnel – We provide a senior-level                            interdisciplinary team to our customers for their complex and critical                            projects. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Rigorous Engineering Approach – Our concepts are                            built upon rigorous engineering methodologies born from computer                            science, systems engineering, engineering management, and electrical                            engineering. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Team-Based Approach – We have a team comprised of                            expertise from accounting to healthcare IT. We utilize the necessary                            expertise from the fabric of our company on any given customer’s                            project. We ensure maximum value to the customer by pooling our                            resources and drawing what is needed to meet their needs. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Quality Service Levels – The foundation of our                            quality service levels are built on our core values of community,                            excellence, solutions, education, and entrepreneurship. Our customers                            benefit from professional services rooted in our ethical business                            practices. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Continuous Process Improvement – We apply the                            Capability Maturity Model Integration (CMMI) methodology developed by                            Carnegie Melon’s Software Engineering Institute’s (SEI) to                            improve processes in the context of our customers’ business                            processes. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Knowledge Transfer – We recognize that                            leading-edge technology and stellar processes cannot produce results                            without transferring necessary skills and knowledge to the                            customer. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Customer Empowerment – We pride ourselves on                            leading the customer to results it can reproduce. We ensure control is                            in the customer’s hands. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

*Healthcare Enterprise IT Consulting*

             

A 125-bed regional hospital contracts our enterprise IT consulting            solutions for its enterprise. Annually, we have reduced operating expenses by as much            as 30%, while increasing the volume of projects completed and the quality of IT            solutions. These advances have been made possible through our significant successes and            ongoing services, which include the following:

             

|   | **•** | Completion of comprehensive baseline of the                            hospital’s IT infrastructure, including inventories of software,                            desktop, server and networking hardware, policies and procedures, and                            personnel job duties and qualifications. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Design of the IT department’s organizational chart                            to meet the needs of the department. We also wrote all job descriptions                            and filled the positions with existing staff and new staff as                            needed. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Definition, documentation, and implementation of IT                            standards, policies, and procedures and continuation of efforts to                            ensure compliance with them. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Methodic organization and standardization of computer                            and networking hardware configurations. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------|

4

 

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|   | **•** | Development of and continued updates to the IT strategic                            plan to parallel the hospital’s enterprise strategic                            plan. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Leadership of a team of 20 internal hospital IT staff.                            In addition, we started an internship program and through partnerships                            with the local university, we developed 20 student internship                            opportunities. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Development and implementation of programs for                            increasing the technical and customer skill sets of the hospital IT                            personnel. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Development and implementation of numerous public                            relations strategies to increase the customer confidence of the                            hospital’s IT department and to solicit support for the                            technology initiatives. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Management of the IT budget of $3.6 million in                            operations and $3 million in capital. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Negotiation of contracts for software, hardware, and IT                            systems used in the hospital, ensuring that training, reduced purchase                            and maintenance price, and licensing compliance are                            achieved. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Development and implementation of comprehensive                            lifecycle management plans to ensure a planned, phased approach to                            reduce downtime from failure and reduce the total cost of ownership for                            technology investments. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Lead role in clinical and financial application                            implementations, including nurse charting systems, time and attendance                            systems, revenue cycle applications, and technology process                            improvements. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Management of the operation of the financial and patient                            management system. |
|--------|------------|--------------------------------------------------------------------------------------------------------|

 

|   | **•** | Design and implementation of optimizations and oversight                            of the upgrades of the hospital’s enterprise-level core financial                            and patient record system. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Project management not only to the IT-based projects but                            also throughout the hospital on interdisciplinary projects requiring                            assistance. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Definition, organization, and continue management of                            both the hospital’s IT steering committee and change control                            board. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Communication with and direction given to                            hospital’s management and board of directors. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------|

 

*Education Enterprise IT Consulting*

             

Our leading philosophy is the value of coordinated efforts between            community, business, and education. Each group could stand alone and be marginally            successful; however, it is when the groups intersect and form a synergistic            relationship that a higher level of success is achieved.

             

We are pursuing collaborative projects within secondary and            university-level educational institutes. Our proposed projects include the following            seven key elements:

             

|   | **•** | IT Strategic Planning – We collaborate with                            administration to develop an IT strategic plan that will echo the                            institute’s strategic plan. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | IT Buying Group Development – We have forged                            strategic relationships with reliable IT vendors in order to offer our                            clients the best quality at a price that meets their budgetary                            demands. |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

5

 

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|   | **•** | Grant Development / E-Rate Funding – We provide                            experience and supplemental labor to our educational customers, thereby                            opening financial possibilities previously out of reach. |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | IT Maintenance Program Development – We show our                            clients how to use maintenance work to optimize their                            return-on-investment for IT purchases. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Training Program for Students – We offer students                            the opportunity to learn technology with theory and practical hands-on                            work. Skills stretch from concept to implementation. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Mentoring, Scholarship, and Internship Programs –                            Opportunity inspires success. We seek to include opportunities for                            career path development in all our work. Students are given                            opportunities to present their work to company decision makers and make                            contacts that will provide them a professional foothold. |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Employment Opportunities – Always seeking to                            develop our company with skilled minds, we explore our community and                            educational projects for promising applicants that look for                            collaborative work and productive career growth. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

             

***Business IT Consulting***

             

Our business IT consulting solutions provide many of the same benefits            of our enterprise IT consulting solutions. Our approach provides customers with the            same pool of expertise to ensure their complex technology needs are met, without the            expense of staffing their business with senior-level staff. We provide quality            solutions cost effectively. Services offered include, but not limited to, the            following:

             

|   | **•** | engineering of complex IT systems; |
|--------|------------|------------------------------------|

|   | **•** | business process improvement; |
|--------|------------|-------------------------------|

|   | **•** | infrastructure assessment and improvement; |
|--------|------------|--------------------------------------------|

|   | **•** | IT planning; |
|--------|------------|--------------|

|   | **•** | optimization of software and hardware                            systems; |
|--------|------------|---------------------------------------------------------------------------|

|   | **•** | network optimization; and |
|--------|------------|---------------------------|

|   | **•** | lifecycle management. |
|--------|------------|-----------------------|

             

We provide customers the ability to purchase computer and networking            equipment, the service of installation, and follow-on support necessary for successful            operation. We forge strategic relationships with reliable IT vendors to offer clients            the best quality at a price that meets their budgetary demands. We have a team of            experts that designs a system with high reliability and installs it according to all            manufacturers’ specifications. Finally, after the system is designed and            installed, we provide the support to keep it up and running.

             

6

 

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***Software and Hardware Products***

             

We have developed and are selling our own proprietary AeroMD EMR product            nationwide through direct marketing and a group of VARs throughout the country. AeroMD            EMR, with its unique pricing strategy, support, and customization package, overcomes            three of the top objections to EMR adoption: high price, fear of work flow changes, and            reliability issues that have plagued the industry. Our AeroMD EMR offers medical            offices the wireless ability to perform all office tasks from scheduling and            examinations to prescription and billing processes. The EMR’s ability to achieve            these functions with full mobility provides offices the tool to streamline their            operations and establish valuable processes that will limit errors and increase            productivity, further helping decrease the high costs in the healthcare            industry.

             

Competitive features of AeroMD EMR include the following:

             

|   | **•** | Unique approach to pricing of EMR that has eliminated                            the common barriers offices face when considering the implementation of                            EMR into their practice. |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | AeroMD EMR was built from the ground up to be mobile,                            unlike some other EMR programs that are too bulky to run across most                            wireless networks. |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | Instantaneous return on investment coupled with                            value-added support. |
|--------|------------|-------------------------------------------------------------------------------------------------|

 

|   | **•** | Direct wireless connectivity providing real-time data                            transfer. |
|--------|------------|--------------------------------------------------------------------------------------------|

 

|   | **•** | Unique ability of the program to allow for multiple                            levels of customization. |
|--------|------------|---------------------------------------------------------------------------------------------------------|

             

We are also a VAR for four McKesson healthcare software and service            packages: Medisoft PMS, Lytec PMS, Practice Partner PMS and EMR system, and RelayHealth            patient/physician portal. We are actively marketing these products throughout the            country with our direct marketing focused on customers in Idaho, Utah, North Dakota,            South Dakota, Wyoming, Montana, and eastern Oregon.

             

Additionally, we provide custom software development for specialized EMR            charts, customized PMS reports, and interfaces for other software systems.

             

We develop strategic relationships with reliable computing and            networking equipment vendors in order to offer our clients the best quality at a price            that meets their budgetary demands. We provide hardware resale as a convenience to our            customers to simplify their IT purchasing process when upgrading hardware or software            systems.

             

***Product Support***

             

We provide remote and onsite product support and training for each of            our offered software products. Support can be purchased in either support contracts or            on a per-hour basis.

             

For those customers that do not require advanced IT services, but are            interested in having reliable and cost-effective support to provide product upgrades            and product support, we provide contracts for one- or two-year periods. Our product            support contracts provide product support and annual product upgrades for the term of            the contract.

 

7

 

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**Livestock Segment**

 

We applied our business IT solutions experience in the healthcare            industry along with the core technology in our AeroMD EMR software to develop a unique            niche in the livestock security industry. This transition of technology and knowledge            was possible because the underlying information system principles and needs are similar            between the two industries.

             

As a result of this transition, we partnered with Johnson Livestock,            LLC, an unaffiliated Idaho limited liability company, of which Gary Johnson is a            co-owner, and Dr. Scott MacGregor, a large-animal veterinarian with international            clients, to form our controlled subsidiary Southfork. Southfork’s objective is to            provide electronic livestock verification and tracking throughout the lifecycle of an            animal.

 

***The Organization of Southfork***

             

We incorporated Southfork in October 2006 and received 1,000 shares of            common stock in consideration of organizational expenses and efforts. At this time,            David W. Hempstead was appointed as its chairman and Antoinette R. Knapp was appointed            as its secretary/treasurer. In January 2007, we, David W. Hempstead, Johnson Livestock,            LLC, Gary Johnson, and Dr. Scott MacGregor transferred all rights to the intellectual            properties and technologies related to identifying and tracking livestock, including            the rights to the patent application entitled “*Method            and Apparatus for Improved Monitoring and Managing of            Livestock*” filed June 22, 2007. Each party            transferred the technology rights in exchange for shares of Southfork’s common            stock. In consideration of such transfer of technology, Southfork issued 2,615,170            shares of common stock to us, 2,289,149 shares of common stock to Johnson Livestock,            and 1,635,107 shares of common stock to Dr. Scott MacGregor. At that time, Gary            Johnson, a co-owner of Johnson Livestock, was appointed as one of its officers, and Dr.            Scott MacGregor was elected as a member of its board of directors.

             

In July 2007, we entered into an agreement with Southfork to provide            engineering, marketing, bookkeeping, and administrative services for Southfork for a            fee based on the number of hours worked and level of expertise provided. Southfork            granted us royalty-free, irrevocable, worldwide-exclusive right and license under any            patents, technology, or other intellectual property owned by Southfork to the extent            required by us to exploit the patent, technology, or intellectual property in other            industries and markets outside of the livestock industry specifically targeted by            Southfork. Additionally, any modifications made to these technologies or other            intellectual property by us outside of the scope of the agreement will be owned by            us.

             

In August 2007, Southfork agreed to sell 500,000 shares of common            stock for an aggregate subscription price of $500,000, payable as it accomplished            certain development benchmarks, to Five Rivers Ranch Cattle Feeding LLC, an            unaffiliated large cattle feeding operation. Pursuant to this transaction, Russ Danner,            an officer of Five Rivers, was elected as a member of its board of            directors.

 

***The Animal Tracking Opportunity***

             

Currently in the United States, there are over 105 million head of            cattle with approximately 33 million cattle slaughtered each year. Of those            slaughtered, less than 1% would qualify as source-verified, according to the source            verification program specifications released by the government. This only refers to            cattle in the United States, as other countries worldwide are attempting to or have            already established some form of an animal-tracking program.

             

8

 

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This small number of source-verified cattle is due largely to the            complexity and rudimentary way of source verifying an animal with current processes.            Current source verification methods require data to be manually recorded on paper and            stored in filing cabinets with no standard filing system, creating a time-consuming            process for the recording, secure storage, and retrieval of the information.

             

The industry as a whole acknowledges the need for an overall            standardized source verification and livestock tracking program. However, an effective            program has not yet been commercially available.

             

Southfork, with our management and technical expertise, has built a            prototype tracking system. Incorporating our own proprietary radio-frequency            identification, or RFID, technology and software, we have created an effective            electronic tracking program that we call Electronic Livestock Verification Information            System, or ELVIS. The ELVIS program will enable animal source tracing that is            substantially faster than the NAIS (National Animal Identification System) goal of 48            hours. It will also allow for more efficient processing of cattle because RFID            technology will reduce the number of times an animal must be touched, which also            reduces handling time, stress, and bruising caused to the animal during            processing.

             

The ELVIS program provides age, source, and process verification of            livestock. The ELVIS program allows for the tracking of historical individual animal            performance information, often necessary to make sound revenue-based decisions that            enhance bottom line profits for livestock producers.

             

In addition to source tracking, the ELVIS program enables feedlot            operators and others in the livestock industry to monitor individual animal feeding,            watering, and other behaviors, which provide timely and accurate data for healthcare            diagnosis, feed management, and other livestock management decisions.

             

In June 2007, we filed an application for Letters Patent of the United            States entitled “*Method and Apparatus for Improved            Monitoring and Managing of Livestock*.” We have            developed an intellectual property protection plan and are in the process of filing for            additional patents for the inventions resulting from the ELVIS program.

             

We have tested our ELVIS prototype in actual operation conditions with            positive results in a number of commercial cattle feedlot locations. The results of our            tests have resulted in a number of inquiries from prospective customers within the            livestock industry.

             

**Research and Development**

 

We incurred costs of $210,965 and $152,552 for research and development            during the years ended December 31, 2007 and 2006, respectively. In addition, we            routinely complete customer-required engineering and related developmental activities            in connection with the delivery of various customized products that indirectly support            our research and development effort.

 

**Intellectual Property**

 

We believe our intellectual properties are critical to our business and            growth. We rely on trade secret protection, confidentiality agreements with employees,            consultants, customers, and others with which we interact and patent laws to protect            our proprietary rights. We do not believe that our business IT solutions segment is            dependent upon or obtains a competitive advantage from our patents.

 

9

 

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            We            have filed one application for a U.S. patent relating to identifying and tracking            livestock, including the rights to the patent application entitled            “*Method and Apparatus for Improved Monitoring and            Managing of Livestock*” filed June 22, 2007. We            anticipate that will apply for patent protection on other features of our products, but            cannot assure that any patents will be issued or that we will derive any competitive            advantage. We believe that any patent protection we obtain may be beneficial in            protecting our developing livestock segment. We have not applied for any foreign            patents and cannot assure that we could obtain any patents we may seek            internationally.

 

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 do not believe that any of our products or other proprietary rights            infringe 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.

 

The Idaho National Laboratory (formerly, the Idaho National Engineering            & Environmental Laboratory) has granted us an exclusive license to advanced            database management and manipulation technologies, which are not used in any of our            current products but may be important for future products or services.

 

**Employees**

 

As of March 24, 2008, we had seventeen total employees, including            fifteen full-time employees, consisting of two executive officers who are also            directors and perform technical and managerial functions, thirteen other technical and            managerial employees, and two part-time administrative staff.

 

**Government Regulation; Environmental Compliance**

 

Our activities are not subject to present or expected probable material            governmental regulation, including environmental laws.

 

**Competition**

 

The market for IT services and products is intensely competitive and            highly fragmented, with minimal barriers to entry. We expect competition to increase in            the future, and there can be no assurance that we will be able to compete effectively            with current or future competitors or that the competitive pressures we face will not            have a material adverse effect on our business, financial condition, and operating            results.

 

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 products that are equal to or                            superior to our products or that achieve greater market acceptance than                            our products; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | devote greater resources to developing, marketing, or                            selling their products; |
|--------|------------|----------------------------------------------------------------------------------------------------------|

 

|   | **•** | respond more quickly to new or emerging technologies or                            technical advances and changes in customer requirements, which could                            render our technologies or products obsolete; |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

10

 

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|   | **•** | introduce products that make the continued development                            of our current and future products uneconomical; |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | obtain patents that block or otherwise inhibit our                            ability to develop and commercialize our products; |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------|

 

|   | **•** | 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 or other opportunities                            more readily than we can. |
|--------|------------|-----------------------------------------------------------------------------------------------------------|

In our business IT solutions segment, we believe compensation is based            principally on providing resourceful creative solutions at competitive prices with            quick, responsive service. We cannot assure that our efforts to meet these competitive            factors will be successful.

 

In our livestock segment, we believe that the commercialization of our            RFID livestock tracking and management systems will depend on our ability to be the            first to introduce a robust, adaptable system with numerous applications that are            perceived to add significant value to the livestock business by reducing costs and            risks and increasing accountability. The cost of enterprise-wide installation and            implementation of the system as well as employee and management acceptance and            adaptability may also be competitive factors in replacing less structured and            technically well-established management approaches. We are a new entrant into this            segment, so we have no current competitive advantage or standing.

 

**Risk Factors**

 

In addition to the negative implications of all information and            financial data included in or referred to directly in this periodic report, you should            consider the following risk factors. This periodic report contains forward-looking            statements and information concerning us, our plans, and other future events. Those            statements should be read together with the discussion of risk factors set forth below,            because those risk factors could cause actual results to differ materially from such            forward-looking statements.

 

*The auditors’ report for our most recent fiscal year contains            an explanatory paragraph about our ability to continue as a going            concern.*

 

The reports of our auditors on our financial statements for the years            ended December 31, 2006 and 2007, contain an explanatory paragraph about our            ability to continue as going concern.

 

We will require substantial additional funds to implement our marketing            plan and pursue our other expansion of our business IT segment and the completion of            development of a commercial product and market rollout in the livestock segment. 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.

 

11

 

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            We            may seek required funds through the sale of equity or other securities of either our            parent or our subsidiary, Southfork. 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 us at the time of such 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. There can be no assurance            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            shareholders 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. We have used this strategy to obtain            $500,000 in external funding from a strategic investor in Southfork. Any such            relationships may dilute our interest in any specific project and decrease the amount            of revenue that we may receive from such project. Further, any separate funding we may            obtain for Southfork will likely have to be used to advance its activities and will            only indirectly benefit our parent company and its business IT segment. There can be no            assurance 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, product candidates, or products that we would            otherwise seek to develop or commercialize ourselves; or to license our rights to such            products on terms that are less favorable to us than might otherwise be            available.

 

*Our expansion into the livestock segment will require substantial            financial, technical, and managerial resources that we may not be able to            recover.*

             

We are seeking material funding and are devoting substantial technical            and management resources toward launching commercial products using our tracking and            identification technologies for the livestock industry. Our ability to realize a            financial return from these efforts will depend on our ability to market successfully            one or more products or services in the livestock industry. We have not previously            marketed livestock industry products and cannot assure that we will be able to do so            successfully. We may be unable to recover the investment of our resources if we cannot            develop commercial products or services and market and deliver them timely and            economically.

 

*Product development still 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 in establishing our new            business, including:

 

|   | **•** | our ability to maintain and expand a sales network to                            expose our product 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; |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------|

12

 

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|   | **•** | 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.

 

*Claims that we infringe upon the intellectual property rights of            others could be costly to defend or settle.*

             

Litigation regarding intellectual property rights is common in the            software industry. We expect that software technologies and services may be            increasingly subject to third-party infringement claims as the number of competitors in            our industry segment grows and the functionality of products and services in different            industry segments overlaps. We may from time to time encounter disputes over rights and            obligations concerning intellectual property. Although we believe that our intellectual            property rights will be sufficient to allow us to market products and services without            incurring third-party liability, third parties may bring claims of infringement against            us. These claims may or may not have merit. Any litigation to defend against claims of            infringement or invalidity could result in substantial costs and diversion of            resources. Furthermore, a party making a claim could secure a judgment that requires us            to pay substantial damages. A judgment could also include an injunction or other court            order that could prevent us from selling products or services. Our business, operating            results, and financial condition could be harmed if any of these events            occurred.

 

*We are heavily dependent on our executive officers and technical            personnel.*

             

We are dependent upon the continued participation and assistance of our            key management and technical personnel, including David Hempstead, Chief Executive            Officer and President, and Antoinette Knapp, Deputy Chief Executive Officer and Vice            President. We do not have and generally do not intend to acquire keyman life insurance            on any of our executives. We will require the recruitment and retention of additional            personnel, including technical advisors and management, and the development of            additional expertise by existing management. The inability to acquire such services or            to develop such expertise could have a material adverse effect on our            operations.

 

13

 

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*We will need to hire and retain a number of key employees who may be            difficult to find.*

 

Our growth may require us to hire additional personnel, including            software engineers, systems engineers, 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 such 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.

 

*If we provide software products that are unreliable, we could lose            customers and revenues.*

             

Software products may contain unknown and undetected errors or            performance problems. Many serious defects in software products are frequently found            during the period immediately following introduction of new or enhancements to existing            products. Although we will attempt to resolve all errors we believe our customers would            consider serious, no technology is error-free. Undetected errors or performance            problems may be discovered after customers begin using our products. This could result            in lost revenues or delays in customer acceptance and could be detrimental to our            reputation, which could harm our business, operating results, and financial            condition.

 

*We will be exposed to the risk of product liability.*

             

The implementation of our business plan entails risks of product            liability. We will seek to obtain product liability insurance, but there can be no            assurance that we will be able to obtain such insurance or, if we are able to do so,            that we will be able to do so at rates that will make it cost-effective. Any successful            product liability claim made against us could substantially reduce or eliminate any            economic return to us or our shareholders and could have a significant adverse impact            on our future.

 

*If we become subject to service-related liability claims, they could            be time-consuming and costly to defend.*

             

Because our customers will use our products and services for            mission-critical applications in the medical and other fields, any errors, defects, or            other performance problems could result in liability or financial or other damages to            our customers. They could seek damages for losses from us, which, if successful, could            have a material adverse effect on our business, operating results, or financial            condition. Although we intend for our agreements with customers to contain provisions            designed to limit exposure to service-related liability claims, existing or future laws            or unfavorable judicial decisions could negate these limitations of liability            provisions. A service-related liability claim brought against us, even if unsuccessful,            could be time-consuming and costly to defend and could harm our reputation.

 

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*We are authorized to issue substantial additional shares of stock,            which would dilute the ownership of holders of Common Shares.*

             

We have authorized 100,000,000 shares of common stock and 5,000,000            shares of preferred stock. Of these, 21,011,863 shares of common stock are issued and            outstanding as of the date of this report. Our board of directors also has authority,            without action or vote of the shareholders, to issue all or part of the authorized but            unissued shares. Any such issuance will dilute the percentage ownership of shareholders            and may further dilute the book value of the shares of common stock.

 

**ITEM 2. DESCRIPTION OF PROPERTY**

 

Our principal executive offices are located at 1651 Alvin Ricken Drive,            Pocatello Idaho, where we lease approximately 4,000 square feet of office space from an            unrelated party at $1,000 per month.

 

**ITEM 3. LEGAL PROCEEDINGS**

 

We are not a party to any material legal proceedings and no material            legal proceedings have been threatened by us or, to the best of our knowledge, against            us.

 

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY            HOLDERS**

 

No matters were submitted to the stockholders for consideration during            the fourth quarter of our most recently completed fiscal year.

 

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**PART II**

 

**ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND            SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES**

 

Our common stock has been quoted on the Over-the-Counter Bulletin Board            since October 25, 2006. The following table sets forth for the periods indicated the            high and low bid prices for our common stock as quoted under the symbol TDYS on the            Over-The-Counter Bulletin Board. Such quotations do not include commissions or retail            mark-ups or mark-downs and may not represent actual transactions:

 

|                                  | **Low**          |   | **High**         |
|---------------------------------------|------------------|--------|------------------|
| **2008:**                             |             |   |             |
| First Quarter to March 24, 2008       | $0.10            |   | $0.30            |
|                                  |             |   |             |
| **2007:**                             |             |   |             |
| Fourth Quarter                        |   0.12 |   |   0.20 |
| Third Quarter                         |   0.10 |   |   0.25 |
| Second Quarter                        |   0.07 |   |   0.51 |
| First Quarter                         |   0.55 |   |   2.00 |
|                                  |             |   |             |
| **2006:**                             |             |   |             |
| Fourth Quarter after October 25, 2006 |   0.26 |   |   2.00 |

 

On March 24, 2008, the closing price per share of our common stock on            the Over-The-Counter Bulletin Board was $0.10.

 

We have never paid cash dividends on our common stock and do not            anticipate that we will pay dividends in the foreseeable future. We intend to reinvest            any future earnings to further expand our business. We estimate that, as of March 24,            2008, we had approximately 820 stockholders.

 

**Equity Compensation Plans**

             

The following table provides information respecting our compensation            plans (including individual compensation arrangements) under which our equity            securities are authorized for issuance.

             

|  

                             

**Plan Category** |   | **Number of Securities To Be Issued upon Exercise of                            Outstanding Options, Warrants and Rights**

**(a)** |   | **Weighted-Average Exercise Price of Outstanding                            Options, Warrants and Rights**

**(b)** |   | **Number of Securities Remaining Available for Future                            Issuance under Equity Compensation Plans (excluding securities                            reflected in column (a))(c)** |
|---------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                          |   |                                                                                                                                |   |                                                                                                                |   |                                                                                                                                                                                                     |
| Equity compensation plans

approved by security holders       |   |  

1,633,000                                                                                                                   |   |  

$0.098                                                                                                      |   |  

2,367,000                                                                                                                                                                                        |
|                                                          |   |                                                                                                                                |   |                                                                                                                |   |                                                                                                                                                                                                     |
| Equity compensation plans not

approved by security holders   |   |  

--                                                                                                                          |   |  

--                                                                                                          |   |  

--                                                                                                                                                                                               |
| **Total**                                                     |   |  

1,633,000                                                                                                                   |   |  

$0.098                                                                                                      |   |  

2,367,000                                                                                                                                                                                        |

 

 

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**ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF            OPERATION**

 

The following discussion should be read in conjunction with our audited            consolidated financial statements and notes to our financial statements included            elsewhere in this report. This discussion contains forward-looking statements that            involve risks and uncertainties. Actual results could differ materially from those            anticipated in these forward-looking statements as a result of various factors            discussed elsewhere in this report.

 

Certain information included herein contains statements that may be            considered forward-looking statements within the meaning of Section 27A of the            Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act            of 1934, as amended, such as statements relating to our anticipated revenues, gross            margin and operating results, future performance and operations, plans for future            expansion, capital spending, sources of liquidity, and financing sources. Such            forward-looking information involves important risks and uncertainties that could            significantly affect anticipated results in the future, and accordingly, such results            may differ from those expressed in any forward-looking statements made herein. These            risks and uncertainties include those relating to our liquidity requirements, the            continued growth of the mobility software industry, the success of our product            development, marketing, and sales activities, vigorous competition in the software            industry, dependence on existing management, leverage and debt service (including            sensitivity to fluctuations in interest rates), domestic or global economic conditions,            the inherent uncertainty and costs of prolonged arbitration or litigation, and changes            in federal or state tax laws or the administration of such laws.

 

**Overview**

 

We optimize business and IT processes by utilizing systems engineering            methodologies, strategic development, and integration to add efficiencies and value to            our customers’ business processes. Our business was founded as an Idaho            corporation, TetriDyn Solutions, Inc. On March 22, 2006, we completed a share exchange            with Creative Vending Corp., then inactive, that resulted in TetriDyn Solutions, Inc.            becoming a wholly owned subsidiary of the Florida corporation, the legal acquirer. For            accounting purposes, the Idaho corporation was the accounting acquirer because its            management and controlling shareholders continued to manage and control the            consolidated enterprise following the exchange. In June 2006, we changed our corporate            domicile from Florida to Nevada and changed our name from Creative Vending Corp. to            TetriDyn Solutions, Inc.

 

Our business IT solutions segment provides IT solutions to the            healthcare industry, but we are expanding our business IT solutions to selected other            industries.We provide small-to-midsize businesses with a            cost-effective conduit to an array of advanced IT engineering skills from management to            engineering to basic technical assistance.

 

Our livestock segment capitalizes on our business IT solutions            healthcare industry experience along with the core technology in our AeroMD EMR            software to develop products that will provide electronic livestock verification and            tracking throughout the lifecycle of an animal.

             

**Description of Expenses**

 

General and administrative expenses consist primarily of salaries and            related costs for accounting, administration, finance, human resources, and information            systems.

 

Professional fees expenses consist primarily of fees related to legal,            outside accounting, auditing, and investor relations services.

 

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Selling and marketing expenses consist primarily of advertising,            promotional activities, trade shows, travel, and personnel-related expenses.

 

Research and development expenses consist of payroll and related costs            for software engineers, management personnel, and the costs of materials used by these            employees in the development of new or enhanced product offerings.

 

In accordance with Financial Accounting Standards Board, or FASB,            Statement of Financial Accounting Standards (“SFAS”) No. 86,            “*Accounting for the Costs of Computer Software to be            Sold, Leased or Otherwise Marketed,”*development costs            incurred in the research and development of new software products to be sold, leased,            or otherwise marketed are expensed as incurred until technological feasibility in the            form of a working model has been established. Internally generated, capitalizable            software development costs have not been material to date. We have charged our software            development cost to research and development expense in our statements of            operations.

 

Property and equipment are recorded at cost. Maintenance, repairs, and            renewals that neither materially add to the value of the property nor appreciably            prolong its life are charged to expense as incurred. Property and equipment are            depreciated using the straight-line method over the estimated useful lives of the            assets. Gains or losses on dispositions of property and equipment are included in the            results of operations when realized.

 

**Results of Operations**

 

**Comparison of Years Ended December 31, 2007 and 2006**

             

**Revenues**

             

Our revenue was $1,151,962 and $771,651 for 2007 and 2006, respectively,            representing an increase of $380,311, or 49%, in 2007. The increase in revenues in 2007            was due to a full year versus a partial year of consulting services contract with a            regional hospital for 2007 and 2006, respectively, and increased AeroMD software sales            during 2007.

 

**Cost of Revenue**

             

Our cost of revenue was $418,562 and $280,027 for 2007 and 2006,            respectively, representing an increase of $138,535, or 49%, in 2007. The gross margin            percentage on revenue was 64% for both 2007 and 2006. The increased cost of revenue was            due to services provided in support of a full year versus a partial year consulting            service contract with a regional hospital.

 

Although the net changes and percent changes with respect to our            revenues and our cost of revenue for 2007 and 2006 are summarized above, these trends            should not be viewed as a definitive indication of our future results.

 

**Operating Expenses**

             

*General and Administrative*— General            and administrative expenses, including non-cash compensation expense, were $260,807 and            $209,321 for 2007 and 2006, respectively, representing an increase of $51,486, or 25%,            in 2007. The increase in our general and administrative expenses in 2007, as compared            to 2006, reflects an increase in payroll costs in 2007 due to an additional            administrative staff member and an increase in salaries to existing            personnel.

 

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*Professional Fees*— Professional fees            expenses, including noncash compensation expense, were $384,844 and $537,271 for 2007            and 2006, respectively, representing a decrease of $152,427, or 28%, in 2007. The            decrease in our professional fees expenses from 2007, as compared to 2006, reflects            legal, auditing, and other consulting fees incurred in 2006 directly related to the            reverse acquisition of TetriDyn Solutions, Inc. by Creative Vending Corp., the name and            domicile change to Nevada, and Securities and Exchange Commission filing            requirements.

 

*Selling and Marketing*— Selling and            marketing expenses, including non-cash compensation expense, were $256,198 and $259,293            for 2007 and 2006, respectively, representing a decrease of $3,095, or 1%, in 2007. The            changes in our selling and marketing expenses from 2007, as compared to 2006, were            immaterial.

 

*Research and Development*— Research            and development expenses were $210,965 and $152,552 for 2007 and 2006, respectively,            representing an increase of $58,413, or 38%, in 2007. The increase in research and            development expenses in 2007, as compared to 2006, reflects increased research and            development activities within and in support of our livestock segment in 2007. The            increased research and development activities required the addition of two engineers to            our staff. We expect that research and development expenses will continue at or above            2007 levels as we continue livestock segment product development, subject to the            availability of required funds.

 

Interest expense was $59,004 and $91,988 in 2007 and 2006, respectively,            a decrease of $32,984, or 36%, in 2007. The decrease in interest expense from 2007, as            compared to 2006, related primarily to our reduction of debt on which interest was            applied.

 

**Liquidity and Capital Resources**

 

At December 31, 2007, our principal sources of liquidity consisted of            $148,934 of cash, as compared to $81,723 of cash at December 31, 2006. In addition, our            stockholders’ deficit was $670,040 at December 31, 2007, compared to            stockholders’ deficit of $827,851 at December 31, 2006, a decrease in the deficit            of $157,811.

 

Our operations provided net cash of $126,747 during 2007, as compared to            using $120,680 of net cash during 2006. The $247,427 decrease in the net cash used by            our operating activities during 2007 primarily resulted from the significantly smaller            net loss in 2007, as compared to 2006, the issuance of common stock and options            aggregating $354,927 as payment for services, and $157,940 for the non-controlling            interest in Southfork. Operations used $97,873 during 2007 to reduce accounts            payable.

 

Investing activities for 2007 used $9,045 of net cash, as compared to            $2,072 of net cash used during 2006. The increase in net cash used related primarily to            the purchase of additional computer equipment in 2007.

 

Financing activities used $50,491 during 2007, compared to providing net            cash of $96,164 during 2006. The decrease of $146,655 of net cash provided in financing            activities was primarily due to the sale of stock in 2006 and the increase in notes            payable repayments in 2007.

 

We are focusing our efforts on increasing revenue while we explore            external funding alternatives. We currently have contracts in place for future            deliveries of our consulting services, our AeroMD product, and other solutions that we            believe will cover our minimum expenditures for operating costs and minimum            installments due on our other indebtedness to nonaffiliates during the next 12 months.            We expect that additional sales will enable us to increase our payments on indebtedness            and support the development of other products.

             

19

 

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In order for us to expand our business IT solutions customer base and to            pursue the development of our ELVIS program in our livestock segment leading to product            roll-out, we will be required to increase our revenues substantially and to seek            additional external capital. Our growth within ELVIS will be severely restricted if we            are unable to obtain external funding. ELVIS is currently being funded by an investor            within the cattle industry through Southfork. The development of the ELVIS program and            market introduction of commercial products is dependent upon the further investment by            the current investor or additional external funding being raised. Investment made in            Southfork directly benefits TetriDyn since we are contracted to provide the management,            administrative, and research and development services to Southfork. We do not            anticipate that Southfork will generate significant revenues during 2008 due to the            continued research and development activities that are required.

 

On October 25, 2006, our common stock began being quoted on the OTCBB            and the Pink Sheets, which we anticipate may improve our access to equity capital.            Additionally, as we continue development of new products and identify specific            commercialization opportunities, we will focus on those product markets and            opportunities for which we might be able to get external funding through joint venture            agreements, strategic partnerships, or other direct investments.

 

We have no significant contractual obligations or commercial commitments            not reflected on our balance sheet as of this date.

             

**Critical Accounting Policies**

 

We have identified the policies            outlined below as critical to our business operations and an understanding of our            results of operations. The list is not intended to be a comprehensive list of all of            our accounting policies. In many cases, the accounting treatment of a particular            transaction is specifically dictated by accounting principles generally accepted in the            United States, with no need for management's judgment in their application. The impact            and any associated risks related to these policies on our business operations is            discussed throughout Management's Discussion and Analysis or Plan of Operations where            such policies affect our reported and expected financial results. For a detailed            discussion on the application of these and other accounting policies, see the Notes to            the December 31, 2007 Consolidated Financial Statements. Note that our preparation of            the financial statements requires us to make estimates and assumptions that affect the            reported amount of assets and liabilities, disclosure of contingent assets and            liabilities at the date of our financial statements, and the reported amounts of            revenue and expenses during the reporting period. There can be no assurance that actual            results will not differ from those estimates.

 

**Revenue Recognition**

 

Our AeroMD EMR software is provided as turnkey software that has been            customized for specific medical specializations. We typically install the software at            the customer’s location for a fee and charge the customer a monthly license fee,            based on the number of operating workstations, under a one- or two-year usage            agreement. The customer is entitled to all systems upgrades during the one- or two-year            license. At the end of their contracts, customers may continue using AeroMD by entering            into a new license with us. We also sell installation and post-contract telephone            support service contracts on an hourly basis. We do not provide any rights of return or            warranties on our AeroMD EMR software.

 

20

 

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Revenue from software licenses and related installation and support            services is recognized when earned 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 collectibility is reasonably assured.            Amounts billed to customers prior to these criteria being met are deferred. Revenue            from the sale of software is recognized when delivered to the customer or upon            installation of the software if an installation contract exists. Revenue from            post-contract telephone support service contracts is recognized as the services are            provided, determined on an hourly basis. Revenue applicable to multiple-element fee            arrangements is divided among the software, the installation, and post-contract support            service contracts using vendor-specific objective evidence of fair value, as evidenced            by the prices charged when the software and the services are sold as separate products            or arrangements.

 

We also provide information technology management consulting services.            To date, these services have been primarily in the hospital industry. These services            are paid for on a monthly basis and for a contracted monthly fee, which is not            cancelable or refundable. Revenue for these services is recognized over the contract            period.

 

**Income Taxes**

 

We utilize the liability method of accounting for income taxes. Under            the liability method, deferred tax assets and liabilities are determined based on            temporary differences between financial reporting and tax bases of assets and            liabilities and on the amount of operating loss carry-forwards, and are measured using            the enacted tax rates and laws that will be in effect when the temporary differences            and carry-forwards are expected to reverse. An allowance against deferred tax assets is            recorded when it is more likely than not that such tax benefits will not be            realized.

 

**Recent Accounting Pronouncements**

 

In September 2006, the FASB issued SFAS No. 157,            “*Fair Value            Measurements.*” The objective of SFAS 157 is to increase            consistency and comparability in fair value measurements and to expand disclosures            about fair value measurements. SFAS 157 defines fair value, establishes a framework for            measuring fair value in generally accepted accounting principles, and expands            disclosures about fair value measurements. SFAS 157 applies under other accounting            pronouncements that require or permit fair value measurements and does not require any            new fair value measurements. The provisions of SFAS 157 are effective for fair value            measurements made in fiscal years beginning after November 15, 2007. The adoption of            this statement is not expected to have a material effect on our future reported            financial position or results of operations.

 

In February 2007, the FASB issued SFAS No. 159,            “*The Fair Value Option for Financial Assets and            Financial Liabilities – Including an Amendment of FASB Statement No.            115.*” This statement permits entities to choose to            measure many financial instruments and certain other items at fair value. Most of the            provisions of SFAS 159 apply only to entities that elect the fair value option.            However, the amendment to SFAS No. 115, “*Accounting for            Certain Investments in Debt and Equity Securities,*”            applies to all entities with available-for-sale and trading securities. SFAS 159 is            effective as of the beginning of an entity’s first fiscal year that begins after            November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year            that begins on or before November 15, 2007, provided the entity also elects to apply            the provision of SFAS 157*.*The            adoption of this statement is not expected to have a material effect on our financial            statements.

 

21

 

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In December 2007, the FASB issued SFAS No. 160,            “*Noncontrolling Interests in Consolidated Financial            Statements – an amendment of ARB No. 51.*” This            statement improves the relevance, comparability, and transparency of the financial            information that a reporting entity provides in its consolidated financial statements            by establishing accounting and reporting standards that require the ownership interests            in subsidiaries held by parties other than the parent and the amount of consolidated            net income attributable to the parent and to the noncontrolling interest be clearly            identified and presented on the face of the consolidated statement of income; changes            in a parent’s ownership interest while the parent retains its controlling            financial interest in its subsidiary be accounted for consistently; when a subsidiary            is deconsolidated, any retained noncontrolling equity investment in the former            subsidiary be initially measured at fair value; and entities provide sufficient            disclosures that clearly identify and distinguish between the interests of the parent            and the interests of the noncontrolling owners. SFAS 160 affects those entities that            have an outstanding noncontrolling interest in one or more subsidiaries or that            deconsolidate a subsidiary. SFAS 160 is effective for fiscal years, and interim periods            within those fiscal years, beginning on or after December 15, 2008. Early adoption is            prohibited. The adoption of this statement is not expected to have a material effect on            our financial statements.

             

**ITEM 7. FINANCIAL STATEMENTS**

 

Our consolidated financial statements are filed with and begin on page            F-1 of this report.

 

**ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS**

**ON            ACCOUNTING AND FINANCIAL DISCLOSURE**

 

|   | None. |
|--------|-------|

 

 

**ITEM 8A. CONTROLS AND PROCEDURES**

 

We maintain disclosure controls and procedures that are designed to            ensure that information required to be disclosed by us in the reports that we file or            submit to the Securities and Exchange Commission under the Securities Exchange Act of            1934, as amended, is recorded, processed, summarized, and reported within the time            periods specified by the Securities and Exchange Commission’s rules and forms,            and that information is accumulated and communicated to our management, including our            principal executive and principal financial officers (whom we refer to in this periodic            report as our Certifying Officers), as appropriate to allow timely decisions regarding            required disclosure. Our management evaluated, with the participation of our Certifying            Officers, the effectiveness of our disclosure controls and procedures (as defined in            Rule 13a-15(e) under the Securities Exchange Act) as of December 31, 2007, pursuant to            Rule 13a-15(b) under the Securities Exchange Act. Based upon that evaluation, our            Certifying Officers concluded that, as of December 31, 2007, our disclosure controls            and procedures were effective.

 

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

             

Internal control over financial reporting is a process to provide            reasonable assurance regarding the reliability of financial reporting and the            preparation of financial statements for external purposes in accordance with U.S.            generally accepted accounting principles.  There has been no change in our            internal control over financial reporting during the year ended December 31, 2007            that has materially affected, or is reasonably likely to materially affect, our            internal control over financial reporting.

 

22

 

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

             

Our Chief Executive Officer and Chief Financial Officer (our principal            executive officer and principal financial officer) conducted an evaluation of the            effectiveness of our internal control over financial reporting based on the framework            in*Internal Control – Integrated Framework*issued by the Committee of Sponsoring Organizations of the Treadway            Commission. Based on this evaluation, he concluded that our internal control over            financial reporting was effective as of December 31, 2007.

             

This annual report does not include an attestation report of our            registered public accounting firm regarding internal control over financial reporting.            Management’s report was not subject to attestation by our registered public            accounting firm pursuant to temporary rules of the Securities and Exchange Commission            that permit us to provide only management’s report in this annual            report.

 

**ITEM 8B. OTHER INFORMATION**

 

|   | None. |
|--------|-------|

 

23

 

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**PART III**

 

**ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND            CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT**

 

 

| **Name**               |   | **Age** |   | **Title**                                                                                                        |
|------------------------|--------|---------|--------|------------------------------------------------------------------------------------------------------------------|
| David W. Hempstead     |   | 44      |   | Chairman of the Board, Chief Executive Officer, Chief                            Financial Officer, and Director |
| Antoinette R. Knapp    |   | 43      |   | Secretary and Treasurer, Chief Technology Officer, and                            Director                       |
| Orville J. Hendrickson |   | 83      |   | Director and Member of Executive Compensation                            Committee                               |
| Larry J. Ybarrondo     |   | 70      |   | Director and Member of Executive Compensation                            Committee                               |

 

***David Hempstead***has served as Chief            Executive Officer, President, Chairman of the Board, and as a director of TetriDyn            since TetriDyn-Idaho’s inception, and assumed these positions with us upon            consummation of our share exchange transaction with TetriDyn-Idaho. Mr. Hempstead has            served as the Chief Executive Officer, President, Chairman of the Board, and as a            director of Southfork since its inception. Mr. Hempstead sets the strategic direction            of the companies and works closely with the management team, board of directors, and            advisors on all aspects of our operations, from product development to marketing. He            has 23 years of experience in management, accounting, financial forecasting, business            development, marketing, and software design, development, and maintenance. Mr.            Hempstead brings a unique blend of business and technical expertise to our team. He has            capitalized on his diverse experience by frequently serving as the liaison between            technical and business divisions, enabling efficient and productive communication. Mr.            Hempstead has been instrumental in the development of our many strategic alliances and            in providing the vision and focus for the company. He also serves on the Scientific and            Industrial Advisory Boards of the International Congress on Medical and Care            Compunetics. Education: BS, Accounting with Computer Science Minor, University of            Idaho.

 

***Antoinette Knapp***serves as the            Deputy Chief Executive Officer, Vice President, Secretary/Treasurer, and a director of            TetriDyn. Ms Knapp served as Chief Technology Officer, Vice President, and as a            director of TetriDyn since TetriDyn-Idaho’s inception and as its Secretary and            Treasurer since May 2004, and assumed these positions with us upon consummation of our            share exchange transaction with TetriDyn-Idaho. Ms. Knapp also serves as Vice President            of Finance and Information Technologies, Secretary/Treasurer, and a director of            Southfork. Ms. Knapp administers all corporate and finance activities of the companies.            Ms. Knapp also directs our software development activities and coordinates product            development with marketing and sales. Ms. Knapp has 23 years of experience in            management, finance, software management, and software development. Ms. Knapp has also            served as adjunct faculty for University of Idaho where she taught Computer Science            courses. Education: MS, Computer Science, University of Idaho; BS, Applied Mathematics,            University of Idaho.

 

24

 

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            ***Orville J. Hendrickson***was elected            to TetriDyn-Idaho’s board of directors in July 2004, and became a director of            ours upon consummation of our share exchange transaction with TetriDyn-Idaho; however,            Mr. Hendrickson served as a valued advisor to TetriDyn-Idaho from its inception in            providing contacts and advice in legal, accounting, technical, and business areas. Mr.            Hendrickson serves on the board’s executive compensation committee. He is a            retired Lieutenant Colonel for the United States Air Force and spent three years            teaching Mechanical Engineering at the University of Washington. Mr. Hendrickson served            for 38 years as Executive Vice President and 50% owner of Industrial Contractor, Inc.,            a specialty mechanical construction company that completed over $1 billion in            today’s dollars of successful contracts and was the sixth company in America to            receive the Nuclear Construction ASME Stamp. Mr. Hendrickson continues to pursue new            ventures by starting Productrade Insumos Organicos Occidente S de RL de CV, a Mexican            enterprise, in which patented organic soil is developed, in addition to developing            organic polymer that allows farmers to raise produce with 60% savings of the water            required and with approximately 30% time savings from planting to maturity. Education:            B.S., Mechanical Engineering (with nine additional minors including Accounting and            Mathematics), University of Washington.

 

***Larry J. Ybarrondo, Ph.D.***was            elected to TetriDyn-Idaho’s board of directors in July 2004, and became a            director of ours upon consummation of our share exchange transaction with            TetriDyn-Idaho. Dr. Ybarrondo serves on the board’s executive compensation            committee. Dr. Ybarrondo founded and built SCIENTECH, Inc., a 1,200-person, national,            high-technology engineering services company with offices in over 30 cities and six            foreign countries. His work experience includes responsibility for operation of four            nuclear reactor facilities, major advisory and programmatic roles for the U.S. Nuclear            Regulatory Commission (NRC) and the U.S. Department of Energy (DOE), and a broad range            of general management issues including planning, facility design, construction,            fabrication, and modification. Customer responsiveness, excellence in performance,            safety, training, maintenance, and total quality management were strongly emphasized in            Dr. Ybarrondo’s work. Dr. Ybarrondo has over 30 years experience in the            technological, operational, and managerial aspects of nuclear reactor technology. His            experience has included senior management positions with a national laboratory            organization, consulting to prestigious groups, and strategic, tactical, and            operational planning for a diverse set of large and nationally significant projects.            Education: Ph.D., Mechanical Engineering, Georgia Institute of Technology; MS,            Mechanical Engineering, Northwestern University; BS, Mechanical Engineering, University            of Detroit; Ten-Week Program for Senior Executives, Massachusetts Institute of            Technology, Sloan Business School.

 

Unless a director dies, resigns, or is removed earlier, each director            serves at least two years or until the next annual meeting of shareholders, provided            that each director will serve until such director’s successor is elected and            qualified.

 

|   | David W. Hempstead and Antoinette R. Knapp are                            married. |
|--------|------------------------------------------------------------------------------------|

 

**Board of Directors’ Committees**

 

Both Orville J. Hendrickson and Larry J. Ybarrondo are considered            independent members of our board of directors under NASD Rule 4200(a)(15).

 

Our compensation committee is composed of Messrs. Hendrickson and            Ybarrondo, our independent directors. Our board as a whole acts as the audit committee.            Our board of directors has concluded that Mr. Hendrickson, an independent director,            serves as the audit committee financial expert.

 

25

 

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**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 10. EXECUTIVE COMPENSATION**

 

The following table sets forth, for the last completed fiscal year, the            dollar value of all cash and non-cash compensation earned by any person who was our            principal executive officer during the preceding fiscal year and each of our other two            highest compensated executive officers earning more than $100,000 during the last            fiscal year (together, the “Named Executive Officer”):

 

| **Name and Principal Position**                          | **Year Ended Dec. 31** | **Salary**

**($)** | **Bonus ($)** | **Stock**

**Award(s)**

**($)** | **Option Awards ($)** | **Non-Equity Incentive Plan                            Compen-sation** | **Change in Pension Value and Non-Qualified Deferred                            Compen-sation Earnings ($)** | **All Other Compen-sation ($)** | **Total ($)** |
|----------------------------------------------------------|------------------------|---------------------|---------------|----------------------------------|-----------------------|------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|---------------------------------|---------------|
| **(a)**                                                  | **(b)**                | **(c)**             | **(d)**       | **(e)**                          | **(f)**               | **(g)**                                                                | **(h)**                                                                                                      | **(i)**                         | **(j)**       |
|                                                     |                   |                |          |                             |                  |                                                                   |                                                                                                         |                            |          |
| David W. Hempstead                                       | 2007                   | $90,000             | --            | --                               | $18,726 (1)           | --                                                                     | --                                                                                                           | $52                             | $108,778      |
| Chief Executive                             Officer |                   |                |          |                             |                  |                                                                   |                                                                                                         |                            |          |
|                                                          |                        |                     |               |                                  |                       |                                                                        |                                                                                                              |                                 |               |  |

                                             

| (1) | Equivalent to the dollar amount to be recognized as                            compensation expense for financial reporting purposes under FAS                            123R. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Our employment agreement with Mr. Hempstead engages him as an at-will            employee that we can terminate at any time, with or without cause. He agrees to            maintain the confidentiality of company information, assign to us all of his inventions            during employment and not to compete with us for three years after his employment by us            terminates for any reason. Mr. Hempstead’s annual compensation is determined            annually by the compensation committee. Mr. Hempstead’s salary was set to $90,000            per year by the executive compensation committee for the fiscal year 2007.

 

**Outstanding Equity Awards at Fiscal Year-End**

 

|   | We did not have any outstanding equity awards at                            December 31, 2007. |
|--------|-----------------------------------------------------------------------------------------------------|

 

We have not granted any stock appreciation rights during the last            completed fiscal year to our Named Executive Officer. We granted 720,000 incentive            stock options to our Named Executive Officer in 2007, all of which were unexercised at            the end of the fiscal year.

 

**Directors’ Compensation**

 

Each of our outside directors was compensated with a stock award valued            at $5,000 and 100,000 incentive stock options valued at $1,688.

 

26

 

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**ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND            MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

 

The following table sets forth, as of March 24, 2008, the outstanding            shares of common stock owned of record or beneficially by each person who owned of            record, or was known by us to own beneficially, more than 5% of our issued and            outstanding shares, and the name and share holdings of each director and all of the            executive officers and directors as a group:

 

| **Name of Person or Group**                                                                      | **Nature of Ownership** | **Amount** |   | **Percent** |
|--------------------------------------------------------------------------------------------------|-------------------------|------------|--------|-------------|
|                                                                                             |                    |       |   |        |
| **Principal Stockholders:**                                                                      |                    |       |   |        |
| Sawtooth Meadows, LP(1)                                                                          | Common Stock            | 12,279,111 |   | 58.4%       |
|                                                                                             |                    |       |   |        |
| **Directors:**                                                                                   |                    |       |   |        |
| David W. Hempstead(1)                                                                            | Common Stock            | 12,279,111 |   | 58.4%       |
|                                                                                             |                    |       |   |        |
| Antoinette R. Knapp(1)                                                                           | Common Stock            | 12,279,111 |   | 58.4%       |
|                                                                                             |                    |       |   |        |
| Orville J. Hendrickson                                                                           | Common Stock            | 163,383    |   | *           |
|                                                                                             |                    |       |   |        |
| Larry J. Ybarrondo                                                                               | Common Stock            | 248,420    |   | 1.2%        |
|                                                                                             |                    |       |   |        |
| **All Executive Officers and Directors as a                            Group**

**(4 persons):** | Common Stock            | 12,690,914 |   | 60.4%       |

                                                         

| * | Less than 1%. |
|---|---------------|

| (1) | Consists of 25,920 shares owned of record by David W.                            Hempstead; 25,920 shares owned of record by Antoinette R. Knapp; and                            12,227,271 shares owned of record by Sawtooth Meadows, LP. David W.                            Hempstead and Antoinette R. Knapp, husband and wife, are owners of, and                            control, Sawtooth Meadows, LP, and as such, each is deemed to be the                            beneficial owner of shares owned of record by Sawtooth Meadows,                            LP. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS            AND DIRECTOR INDEPENDENCE**

 

|   | The terms of the following transactions were not the                            result of arm’s length negotiations. |
|--------|----------------------------------------------------------------------------------------------------------------------------|

 

**Issuance of Common Stock at Organization**

 

We incorporated Southfork as an Idaho corporation in October 2006. It            then issued us 1,000 shares of its common stock for our expenses and efforts in its            organization.

 

**Issuance of Common Stock for Intellectual Property            Rights**

 

In January 2007, Southfork entered into a transaction by which we; David            W. Hempstead, our chief executive officer, a director and a principal stockholder;            Johnson Livestock, LLC, an unaffiliated Idaho limited liability company; Gary Johnson            an unaffiliated individual; and Dr. Scott MacGregor, an unaffiliated individual, each            transferred to Southfork all rights to the intellectual properties and technologies            related to identifying and tracking livestock, including the rights to the patent            application entitled “*Method and Apparatus for Improved            Monitoring and Managing of Livestock*” filed            June 22, 2007, in exchange for shares of Southfork common stock. In consideration            of such transfer of technology, Southfork issued 2,615,170 shares (40% of the            outstanding shares) of common stock to us, 2,289,149 shares of common stock to Johnson            Livestock, and 1,635,107 shares of common stock to Dr. Scott MacGregor. At that time,            Gary Johnson, a co-owner of Johnson Livestock, was appointed as one of Southfork            officers, and Dr. Scott MacGregor was elected as a member of its board of            directors.

 

27

 

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            As            described below, Southfork subsequently granted to us a license to use the intellectual            properties and technologies developed for identifying and tracking livestock in other            industries and markets outside the livestock industry specifically targeted by            it.

 

**Issuance of Common Stock for Cash**

 

In August 2007, Five Rivers Ranch Cattle Feeding LLC, an unaffiliated            Delaware limited liability company, agreed to purchase an aggregate of 500,000 shares            of Southfork common stock for an aggregate subscription price of $500,000. Five Rivers            also agreed to incorporate Southfork’s livestock identification and tracking            systems into the Five Rivers’ cattle feeding operations. The aggregate            subscription price of $500,000 is to be paid to Southfork in six installments of            between $70,000 and $120,000 each as it reaches certain benchmarks in the installation            of the livestock identification and trading system into the operations of Five Rivers.            As of December 31, 2007, Five Rivers had paid $290,000 and received 290,000 shares in            Southfork. Pursuant to this transaction, Russ Danner, an officer of Five Rivers, was            elected as a member of Southfork’s board of directors.

 

**Intellectual Property Transactions with TetriDyn Solutions,            Inc.**

 

Pursuant to our July 17, 2007, consulting agreement with Southfork,            it granted us a license to use of the propriety technologies it developed for livestock            identification and tracking in other industries and markets outside of the livestock            industry specifically targeted by it. Any modifications and improvements made to the            technologies or intellectual properties for use outside the livestock industry will be            owned by us. In consideration of this license grant from Southfork, we granted to            Southfork a license to use our AeroForms software in livestock industry applications of            its identification and tracking technologies. Under the consulting agreement, we will            retain all rights to any modifications and enhancements made to our AeroForms software            product or any related components that relate to the livestock industry.

 

**ITEM 13. EXHIBITS**

 

 

| **Exhibit**

**Number** |   |  

**Title of Document**                                                                                                                                                                                 |   |  

**Location**                                                                                                                             |
|-------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |   |                                                                                                                                                                                                          |   |                                                                                                                                             |
| **Item 3.**             |   | **Articles of Incorporation and Bylaws**                                                                                                                                                                      |   |                                                                                                                                             |
| 3.01                    |   | Articles of                            Incorporation of TetriDyn Solutions, Inc. dated May 15, 2006                                                                                                           |   | Incorporated by reference from the current report on                            Form 8-K filed June 7, 2006.

                              |
|                    |   |                                                                                                                                                                                                          |   |                                                                                                                                             |
| 3.02                    |   | Bylaws of                            TetriDyn Solutions, Inc. adopted May 26, 2006                                                                                                                            |   | Incorporated by reference from the current report on                            Form 8-K filed June 7, 2006.                                     |
|                    |   |                                                                                                                                                                                                          |   |                                                                                                                                             |
| **Item 4.**             |   | **Instruments Defining the Rights of Security Holders,                            Including Debentures**                                                                                                      |   |                                                                                                                                             |
| 4.01                    |   | Specimen stock certificate                                                                                                                                                                                    |   | Incorporated by reference from the current report on                            Form 8-K filed June 7, 2006.                                     |
|                    |   |                                                                                                                                                                                                          |   |                                                                                                                                             |
| **Item 10.**            |   | **Material Contracts**                                                                                                                                                                                        |   |                                                                                                                                             |
| 10.01                   |   | Technology License Agreement, effective October 16,                            2001, by Bechtel B WXT Idaho, LLC, and TetriDyn Solutions,                            Inc.

                              |   | Incorporated by reference from the current report on                            Form 8-K filed March 28, 2006.                                   |

 

28

 

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| 10.02        |   | Lease Document between Idaho State University and                            TetriDyn Solutions, Inc. dated September 1, 2004

                                                                                                |   | Incorporated by reference from the current report on                            Form 8-K filed March 28, 2006.                                                                   |
|--------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                |   |                                                                                                                                                                             |
| 10.03        |   | Employment Agreement between TetriDyn Solutions, Inc.                            and David W. Hempstead dated January 21, 2006

                                                                                               |   | Incorporated by reference from the current report on                            Form 8-K filed March 28, 2006.                                                                   |
|         |   |                                                                                                                                                                                                                                |   |                                                                                                                                                                             |
| 10.04        |   | Employment Agreement between TetriDyn Solutions, Inc.                            and Antoinette R. Knapp dated January 21, 2006

                                                                                              |   | Incorporated by reference from the current report on                            Form 8-K filed March 28, 2006.                                                                   |
| 10.05        |   | Debt Resolution Agreement between TetriDyn Solutions,                            Inc. and David W. Hempstead signed April 24, 2007                                                                                                  |   | Incorporated by reference from the current report on                            Form 8-K filed April 27, 2007.                                                                   |
|         |   |                                                                                                                                                                                                                                |   |                                                                                                                                                                             |
| **Item 14.** |   | **Code of Ethics**                                                                                                                                                                                                                  |   |                                                                                                                                                                             |
| 14.01        |   | TetriDyn Solutions, Inc., Code of Ethics                                                                                                                                                                                            |   | Incorporated by reference from the annual report on Form                            10-KSB for the year ended December 31, 2006, filed April 2,                            2007. |
|         |   |                                                                                                                                                                                                                                |   |                                                                                                                                                                             |
| **Item 16.** |   | **Letter on Change of Certifying                            Accountant**                                                                                                                                                            |   |                                                                                                                                                                             |
| 16.01        |   | Letter from Hansen, Barnett & Maxwell to Securities                            and Exchange Commission                                                                                                                          |   | Incorporated by reference from the current report on                            Form 8-K filed January 22, 2007.                                                                 |
|         |   |                                                                                                                                                                                                                                |   |                                                                                                                                                                             |
| **Item 21.** |   | **Subsidiaries of the Small Business                            Issuer**                                                                                                                                                            |   |                                                                                                                                                                             |
| 21.01        |   | Schedule of subsidiaries                                                                                                                                                                                                            |   | This filing.                                                                                                                                                                     |
|         |   |                                                                                                                                                                                                                                |   |                                                                                                                                                                             |
| **Item 31.** |   | **Rule 13a-14(a)/15d-14(a)                            Certifications**                                                                                                                                                              |   |                                                                                                                                                                             |
| 31.01        |   | Certification of Principal Executive Officer and                            Principal Financial Officer Pursuant to Rule 13a-14                                                                                                     |   | This filing.                                                                                                                                                                     |
|         |   |                                                                                                                                                                                                                                |   |                                                                                                                                                                             |
| **Item 32.** |   | **Section 1350 Certifications**                                                                                                                                                                                                     |   |                                                                                                                                                                             |
| 32.01        |   | Certification of Chief Executive Officer and Chief                            Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted                            Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |   | This filing.                                                                                                                                                                     |

_______________

| * | The number preceding the decimal indicates the                            applicable SEC reference number in Item 601, and the number following                            the decimal indicating the sequence of the particular document. Omitted                            numbers in the sequence refer to documents previously filed with the                            SEC as exhibits to previous filings, but no longer required. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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**ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

 

**Audit Fees**

 

For our fiscal year ended December 31, 2007, we were billed            approximately $23,424 for professional services rendered for the audit and reviews of            our financial statements. For our fiscal year ended December 31, 2006, we were billed            approximately $26,007 for professional services rendered for the audit and reviews of            our financial statements.

 

**Audit Related Fees**

 

|   | For our fiscal years ended December 31, 2007 and 2006,                            we did not incur any audit related fees. |
|--------|----------------------------------------------------------------------------------------------------------------------------|

 

**Tax Fees**

 

For our fiscal years ended December 31, 2007 and 2006, we were not            billed for professional services rendered for tax compliance, tax advice, and tax            planning.

 

**All Other Fees**

 

We didnotincur any other            fees related to services rendered by our principal accountant for the fiscal years            ended December 31, 2007 and 2006.

 

**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 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 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            preapproves 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 SEC rules and guidance. The Audit Committee must specifically approve            all other tax services.

 

30

 

----

            **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 SEC’s            rules on auditor independence, to the Audit Committee (or its Chair or any of its other            members pursuant to delegated authority) for approval.

 

**SIGNATURES**

 

In accordance with Section 13 or 15(d) of the Exchange Act, the            registrant caused this report to be signed on its behalf by the undersigned, thereunto            duly authorized.

 

|                 | **TETRIDYN SOLUTIONS, INC.**                                                                  |
|----------------------|-----------------------------------------------------------------------------------------------|
|                 |                                                                                          |
|                 |                                                                                          |
| Date: March 31, 2008 | By                                                                                            | /s/ David W. Hempstead |
|                 |     David W. Hempstead,                            President              |
|                 |     Principal Executive                            Officer                |
|                 |     Principal Financial and                            Accounting Officer |

 

 

In accordance with the Exchange Act, this report has been signed below            by the following persons on behalf of the registrant and in the capacities and on the            date indicated.

 

Dated: March 31, 2008

| /s/ David W. Hempstead           |
|----------------------------------|
| David W. Hempstead, Director     |
|  

/s/ Antoinette R. Knapp  |
| Antoinette R. Knapp, Director    |
|                             |
| /s/ Orville J. Hendrickson       |
| Orville J. Hendrickson, Director |
|                             |
| /s/ Larry J. Ybarrondo           |
| Larry J. Ybarrondo, Director     |

 

 

31

 

----

**SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT            TO SECTION 15(d) OF THE EXCHANGE ACT BY NONREPORTING ISSUERS**

 

The Company will furnish to the Commission at the same time that it is            sent to stockholders any proxy or information statement that it sends to stockholders            in connection with its 2008 annual stockholders’ meeting.

 

 

32

 

----

 

 

 

**TETRIDYN SOLUTIONS, INC.**

 

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING            FIRM**

**AND**

**CONSOLIDATED FINANCIAL STATEMENTS**

 

**DECEMBER 31, 2007 and 2006**

 

 

 

 

----

 

**TETRIDYN SOLUTIONS, INC.**

 

**INDEX TO FINANCIAL STATEMENTS**

 

 

|   | **Page** |
|--------|----------|

 

| Report of Independent Registered Public Accounting Firm                            – Webb & Company, P.A. | F-1 |
|---------------------------------------------------------------------------------------------------------------------|-----|

 

| Consolidated Balance Sheets – December 31, 2007                            and December 31, 2006 | F-2 |
|--------------------------------------------------------------------------------------------------------|-----|

 

| Consolidated Statements of Operations for the Years                            Ended December 31, 2007 and 2006 | F-3 |
|-----------------------------------------------------------------------------------------------------------------|-----|

 

| Consolidated Statements of Stockholders’ Deficit                            for the Years Ended December 31, 2006 and 2007 | F-4 |
|----------------------------------------------------------------------------------------------------------------------------------|-----|

 

| Consolidated Statements of Cash Flows for the Years                            Ended December 31, 2007 and 2006 | F-5 |
|-----------------------------------------------------------------------------------------------------------------|-----|

 

| Notes to Consolidated Financial Statements for the Years                            Ended December 31, 2007 and 2006 | F-6 |
|----------------------------------------------------------------------------------------------------------------------|-----|

 

 

----

 

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING            FIRM**

 

To            the Board of Directors of:

TetriDyn Solutions, Inc. and Subsidiary

 

We            have audited the accompanying consolidated balance sheets of TetriDyn Solutions, Inc.            and subsidiary as of December 31, 2007 and December 31, 2006, and the related            consolidated statements of operations and comprehensive income, changes in            stockholders’ deficit and cash flows for the two years then ended. These            financial statements are the responsibility of the Company’s management. Our            responsibility is to express an opinion on these financial statements based on our            audits.

 

We            conducted our audits in accordance with the standards of the Public Company Accounting            Oversight Board (United States). Those standards require that we plan and perform the            audits to obtain reasonable assurance about whether the financial statements are free            of material misstatement. An audit includes examining, on a test basis, evidence            supporting the amounts and disclosures in the financial statements. An audit also            includes assessing the accounting principles used and significant estimates made by            management, as well as evaluating the overall financial statement presentation. We            believe that our audits provide a reasonable basis for our opinion.

 

In our            opinion, the consolidated financial statements referred to above present fairly in all            material respects, the financial position of consolidated as of December 31, 2007 and            December 31, 2006 and the results of its operations and its cash flows for the two            years then ended in conformity with accounting principles generally accepted in the            United States of America.

 

The            accompanying consolidated financial statements have been prepared assuming that the            Company will continue as a going concern. As discussed in Note 1 to the consolidated            financial statements, the Company has a net loss of $282,186, a working capital            deficiency of $250,668 and a stockholders' deficiency of $670,040. These factors raise            substantial doubt about the Company's ability to continue as a going concern.            Management's plans concerning these matters are also described in Note 1. The financial            statements do not include any adjustments that might result from the outcome of this            uncertainty.

 

WEBB            & COMPANY, P.A.

*Certified Public Accountants*

 

Boynton Beach, Florida

February 25, 2008

 

F-1

 

----

 

| **TETRIDYN SOLUTIONS, INC. AND                            SUBSIDIARIES**                    |
|---------------------------------------------------------------------------------------------|
| **CONSOLIDATED BALANCE SHEETS**                                                             |
|                                                                                        |
|                                                                                        |   | **December 31,** |   | **December 31,** |
|                                                                                        |   | **2007** |   | **2006** |
| **ASSETS**                                                                                  |   |   |   |   |
| **Current Assets**                                                                          |   |   |   |   |
| Cash                                                                                        |   | $       148,934  |   | $        81,723  |
| Accounts receivable, net                                                                    |   | 818  |   | 200  |
| Prepaid expenses                                                                            |   | 10,184  |   | -  |
| **Total Current Assets**                                                                    |   | 159,936  |   | 81,923  |
| **Property and Equipment, net**                                                             | 45,264  |   | 14,351  |
| **Deferred Offering Costs**                                                                 |   | 11,951  |   | -  |
| **Total Assets**                                                                            |   | $       217,151  |   | $         96,274  |
|                                                                                        |   |   |   |   |
| **LIABILITIES**                                                                             |   |   |   |   |
| **Current Liabilities**                                                                     |   |   |   |   |
| Accounts payable                                                                            |   | $        56,801  |   | $       154,674  |
| Accrued liabilities                                                                         |   | 73,469  |   | 79,769  |
| Unearned revenue                                                                            |   | 57,803  |   | 57,796  |
| Notes payable, current portion                                                              | 222,531  |   | 219,271  |
| **Total Current Liabilities**                                                               |   | 410,604  |   | 511,510  |
| **Long-Term Liabilities**                                                                   |   |   |   |   |
| Notes payable, net of current portion                                                       | 318,647  |   | 334,864  |
| Notes payable to related parties, net of current                            portion         | -  |   | 77,751  |
| **Total Long-Term Liabilities**                                                             |   | 318,647  |   | 412,615  |
| **Total Liabilities**                                                                       |   | 729,251  |   | 924,125  |
|                                                                                        |   |   |   |   |
| **NON-CONTROLLING INTEREST**                                                                | 157,940  |   | -  |
|                                                                                        |   |   |   |   |
| **STOCKHOLDERS' DEFICIT**                                                                   |   |   |   |   |
| Preferred stock - $0.001 par value                                                          |   |   |   |
| Authorized:                                                                                 | 5,000,000 shares |   |   |   |
| Issued:                                                                                     | no shares | -  |   | -  |
| Common stock - $0.001 par value                                                             |   |   |   |
| Authorized:                                                                                 | 100,000,000 shares |   |   |   |
| Issued and outstanding:                                                                     | 21,011,863 shares and |   |   |   |
|                                                                                        | 20,009,350 shares, respectively | 21,012  |   | 20,009  |
| Additional paid-in capital                                                                  |   | 2,576,710  |   | 2,124,430  |
| Deferred stock compensation                                                                 |   | (13,286) |   | -  |
| Accumulated deficit                                                                         |   | (3,254,476) |   | (2,972,290) |
| **Total Stockholders' Deficit**                                                             |   | (670,040) |   | (827,851) |
| **Total Liabilities and Stockholders'                            Deficit**                  | $      217,151  |   | $         96,274  |
|                                                                                        |   |   |   |   |
| See the accompanying notes to consolidated financial                            statements. |

 

F-2

 

----

 

| **TETRIDYN SOLUTIONS, INC. AND                            SUBSIDIARIES**                    |
|---------------------------------------------------------------------------------------------|
| **CONSOLIDATED STATEMENTS OF OPERATIONS**                                                   |
|                                                                                        |   |   |   |
|                                                                                        | **For the Years Ended** |
|                                                                                        | **December 31,** |
|                                                                                        | **2007** |   | **2006** |
| **Revenue**                                                                                 | $  1,151,962  |   | $      771,651  |
| **Cost of Revenue**                                                                         | 418,562  |   | 280,027  |
| **Gross Profit**                                                                            | 733,400  |   | 491,624  |
| **Operating Expenses**                                                                      |   |   |   |
| General and administrative                                                                  | 260,807  |   | 209,321  |
| Professional fees                                                                           | 384,844  |   | 537,271  |
| Selling and marketing                                                                       | 256,198  |   | 259,293  |
| Research and development                                                                    | 210,965  |   | 152,552  |
| **Total Operating Expenses**                                                                | 1,112,814  |   | 1,158,437  |
| **Net Loss from Operations**                                                                | (379,414) |   | (666,813) |
| **Other Income (Expenses)**                                                                 |   |   |   |
| Other Income (Expense)                                                                      | (141) |   | 37,500  |
| Gain on settlement of notes payable                                                         | 23,318  |   | -  |
| Non-Controlling Interest in Investee's                                                      |   |   |   |
| Net (Income)/Loss                                                                           | 132,746  |   | -  |
| Interest Income                                                                             | 309  |   | 537  |
| Interest Expense                                                                            | (59,004) |   | (91,988) |
| **Total Other Income (Expenses)**                                                           | 97,228  |   | (53,951) |
| **Net Profit (Loss) before Provision for Income                            Taxes**          | (282,186) |   | (720,764) |
| **Provision for Income Taxes**                                                              | -  |   | - |
| **Net Profit (Loss)**                                                                       | $   (282,186) |   | $    (720,764) |
|                                                                                        |   |   |   |
| **Basic and Diluted Loss Per Common                            Share**                      | $         (0.01) |   | $         (0.04) |
|                                                                                        |   |   |   |
| **Basic and Diluted Weighted-Average**                                                      |   |   |   |
| **Common Shares Outstanding**                                                               | 20,809,045  |   | 19,172,669  |
|                                                                                        |   |   |   |
| See the accompanying notes to consolidated financial                            statements. |
|                                                                                        |   |   |   |

 

F-3

 

----

 

| **TETRIDYN SOLUTIONS INC. AND                            SUBSIDIARIES**                     |
|---------------------------------------------------------------------------------------------|
| **CONSOLIDATED STATEMENTS OF STOCKHOLDERS’                            DEFICIT**       |
| **For the Years Ended December 31, 2006 and December                            31, 2007**  |
|                                                                                        |   |   |   |   |   |   |   |   |   |
|                                                                                        |   |   |   |   |   | **Additional** | **Deferred** |   | **Total** |
|                                                                                        |   | **Common Stock** | **Preferred Stock** | **Paid In** | **Stock** | **Accumulated** | **Stockholders'** |
|                                                                                        |   | **Shares** | **Amount** | **Shares** | **Amount** | **Capital** | **Compensation** | **Deficit** | **Deficit** |
| **Balance, December 31, 2005**                                                              |   | 15,769,828 | $ 15,771 | - | $         - | $      566,703  | $                   -  | $   (2,251,526) | $   (1,669,052) |
| Issuance for conversion of note                                                             |   |   |   |   |   |   |   |   |   |
| payable and related accrued                                                                 |   |   |   |   |   |   |   |   |   |
| interest, $0.49 per share,                                                                  |   |   |   |   |   |   |   |   |   |
| March 2006                                                                                  |   | 518,398 | 518 | - | - | 251,838  | -  | -  | 252,356  |
| Issuance for cash, $0.48 per                                                                |   |   |   |   |   |   |   |   |   |
| share, March 2006                                                                           |   | 334,885 | 335 | - | - | 161,165  | -  | -  | 161,500  |
| Issuance for legal services,                                                                |   |   |   |   |   |   |   |   |   |
| $0.32 per share, March 2006                                                                 |   | 1,026 | 1 | - | - | 329  | -  | -  | 330  |
| Issuance to employees for                                                                   |   |   |   |   |   |   |   |   |   |
| exercised stock options,                                                                    |   |   |   |   |   |   |   |   |   |
| $0.007 exercise price per                                                                   |   |   |   |   |   |   |   |   |   |
| share, $0.48 fair value per                                                                 |   |   |   |   |   |   |   |   |   |
| share, January 2006                                                                         |   | 91,248 | 91 | - | - | 43,914  | -  | -  | 44,005  |
| Issuance for conversion of                                                                  |   |   |   |   |   |   |   |   |   |
| redeemable stock, $1.56 per                                                                 |   |   |   |   |   |   |   |   |   |
| share, March 2006                                                                           |   | 455,178 | 455 | - | - | 707,819  | -  | -  | 708,274  |
| Issuance for services to a                                                                  |   |   |   |   |   |   |   |   |   |
| consultant, $0.48 per share,                                                                |   |   |   |   |   |   |   |   |   |
| March 2006                                                                                  |   | 829,437 | 830 | - | - | 399,170  | -  | -  | 400,000  |
| Issuance in acquisition of                                                                  |   |   |   |   |   |   |   |   |   |
| Creative Vending Corp.,                                                                     |   |   |   |   |   |   |   |   |   |
| $(0.00) per share,                                                                          |   |   |   |   |   |   |   |   |   |
| March 2006                                                                                  |   | 2,009,350 | 2,009 | - | - | (6,509) | -  | -  | (4,500) |
| Net loss                                                                                    |   | - | - | - | - | -  | -  | (720,764) | (720,764) |
| **Balance, December 31, 2006**                                                              |   | 20,009,350 | $ 20,010 | - | $         - | $ 2,124,429  | $                   -  | $   (2,972,290) | $      (827,851) |
| Issuance for investor                                                                       |   |   |   |   |   |   |   |   |   |
| relations services, $0.70                                                                   |   |   |   |   |   |   |   |   |   |
| per share, January 2007                                                                     |   | 450,000 | 450 | - | - | 314,550  | (13,286) | -  | 301,714  |
| Issuance for conversion of                                                                  |   |   |   |   |   |   |   |   |   |
| related party note payable                                                                  |   |   |   |   |   |   |   |   |   |
| and accrued interest, $0.20                                                                 |   |   |   |   |   |   |   |   |   |
| per share, April 2007                                                                       |   | 420,401 | 420 | - | - | 83,660  | -  | -  | 84,080  |
| Issuance for outside director                                                               |   |   |   |   |   |   |   |   |   |
| services, $0.09 per share,                                                                  |   |   |   |   |   |   |   |   |   |
| May 2007                                                                                    |   | 111,112 | 111 | - | - | 9,889  | -  | -  | 10,000  |
| Issuance for employee bonus,                                                                |   |   |   |   |   |   |   |   |   |
| $0.09 per share, May 2007                                                                   |   | 15,000 | 15 | - | - | 1,335  | -  | -  | 1,350  |
| Issuance to employee for                                                                    |   |   |   |   |   |   |   |   |   |
| exercised stock options,                                                                    |   |   |   |   |   |   |   |   |   |
| $0.09 exercise price per share,                                                             |   |   |   |   |   |   |   |   |   |
| $0.20 fair value per share,                                                                 |   |   |   |   |   |   |   |   |   |
| August 2007                                                                                 |   | 6,000 | 6 | - | - | 534  | -  | -  | 540  |
| Stock options                                                                               |   | - | - | - | - | 42,313  | -  | -  | 42,313  |
| Net loss                                                                                    |   | - | - | - | - | -  | -  | (282,186) | (282,186) |
| **Balance, December 31, 2007**                                                              |   | 21,011,863 | $ 21,012 | - | $         - | $ 2,576,710  | $       (13,286) | $   (3,254,476) | $      (670,040) |
|                                                                                        |   |   |   |   |   |   |   |   |   |
| See the accompanying notes to consolidated financial                            statements. |

 

F-4

 

----

 

| **TETRIDYN SOLUTIONS, INC. AND                            SUBSIDIARIES**                                             |                                                                                                                      |
|----------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|
| **CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                                            |                                                                                                                      |
|                                                                                                                 |                                                                                                                 |   |   |  |
|                                                                                                                 | **For the Years Ended**                                                                                              |  |
|                                                                                                                 | **December 31,**                                                                                                     |  |
|                                                                                                                 | **2007**                                                                                                             |   | **2006** |  |
| **Cash Flows from Operating Activities**                                                                             |                                                                                                                 |   |   |  |
| Net Loss                                                                                                             | $       (282,186)                                                                 |   | $      (720,764) |  |
| Adjustments to reconcile net loss to net cash provided                            by (used in) operating activities: |                                                                                                                 |   |   |  |
| Depreciation                                                                                                         | 11,971                                                                                                          |   | 12,448  |  |
| Retirement of impaired equipment                                                                                     | -                                                                                                               |   | 27,780  |  |
| Loss on disposal of asset                                                                                            | 141                                                                                                             |   | -  |  |
| Interest expense from accretion redeemable                            stock                                          | -                                                                                                               |   | 12,164  |  |
| Common stock issued for services                                                                                     | 312,614                                                                                                         |   | 443,675  |  |
| Granted stock options                                                                                                | 42,313                                                                                                          |   | -  |  |
| Gain on notes payable settlement                                                                                     | (23,318)                                                                                                             |   | -  |  |
| Non-Controlling Interest in Investee                                                                                 | 157,940                                                                                                         |   | -  |  |
| Changes in operating assets and liabilities:                                                                         |                                                                                                                 |   |   |  |
| Accounts receivable                                                                                                  | (618)                                                                                                                |   | 2,019  |  |
| Inventory                                                                                                            | -                                                                                                               |   | 263  |  |
| Prepaid expenses                                                                                                     | (10,184)                                                                                                             |   | -  |  |
| Deferred offering costs                                                                                              | (11,951)                                                                                                             |   | -  |  |
| Accrued expenses                                                                                                     | 27,891                                                                                                          |   | 9,714  |  |
| Accounts payable                                                                                                     | (97,873)                                                                                                             |   | 49,902  |  |
| Unearned revenue                                                                                                     | 7                                                                                                               |   | 42,119  |  |
| **Net Cash Provided by (Used in) Operating                            Activities**                                   | 126,747                                                                                                         |   | (120,680) |  |
| **Cash Flows from Investing Activities**                                                                             |                                                                                                                 |   |   |  |
| Proceeds from sale of property and equipment                                                                         | 236                                                                                                             |   | -  |  |
| Purchase of property and equipment                                                                                   | (9,281)                                                                                                              |   | (2,072) |  |
| **Net Cash Used in Investing Activities**                                                                            | (9,045)                                                                                                              |   | (2,072) |  |
| **Cash Flows from Financing Activities**                                                                             |                                                                                                                 |   |   |  |
| Proceeds from borrowing under notes payable                                                                          | -                                                                                                               |   | 202,119  |  |
| Principal payments on notes payable                                                                                  | (51,481)                                                                                                             |   | (235,229) |  |
| Principal payments on notes payable to related                            parties                                    | -                                                                                                               |   | (15,250) |  |
| Principal payments on capital lease                            obligations                                           | -                                                                                                               |   | (17,636) |  |
| Proceeds from issuance of common stock                                                                               | 450                                                                                                             |   | 161,500  |  |
| Proceeds from exercised stock options                                                                                | 540                                                                                                             |   | 660  |  |
| **Net Cash Provided by (Used in) Financing                            Activities**                                   | (50,491)                                                                                                             |   | 96,164  |  |
| **Net Increase (Decrease) in Cash**                                                                                  | 67,211                                                                                                          |   | (26,588) |  |
| **Cash at Beginning of Period**                                                                                      | 81,723                                                                                                          |   | 108,311  |  |
| **Cash at End of Period**                                                                                            | $        148,934                                                        |   | $        81,723  |  |
|                                                                                                                 |                                                                                                                 |   |   |  |
| **Supplemental Disclosure of Cash Flow                            Information:**                                     |                                                                                                                 |   |   |  |
| Cash paid for income taxes                                                                                           | $                  -  |   | $                                            -  |  |
| Cash paid for interest expense                                                                                       | $         66,693                                                   |   | $       60,676  |  |
|                                                                                                                 |                                                                                                                 |   |   |  |
|                                                                                                                 |                                                                                                                 |   |   |  |
| **Schedule of Noncash Investing and Financing                            Activities:**                               |                                                                                                                 |   |   |  |
| Conversion of note payable into common stock                                                                         | 84,080                                                                                                          |   | 252,356  |  |
| Conversion of redeemable stock into common                            stock                                          | -                                                                                                               |   | 708,274  |  |
| Common stock issued in exchange for Creative Vending                            Corp. liabilities                    | -                                                                                                               |   | 4,500  |  |
| Purchase of property and equipment with note                            payable                                      | 33,980                                                                                                          |   | -  |  |
| See the accompanying notes to consolidated financial                            statements.                          |                                                                                                                      |
|                                                                                                                      |

 

F-5

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

**Note 1 – Organization and Summary of Significant Accounting            Policies**

 

***Nature of Business***– TetriDyn            Solutions, Inc. (the “Company”), and its wholly owned and controlled            subsidiaries specialize in providing business information technology (IT) solutions to            its customers. The Company optimizes business and IT processes by utilizing systems            engineering methodologies, strategic planning and guidance, and system integration to            add efficiencies and value to its customers’ business processes.

 

***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. (“TetriDyn-Idaho”), and results of operations of its 39.8%            owned variable interest entity, Southfork Solutions, Inc., from October 30, 2006, to            December 31, 2007. Intercompany accounts and transactions have been eliminated in            consolidation (see Note 7).

 

***Business Segments –***The            Company’s services can be broadly classified into two principal segments: the            Business IT Solutions segment and the Livestock segment. The Business IT Solutions            segment primarily provides business IT solutions within the healthcare industry,            although the segment is in the process of expanding the solutions to other selected            industries including education and professional services such as legal and accounting            offices. The Livestock segment is focused on providing business IT solutions            specifically within the livestock industry. In accordance with Statement of Financial            Accounting Standards            (“SFAS”) No. 131,*“Disclosures            about Segments of an Enterprise and Related            Information*,” the Company has evaluated the segment            reporting requirements and determined that it now has two reportable            segments.

 

***Use of Estimates –***In            preparing financial statements in conformity with generally accepted accounting            principles, management is required to make estimates and assumptions that affect the            reported amounts of assets and liabilities and the disclosure of contingent assets and            liabilities at the date of the financial statements and revenues and expenses during            the reported period. Actual results could differ from these estimates.

 

***Cash and Cash Equivalents –***For purposes of the cash flow statements, the Company considers all            highly liquid investments with original maturities of three months or less at the time            of purchase to be cash equivalents.

 

***Revenue Recognition –***The            Company’s AeroMD EMR, or electronic medical records, software is provided as            turnkey software that has been customized for specific medical specializations. The            Company typically installs the software at the customer’s location for a fee and            charges the customer a monthly license fee, based on the number of operating            workstations, under a one- or two-year usage agreement. The customer is entitled to all            systems upgrades during the one- or two-year license. At the end of their contracts,            customers may continue using AeroMD by entering into a new license with the Company.            The Company also sells installation and post-contract telephone support service            contracts on an hourly basis. The Company does not provide any rights of return or            warranties on its AeroMD EMR software.

 

Revenue from software licenses and related installation and support            services is recognized when earned and realizable. Revenue is earned and realizable            when persuasive evidence of an arrangement exists, services, if requested by the            customers, have been rendered and are determinable, and collectibility is reasonably            assured. Amounts received from customers prior to these criteria being met are            deferred. Revenue from the sale of

 

F-6

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

software is recognized when delivered to the customer or upon            installation of the software if an installation contract exists. Revenue from            post-contract telephone support service contracts is recognized as the services are            provided, determined on an hourly basis. Revenue applicable to multiple-element fee            arrangements is divided among the software, the installation, and post-contract support            service contracts using vendor-specific objective evidence of fair value, as evidenced            by the prices charged when the software and the services are sold as separate products            or arrangements.

 

The            Company also provides information technology management consulting services. To date,            these services have been primarily in the healthcare industry. These services are paid            on a monthly basis and for a contracted monthly fee, which is not cancelable or            refundable. Revenue for these services is recognized over the contract            period.

 

***Long-Lived Assets –***The            Company accounts for long-lived assets under SFAS No. 142,            “*Accounting for Goodwill and Other Intangible            Assets*,” and SFAS No. 144,            “*Accounting for Impairment or Disposal of Long-Lived            Assets*.” In accordance with SFAS No. 142 and SFAS No.            144, 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 financial            statements have been prepared on the assumption that the Company will continue as a            going concern. As reflected in accompanying financial statements, the Company had a net            loss of $282,186, a working capital deficiency of $250,668, and an accumulated deficit            of $670,040.  The ability of the Company to continue as a going concern is            dependent on the Company’s ability to generate increased sales and raise            additional capital. The financial statements do not include any adjustments that may            result from the outcome of this uncertainty.

 

***Income Taxes –***The Company            utilizes the liability method of accounting for income taxes. Under the liability            method, deferred tax assets and liabilities are determined based on temporary            differences between financial reporting and tax bases of assets and liabilities and on            the amount of operating loss carry-forwards, and are measured using the enacted tax            rates and laws that will be in effect when the temporary differences and carry-forwards            are expected to reverse. An allowance against deferred tax assets is recorded when it            is more likely than not that such tax benefits will not be realized.

 

***Recent Accounting Pronouncements –***In September 2006, the Financial Accounting Standards Board, or FASB,            issued SFAS No. 157, “*Fair Value            Measurements.*” The objective of SFAS No. 157 is to            increase consistency and comparability in fair value measurements and to expand            disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes            a framework for measuring fair value in generally accepted accounting principles, and            expands disclosures about fair value measurements. SFAS No. 157 applies under other            accounting pronouncements that require or permit fair value measurements and does not            require any new fair value measurements. The provisions of SFAS No. 157 are effective            for fair value measurements made in fiscal years beginning after November 15, 2007. The            adoption of this statement is not expected to have a material effect on the            Company’s future reported financial position or results of operations.

 

In            February 2007, the FASB issued SFAS No. 159, “*The Fair            Value Option for Financial Assets and Financial Liabilities – Including an            Amendment of FASB Statement No. 115.*” This statement            permits entities to choose to measure many financial instruments and certain other            items at fair value. Most of the provisions of SFAS No.

 

F-7

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

159 apply only to entities that elect the fair value option.            However, the amendment to SFAS No. 115, “*Accounting for            Certain Investments in Debt and Equity Securities,*”            applies to all entities with available-for-sale and trading securities. SFAS No. 159 is            effective as of the beginning of an entity’s first fiscal year that begins after            November 15, 2007. Early adoption is permitted as of the beginning of a fiscal            year that begins on or before November 15, 2007, provided the entity also elects to            apply the provisions of SFAS No. 157*.*The adoption of this statement is not expected to have a material effect            on the Company’s financial statements.

 

In            December 2007, the FASB issued SFAS No. 160,            “*Noncontrolling Interests in Consolidated Financial            Statements – an amendment of ARB No. 51.*” This            statement improves the relevance, comparability, and transparency of the financial            information that a reporting entity provides in its consolidated financial statements            by establishing accounting and reporting standards that require the ownership interests            in subsidiaries held by parties other than the parent and the amount of consolidated            net income attributable to the parent and to the noncontrolling interest be clearly            identified and presented on the face of the consolidated statement of income, changes            in a parent’s ownership interest while the parent retains its controlling            financial interest in its subsidiary be accounted for consistently, when a subsidiary            is deconsolidated, any retained noncontrolling equity investment in the former            subsidiary be initially measured at fair value, entities provide sufficient disclosures            that clearly identify and distinguish between the interests of the parent and the            interests of the noncontrolling owners. SFAS No. 160 affects those entities that have            an outstanding noncontrolling interest in one or more subsidiaries or that            deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim            periods within those fiscal years, beginning on or after December 15, 2008. Early            adoption is prohibited. The adoption of this statement is not expected to have a            material effect on the Company’s financial statements.

 

***Fair Value of Financial Instruments –***The carrying amounts of the Company’s accounts receivable,            restricted cash, accounts payable, notes payable, and deferred compensation 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 lives of the            assets. Gains or losses on dispositions of property and equipment are included in the            results of operations when realized.

 

***Stock-Based Compensation –***On            May 15, 2006, at a special shareholders’ meeting, the Company’s            shareholders approved the 2006 Long-Term Incentive Plan under which up to 4,000,000            shares of common stock may be issued. The 2006 plan is to be administered either by the            board of directors or by the appropriate committee to be appointed from time to time by            such board of directors. Awards granted under the 2006 plan may be incentive stock            options (“ISOs”) (as defined in the Internal Revenue Code), appreciation            rights, options that do not qualify as ISOs, or stock bonus awards that are awarded to            employees, officers, and directors who, in the opinion of the board or the committee,            have contributed or are expected to contribute materially to the Company’s            success. In addition, at the discretion of the board of directors or the committee,            options or bonus stock may be granted to individuals who are not employees, officers,            or directors, but contribute to the Company’s success.

 

Equity instruments issued to other than employees are recorded on the            basis of the fair value of the instruments, as required by SFAS No. 123 (Revised            2004), “*Share-Based Payment,” or SFAS No.            123R*. Emerging Issues Task Force, or EITF,            Issue 96-18,*“Accounting for Equity Instruments That            Are Issued to Other Than Employees*

 

F-8

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

*for Acquiring, or in Conjunction with Selling, Goods or            Services,*” defines the measurement date and            recognition period for such instruments. In general, the measurement date is when            either a (a) performance commitment, as defined, is reached; or (b) the            earlier of (i) the non-employee performance is complete or (ii) the            instruments are vested. The measured value related to the instruments is recognized            over a period based on the facts and circumstances of each particular grant as defined            in the EITF.

 

Effective January 1, 2006, the Company adopted the provisions of SFAS            No. 123R for its stock-based compensation plan. Under SFAS No. 123R, all employee            stock-based compensation is measured at the grant date, based on the fair value of the            option or award, and is recognized as an expense over the requisite service, which is            typically through the date the options or awards vest. The Company adopted SFAS No.            123R using the modified prospective method. Under this method, for all stock-based            options and awards granted prior to January 1, 2006, that remain outstanding as of that            date, compensation cost is recognized for the unvested portion over the remaining            requisite service period, using the grant-date fair value measured under the original            provisions of SFAS No. 123, “*Accounting for Stock-Based            Compensation,*” for pro forma and disclosure purposes.            Furthermore, compensation costs will also be recognized for any awards issued,            modified, repurchased, or cancelled after January 1, 2006.

 

As            the result of adoption of SFAS No. 123R, the Company recognized $42,313 of compensation            during the year ended December 31, 2007, relating to stock options granted in May 2007            that were outstanding at December 31, 2007 (see Note 2). The Company did not issue any            stock options or awards under the 2006 plan during the year ended December 31,            2006.

 

***Net Loss Per Common Share –***Basic and diluted net loss per common share is computed based upon the            weighted-average stock outstanding as defined by SFAS No. 128,            “*Earnings Per Share*.” As            of December 31, 2007 and 2006, 1,633,000 and 0 (zero), respectively, of common share            equivalents were antidilutive and not used in the calculation of diluted net loss per            share.

 

***Reclassifications –***Certain            amounts in the 2006 information have been reclassified to conform to the 2007            presentation. These reclassifications had no impact on the Company’s net loss or            cash flows.

 

**Note 2 – Stockholders’ Equity**

 

Through the reverse acquisition of Creative Vending Corp., a Florida            corporation, on March 22, 2006, the Company’s common stock was reverse split on a            1-for-2.07 basis. The accompanying consolidated financial statements and related notes            have been restated on a retroactive basis for all periods presented for the effects of            the stock split, including basic and diluted loss per common share and preferred stock            conversion ratios.

 

***Common Stock***– Prior to the            reverse merger, Creative Vending Corp. had 2,009,350 shares of common stock outstanding            that remained outstanding after the transaction.

 

During January 2006, the Company issued 91,248 shares of common stock to            employees upon exercise of stock options, recognized as stock issued for services. The            common shares issued were valued at $44,005, or $0.48 per share.

 

During March 2006, a $250,000 note payable and $2,356 of related accrued            interest were converted into 518,398 shares of common stock at $0.49 per share. During            March 2006, the Company issued 1,026 shares of common stock in payment of $330 of legal            services, or $0.32 per share. During February and March 2006, the            Company issued 334,885 shares of common stock for $161,500 of cash in a private            placement offering at $0.48 per share.

 

F-9

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

On            March 22, 2006, the Company issued 829,437 shares of common stock to a finder under a            July 2005 agreement for services primarily rendered in connection with the acquisition            of TetriDyn-Idaho. Management has determined that the value of the services rendered to            TetriDyn-Idaho in connection with the acquisition of Creative was $400,000 based on the            estimated fair value of the Company’s common stock at the date of the merger            since the agreement was contingent on the completion of the merger and has valued the            issuance of the common shares at $400,000, or $0.48 per share.

 

In            January 2007, the Company entered into a consulting agreement with a consultant for            investor relations services. The agreement calls for the consultant to provide services            for a period of one year. The Company sold the consultant 450,000 shares of common            stock for cash proceeds of $450 and recorded the fair value of the common stock of            $315,000. The fair value of the common stock will be recognized as an expense over the            term of the agreement. For the year ended December 31, 2007, the Company recognized            consulting expense of $301,714 under the agreement.

 

In            April 2007, the Company agreed to pay the amount owed to the stockholder discussed in            Note 3, including all accrued interest, with the Company’s common stock at the            fair value on the date of the conversion. The balance including accrued interest due to            the stockholder in April 2007 was $84,080. As a result, the Company issued 420,401            shares of common stock for the cancellation of the debt to the stockholder, and no gain            or loss was recognized on the conversion.

 

In            May 2007, the Company granted 55,556 shares of common stock to each of its outside            directors (111,112 total shares) for their services valued at the fair value on the            date of grant of $10,000. The Company also granted 15,000 shares of common stock to an            employee as a bonus valued at the fair value on the date of grant of $1,350. Also in            May 2007, the Company granted options to purchase 1,639,000 shares of common stock to            employees, executives, and directors. Stock option compensation expensed for the year            ended December 31, 2007, is the estimated fair value of options granted amortized on a            straight-line basis over the requisite service period for the entire portion of the            award. In August 2007, 6,000 of the employee stock options were exercised for            $540.

 

On            May 15, 2006, at a special shareholders’ meeting, the Company’s            shareholders approved the 2006 Long-Term Incentive Plan under which up to 4,000,000            shares of common stock may be issued. The 2006 plan is to be administered either by the            board of directors or by the appropriate committee to be appointed from time to time by            such board of directors. Awards granted under the 2006 plan may be incentive stock            options (“ISOs”) (as defined in the Internal Revenue Code), appreciation            rights, options that do not qualify as ISOs, or stock bonus awards that are awarded to            employees, officers, and directors who, in the opinion of the board or the committee,            have contributed or are expected to contribute materially to the Company’s            success. In addition, at the discretion of the board of directors or the committee,            options or bonus stock may be granted to individuals who are not employees, officers,            or directors, but contribute to the Company’s success.

 

F-10

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

The            fair value of options at the date of grant is estimated using the Black-Scholes option            pricing model. The assumptions made in calculating the fair values of options are as            follows:

 

|                     |   | **For the Year Ended December 31, 2007** |
|--------------------------|--------|------------------------------------------|
|                     |   | **Employees**                            |   | **Executives** |   | **Directors** |
| Expected term (in years) |   | 2.5                                      |   | 1 |   | 0.08 to 0.75 |
| Expected volatility      |   | 79%                                      |   | 79% |   | 79% |
| Expected dividend yield  |   | 0%                                       |   | 0% |   | 0% |
| Risk-free interest rate  |   | 4.69%                                    |   | 4.87% |   | 4.72% to 4.91% |

 

A            summary of the status of the Company’s stock options as of December 31, 2007, and            the changes during the period ended are presented below:

 

| **Weighted Average Fixed Options**                                                                          |   | **Shares** |      | **Exercise Price** |   |
|-------------------------------------------------------------------------------------------------------------|--------|------------|-----------|--------------------|--------|
| Outstanding at beginning of year                                                                            |   |       | --        |               | $      | -- |   |
| Issued                                                                                                      |   |       | 285,000   |               |   | 0.09 |   |
| Issued                                                                                                      |   |       | 1,360,000 |               |   | 0.10 |   |
| Exercised                                                                                                   |   |       | 6,000     |               |   | 0.09 |   |
| Cancelled                                                                                                   |   |       | 6,000     |               |   | 0.09 |   |
| Outstanding at December 31, 2007                                                                            |   |       | 1,633,000 |               |   |   |   |
| Exercisable at December 31, 2007                                                                            |   |       | 1,633,000 |               |   |   |   |
| Weighted average exercise price of options granted to                            employees at Dec. 31, 2007 |   | $          | 0.10      |               |   |   |   |

 

| **Exercise Price** |   | **Number****Outstanding****at December 31, 2007** |      | **Weighted****Average****Remaining****Contractual Life** |   | **Weighted****Average****Exercise Price** |   | **Number****Exercisable at****December 31, 2007** |   | **Weighted****Average****Exercise Price** |   |
|--------------------|--------|---------------------------------------------------|-----------|----------------------------------------------------------|--------|-------------------------------------------|--------|---------------------------------------------------|--------|-------------------------------------------|--------|
| $0.09              |   |                                              | 273,000   |                                                     |   | 7.4                                       |   | $                                                 | 0.09   |                                      |   | 273,000 |   | $ | 0.09 |   |
| $0.10              |   |                                              | 1,360,000 |                                                     |   | 4.4                                       |   | $                                                 | 0.10   |                                      |   | 1,360,000 |   | $ | 0.10 |   |

 

***Redeemable Stock***– On            September 25, 2002, the Company issued redeemable preferred stock for cash proceeds of            $486,100, which is net of $13,900 of offering costs. The Company had the right at any            time to redeem all or any portion of the redeemable stock for the related pro rata            portion of the total value of $500,000 plus an 8% annual simple rate of return. The            holder of the redeemable stock was issued a put option with a redemption price to be            the greater of the pro rata portion of*(i)*$500,000 increased at an 8% annual simple rate of return*or (ii)*the then fair value of the            redeemable stock, determined by a qualified business appraiser, but not in excess of            $500,000 increased at a 12% annual simple rate of return.

 

In            accordance with SFAS No. 150, “*Accounting for Certain            Financial Instruments with Characteristics of both Liabilities and            Equity*,” the redeemable stock was a conditional            obligation and was therefore classified as a liability. This liability was classified            as long-term based upon the term during which that redemption could occur.

 

The            future fair value of the redeemable stock at the dates the put option could have been            exercised was not determinable at the date of issuance. The estimated fair value of the            redeemable stock at the date of issuance and at the end of each reporting period has            been determined based on a 12% annual simple rate of return. The increase in the fair            value has been recognized as interest expense. The estimated amount that would have            been paid to the holder of the redeemable stock if redemption had occurred on March 22,            2006, was $708,274. The amount of interest expense recognized from the change in the            fair value of the redeemable stock was $12,164 during 2006 through March 22,            2006.

 

F-11

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

On            March 22, 2006, the holder of the redeemable stock converted the stock into 455,178            shares of common stock at $1.56 per common share. Upon conversion, the redemption            rights and the put option held by the holder of the redeemable stock            expired.

 

**Note            3 – Note Payable to Related Party**

 

The            Company had amounts due to a stockholder for funds loaned to the Company and for            Company expenditures covered by the stockholder. The balances due to the stockholder at            December 31, 2007, and December 31, 2006, were $0 and $77,751, respectively. The notes            payable bore interest at 6% per annum. During May 2006, the stockholder and the Company            agreed to modify the terms of the notes payable such that they were due on May 30,            2008. During April 2007, the stockholder and the Company agreed to convert the note            payable and accrued interest into 420,401 shares of common stock at the fair value on            the date of conversion (see Note 2).

 

**Note            4 – Notes Payable and Revolving Credit Agreements**

 

To            finance operations, the Company used credit cards held in the name of the Company and            guaranteed by a shareholder and officer of the Company. Aggregate amounts payable under            the revolving credit card agreements total $89,099 at December 31, 2007, with required            monthly payments of $1,453 as of December 31, 2007. Interest charged on the credit            cards ranged from 0% to 7% per annum.

 

In            2007, the Company renegotiated a loan with an economic development company to extend            the loan term, reduce the interest rate retroactively, and reduce payments. As part of            this renegotiated loan, the loan’s accrued interest was reduced from $36,458 to            $19,060 and the loan’s reduced accrued interest was rolled into the principal,            resulting in the Company recognizing a gain of $23,318.

 

F-12

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

Notes payable are summarized as follows:

 

|                                                                                    | **December 31,**                                         |   | **December 31,** |
|-----------------------------------------------------------------------------------------|----------------------------------------------------------|--------|------------------|
|                                                                                    | **2007**                                                 |   | **2006**         |
| Note payable to third party, due in monthly payments                            of      |                                                     |   |             |
| $2,000 through September 2015, bearing interest at                            7%        |                                                     |   |             |
| per annum, secured by certain assets and shares                            of           |                                                     |   |             |
| common stock                                                                            | $       142,889       |   | $ 125,000   |
| Note payable to third party, due in monthly payments                            of      |                                                     |   |             |
| $979 through January 2013, bearing interest at                            6.25%         | 50,258                                                   |   | 58,670           |
| per annum, secured by assets                                                            |                                                     |   |             |
| Note payable to bank, bearing interest at 9.75%,                            due         |                                                     |   |             |
| June 2008, guaranteed by two shareholders, secured                            by        | 145,047                                                  |   | 186,945          |
| the shareholders' personal property                                                     |                                                     |   |             |
| Line of credit agreements with a bank, interest at                            prime     |                                                     |   |             |
| plus 3%, unsecured                                                                      | 49,904                                                   |   | 49,497           |
| Note payable to economic development entity,                            non-interest    |                                                     |   |             |
| bearing, due in April 2007, unsecured                                                   | 30,000                                                   |   | 30,000           |
| Note payable to credit union, bearing interest at 6.29%,                            due |                                                     |   |             |
| January 2013, guaranteed by two shareholders,                            secured        | 33,981                                                   |   | -                |
| by certain asset                                                                        |                                                     |   |             |
| Revolving credit card loans payable, due on demand,                            interest |                                                     |   |             |
| at 0% to 7% per annum, unsecured, guaranteed by                            a            |                                                     |   |             |
| shareholder                                                                             | 89,099                                                   |   | 104,023          |
| Total Notes Payable                                                                     | $        541,178 |   | $ 554,135        |
| Less: Current Portion                                                                   | 222,531                                                  |   | 219,271          |
| Long-Term Notes Payable                                                                 | $        318,647 |   | $ 334,864        |
|                                                                                    |                                                     |   |             |

 

Annual            maturities of notes payable as of December 31, 2007, were as follows:

 

| ***Years Ending December 31:*** |      |
|---------------------------------|-----------|
| 2008                            | $ 222,531 |
| 2009                            | 61,322    |
| 2010                            | 63,460    |
| 2011                            | 65,745    |
| 2012                            | 68,045    |
| Thereafter                      | 60,075    |
| Total                           | $ 541,178 |

 

F-13

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

**Note            5 – Property and Equipment**

 

Property and equipment consist of the following as of December 31, 2007            and 2006:

 

| *December 31,*                  | **2007**            | **2006**            |
|---------------------------------|---------------------|---------------------|
| Computer & office equipment | $ 69,873  | $ 69,982  |
| Company Vehicle                 | 33,981         | --             |
| Accumulated depreciation        | (58,590)            | (48,631)            |
|                            | $ 45,264  | $ 21,351  |

 

Depreciation expense during the years ended December 31, 2007 and 2006,            was $11,971 and $12,448, respectively. For the year ended December 31, 2006, the            Company expensed $27,780 for lost, impaired, and retired equipment.

 

**Note            6 – Concentrations**

 

The            Company had one customer that represented 77% and 76% of sales for the years ended            December 31, 2007 and 2006, respectively. This customer is a regional hospital that            contracted with the Company for IT consulting and management services.

 

**Note            7 – Variable Interest Entities**

 

In            December 2003, the FASB issued a revision to Interpretation No. 46,            “*Consolidation of Variable Interest            Entities”*(“FIN No. 46R”), which was            originally issued in January 2003. FIN No. 46R provides guidance on the consolidation            of certain entities when control exists through means other than ownership of voting            (or similar) interests and was effective for public entities that have interests in            variable interest entities commonly referred to as special purpose entities for the            first reporting period that ends after March 15, 2004. FIN No. 46R requires            consolidation by the majority holder of expected residual gains and losses of the            activities of a variable interest entity (“VIE”).

 

As            of December 31, 2007, the Company owned 39.6% of the voting interest in Southfork            Solutions, Inc., an Idaho corporation. Southfork Solutions’ objective is to            provide electronic livestock verification and tracking throughout the entire livestock            lifecycle. In July 2007, the Company entered into an agreement with Southfork            Solutions. The agreement details the stock compensation that Southfork Solutions will            pay to the Company for management services, as well as cash compensation that Southfork            Solutions will pay to the Company for technical services, including but not limited to            engineering, marketing, bookkeeping, and administration. According to the agreement,            Southfork Solutions will compensate the Company with 45,000 common shares per month for            management services and with cash based upon hours spent for all other            services.

 

The            Company has concluded that Southfork Solutions meets the definition of a VIE because            the Company has an agreement with Southfork Solutions to fully manage and control the            financial direction of Southfork Solutions and is the primary beneficiary of its            operations.

 

The            effect of the VIE’s consolidation on the Company’s consolidated balance            sheet at December 31, 2007, was an increase in the Company’s assets of            $59,429 with no change to the Company’s liabilities. The Company also recognized            non-controlling income of $132,746 for the year ended December 31, 2007.

 

F-14

 

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|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

**Note            8 – Segment Reporting**

 

The            Company operates in two reportable segments, based on differences in services provided.            The Business IT Solutions segment primarily provides IT services and products to a            variety of industries, whereas the Livestock segment is focused on delivering services            and products specifically to the livestock industry.

 

The            accounting policies of the segments are the same as those described in            “Organization and Summary of Significant Accounting Policies” above.            Segment data includes intersegment revenues. Assets and costs of the corporate            headquarters are allocated to the segments based on usage. The Company’s business            is currently conducted principally in the United States.

 

The            following table summarizes segment information. No segment information has been            presented for the year ended December 31, 2006, as Southfork Solutions did not have any            operations until 2007:

 

|                               |   | **Business IT Solutions** |      |   | **Livestock** |   |    | **Eliminations** |   |   | **Consolidated** |
|------------------------------------|--------|---------------------------|-----------|--------|---------------|--------|---------|------------------|--------|--------|------------------|
|                               |   |                      |      |   |          |   |    |             |   |   |             |
| **Year Ended December 31, 2007**   |   |                      |      |   |          |   |    |             |   |   |             |
| External revenues                  |   | $                         | 1,151,962 |   |          | $      | --      |             |   | $      | --               |   |   | $ | 1,151,962 |
| Intersegment revenues              |   |                      | 158,738   |   |          |   | --      |             |   |   | (158,738         | ) |   |   | -- |
| General and administrative expense |   |                      | 257,213   |   |          |   | 3,594   |             |   |   | --               |   |   |   | 260,807 |
| Professional fees expense          |   |                      | 354,391   |   |          |   | 30,453  |             |   |   | --               |   |   |   | 384,844 |
| Research & development expense |   |                      | 89,230    |   |          |   | 121,735 |             |   |   | --               |   |   |   | 210,965 |
| Net loss                           |   |                      | 126,404   |   |          |   | 155,782 |             |   |   | --               |   |   |   | 282,186 |
| Total assets                       |   |                      | 145,770   |   |          |   | 99,621  |             |   |   | (28,240          | )  |   |   | 217,151 |
| Total liabilities                  |   |                      | 729,251   |   |          |   | 26,978  |             |   |   | (26,978          | )  |   |   | 729,251 |

 

**Note            9 – Income Taxes**

 

As            of December 31, 2007, the Company has net operating loss carry-forwards of $2,650,422            that expire, if not used, from 2022 through 2027. The valuation allowance at December            31, 2007, was $1,035,582. The net change in the valuation allowance for the year ended            December 31, 2007, was an increase of $156,906. The Company paid no income taxes during            the years ended December 31, 2007 and 2006. Deferred tax assets and related valuation            allowance were as follows at December 31, 2007 and 2006:

 

| *December 31,*                       | **2007**                                                                                                                       | **2006**                                                                                                     |
|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
| Unearned revenue                     | $      24,046                                                                               | $   22,540                                                                               |
| Operating loss carry forwards        | 1,011,536                                                                                                                 | 856,040                                                                                                 |
| Other                                | -                                                                                                                         | 96                                                                                                      |
| **Total Deferred Income Tax Assets** | 1,035,582                                                                                                                 | 878,676                                                                                                 |
| Valuation allowance                  | (1,035,582)                                                                                                                    | (878,676)                                                                                                    |
| **Net Deferred Income Tax Asset**    | $                                          -   | $                                        -  |

 

F-15

 

----

|   | **TETRIDYN SOLUTIONS, INC.** |
|--------|------------------------------|

|   | **NOTES TO CONSOLIDATED FINANCIAL                            STATEMENTS** |
|--------|---------------------------------------------------------------------------|

|   | **DECEMBER 31, 2007 AND 2006** |
|--------|--------------------------------|

 

 

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,*    | **2007**                                                                   | **2006**                                                                                                     |
|---------------------------------------|----------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|
| Benefit at statutory rate (34%)       | $(94,887)                                                                  | $(120,889)                                                                                                   |
| Non-deductible permanent differences  | (47,863)                                                                   | 20,515                                                                                                  |
| Change in valuation allowance         | 156,906                                                               | 112,256                                                                                                 |
| State tax benefit, net of federal tax | (14,156)                                                                   | (11,882)                                                                                                     |
| **Benefit from Income Taxes**         | $           -  | $                                        -  |

 

**Note            10 – Commitments and Contingencies**

 

On            January 21, 2006, the Company entered into executive employment agreements with its            Chief Executive Officer and its Chief Technology Officer to have their annual salaries            set by the board of directors’ executive compensation committee. The executive            compensation committee set the Chief Executive Officer’s annual salary to be            $90,000 and the Chief Technology Officer’s annual salary to be $80,000, effective            January 1, 2006. These agreements remained effective through the year ended December            31, 2007. In December 2007, the executive compensation committee approved the purchase            of a company vehicle to be utilized by the Company’s Chief Executive Officer and            the Chief Technology Officer. As with other employees, the Company’s Chief            Executive Officer and Chief Technology Officer receive health, dental, and vision            coverage along with life insurance and accidental and life insurance equal to their            annual salaries.

 

F-16