Attached files

file filename
EX-23.1 - ATTUNE RTDv178929_ex23-1.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 2
FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

ATTUNE RTD
(Name of small business issuer in our charter)

Nevada
 
32-0212241
    
 
   
  (State or other jurisdiction of
 
(I.R.S. employer
incorporation or organization)
 
identification number)

3700 B Tachevah Road
   
Palm Springs CA
 
92262
    
   
 (Address of principal executive offices)
 
(Zip code)

Registrant's telephone number: (760) 323-0233

CORPORATE SERVICES GROUP, LLC
723 S CASINO CENTER BLVD 2ND FL
LAS VEGAS NV 89101
1-800-354-4004
[Name, address and telephone number of Agent for Service]

Approximate date of commencement of proposed sale to the public: From time to time after this Registration Statement becomes effective.

If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box: ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act of 1933 registration number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. ¨
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
 
CALCULATION OF REGISTRATION FEE
 
Title of each
class of
securities to be
registered
 
Amount to be
registered
   
Proposed
maximum
offering
price
per unit
   
Proposed
maximum
aggregate
offering
price
   
Amount of 
registration 
fee [1] [2]
 
Common Stock offered by our
Selling Stockholders [3]
   
1,555,326
   
$
0.35
   
$
544,364.10
   
$
30.38
 
                                 
TOTAL
   
1,555,326
   
$
0.35
   
$
544,364.10
   
$
30.38
 
 
(1) Estimated in accordance with Rule 457(a) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee based on recent prices of private transactions.
 
(2) Calculated under Section 6(b) of the Securities Act of 1933 as .00005580 of the aggregate offering price.
 
(3) Represents shares of the registrant’s common stock being registered for resale that have been issued to the selling shareholders named in this registration statement.
 
We hereby amend this registration statement on such date or dates as may be necessary to delay our effective date until we will file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine.

 
 

 

PROSPECTUS

ATTUNE RTD
1,555,326 Shares of Common Stock
 
Selling shareholders are offering up to 1,555,326 shares of common stock. The selling shareholders will offer their shares at $0.35 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. We will not receive proceeds from the sale of shares from the selling shareholders.

Prior to this offering, there has been no market for our securities. Our common stock is not currently listed on any national securities exchange, the NASDAQ stock market or the Over the Counter Bulletin Board. There is no assurance that our securities will ever become qualified for quotation on the OTC Bulletin Board. There is no assurance that the selling shareholders will sell their shares or that a market for our shares will develop even if our shares are quoted on the OTC Bulletin Board.

This offering is highly speculative and these securities involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See “Risk Factors” beginning on page 8.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is ________, 2010.

 
2

 

TABLE OF CONTENTS
 
4
RISK FACTORS
 
8
SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS
 
16
USE OF PROCEEDS
 
17
DETERMINATION OF OFFERING PRICE
 
17
DILUTION
 
17
SELLING SECURITY HOLDERS
 
17
PLAN OF DISTRIBUTION
 
22
LEGAL PROCEEDINGS
 
25
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
 
25
EXECUTIVE COMPENSATION
 
29
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
32
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSON
 
33
DESCRIPTION OF SECURITIES
 
35
EXPERTS
 
36
INTEREST OF NAMED EXPERTS
 
36
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES
 
36
DESCRIPTION OF BUSINESS
 
37
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
43
DESCRIPTION OF PROPERTY
 
57
 
58
FINANCIAL STATEMENTS
 
61
 
 
3

 

SUMMARY INFORMATION

You should carefully read all information in the prospectus, including the financial statements and their explanatory notes, under “Financial Statements” prior to making an investment decision.

Organization

ATTUNE RTD is a Nevada corporation which was originally incorporated as Catalyst Set Corporation on December 19, 2001 and changed its name in September 2007 to Interfacing Technologies, Inc and again changed to our current name in March 2008.

We maintain our principal place of business and corporate headquarters at 3700 B Tachevah Road, Suite 117 Palm Springs, CA  92262.  Our phone number is: (760)323-0233.  Our website is www.attunertd.com.  Nothing on our website is part of this registration statement.


ATTUNE RTD uses its patented-pending, proprietary technology in products designed to promote energy conservation and save cost for owners of swimming pools.  It is also designed to prevent potential costly maintenance problems from occurring in swimming pool filtration systems.

We currently have two models of our product, the “BrioWave 175p” and “BrioWave 325p”, and an interactive Graphical User Interface (GUI).

The “BrioWave 325p” is designed to conserve energy and reduce costs through an electrical control center with timing mechanisms linking the pool owner’s air conditioning/heating, or HVAC, unit and the pool circulation and filtration system.  It coordinates the timing of operation of the HVAC unit and the pool circulation and filtration system.  The device is also designed to reduce potential costly swimming pool maintenance problems by monitoring pressure in a swimming pools filtration system.  The BrioWave 325p is designed with all of the functionality of the BrioWave 175p, however, the BrioWave 325p is designed to monitor pressure in the swimming pools filtration system and react to overpressure conditions by reading from a pressure switch that must be installed in line on the filtration system plumbing lines and wired to a feature on the BrioWave 325p controller.  When an over pressure condition exists, a signal is sent to the automatic in line valve controls, which are not included and plumbed in line and powered separately, to rotate one hundred and eighty degrees to reverse the flow of water in the filtration system to clear dirt or debris from the filter, which are ejected into a small holding tank which must be purchased separately. The device is Wi-Fi enabled allowing it to communicate directly to the newly developed globally implemented smart meter that allows the utilities to measure energy inflow and outflows during time of use, allowing for integration within the utilities newly developed smart grid infrastructure.  The Graphical User Interface is a server based software platform that allows users of both BrioWave control units to access, control, change and view BrioWave parameters from remote locations.  The Graphical User Interface is expected to be completed by end of June 2010, and will be available to BrioWave consumers through an annual license fee.

 
4

 

The “BrioWave 175p” model does not contain the pressure monitoring/automatic backwash system.

The BrioWave 175p controllers are near completion with two pilot units expected by March 31, 2010 for the BrioWave 175p and by January 2011 for the BrioWave 325p.  By September 2010, we expect to have BrioWave 175p units in production for delivery by October 2010.  We estimate initially we will need to build 4,500 units of the BrioWave 175p’s.

On a go forward basis, the Company is seeking additional financing through equity private placements. The company had determined that it would need approximately $3.5 million in funding to meet all of its planned obligations to fund product development expenditures, meet current selling, general and administrative expenses, future expenses, purchase technology equipment and hire new sales staff necessary to implement and roll out its business strategy over the next 18-24 months.  This funding is not required to be funded all at once, as the business can continue to operate and meet its current administrative and software development expenses on a limited basis requiring $750,000 over the next 12 months until full funding occurs.

If we secure this funding, we will be able to create an inventory of 4,500 BrioWave 175p units, hire various sales representatives and create a web infrastructure for our Graphical User Interface.

We have not generated any revenue from the sale of our products.  There is substantial doubt about our ability to continue as a going concern over the next twelve months.

The Offering

As of the date of this prospectus, we had 21,505,511 shares of common stock issued and outstanding.

Selling shareholders are offering up to 1,555,326 shares of common stock. The selling shareholders will offer their shares at $0.35 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.
 
There is no assurance that our securities will ever become qualified for quotation on the OTC Bulletin Board. There is no assurance that the selling shareholders will sell their shares or that a market for our shares will develop even if our shares are quoted on the OTC Bulletin Board. To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. The current absence of a public market for our common stock may make it more difficult for you to sell shares of our common stock that you own.

 
5

 

Our shares will be "penny stocks" as that term is generally defined in the Securities Exchange Act of 1934. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock. Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Therefore, our shareholders will, in all likelihood, find it difficult to sell their securities.

 
6

 

Financial Summary

Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this prospectus, including the financial statements and their explanatory notes before making an investment decision.

Statements of Operations Data

   
Attune RTD
   
Year Ended
   
Year Ended
   
December 31, 2009
   
December 31, 2008
 
                 
Revenue
 
$
-
   
$
-
 
                 
Net Income (Loss)
 
$
(645,946
)
 
$
(422,612
)
                 
Net Income (Loss) Per share
 
$
(0.03
)
 
$
(0.03
)
                 
Weighted average number of common shares outstanding-basic and fully diluted
   
19,545,125
     
15,456,779
 

Balance Sheet Data

  
 
December 31, 2009
   
December 31, 2008
 
             
Cash
 
$
106,496
   
$
22,513
 
                 
Working Capital (Deficit)
 
$
(281,962
)
 
$
(171,717
)
                 
Total Assets
 
$
339,308
   
$
240,767
 
                 
Total Current Liabilities
 
$
388,458
   
$
201,961
 
                 
Deficit Accumulated During Development Stage
 
$
(1,510,191
)
 
$
(864,245
)
                 
Total Stockholders' Equity(Deficit)
 
$
(50,929)
   
$
35,146
 
 
 
7

 

RISK FACTORS

In addition to the other information provided in this prospectus, you should carefully consider the following risk factors in evaluating our business before purchasing any of our common stock.

There is substantial doubt about our ability to continue as a going concern as a result of our lack of revenues and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations.

We are a development stage company.  We have generated no revenues to date.  Our auditors have raised substantial doubt as to our ability to continue as a going concern.   The business needs approximately $3,500,000 to fully implement our business plan. At March 22, 2010, we had $57,766 cash in the bank.   We have no agreement, commitment or understanding to secure any such funding from any other source. There is uncertainty regarding our ability to implement our business plan without additional financing.  We have a history of operating losses, limited funds and no agreements, commitments or understandings. Our future success is dependent upon our ability to commence selling our products, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to commence selling our product, generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse affect on our ability to continue in business and implement our business plan.

Our lack of operating history makes it difficult for an investor to evaluate our future business prospects.

We have a limited operating history.  We have generated no revenues from the sales of our product.  Our business plan is speculative and unproven.  There is no assurance that we will be successful in executing our business plan or that even if we successfully implement our business plan, we will ever generate revenues or profits, which makes it difficult to evaluate our business.  As a consequence, it is difficult, if not impossible, to forecast our future results.  Because of the uncertainties related to our lack of operating history, it is more difficult for an investor to make an investment decision concerning our securities than if we were a profitable operating business. 
  
The products we sell and install have never been sold on a mass market commercial basis, and we do not know whether they will be accepted by the market.

The market for our Brio Wave products for use by residential, commercial, industrial and governmental users is at a relatively early stage of development and the extent to which the products we sell and install will be widely adopted is uncertain. If these products are not accepted by the market, our business plans, prospects, results of operations and financial condition will suffer. Moreover, demand for the products we sell and install may not develop or may develop to a lesser extent than we anticipate. The development of a successful market for our products and our ability to sell our products at a lower price per watt may be affected by a number of factors, many of which are beyond our control, including but not limited to:

 
8

 
 
¨
The failure of our products to compete favorably against other similar energy conservation products on the basis of cost, quality and performance.
¨
Our failure to develop and maintain successful relationships with suppliers.
¨
Customer acceptance of our Brio Wave.
 
If our proposed products fail to gain sufficient market acceptance, our business plans, prospects, results of operations and financial condition will suffer.
 
 
We will rely on various third party suppliers for the components used in the production of our swimming pool electronic control products and for the manufacturing of our products.  Specifically, we are outsourcing all production, including, but not limited to, the design of our printed circuit board technology, firmware, and software assembly to MEC Northwest.  We maintain tooling in Guangzhou China for the purpose of manufacturing our polyethylene enclosure.  We do not have any signed contracts pertaining to any of our manufacturing which exposes us to a greater risk of losing these suppliers or manufacturers than if we had written agreements.

If we lose these suppliers, there can be no assurance that we will be able to negotiate new supplier or manufacturer agreements on acceptable terms, if at all, or that current or future supplier or manufacturer arrangements will be successful. With respect to any products supplied or manufactured by third parties, there can be no assurance that any third-party supplier will perform acceptably or that failures by third parties will not delay or impair our ability to deliver products on a timely basis, which could reduce our revenues.
 
Technological changes in our industry could render our Brio Wave products obsolete, which could prevent us from achieving sales and market share.
 
The failure of us or our suppliers to refine our, or their, technology and to develop and introduce new products could cause our, or their, products to become uncompetitive or obsolete, which could prevent us from increasing our sales and becoming profitable. The industry related to components using our Brio Wave products is rapidly evolving and highly competitive. Development efforts may be rendered obsolete by the technological advances of others, and other technologies may prove more advantageous for the commercialization of products using our products. If this occurs, our sales could be diminished.

 
9

 
 
Problems with product quality or product performance, including defects, in the Brio Wave products we distribute and install, could result in a decrease in customers and revenue, unexpected expenses and loss of market share.

Our Brio Wave products may contain undetected errors or defects, especially when first introduced. For example, components in our Brio Wave products may contain defects that are not detected until after they are shipped or are installed because we cannot test for all possible scenarios. These defects could cause us to, or may cause us to request that suppliers incur significant re-engineering costs, divert the attention of our personnel from product selling efforts and significantly affect our customer relations and business reputation. If we deliver components with errors or defects, or if there is a perception that our components contain errors or defects, our credibility and the market acceptance and sales of our products could be harmed. Similarly, if we deliver components with errors or defects, or if there is a perception that such components contain errors or defects, our credibility and the market acceptance and sales of our Brio Wave products could be harmed.  Furthermore, widespread product failures may damage our market reputation and reduce our market share and cause sales to decline.

Like other retailers, distributors and manufacturers of products that are used by consumers, we face an inherent risk of exposure to product liability claims in the event that the use of the component products in our energy systems results in injury.

Our business may be subject to warranty and product liability claims in the event that our Brio Wave fails to perform as expected or if a failure of our Brio Wave results, or is alleged to result, in bodily injury, property damage or other damages. Because our Brio Wave is used with products that involve the use of electricity, it is possible that our products could result in injury, whether by product malfunctions, defects, improper installation or other causes. Moreover, we may not have adequate resources in the event of a successful claim against us. We have no product liability insurance in addition, quality issues can have various other ramifications, including delays in the recognition of revenue, loss of revenue, loss of future sales opportunities, increased costs associated with repairing or replacing products, and a negative impact on our goodwill and reputation, which could also adversely affect our business and operating results. Our business’ exposure to product liability claims is expected to increase significantly in connection with the implementation of our business plan.

We rely on suppliers to comply with intellectual property, copyright, hazardous materials and processes and trade secrecy laws and regulations and, if such laws and regulations are not sufficiently followed, our business could suffer substantially.
 
We endeavor to comply with all law and regulation regarding intellectual property law manufacturing process law and regulation, however, in many cases it is our supplier that must comply with such regulations and laws.  Although we make efforts to ensure that products sourced from third parties comply with required regulation and law and that the operation of our suppliers do as well, our business could suffer if a supplier was, or suppliers were, found to be non compliant with regulation and law in our, our customers’ or our suppliers’ jurisdictions.

 
10

 

Our inability to protect our intellectual property rights could allow competitors to use our property rights and technologies in competition against our company, which would reduce our sales.  In such an event we would not be able to grow as quickly as expected, and the loss of anticipated revenues will also reduce our ability to fully fund our operations and to otherwise execute our business plan.

We rely on a combination of only three patents pending, copyright, trademark and trade secret laws, proprietary rights agreements and non-disclosure agreements to protect our intellectual properties.  We cannot give you any assurance that these measures will prove to be effective in protecting our intellectual properties.  We also cannot give you any assurance that our existing patents will not be invalidated, that any patents that we currently or prospectively apply for will be granted, or that any of these patents will ultimately provide significant commercial benefits. Further, competing companies may circumvent any patents that we may ultimately hold by developing products which closely emulate but do not infringe our patents.   We can give you no assurance that we will be able to successfully defend our patents if and when received and proprietary rights in any action we may file for patent infringement.  Similarly, we cannot give you any assurance that we will not be required to defend against litigation involving the patents if and when received or proprietary rights of others, or that we will be able to obtain licenses for these rights.  Legal and accounting costs relating to prosecuting or defending patent infringement litigation may be substantial.
 
We also rely on proprietary designs, technologies, processes and know-how not eligible for patent protection.  We cannot give you any assurance that our competitors will not independently develop the same or superior designs, technologies, processes and know-how.

We have a policy concerning proprietary rights with our employees giving us proprietary rights to certain technology developed by those employees while engaged by our company; however, we can give you no assurance that courts of competent jurisdiction will enforce this policy.

Our lack of an established brand name and relative lack of resources could negatively impact our ability to effectively compete in the market for applications using our Brio Wave which could reduce the value of your investment.

We do not have an established brand name or reputation in the business of sales and installation of our Brio Wave products. We also have a relative lack of resources to conduct our business operations. Thus, we may have difficulty effectively competing with companies that have greater name recognition and resources than we do. Our inability to promote and/or protect our brand name may have an adverse effect on our ability to compete effectively in the energy systems market.

 
11

 

Because our sales history may involve variations in sales by season, our financial results may vary from period to period which could affect our stock price if our securities become qualified for quotation on the Over the Counter Bulletin Board.

The history of swimming pool electronic control products indicates that our busiest delivery periods tend to be March through September.  October through February are slower periods.  Accordingly, our financial results may vary from period to period which could affect our stock price if our securities become qualified for quotation on the Over the Counter Bulletin Board.

Because insiders control our activities, they may cause us to act in a manner that is most beneficial to them and not to outside shareholders, which could cause us not to take actions that outside investors might view favorably and which could prevent or delay a change in control.

Our executive officers, directors, and holders of 5% or more of our outstanding common stock beneficially own approximately 82.14% of our outstanding common stock and 100% or all 1,000,000 authorized shares of our Class B preferred stock which has 100 votes per share. As the Class B preferred stock votes with common stock, these individuals collectively hold 95.82% of the voting rights of our company.  As a result, they effectively control all matters requiring director and stockholder approval, including the election of directors, the approval of significant corporate transactions, such as mergers and related party transactions. These insiders also have the ability to delay or perhaps even block, by their ownership of our stock, an unsolicited tender offer. This concentration of ownership could have the effect of delaying, deterring or preventing a change in control of our company that you might view favorably.

Our management decisions are made by our management team, Shawn Davis, Thomas Bianco and Raymond Kwok Cheung Tai; if we lose their services, our revenues may be reduced.

Our success is dependent in part upon the availability of our senior executive officers. The loss or unavailability to us of any of these individuals could have a material adverse effect on our business, prospects, financial condition and operating results. Specifically, we are substantially dependent on the continued services of Shawn Davis, Thomas `Bianco and Raymond Kwok Cheung Tai. If Shawn Davis, Thomas Bianco and Raymond Kwok Cheung Tai are not able to continue as an officer, our prospects could be adversely affected and, as a result, the loss of Mr. Davis, Mr. Bianco and Mr. Tai’s services could materially adversely affect our operations.   Shawn Davis and Thomas Bianco have an employment contract.  We do not maintain Key man insurance.

The persons responsible for managing our business will devote less than full time to our business, which may impede our ability to implement our business plan.

None of our management devotes full time to their duties to our business, as follows:

 
12

 

Name
 
Percentage of Time 
Currently Devoted to 
Our Business
   
Percentage of Time
Currently to be Devoted to
Our Business upon
completion of funding and
commencement of full-scale
operations
 
Shawn Davis
 
60
   
100
 
Thomas Bianco
 
60
   
100
 
Paul Davis
 
5
   
80
 
Timothy Smith
 
2
   
20
 
Steve Bailey
 
2
   
20
 
Shawn Steib
 
2
   
100
 
Raymond Kwok Cheung Tai
 
35
   
50
 

As a result, our management may not currently be able to devote the time necessary to our business to assure successful implementation of our business plan.

We will be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.

The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our common stock is a “penny stock”, we will become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

Our common stock will not initially qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.

 
13

 

This prospectus permits selling security holders to resell their shares. If they do so, the market price for our shares may fall and purchasers of our shares may be unable to resell them.

This prospectus includes 1,555,326 shares being offered by existing stockholders. To the extent that these shares are sold into the market for our shares, if developed, there may be an oversupply of shares and an undersupply of purchasers. If this occurs the market price for our shares may decline significantly and investors may be unable to sell their shares at a profit, or at all.

Our management has limited experience in managing the day to day operations of a public company and, as a result, we may incur additional expenses associated with the management of our business.

The management team of Shawn Davis, Thomas Bianco and Raymond Kwok Cheung Tai is responsible for our operations and reporting. The requirements of operating as a small public company are new to the management team and the employees as a whole. This may require us to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be more costly than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements and compliance under the Sarbanes-Oxley Act of 2002. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.
 
We are exposed to increased expenses from recent legislation requiring companies to evaluate internal control over financial reporting which could reduce our revenues.

Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404") requires our management to report on the operating effectiveness of our Internal Controls over financial reporting for the year ended December 31 in the fiscal year after the fiscal year in which this registration statement is declared effective. Salberg & Company, P.A., is our independent registered public accounting firm and may be required to attest to the effectiveness of our internal control over financial reporting beginning for our fiscal year ended December 31, 2011. We must establish an ongoing program to perform the system and process evaluation and testing necessary to comply with these requirements. We expect that the cost of this program will require us to incur expenses and to devote resources to Section 404 compliance on an ongoing basis which will reduce our revenues.

 
14

 

Sales of our common stock under Rule 144 could reduce the price of our stock.

As of December 31, 2009, there were 4,315,431 shares of our common stock held by non-affiliates, 2,337,776 of which have been held for more than one year and thus are not restricted, and 705,326 of which are being registered hereunder, and 17,255,658 shares of our common stock held by affiliates, all of which are restricted as per Rule 144 of the Securities Act of 1933 defines as restricted securities, 850,000 of which are being registered hereunder.  All shares being registered hereunder are available for resale as of the date of effectiveness of this registration statement. Of the shares not being registered hereunder, all of the non-restricted shares held by non-affiliates as well as the restricted securities held by affiliates, subject to the limitations on amounts and manner of sale in Rule 144, could be available for sale in a public market, if developed, beginning 90 days after the date of this prospectus. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.

Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws.

Our common stock is currently not quoted on any market. No market may ever develop for our common stock, or if developed, may not be sustained in the future.

The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the Shares available for trading on the OTCBB, investors should consider any secondary market for the Company's securities to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication which permits a "manual exemption." This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations.  We may not be able to secure a listing containing all of this information.  Furthermore, the manual exemption is a non issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.

Accordingly, our shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.

 
15

 
 
Because we do not have an audit or compensation committee, shareholders will have to rely on the entire board of directors, no members of which are independent, to perform these functions.

We do not have an audit or compensation committee comprised of independent directors. We do not have any audit or compensation committee. These functions are performed by the board of directors as a whole. None of the members of the board of directors are independent directors under the definition set forth in the listing standards of the NASDAQ Stock Market, Inc. Thus, there is a potential conflict in that board members who are management will participate in discussions concerning management compensation and audit issues that may affect management decisions.

Although we will be a mandatory reporting company under Section 15(d) of the Securities Act of 1933 until and through fiscal year end December 31, 2010, if we do not file a Registration Statement on Form 8-A to become a mandatory reporting company under Section 12(g) of the Securities Exchange Act of 1934, we will continue as a voluntary reporting company and will not be subject to the proxy statement or other information requirements of the 1934 Act, our securities can no longer be quoted on the OTC Bulletin Board, and our officers, directors and 10% stockholders will not be required to submit reports to the SEC on their stock ownership and stock trading activity, all of which could reduce the value of your investment and the amount of publicly available information about us.

As a result of this offering as required under Section 15(d) of the Securities Exchange Act of 1934, we will file periodic reports with the Securities and Exchange Commission through December 31, 2010, including a Form 10-K for the year ended December 31, 2010, assuming this registration statement is declared effective before that date.  At or prior to December 31, 2010, we intend voluntarily to file a registration statement on Form 8-A which will subject us to all of the reporting requirements of the 1934 Act. This will require us to file quarterly and annual reports with the SEC and will also subject us to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders will be required to submit reports to the SEC on their stock ownership and stock trading activity.  We are not required under Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have more than 500 shareholders and total assets of more than $10 million on December 31, 2010.  If we do not file a registration statement on Form 8-A at or prior to December 31, 2010, we will continue as a voluntary reporting company and will not be subject to the proxy statement or other information requirements of the 1934 Act, our securities can no longer be quoted on the OTC Bulletin Board, and our officers, directors and 10% stockholders will not be required to submit reports to the SEC on their stock ownership and stock trading activity.

SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS

Some of the statements in this prospectus are “forward-looking statements.” These forward-looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, the factors set forth above under “Risk Factors.” The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar expressions identify forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. However, the Private Securities Litigation Reform Act of 1995 is not available to us as a non-reporting issuer. Further, Section 27A(b)(1)(C) of the Securities Act and Section 21E(b)(1)(C) provide that the safe harbor for forward looking statements does not apply to statements made by companies such as ours that issue penny stock. Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection with an initial public offering.

 
16

 

USE OF PROCEEDS

We will not receive any proceeds from the sale of shares offered by the selling shareholders.

DETERMINATION OF OFFERING PRICE

The offering price has been arbitrarily determined and does not bear any relationship to our assets, results of operations, or book value, or to any other generally accepted criteria of valuation. Prior to this offering, there has been no market for our securities.  In order to assure that selling shareholders will offer their shares at $0.35 per share until our shares are quoted on the OTC Bulletin Board, we will notify our shareholders and our Transfer Agent that no sales will be allowed prior to the date our shares are quoted on the OTC Bulletin Board without proof of the selling price.

DILUTION

Not applicable. We are not offering any shares in this registration statement. All shares are being registered on behalf of our selling shareholders.

SELLING SECURITY HOLDERS

The selling security holders named below are selling the securities. The table assumes that all of the securities will be sold in this offering. However, any or all of the securities listed below may be retained by any of the selling security holders, and therefore, no accurate forecast can be made as to the number of securities that will be held by the selling security holders upon termination of this offering. These selling security holders acquired their shares in various exempt transactions under Section 4(2) of the 1933 Act during the past two years as follows:

 
17

 

2007

Davis, Shawn
 
7/14/2007
    21,429  
Bianco, Thomas Scott
 
7/14/2007
    21,429  
Bailey, Steve
 
7/14/2007
    1,786  
Davis, Paul
 
7/14/2007
    1,786  
Smith, Timothy
 
7/14/2007
    1,786  
Steib, Shawn
 
7/14/2007
    1,786  
After 1 For 280 Split On 9/7/2007
           
Davis, Shawn
 
7/14/2007
    6,000,000  
Bianco, Thomas Scott
 
7/14/2007
    6,000,000  
Bailey, Steve
 
7/14/2007
    500,000  
Davis, Paul
 
7/14/2007
    500,000  
Smith, Timothy
 
7/14/2007
    500,000  
Steib, Shawn
 
7/14/2007
    500,000  
Simmons, Jacqui
 
11/20/2007
    100,000  
Valenzuela, Deattria. Raye
 
11/21/2007
    8,000  
Tokatli, Joseph
 
11/30/2007
    8,000  
Valenzuela, James and Deattria
 
12/15/2007
    8,000  
Simmons, Jacqui
 
12/20/2007
    100,000  

2,352,803 shares of Class A common stock were issued to 27 individuals who are selling security holders.

2008

Dunn, Gary
 
1/22/2008
    8,000  
Steib, Mike
 
1/23/2008
    8,000  
Tokatli, Joseph
 
2/5/2008
    12,000  
Simmons, Jacqui
 
2/22/2008
    50,000  
Sanchez, Mike & Tracy
 
3/23/2008
    8,000  
Davis, Shane & Jeannette
 
3/23/2008
    100,000  
Parson, Doug & Rosaura
 
3/23/2008
    8,000  
Schaible, Mark W. & Patty
 
3/27/2008
    8,000  
Landress, William & Freda
 
3/31/2008
    8,000  
Tai, Raymond
 
6/4/2008
    700,000  
Slesinger, Patty
 
6/24/2008
    100,000  
Multimedia Ventures, Ron Paxson Principal
 
7/22/2008
    200,000  
Multimedia Ventures, Ron Paxson Principal
 
8/6/2008
    200,000  
Multimedia Ventures, Ron Paxson Principal
 
8/12/2008
    200,000  
Multimedia Ventures, Ron Paxson Principal
 
8/27/2008
    200,000  
Multimedia Ventures, Ron Paxson Principal
 
10/7/2008
    130,310  
Davis, Shane & Jeannette
 
10/17/2008
    100,000  
Stys, Philip R.
 
10/20/2008
    40,000  
Ramos, Richard & Thelma
 
10/21/2008
    13,636  
Ramos, Richard Rito & Belen
 
10/21/2008
    13,636  
Reason, Michael D & Denise
 
11/21/2008
    40,000  
Belia, Mariscal & Davis, Jeannette
 
12/4/2008
    27,777  
Loyd, David T.
 
12/4/2008
    8,000  
Sisneros, Orlando & Linda
 
12/4/2008
    27,777  
 
 
18

 

Shares of Class A common stock were issued for to individuals who are selling security holders.

Shares Issued for Services:

2007

50,000 shares of Class A common stock were issued for legal services provided to the company to one individual.

Williams, Michael
 
11/1/2007
  50,000  

2008

169,000 shares of Class A common stock were issued for services to 7 individuals who are selling security holders.

Tai, Raymond
 
1/31/2008
  100,000  
Curtin, Robert
 
2/20/2008
  8,000  
George Fog III
 
8/20/2008
  8,000  
Conley, Bill
 
8/20/2008
  15,000  
Royce, Robert
 
8/20/2008
  8,000  
Curtin, Robert
 
9/21/2008
  15,000  
Lostlen, Tad
 
9/27/2008
  15,000  

Shares Issued in Conversion of other liabilities:

2008

100,000 shares of Class A common stock were issued to a vendor.  

USFI Marketing Communications
 
12/2/2008
  100,000  

2007

866,667 shares of Class B preferred stock were issued to 6 founders for services rendered during 2007 with a value of $0.3375 per share based on the above contemporaneous sale of Class B preferred stock.
 
 
19

 

Bailey, Steve
 
133,333.33
 
10/5/2007
Bianco, Thomas
 
133,333.33
 
10/5/2007
Davis, Paul
 
133,333.33
 
10/5/2007
Davis, Shawn
 
200,000.00
 
10/5/2007
Smith, Timothy
 
133,333.33
 
10/5/2007
Steib, Shawn
 
133,333.33
 
10/5/2007

We relied upon Section 4(2) of the Securities Act of 1933, as amended for the above issuances. We believed that Section 4(2) was available because:

 
o
None of  these issuances involved underwriters, underwriting discounts or commissions.
 
o
Restrictive legends were and will be placed on all certificates issued as described above.
 
o
The distribution did not involve general solicitation or advertising.
 
o
The distributions were made only to accredited investors or investors who were sophisticated enough to evaluate the risks of the investment who understood the speculative nature of their investment.

In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:

 
o
Access to all our books and records.
 
o
Access to all material contracts and documents relating to our operations.
 
o
The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access.

Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.

We believe that the selling security holders listed in the table have sole voting and investment powers with respect to the securities indicated. We will not receive any proceeds from the sale of the securities by the selling security holders.  None of our selling security holders is or is affiliated with a broker-dealer.

 
20

 

Selling Security Holders Table:

Name
 
Total
Shares
Owned
   
Shares
Registered
   
Percentage
Before
Offering
   
Number
of
Shares
after
Offering
(1)
   
Percentage
After
Offering (1)
   
Relationship
to Attune
RTD
Bailey, Steve
    5,00,000       100,000       2.32 %     400,000       2.00 %  
Operations Officer
Bianco, Thomas
    5,739,281       100,000       26.69 %     5,639,281       28.27 %  
Treasurer, C.F.O, Director
Conley, Bill
    15,000       8,000       0.07 %     7,000       0.04 %  
Services/PCB Development 8/20/2008
Curtin, Rob
    23,000       11,500       0.11 %     11,500       0.06 %  
Services/Consulting on HVAC 2/20/2008, 9/21/2008
Davis, Paul
    500,000       100,000       2.32 %     400,000       2.00 %  
Vice President, Director
Davis, Shane & Jeannette
    300,000       100,000       1.39 %     200,000       1.00 %    
Davis, Shawn
    5,739,281       100,000       26.69 %     5,639,281       28.27 %  
Principal Executive Officer, Director
Dunn, Gary
    20,000       8,000       0.09 %     12,000       0.06 %    
Fog  III, George
    8,000       8,000       0.04 %     0       0.00 %  
Services/Equipment Testing 8/20/2008
Landress, William & Freda
    8,000       8,000       0.04 %     0       0.00 %    
Lostlen, Tad
    15,000       15,000       0.07 %     0       0.00 %  
Services/Contracting Services 9/27/2008
Loyd, David T.
    8,000       8,000       0.04 %     0       0.00 %    
Mariscal, Belia & Davis, Jeannette
    27,777       27,777       0.13 %     0       0.00 %    
Multimedia Ventures, Ron Paxson Principal
    1,240,283       100,000       5.77 %     1,140,283       5.72 %    
Parsons, Douglas & Rosaura
    8,000       8,000       0.04 %     0       0.00 %    
Ramos, Richard & Belen
    20,303       13,636       0.09 %     6,667       0.03 %    
Ramos, Richard & Thelma
    13,636       13,636       0.06 %     0       0.00 %    
Reason, Michael & Denise
    40,000       40,000       0.19 %     0       0.00 %    
Royce, Robert
    8,000       8,000       0.04 %     0       0.00 %  
Services/Enclosure Engineering 8/20/2008
Sanchez, Mike & Tracy
    8,000       8,000       0.04 %     0       0.00 %    
Schaible, Mike & Patti
    16,000       8,000       0.07 %     8,000       0.04 %    
Simmons, Jacqui
    350,000       100,000       1.63 %     250,000       1.25 %    
Sisneros, Orlando & Linda
    27,777       27,777       0.13 %     0       0.00 %    
Slesinger, Patty
    100,000       100,000       0.46 %     0       0.00 %    
Smith, Timothy
    500,000       100,000       2.32 %     400,000       2.00 %  
Secretary
Steib, Mike
    8,000       8,000       0.04 %     0       0.00 %    
Steib, Shawn
    500,000       100,000       2.32 %     400,000       2.00 %  
Executive Technical Officer 
Stys, Philip R.
    106,667       40,000       0.50 %     66,667       0.33 %    
Tai, Raymond
    2,945,714       100,000       13.70 %     2,845,714       14.26 %  
Foreign Operations Officer 
Tokatli, Joseph
    20,000       20,000       0.09 %     0       0.00 %    
USFI Marketing Faisal Ahmad Principal
    239,944       100,000       1.12 %     139,944       0.70 %  
Services/Marketing Communications On Going
Valenzuela, Deattria Raye
    8,000       8,000       0.04 %     0       0.00 %    
Valenzuela, James & Deattria
    8,000       8,000       0.04 %     0       0.00 %    
Williams, Michael
    170,000       50,000       0.79 %     120,000       0.60 %  
Attorney- On going
Total
    21,505,511       1,555,326       100.00 %     19,950,184.00       100.00 %    
 
[1] Assuming sale of all shares registered hereunder.
 
 
21

 

Blue Sky
 
The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the Shares available for trading on the OTCBB, investors should consider any secondary market for the Company's securities to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication which permits a "manual exemption." This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations.  We may not be able to secure a listing containing all of this information.  Furthermore, the manual exemption is a non issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.

PLAN OF DISTRIBUTION

Our common stock is currently not quoted on any market. No market may ever develop for our common stock, or if developed, may not be sustained in the future. Accordingly, our shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.

 
22

 

Selling shareholders are offering up to 1,555,326 shares of common stock. The selling shareholders will offer their shares at $0.35 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. We will not receive proceeds from the sale of shares from the selling shareholders.

The securities offered by this prospectus will be sold by the selling shareholders. We are not aware of any underwriting arrangements that have been entered into by the selling shareholders. The distribution of the securities by the selling shareholders may be effected in one or more transactions that may take place in the over-the-counter market, including broker's transactions or privately negotiated transactions.

The selling shareholders may pledge all or a portion of the securities owned as collateral for margin accounts or in loan transactions, and the securities may be resold pursuant to the terms of such pledges, margin accounts or loan transactions. Upon default by such selling shareholders, the pledge in such loan transaction would have the same rights of sale as the selling shareholders under this prospectus. The selling shareholders may also enter into exchange traded listed option transactions, which require the delivery of the securities listed under this prospectus. After our securities are qualified for quotation on the over the counter bulletin board, the selling shareholders may also transfer securities owned in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer without consideration, and upon any such transfer the transferee would have the same rights of sale as such selling shareholders under this prospectus.
 
In addition to the above, each of the selling shareholders will be affected by the applicable provisions of the Securities Exchange Act of 1934, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the securities by the selling shareholders or any such other person. We have instructed our selling shareholders that they may not purchase any of our securities while they are selling shares under this registration statement.

Upon this registration statement being declared effective, the selling shareholders may offer and sell their shares from time to time until all of the shares registered are sold; however, this offering may not extend beyond two years from the initial effective date of this registration statement.

There can be no assurances that the selling shareholders will sell any or all of the securities. In various states, the securities may not be sold unless these securities have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

All of the foregoing may affect the marketability of our securities. Pursuant to oral promises we made to the selling shareholders, we will pay all the fees and expenses incident to the registration of the securities.

 
23

 

Should any substantial change occur regarding the status or other matters concerning the selling shareholders or us, we will file a post-effective amendment to this registration statement disclosing such matters.

OTC Bulletin Board Considerations

To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. We anticipate that after this registration statement is declared effective, market makers will enter “piggyback” quotes and our securities will thereafter trade on the OTC Bulletin Board.

The OTC Bulletin Board is separate and distinct from the NASDAQ stock market. NASDAQ has no business relationship with issuers of securities quoted on the OTC Bulletin Board. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTC Bulletin Board.

Although the NASDAQ stock market has rigorous listing standards to ensure the high quality of its issuers, and can delist issuers for not meeting those standards, the OTC Bulletin Board has no listing standards. Rather, it is the market maker who chooses to quote a security on the system, files the application, and is obligated to comply with keeping information about the issuer in its files. FINRA cannot deny an application by a market maker to quote the stock of a company. The only requirement for inclusion in the bulletin board is that the issuer be current in its reporting requirements with the SEC.

Although we anticipate listing on the OTC Bulletin board will increase liquidity for our stock, investors may have greater difficulty in getting orders filled because it is anticipated that if our stock trades on a public market, it initially will trade on the OTC Bulletin Board rather than on NASDAQ. Investors’ orders may be filled at a price much different than expected when an order is placed. Trading activity in general is not conducted as efficiently and effectively as with NASDAQ-listed securities.
 
Investors must contact a broker-dealer to trade OTC Bulletin Board securities. Investors do not have direct access to the bulletin board service. For bulletin board securities, there only has to be one market maker.

Bulletin board transactions are conducted almost entirely manually. Because there are no automated systems for negotiating trades on the bulletin board, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. Therefore, when investors place market orders - an order to buy or sell a specific number of shares at the current market price - it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and getting execution.

Because bulletin board stocks are usually not followed by analysts, there may be lower trading volume than for NASDAQ-listed securities.

 
24

 

LEGAL PROCEEDINGS

We are not aware of any pending or threatened legal proceedings in which we are involved.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS

The board of directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be elected for the term of one year, and until his successor is elected and qualified, or until his earlier resignation or removal. Our directors and executive officers are as follows:

Name
 
Age
 
Position
 
Shawn Davis
 
40
 
Chief Executive Officer/Director
 
Thomas Bianco
 
45
 
Treasurer/Director
 
Paul Davis
 
62
 
Vice President/Director
 
Timothy Smith
 
71
 
Secretary
 
Steve Bailey
 
55
 
Operations Officer
 
Shawn Steib
 
27
 
Executive Technical Officer
 
Raymond Kwok
Cheung Tai
  
58
  
Foreign Operations Officer
 

Family Relationships among Officers and or Directors

Shawn Davis and Paul Davis are father and son.  Timothy Smith is Shawn Davis’ father-in-law.  Steve Bailey is Shawn Steib’s father in law.

Shawn Davis joined us in June 2007 as Chief Executive Officer.  From June 2007 to present, Mr. Davis has been the C.E.O of Attune RTD.  From 1995 to present owner of S.D. Electric.  From March 2005 to 2007, worked for Davis Companies as V.P. of Operations.  From 1998 to 2002, employed by El Monte Unified High School District as a school teacher.  In 1997 earned a B.S. in Business from Azusa Pacific University.  In 1995 obtained a C-10 Electrical Contractors License.  In 2009 obtained a certificate from “Boots on the Roof” as a certified photovoltaic installer.

Thomas Bianco joined us in June 2007 as Treasurer and Director.  From June 1994 to date, he has been the owner of Bianco & Son Fine Jewelry & Collectables.  He holds a Gemologist Degree received from the Gemological Institute of America issued in December 1994.   He is a current Member of the National Association of Jewelry Appraisers # 94070 since October 1994.  In December 2005, he received a Bachelor Degree in Business Science (BSB/M) from University Phoenix.  In May 2007, he received a Masters Degree in Business Administration (MBA) from Colorado State University.  He holds a Second Hand Dealers License issued by the Palm Springs Police Department in July 2007.

 
25

 

Paul Davis joined us in June 2007 as Vice President and Director.  From 2002 to date, he has been Senior Field Supervisor for Davis Companies, Inc., a general contracting business specializing in property management and medium sized construction projects.

Timothy Smith joined us in June 2007 as Secretary.  From 1966 to date, he has been an Engineer, in the Quotation Department for National Technical Systems, which specializes in engineering, testing and evaluation, certification servicing and technical resources.

Steve Bailey joined us in June 2007 as Operations Officer.  From 2007 to date, he has been president and CEO of American Patriot Building Contractors.  From 2006 to 2007, he was Vice President of Operations for Davis Companies, Inc.  From 2004 to 2006, he was Director of Human Resources for Stronghold Engineering, Inc.  From 2002 to 2006, he was Project Manager for Stronghold Engineering, Inc.  He received a Doctorate in Education from Pepperdine University in 2002, a Master's Degree in Education from California State University, San Bernardino in 1994 and a Bachelor's Degree in Business from University of Redlands in 1992.

Shawn Steib joined us in June 2007 as Executive Technical Officer.  From July 2000 to December 2005, he was a Tile Setter at Peterson Tile Inc.  From December 2005 to March 2007, he was Vice President of Davis Companies, Inc.  From March 2007 to date, he has been Vice President of Operations at American Patriot, an organization specializing in general construction of small to medium sized construction projects.

Raymond Kwok Cheung Tai joined us in July 2007 and became the Foreign Operations Officer.  From April 1989 to date, he has worked at Aqua Lung American Inc., as the Design and Development Manager. Aqua Lung America specializes in the design and manufacture of diving equipment.  Mr. Tai had a personal bankruptcy under Chapter 13 which was discharged in October 2005.
  
None of our management devotes full time to their duties to our business, as follows:

Name
  
Percentage of Time
Currently Devoted to
Our Business
  
Percentage of Time
Currently to be Devoted to
Our Business upon
completion of funding and
commencement of full-scale
operations  [1]
 
Shawn Davis
 
60
 
100
 
Thomas Bianco
 
60
 
100
 
Paul Davis
 
5
 
80
 
Timothy Smith
 
2
 
20
 
Steve Bailey
 
2
 
20
 
Shawn Steib
 
2
 
100
 
Raymond Kwok
Cheung Tai
  
35
  
50
 

 
26

 

As a result, our management may not currently be able to devote the time necessary to our business to assure successful implementation of our business plan.

[1] Completion of funding and commencement of full-scale operations means the following:

The following additional business activities can be completed with approximately $1,700,000 in capital:
Activity
 
Number
of Units
   
cost per
unit
   
Total
 
Inventory
                 
BrioWave 175p Units
    4,500     $ 170.00     $ 765,000.00  
                    $ 765,000.00  
Operations
                       
Existing SG&A Expense
                  $ 472,000.00  
Hire Sales Representative E. Coast
    1             $ 85,000.00  
Hire Sales Representative W. Coast
    1             $ 85,000.00  
HP Servers Cloud Computing
    3             $ 14,681.10  
Web Infrastructure
    1             $ 33,126.11  
                    $ 689,807.21  
                         
Marketing
                       
Marketing Services to drive revenue
                  $ 245,192.79  
                    $ 245,192.79  
                         
Total
                  $ 1,700,000.00  

Approximately four thousand five hundred BrioWave 175p units can be produced.  The additional inventory can be marketed and promoted in additional territories, outside of California and Texas through two additional sales representatives, and marketed through a new promotional and positioning marketing plan that targets segmented consumer profiles.

A scalable web infrastructure consisting of three specially configured servers running VM Ware software in a cloud computing environment, housing Attune RTD’s proprietary Graphical User Interface could be purchased in line with its value proposition to save consumers money to allow for the remote monitoring, changing, and manipulation of its BrioWave 175 controllers for the purposes of conserving energy and reducing energy consumption to save money.

 
27

 

Hybrid Motor Development Expense
                 
Motor Development Expense
              $ 125,000.00  
PCB Controller Expense
              $ 90,000.00  
Tooling Expense, Moulds
              $ 70,000.00  
                $ 285,000.00  
                     
Inventory
                   
Hybrid Motor
    4,500     $ 130.00     $ 585,000.00  
Controller
    4,500     $ 64.00     $ 288,000.00  
                    $ 873,000.00  
                         
Operations
                       
Existing SG&A Expense
                  $ 472,000.00  
Hire IT Personnel
    1             $ 85,000.00  
Hire Computer Code Programmer
    1             $ 85,000.00  
                    $ 642,000.00  
                         
Total
                  $ 1,800,000.00  

The remaining $1,800,000 in capital detailed in the above table fully capitalizes Attune RTD’s business plan, and constitutes completion of funding and commencement of full-scale operations.

Family Relationships

Shawn Davis and Paul Davis are father and son.  Timothy Smith is Shawn Davis’ father-in-law.  Steve Bailey is Shawn Steib’s father in law.

Board Committees

We currently have no compensation committee or other board committee performing equivalent functions. Currently, all members of our board of directors participate in discussions concerning executive officer compensation.

Legal Proceedings

Except as set forth above, no officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last five years in any of the following:

 
o
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time,

 
28

 

 
o
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses),

 
o
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities,

 
o
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
 
Corporate Governance

Our Board of Directors has three directors and has not established Audit, Compensation, and Nominating or Governance Committees as standing committees. The Board does not have an executive committee or any committees performing a similar function. We are not currently listed on a national securities exchange or in an inter-dealer quotation system that has requirements that a majority of the board of directors be independent. The Board has determined that the no members of the Board are “independent” under the definition set forth in the listing standards of the NASDAQ Stock Market, Inc., which is the definition that the Board has chosen to use for the purposes of the determining independence, as the OTCBB does not provide such a definition. Therefore, none of our current Board members are independent.

EXECUTIVE COMPENSATION

Summary Compensation Table
 
The table below summarizes all compensation awarded to, earned by, or paid to our Principal Executive Officer, our two most highly compensated executive officers other than our PEO who occupied such position at the end of our latest fiscal year and up to two additional executive officers who would have been included in the table below except for the fact that they were not executive officers at the end of our latest fiscal year, by us, or by any third party where the purpose of a transaction was to furnish compensation, for all services rendered in all capacities to us for the latest two fiscal years ended December 31, 2009 and 2008.

 
29

 


Name
 
Title
 
Year
 
Salary
   
Bonus
   
Stock  
awards
   
Option 
awards
   
Non
qualified 
deferred 
compensation
   
All other 
compensation
   
Total
 
Shawn Davis
 
CEO/Director
 
2008
  $ 92,054.00       0       0       0     $ 48,715.50       0       140,770  
Thomas Bianco
 
Treasurer/Director
 
2008
  $ 92,054.00       0       0       0     $ 48,715.50       0       140,770  
                                                                 
Shawn Davis
 
CEO/Director
 
2009
  $ 81,095.00       0       0       0     $ 38,905.00       0       120,000  
Thomas Bianco
 
Treasurer/Director
 
2009
  $ 81,095.00       0       0       0     $ 38,905.00       0       120,000  
 
Summary Equity Awards Table

The following table sets forth certain information for our executive officers concerning unexercised options, stock that has not vested, and equity incentive plan awards as of December 31, 2008, and 2009:

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END December 31, 2008 and 2009
 
Name
  
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
  
  
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
  
  
Equity
Incentive
Plan
Awards:
 Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
  
Option
Exercise
Price
($)
  
Option
Expiration
Date
  
  
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
  
  
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
  
  
Equity
Incentive
Plan
Awards:
Number
Of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested 
(#)
  
  
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)
  
                                                                   
Shawn Davis
   
0
     
0
     
0
       
0
     
0
     
0
     
0
     
0
 
Thomas Bianco
   
0
     
0
     
0
       
0
     
0
     
0
     
0
     
0
 

 
30

 

Narrative disclosure to summary compensation and option tables

Set forth below are the material terms of each named executive officer's employment agreement or arrangement, whether written or unwritten:

Effective March 26, 2008, the Company established two employment arrangements by resolution of the Board of Directors with Shawn Davis, its Chief Executive Officer and Thomas Bianco, Chief Financial Officer. These arrangements established a yearly salary for each of $120,000.  The amounts due to the officers represent accrued salaries covering payroll periods from both 2008 and 2009, for which the officers did not receive compensation.   No formal employment agreement has been executed between the parties.  As of December 31, 2009, the Company owed its officers an aggregate of $175,239 based on the terms of the agreement.  Additionally, during the year ended December 31, 2007, neither officer was paid for his services.  Based on the value of the above agreement, the Company recorded the estimated value of contributed services from its officers of $111,781 representing work performed from formation of the Company through December 31, 2007.  

During both 2008 and 2009 the officers’ accrued salaries based on the $120,000 per year each as the employment agreement stipulated. The officers only received cash compensation as funds were available and therefore reduced the accrual by those amounts. Therefore, at 12/31/08 and 12/31/09 the accrual of salaries would not tie directly to the base salary of $120,000 for each officer.

Board of Directors
 
Director Compensation for years ended December 31, 2009 and 2008.
 
Name
 
Fees
earned
or paid
in cash
($)
   
Stock
awards
($)
   
Option
awards
($)
   
Non-equity
incentive plan
compensation
($)
   
Nonqualified
deferred
compensation
earnings
($)
   
All other
compensation
($)
   
Total
($)
 
Shawn Davis
 
$
0
   
$
0
   
$
0
   
$
0
   
$
0
   
$
0
   
$
0
 
Thomas Bianco
 
$
0
   
$
0
   
$
0
   
$
0
   
$
0
   
$
0
   
$
0
 
Paul Davis
 
$
0
   
$
0
   
$
0
   
$
0
   
$
0
   
$
0
   
$
0
 

Narrative to Director Compensation Table
 
We have no compensation arrangements (such as fees for retainer, committee service, service as chairman of the board or a committee, and meeting attendance) with directors.

 
31

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth the ownership of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding voting securities, our directors, our executive officers, and our executive officers and directors as a group.  To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.

The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The business address for all persons is 3700 B Tachevah Road, Suite 117 Palm Springs, CA  92262.

Class A Common Stock

Name
 
Total Shares Owned
   
Percentage
 
Bianco, Thomas
   
5,739,281
     
26.69
%
Davis, Shawn
   
5,739,281
     
26.69
%
Tai, Raymond
   
2,945,714
     
13.70
%
Multimedia Ventures, Inc. (Ron Paxson, beneficial owner)
   
1,204,283
     
5.77
%
All officers and directors as a group [ 7 persons]
   
16,945,714
     
76.37
%
 
Class B Preferred Stock

Name
    
Total Shares Owned
     
Percentage
        
Davis, Shawn
   
200,000
     
20.00
%
Bianco, Thomas
   
133,333.33
     
13.33
%
Davis, Paul
   
133,333.33
     
13.33
%
Smith, Timothy
   
133,333.33
     
13.33
%
Bailey, Steve
   
133,333.33
     
13.33
%
Steib, Shawn
   
133,333.33
     
13.33
%
Kwok Cheung Tai, Raymond
   
133,333.33
     
13.33
%
TOTAL
   
1,000,000.00
     
100.00
%
 
32

 
This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 21,505,511 shares of common stock and 1,000,000 shares of Class B Preferred Stock outstanding as of March 22, 2010.

TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSON

On July 14, 2007 14,000,000 post split vested shares of Class A common stock were issued to 6 founders having a fair value of $232,400, based on a nominal value of $0.0166 per share.  The six founders who were issued shares and the number of shares issued to each is as follows:

Davis, Paul Shawn
 
7/14/2007
 
6,000,000
 
Post Split
Bianco, Thomas Scott
 
7/14/2007
 
6,000,000
 
Post Split
Bailey, Steve
 
7/14/2007
 
500,000
 
Post Split
Davis, Paul
 
7/14/2007
 
500,000
 
Post Split
Smith, Timothy
 
7/14/2007
 
500,000
 
Post Split
Steib, Shawn
 
7/14/2007
 
500,000
 
Post Split

On October 5, 2007, 866,667 shares of Class B preferred stock were issued to 6 founders for services rendered during 2007 with a value of $0.3375 per share based on the above contemporaneous sale of Class B preferred stock.  The six founders who were issued shares and the number of shares issued to each is as follows:

Bailey, Steve
 
133,333.33
 
10/5/2007
Bianco, Thomas
 
133,333.33
 
10/5/2007
Davis, Paul
 
133,333.33
 
10/5/2007
Davis, Shawn
 
200,000.00
 
10/5/2007
Smith, Timothy
 
133,333.33
 
10/5/2007
Steib, Shawn
 
133,333.33
 
10/5/2007

 
33

 

During the years ended December 31, 2008 and 2007, the Company received funds from the issuance of a shareholder loan agreement to Mr. Tai.  During the year ended December 31, 2007, the Company had received $30,000 under this agreement.  During the year ended December 31, 2008, the Company received and additional $30,000 and repaid $4,800. The outstanding balance as of December 31, 2008 was $55,200.  On August 10, 2009, the Company converted $55,200 of loans due to Mr. Tai into 788,571 shares of common stock which were valued at $118,286 or $0.15 per share.  Based on contemporaneous cash sales prices of the Company's common stock.  Mr. Tai owns 2,945,714 shares of our common stock, or 13.70% of our issued and outstanding common stock, and thus is considered a related person.

Pursuant to two separate unsecured promissory notes with our chief executive officer and our chief financial officer (borrowers) dated August 1, 2007, each borrower may borrow an amount equal to or less than $90,000 each at a rate of 5.75%.  Principal and interest are due under the terms of the loans on or before January 31, 2017.  Total principal and interest due under the loans as of December 31, 2009 and December 31, 2008 was $175,825 and $166,625 respectively.  As of 1/31/2010 the officers redeemed 521,439 shares of its common stock with a value of $0.35 per share to the company, to satisfy this outstanding debt obligation.

The Class B Participating Cumulative Preferred Super-voting Stock owned by certain of our officers and directors as set forth in “Security Ownership of Certain Beneficial Owners and Management,” above, pays cumulative dividends at 6%.  For the years ended December 31, 2009 and 2008, the board of directors did not declare any dividends and dividends will not be declared until we have sufficient cash from profits to do so.  Total undeclared Class B Participating Cumulative Preferred Super-voting Stock dividends as of December 31, 2009 was $49,987.

Effective March 26, 2008, the Company established two employment arrangements by resolution of the Board of Directors with its Chief Executive Officer and, Chief Financial Officer. These arrangements established a yearly salary for each of $120,000.  No formal employment agreement has been executed between the parties.  As of December 31, 2009, the Company owed its officers $175,239 based on the terms of the agreement.  Additionally, during the year ended December 31, 2007, neither officer was paid for his services.  Based on the value of the above agreement, the Company recorded the estimated value of contributed services from its officers of $111,781 representing work performed from formation of the Company through December 31, 2007.   These arrangements are with Shawn Davis and Thomas Bianco.

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties. 

 
34

 

DESCRIPTION OF SECURITIES

The following description is a summary of the material terms of the provisions of our articles of incorporation and bylaws. The articles of incorporation and bylaws have been filed as exhibits to the registration statement of which this prospectus is a part.
 
Common Stock

We are authorized to issue 59,000,000 shares of common stock of which 59,000,000 are designated Class A common stock with $0.0166 par value per share. As of the date of this registration statement, there were 21,505,511 shares of Class A common stock issued and outstanding held by 90 shareholders of record. As of the date of this registration statement, there were 1,000,000 shares of Class B preferred cumulative participating super voting stock issued and outstanding held by executive officers of record.

Each share of Class A common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders.

Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available- see same amendment- preferred get preference in payment and then share with common. We have not paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.

Holders of our common stock have no preemptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution or winding up, the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities.
 
Preferred Stock

The Company is authorized to issue 1,000,000 shares of Class B preferred cumulative participating super voting stock with $0.0166 par value per share entitled to 100 votes per share.  The Class B Participating Cumulative Preferred Super-voting Stock pays dividends at 6%.  As of the date of this Prospectus, all 1,000,000 Class B preferred cumulative participating super voting stock is issued and outstanding.

Each share of Class B preferred stock entitles the holder to one hundred votes, either in person or by proxy, at meetings of shareholders. The holders are permitted to vote their shares cumulatively as one class with the common stock. Accordingly, the shareholders of our Class B preferred stock who hold, in the aggregate, more than fifty percent of the total voting rights of our Class B preferred stock can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock and Class B preferred stock entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.  This provision in our Articles of Incorporation would prevent or delay change in our control.

 
35

 

As of the date of this Prospectus, all 1,000,000 Class B preferred cumulative participating super voting stock is issued and outstanding. Each share of Class B preferred stock entitles the holder to one hundred votes, either in person or by proxy, at meetings of shareholders. The holders are permitted to vote their shares cumulatively as one class with the common stock.  The total percentage of voting control on a combined basis that is held by officers, directors and affiliates is 95.82%.

The Board of Directors is authorized without limitation to fix by resolution the dividend rights and dividend rates of Class B Participating Cumulative Preferred Supervoting Stock which has been set at 6% by resolution of the Board.

EXPERTS

Salberg & Company, P.A., an independent registered public accounting firm, audited our financial statements filed herein for the years ended December 31, 2009 and 2008, and for the period from July 14, 2007 (Inception of development stage) to December 31, 2009, which is set forth in their report which is included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

INTEREST OF NAMED EXPERTS

The legality of the shares offered under this registration statement is being passed upon by Williams Law Group, P.A., Tampa, FL. Michael T. Williams, principal of Williams Law Group, P.A. owns 50,000 shares of our common stock, all of which are being registered in this registration statement.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES LIABILITIES

Our by-laws, subject to the provisions of Nevada Corporation Law, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

 
36

 

DESCRIPTION OF BUSINESS

Organization

ATTUNE RTD is a Nevada corporation which was originally incorporated as Catalyst Set Corporation on December 19, 2001 and changed its name in September 2007 to Interfacing Technologies, Inc and again changed to our current name in March 2008.

We maintain our principal place of business and corporate headquarters at 3700 B Tachevah Road, Suite 117 Palm Springs, CA  92262.  Our phone number is: (760)323-0233.  Our website is www.attunertd.com.  Nothing on our website is part of this registration statement.

Business

ATTUNE RTD uses its patented pending, proprietary technology in products designed to promote energy conservation and save cost for owners of swimming pools.  It is also designed to prevent potential costly maintenance problems from occurring in swimming pool filtration systems.

We currently have two models of our product, the “BrioWave 175p” and “BrioWave 325p”, and an interactive Graphical User Interface (GUI).

We have not generated any revenue from the sale of our products.  There is substantial doubt about our ability to continue as a going concern over the next twelve months.
 
Products
 
The “BrioWave 175p” is designed to conserve energy and reduce costs through an electrical control center with timing mechanisms linking the pool owner’s air conditioning/heating, or HVAC, unit and the pool circulation and filtration system.  A swimming pool filtration system does not need to run 24 hours a day.  Typically, an average 18,000 gallon swimming pool system with a filtration system moving 60 gallons per minute would need to run a minimum of 5.0 hours a day to accomplish their purpose.  The electronic control center gives the household HVAC system use priority and only allows the swimming pool system to turn on when the HVAC system is off.  At the end of the day, if the pool filtration system has not run for the required amount of time, the system will allow both the HVAC and pool filtration systems to operate simultaneously for the remainder of the day, but not during pre-determined peak energy times of use, as determined by the utility industry.  Peak time of use are those periods during the summer typically between the hours of 12 p.m. and 6 p.m., when energy rates increase 14 times the standard rate.  Further, in those areas of the country which have or will have variable power pricing, with electricity costing more during certain peak periods, the device is designed to reduce or eliminate the time the pool filtration system runs during the higher-cost peak load times. There is override capability to allow for the air conditioning and pool equipment to run at the same time for maintenance purposes.  Additionally, our device filtrates in real time, by measuring ambient air temperatures and comparing that data to 30 year average daily temperatures compiled by the department of energy, and then makes adjustments to actual filtration times either increasing filtration or decreasing filtration.

 
37

 

The device is also designed to reduce potential costly swimming pool maintenance problems by monitoring pressure in a swimming pools filtration system.  Excess pressure in a filtration system can cause costly damage such as grid breakage and overheating of induction motors.  Our device activates when a predetermined amount of pressure exceeds a pre-set ceiling or threshold by automatically opening an electronic valve to allow a minimal amount of water to bypass, relieving the over-pressure condition between the pump and filter.  After the system has run for the prescribed period of time during a day, the device then rotates three different valves, restarts and backwashes the system.  Backwashing purges the filter of dirt and debris which likely may have resulted in the overpressure condition in the first place.  When local regulations require, the backwashed water is pumped 10 or 20 gallon PVC holding tank and the water is then recycled back into the pools system.  When the backwash is completed, usually within several minutes, the system shuts itself down and rotates the valves back to their normal operating positions, the swimming pools circulation and filtration system is ready for the next day’s cycle of normal run time.  This feature is also designed to conserve energy in that it will only allow the backwashing cycle to take place in the evening when the air conditioning load is generally less.

The “BrioWave 175p” model does not contain the pressure monitoring/automatic backwash system contained in our BrioWave 325p.”
Current retail pricing projections for the BrioWave 175p are $472.22 retail to consumer which includes 40% margins to distributor and 40% margin mark up to consumer, and $629.00 retail to consumer for the BrioWave 325p with 40% margins to distributor and 40% margin mark up to consumer.

The “BrioWave 325p” is designed to conserve energy and reduce costs through an electrical control center with timing mechanisms linking the pool owner’s air conditioning/heating, or HVAC, unit and the pool circulation and filtration system.  It coordinates the timing of operation of the HVAC unit and the pool circulation and filtration system.  The device is also designed to reduce potential costly swimming pool maintenance problems by monitoring pressure in a swimming pools filtration system.  It is designed with all of the functionality of the BrioWave 175p, however, the BrioWave 325p is designed to monitor pressure in the swimming pools filtration system and react to overpressure conditions by reading from a pressure switch that must be installed in line on the filtration system plumbing lines and wired to a future on the BrioWave 325p controller.  When an over pressure condition exists, a signal is sent to automatic in line valve controls, which are not included and plumbed in line and powered separately, to rotate one hundred and eighty degrees to reverse the flow of water in the filtration system to clear dirt or debris from the filter, which are ejected into a small holding tank which must be purchased separately. The device is ZigBee Wi-Fi enabled.  The term, ZigBee Wi-Fi denotes a high level wireless networking communication protocol utilizing small, low cost low power radios allowing the device to communicate directly to the newly developed globally implemented smart meter that allows the utilities to measure energy inflow and outflows during time of use, allowing for integration within the utilities newly developed smart grid infrastructure.  Additionally, each BrioWave unit has the ability to integrate within the home wireless network by having its own internally installed wireless communications module with built in web server.  The Graphical User Interface is a server based software platform that allows users of both BrioWave control units to access, control, change and view BrioWave parameters from remote locations.  

 
38

 
The BrioWave 175p and BrioWave 325p are near completion with pilot units expected by end of March 2010 for the BrioWave 175p and by January 2011 for the BrioWave 325p.  The Graphical User Interface is expected to be completed by end of April 2010, and will be available to BrioWave consumers through an annual license fee.  By May 2010, we expect to have BrioWave 175p units in production for delivery by October 2010.  We initially we will need to build 5,000 units of the BrioWave 175p’s.  We will need approximately $1,700,000 to fund business operations and implement our marketing strategy.  Any delay in securing this funding will delay the launch of our products.

Manufacturing

We are outsourcing all production, including, but not limited to, the design of our printed circuit board technology, firmware, and software assembly to MEC Northwest.  MEC Northwest Engineers, namely Marck Slezak, Norm Simon and Larry Holton discuss the deliverables with Attune project managers namely Shawn Davis and Thomas Bianco which results in MEC generating a project schedule.  Once work is completed and accepted according to the project schedule, MEC Northwest generates an invoice, and payments are made accordingly as work progresses according to the project schedule.  MEC and Attune RTD have in the past agreed to a payment schedule where pre-determined payments are made consisting of a predetermined amount on a monthly basis.  This amount is subject to change as design changes are implemented, or the scope of the technology changes.  MEC warrants that all products delivered will be suitable for their intended use or purpose and free from defects in material and workmanship and shall be manufactured in compliance with IPC-A-610 Class 2 workmanship   We maintain tooling in Guangzhou China for the purpose of manufacturing our polyethylene enclosure.  We do not have any signed contracts pertaining to any of our manufacturing.

Sales and Distribution

Our website is not fully developed yet.  When fully developed by the end of May 2010, our website will provide information and customer support in addition to products and services for current customer access.  Online demonstrations will include tours providing information on the “BrioWave 175p” system.
 
Marketing collateral in the form of brochures and newsletters will be created that includes information to promote the company and the “BrioWave 175p”.  They will contain the company logo, website information, contact information, a variety of services, and hardware and software components.  In addition, testimonials from current customers and the benefits associated with the product will be listed on the company website, brochures, and newsletters.

 
39

 

Smaller, more direct advertisements will be made available through renewable energy type magazines and relevant trade publications.  Provided we have adequate funding, the advertisements will also be made available in local media newspapers, Realtor® Magazine and lore magazines targeting the pool and spa industry.  These ads will consist of a 3-inch in column ad, in black and white emphasizing the “BrioWave 175p” and its benefits, URL of website location to verify and collect contact information, and a brief sentence of how we can reduce consumer energy costs, by balancing electrical loads at competitive pricing.

We also may in the future hire a direct sales force and to promote our product and services at trade shows.

We have retained the services of USFI Marketing Communications to implement our marketing and business development strategies.  We have a written agreement with USFI for their services.   USFI will receive 5% of total revenues plus 5% of revenue payable in stock grants at $0.32 cents per share for three years beginning in December 2008 and ending on November 30, 2011, with monthly service billing for business and marketing communications strategy services not to exceed $3,000 per month. USFI Marketing communications has converted $83,980 in debt accrued since inception through July 31, 2009 in exchange for 239,944 shares of Class A Common Stock.  USFI Marketing Communications has accepted these shares in exchange for Attune RTD past debt accruals on the following basis:  USFI Marketing Communications must be able to sell all or a portion of the equity over a period of time to realize cash greater than or equal to the original  $83,980 in debt accrued since inception through July 31, 2009 and any amount less than the original $83,980 will be reimbursed by the company in cash and not in equity.

Attune RTD plans on selling its product through consumer facing retail utility producers such as TXU Energy and Southern California Edison as we believe this is the shortest path to the consumer.  Attune RTD also plans to sell its product through mass merchandisers such as Wal-Mart, Walmart.com, Sam’s Club, Samsclub.com, Costco, Costco.com, Sears and Sears.com.  As such, we have retained the professional services of Sheldon Gottlieb, who maintains contact with several key personnel from these organizations.  Since Attune RTD is not producing revenue, we have an agreement in place with Sheldon Gottlieb.  The agreement states that Mr. Gottlieb will open communications with these key personnel to establish dialogue and provide consultation in developing, cultivating and maintaining these distribution channels once established.  In exchange for Mr. Gottlieb’s performance, Attune RTD has agreed to give Mr. Gottlieb 500,000 shares of Class A Common Stock.   As of the date of this filing, no sales have occurred under the contract and the shares are not considered issued or outstanding for accounting purposes.

 
40

 

Seasonality

Although we have not yet delivered any products, the history of swimming pool electronic control products indicates that our busiest delivery periods tend to be March through September.  October through February are slower periods.

Warrantees

We will offer the following for our product once developed: Three-year warranty on our product, repair or replacement at our discretion.
 
Intellectual Property

We have the following patent applications which are pending:

Patent
  
Filed On
  
Duration
when
Granted
11,608,467 An Energy saving
system for use with swimming
pool filter systems (Inventor:
Shawn Davis, CEO/Director;
Timothy Smith, Secretary; Steven
Bailey, Shawn Steib, Paul Davis,
Vice President/Director))
 
December 8, 2006
 
20 Years
12/147,069 An Irrigation System (Inventor: Paul Shawn Davis, CEO & Thomas Bianco, Treasurer)
 
June 26, 2008
 
20 Years
12/204,135 Spa Control System (Inventor: Paul Shawn Davis, CEO/Director, Thomas Bianco, Treasurer/Director and Raymond Tai)
  
September 4, 2008
  
20 Years

Product Liability Insurance

We will have product liability in place prior to selling our product, but currently maintain no product liability insurance.

Research and Development
 
We spent $0 and $7,000 for research and development for the fiscal years ending December 31, 2009 and December 31, 2008, respectively.

 
41

 

Competition

We face significant competition in our swimming pool filtration market. Our market area of is highly competitive, and we will face direct competition from a significant number of companies in the pool filtration market, many with a local, state-wide or regional presence and, in some cases, a national presence. Many of these competitors are significantly larger and have greater financial resources than we do. These national, regional and local companies have substantial resources to enable them to compete.
 
Our competitors in this area include:

 
¨
The Intelliflo© by Pentair Pool Products claims to reduce pool pump energy consumption by as much as 90% through the use of a high tech variable speed permanent magnet synchronous motor as opposed to conventional motor induction technology which is 45% to 75% less efficient.

 
¨
Hayward Pool Products© manufactures heavy duty high performance energy saving pool pumps and filters both in single and dual speed, but not variable speed.  These pumps utilize low watt motors that save energy through improved flow characteristics.

 
¨
Sta-Rite© uses efficient motor technology to reduce costs.

 
¨
Astral manufactures an automatic backwashing unit, however, the unit does not interface between the household HVAC, and is primarily directed towards the commercial market.  The Astral unit comes in two versions, a deluxe and semi auto version, the former costing over $10,000 and the latter over $6,000.

 
¨
Pool suppliers such as Superior Pool Products, Leslies Pool Products, California Pool Suppliers, Pool Electrical Products and Aqua Pool Stores which act as suppliers and distributors for manufacturers such as Hayward and Pentair.

None of competitors, however, produce a product similar to the “BrioWave 175p” that we are aware of.  Most competitors are focused on achieving cost reductions through the use of variable speed motors.

We do not intend to compete on the same variables such as those that exist in an already saturated and crowded pump, filtration, or motor manufacturing market already dominated by the biggest players such as Sta-Rite, Pentair, and Hayward.  We intend to compete by focusing on cost savings through intelligent load management which works in conjunction with our competitors variable speed motors and filtration systems to help these motors and systems achieve their ideal rated output.
 
We cannot assure you that we will be able to:
 
 
compete successfully with our existing or potential new competitors,

 
develop market share,

 
42

 

 
use, or compete effectively with competitors that adopt new energy saving methods and technologies,
 
 
keep pace with discoveries or improvements in the pool filtration system products industries such that our existing technologies or products that we currently rely upon will not become obsolete, or

 
commit a portion of our revenues to investment in product/service development and improvement in order to periodically enhance our existing products/services and successfully introduce new products/services.
 
Employees

We have two persons working for us at this time, all members of management, are part time.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and related notes appearing elsewhere in this Report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under "Risk Factors" and elsewhere in this Report on Form S-1, Amendment No.2.

Management’s discussion and analysis of financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions.

 
43

 

Company Overview

Attune RTD Inc. is a research, technology and services company dedicated to solving demand energy, energy efficiency, critical water recovery, and everyday challenges through its proprietary and innovative solutions currently all related to swimming pools. Since inception, the Company’s strategy has focused on the following areas: (1) Invent a technology that addresses a major industrial and environmental problem, (2) Develop the technology from concept design to patenting and prototype, (3) Begin the commercialization of the technology through manufacturing, sales, and services, (4) Identify a partner who will be able to take it to the next level, (5) Create shareholder value through licensing or sale of the technology to market leaders. The Company has swimming pool technologies that are in the various stages of development.
 
The Company does not have a history of successfully developing and monetizing its technologies. The company expects to achieve sales and revenue of its BrioWave 175p™ technology by third quarter of 2010.  Since October 2008, the company has been negotiating with TXU Energy of Dallas Texas. By way of background, TXU Energy is the dominant retail to consumer energy provider in Texas.  Before deregulation in 2002, they were the state utility.  As part of the divestiture, TXU's holding company, Texas Energy Future Holdings, has committed $100 million to marketing initiatives that reduce demand.  At present, Attune RTD is engaged in the business of designing and building high volume smart energy controlling equipment that addresses demand energy problems.

The company met with TXU Energy on February 16, 2010 to discuss the substance and status of the proposed pilot program.  As a result of our meeting with TXU Energy on February 16, 2010, the company is presently engaged in the process of negotiating terms and conditions pursuant to a yet to be agreed upon Letter of Intent outlying the pilot program, cost of the pilot program and a new separate agreement that defines our business relationship through a licensing Agreement.  Negotiations with TXU Energy are ongoing; we expect to have both agreements completed by April 12, 2010.  There is no assurance we will enter into a binding agreement with TXU Energy or that any such agreement would obligate TXU Energy to fund these amounts or assume these obligations.  We have no alternative sources of funding identified.

The Company is presently in the process of finalizing development of two prototype pilot units to be used for preliminary testing to be completed by March 31, 2010 by MEC Northwest, and then building 50 pilot units for TXU Energy to be installed in the Dallas Fort Worth and Houston, Texas areas by end of June 2010.

Attune RTD is in advanced discussions with Southern California Edison for the testing of its technology. A successful pilot project with TXU Energy is designed to prove the technology is commercially viable, and may lead to the development of additional applications of our technologies, which will allow energy companies to optimize their revenues, smooth out the demand energy curve and reduce consumer energy consumption..  The substance and status of Attune RTD’s negotiations with SCE are ongoing, but not as far along as they are with TXU Energy.  Attune RTD’s engineers have been maintaining ongoing dialogue with SCE engineers, and are awaiting a UL tested device which should be ready by April 2010.  Attune RTD intends on delivering a UL tested device to SCE which should be complete by June 7, 2010, and continue negotiations.

 
44

 

The Company manufactured and began testing the prototype of the BrioWave 175p™ in the third quarter of 2009. Management believes the BrioWave 175p™ smart energy controller will be an important addition to our product line to the utility industry.

Attune RTD identifies the TXU Energy pilot program as a major milestone for the organization.  Attune RTD is challenged with creating a successful pilot program.  A successful outcome would present additional opportunities.  A successful outcome would equate to TXU Energy validating the BrioWave 175p value proposition, in that the device functions as it was intended, reading ambient air temperatures and reducing unnecessary filtration, resulting in savings and economic benefit for the intended consumer.  Pursuant to a successful outcome, TXU Energy directors have agreed to endorse the BrioWave 175p technology, which could potentially increase acceptance of our device in other markets, resulting in additional sales.  A failed outcome would have negative consequences if the device fails to perform as expected and the pilot program as a whole fails.  This outcome would negatively affect the organizations ability to continue raising the necessary capital to fund business operations.  Should the BrioWave 175p pilot program fail to yield less than desirable energy savings results, Attune RTD would be forced to change its marketing strategy, and re-direct its efforts towards developing and cultivating mass-market distribution channels which are more costly and time consuming to develop and cultivate, and re-examine the technology making costly revisions to the hardware and firmware delaying the products launch to market.

In order to leverage our success, Attune RTD management has created an advisory board which reports to the Chairman and Treasurer, approved by the Board of Directors.  The purpose of the advisory board is to assist Attune RTD management in developing and deploying innovative products or solutions.  Attune’s purpose in establish an Advisory Board is to ensure it remains a “listening” organization that values “outside-in” thinking and innovative ideas helping management aligning its vision with its mission to develop both long term and short term business strategy that anticipates the future, for the purpose of designing and developing the “what’s next” product that creates consumer value.  Attune RTD is seeking experts in Consumer Marketing, Technology Development, Electric Industry Policy, Economics and Business Management and Administration to serve on the Advisory Board.  Attune RTD has identified Thomas Rose, a retired Energy Future Holdings Employee who has accepted the Advisory Board Chairman’s position.  Mr. Rose is a nuclear engineer that is a well qualified 34 year veteran of the energy sector.  On March 22, 2010 Faisal Ahmad principal owner of USFI Marketing Communications has accepted a position on the Advisory Board.  Mr. Ahmad brings 26 years of extensive knowledge in marketing strategy, marketing communications, technology development, web support and logistics and supply chain experience.  On March 22, 2010 Kyle Priest principal owner of The Priest Group has accepted a position on the Advisory Board. Mr. Priest has led programs for prominent consumer companies including Pepsi-Cola, Mercedes-Benz, Pizza Hut, Nextel, Ocean Spray, Radio Shack, and others.  Priest's extensive work in product, service, and distribution channel launches includes creating strategic plans and managing comprehensive, integrated launches for dozens of offerings from Fortune 500 and startup companies alike.  Priest has proven expertise in marketing and crafting business solutions related to VoIP, contact center software, ERP, CRM and other web-based services.  As a former Vice President of marketing for an international telecom company, Priest has led global teams for international branding and marketing communications initiatives.

 
45

 

In order to attract and retain key Advisory Board members, Attune is in the process of negotiating the following terms: 1) Limit meetings to a one-half day brainstorming session per quarter, 2) cover travel expenses, 3) issue a $1000 stipend paid in cash or class a common stock equivalent to each Advisory Board member for each brainstorming session, 4) limit emails to once a month requests for feedback on product development and use.  As of the date of this filing, no consideration or compensation has been issued to any of the members on this board.  Presently, negotiations are ongoing and expected to be completed by June 2010.
 
The BrioWave 175p™ process is an advanced load management process that we have developed to load manage the two largest energy consuming devices in the residential household dynamically. These devices are the air conditioning unit and the pool circulation pump. Since late 2007, the Company has been designing, testing and improving its BrioWave 175p™ load management process. Management feels one of the most promising applications for its technology is in the utility industry to help energy companies deliver cleaner power, manage conditions that might contribute to the overloading of energy providers resulting in brown out conditions, or excessive maintenance costs related to ramping up energy generation facilities to meet unplanned spikes in consumer energy delivery.

Attune RTD developed the BrioWave 175p™ process in the third half of 2007 and began testing it in early 2008 and mid 2009 under the guidance of National Technical Systems and MEC Midwest. From the testing, the Company learned that the BrioWave 175p™ process is able to efficiently and in a cost effective manner, eliminate excessive pool filtration periods by reading ambient air temperatures and water temperatures in real time.  BrioWave 175p™ technology is designed to wirelessly communicate and collaborate with the new generation of Smart Meters currently being deployed by the utility industry that are Zigbee Wireless Enabled.  “ZigBee Wireless Enabled” is ZigBee Smart Energy, a wireless communications protocol enabling wireless communication between utilities and common household devices such as smart thermostats and appliances.

In addition to the BrioWave 175p™ technology, the Company presently owns several other patent pending technologies as described below that are in the early development stage. Currently, these technologies are in the early development phase and the company projects commercialization of these devices by third quarter 2012.

 
46

 

The following is a list of the Company’s existing intellectual property estate:

U.S. Patent Pending - Energy Saving System for Use with Pool Filter System. Relates to the BrioWave 175p and 325p technology.

U.S. Patent Pending - Irrigation System. Relates to residential irrigation/sprinkler system. planned for commercialization by third quarter 2013.

U.S. Patent Pending - Spa Control. Planned for commercialization by third quarter 2013.

U.S. Patent Applied For – Solar Brushless DC Motor Pump.  Relates to hybrid motor development, planned for commercialization by third quarter 2012.

2009 Highlights

The most significant material accomplishments during 2009 was the organization's ongoing communications and initial meeting with TXU Energy.  The continued design and development of the BrioWave 175p™ Smart Energy Controllers and the submission of initial designs related to the filing of its Irrigation System and energy saving Spa Controllers.  The company was able to identify, develop, design and test the commercial viability of its BrioSpa™ technology.  BrioSpa™ controllers are designed to eliminate the use of multiple induction motors, control water temperatures by zone, increase efficiency and reduce energy consumption.  The company projects commercialization of this technology by third quarter of 2012.  Further, the company conducted a Private Placement which provided us with the necessary capital to provide the financing needed to continue operating the Company. From inception through the end of the year, December 31, 2009 the company had been able to raise approximately $834,000 gross, from its Private Placement and direct investment by its shareholders.

In accordance with generally accepted accounting principles, expenditures for research and development of the Company's products are expensed when incurred, and are included in operating expenses. The Company recognized research and development costs of $0 and $7,000 for the years ended December 31, 2009 and 2008, respectively.

Plan of Operations

Set forth below is our future Plan of Operations:

Milestone or Step 
 
Expected Manner
of Occurrence or
Method of
Achievement
 
Date When Step
Should be
Accomplished
 
Cost of
Completion
 
Prototype printed circuit board build designed with WI-FI module and Zigbee wireless module
 
MEC Northwest beginning on November 2009
 
Ending on 3/31/2010
 
$78,400
 

 
47

 

Advance Programming Interface development and Graphical User Interface Build
 
HiLn Co. beginning on December 2009
 
Ending on 6/10/2010
 
$89,435
             
TXU Energy Conducting market testing
 
Define market goals, design market research, collect results and create report beginning on 12/04/2009
 
Ending on 12/25/2009
 
Costs covered directly by TXU Energy
             
Capital required to cover Attune Selling General & Administrative expenses
 
Beginning on January 1, 2010
 
Through December 31, 2010
 
$750,000 projected
             
Meet with TXU Energy to discuss pilot program
 
Beginning on 2/16/2010 in Dallas, TX
 
Ending on 2/16/2010
 
$6,000
             
Letter of Intent with TXU Energy defining terms of the pilot program
 
Negotiating with TXU Energy beginning on 3/08/2010
 
Negotiations projected to end on 4/2/2010
 
Estimated cost of pilot program to be paid by TXU Energy of $58,700
             
Signed Partnership/Licensing Agreement and Letter of Intent with TXU Energy.  Licensing Agreement consideration to be negotiated
 
Negotiating with TXU Energy beginning on 3/08/2010
 
Ending on 4/2/2010
 
$12,000 in projected legal fees
             
Pilot Build, build out 50 pilot units
 
MEC Northwest, beginning on 5/12/2010
 
Ending on 5/14/2010
 
$12,500, Units costs covered in Letter of Intent with Texas Energy
             
Obtain UL and FCC Testing Certification
 
UL Laboratories, beginning on 5/17/2010
 
Ending on 6/7/2010
 
$13,500
             
Zigbee Wireless development, develop protocol, implement Zigbee pilot testing
 
Obtain Zigbee Certification through Zigbee Alliance Beginning on 5/17/2010
 
Ending on 8/17/2010
 
$3,000
             
Installation of 25 Pilot units in Dallas, TX and 25 units in Houston, TX
 
Beginning on 5/17/2010
 
Ending on 6/11/2010
 
$10,000 cost covered by Texas Energy in Letter of Intent

 
48

 

Go to market with TXU Energy, units in production for delivery
 
Begin delivering first BrioWave Control units on October 26, 2010
 
Projected delivery of 4,500 units completed by May 2011
 
$765,000 cost of BrioWave control units paid by TXU Energy
             
Hire two sales representatives
 
August 2011
 
Through August 2012
 
$170,000
             
Conduct cost benefit analysis to assess if HP Servers, Cloud Computing and additional Web Infrastructure needed
 
Beginning November 2011
 
Purchase equipment and deploy
 
Ending February 2012
 
$47,807
             
Selling General and Administrative costs, hire 2 IT personnel
 
January 2011
 
December 2011
 
$642,000
             
Start up marketing phase.  Marketing services to drive revenue
 
Define market goals, design market research, collect results, create report beginning on January  2012
 
Ending on June 2012.
 
Estimated projected budget between $245,192 and $433,657
             
Hybrid Motor development, printed circuit board for motor, motor control, tooling and moulds
 
MEC Northwest, beginning on January 2012
 
Ending on April  2012
 
Estimated cost $285,000
             
Build out 4,500 hybrid motors and 4,500 controls
 
MEC Northwest, beginning May 2012
 
Ending October 2012
 
$873,000

[1]  Funding anticipated to be received under current letter of intent with TXU Energy.  There is no assurance we will enter into a binding agreement with TXU Energy or that any such agreement would obligate TXU Energy to fund these amounts or assume these obligations.  We have no alternative sources of funding identified.

CRITICAL ACCOUNTING ESTIMATES

In response to the SEC’s financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, the Company has selected its more subjective accounting estimation processes for purposes of explaining the methodology used in calculating the estimate, in addition to the inherent uncertainties pertaining to the estimate and the possible effects on the Company’s financial condition. The three accounting estimates are discussed below. These estimates involve certain assumptions that if incorrect could create a material adverse impact on the Company’s results of operations and financial condition. Some of the estimates are based upon the intellectual property and related assets and inventory.

 
49

 

Revenue Recognition

As mentioned above the Company is currently in the design and implementation phase of its business and has not had any sales to date. However, revenue from sales of equipment is intended to be recognized when products are delivered to and accepted by the customer, and when economic risk of loss has passed to the customer, price is fixed or determinable, collection is probable, and any future obligations of the Company are insignificant. Revenue from the BrioWave 175p™ Smart Energy Controllers will be earned based upon sales to retail providers or direct sales to utility providers and is intended to be recognized in the period the product or service is provided. Payments received in advance of the performance of services or of the delivery of goods will be deferred as liabilities until the services are performed or the goods are delivered. The Company will include shipping and handling fees billed to customers as revenues and shipping and handling costs as cost of revenues.

Useful Lives and Impairment of Machinery and Equipment and Patents

The Company capitalizes machinery and equipment currently, all with useful lives of 5 years. The Company determines the useful lives of machinery and equipment based on the forecasted durability of the technologies utilized in the system. While some of the individual components of the Company’s systems may individually have longer useful lives than the Company’s estimate for the useful life of the entire system (i.e., 10 years or longer), 5 years, management believes, is reasonable for the industry for which they operate in.

The Company determines the useful lives of its patents based on the remaining life of the patent issued by the U.S. Patent Office. Management believes the legal life of the patent is a reasonable period of time over which the Company expects to realize the benefits of its intellectual property rights because of the broad nature of the Company’s patents and the Company’s intent to protect its intellectual property rights over the lives of its patents.

The Company reviews for impairment its machinery and equipment used in its products, whenever events or changes in circumstances indicate that the carrying amount of its assets may not be recoverable. Such events or changes in circumstances might occur when a new version of a product is launched or when a major technological advancement becomes available.

From inception through the year ended December 31, 2009, there has not been any impairment of assets.

 
50

 

Stock-Based Compensation

Under generally accepted accounting principles, the company will recognize an expense for the fair value of our outstanding stock options and warrants as they vest, whether held by employees or others.

We will estimate the fair value of each stock option at the grant date by using the Black-Scholes option pricing model based upon certain assumptions. The Black-Scholes model requires the input of highly subjective assumptions including the expected stock price volatility. Because our stock options and warrants will have characteristics different from those of traded options, and because changes in the subjective input of assumptions can materially affect the fair value estimate, in our management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options.

Currently, the Company has not adopted a stock based compensation plan.

RESULTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

   
Year Ended
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2009
   
2008
 
             
Revenues
 
$
-
   
$
-
 
                 
Operating Expenses
               
Advertising and Promotions
   
4,500
     
77,300
 
Depreciation Expense
   
3,423
     
1,127
 
Legal Expense
   
12,000
     
1,500
 
Marketing Expense
   
36,735
     
3,500
 
Payroll Expense
   
252,673
     
192,230
 
Product Development
   
124,176
     
-
 
Professional Fees
   
45,897
     
87,842
 
Rent Expense
   
22,203
     
9,252
 
Research and Development
   
-
     
7,000
 
Other operating Expenses (including stock based compensation expense of $11,150 and $34,530 for the years ended December 31, 2009 and 2008 respectively)
   
83,571
     
68,840