UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



---



FORM
10-K/A

---







[X]     ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For
the fiscal year ended December 31, 2011

OR





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



For
the transition period from ____________ to ____________



Commission
file number: 333-147247



| | Attune
    RTD                                             | 
| | ---------------------------------------------------------- | 
| | (Exact
    name of registrant as specified in its charter) | 



|Nevada                                                             |  | 32-0212241                              
|------------------------------------------------------------------ |  | ----------------------------------------
|(State
    or other jurisdiction of incorporation or organization) |  | (I.R.S.
    Employer Identification No.)







|3700
                                                                                                                          E Tachevah
                                                                                                                          Dr,
                                                                                                                          #B117
        Palm
        Springs, CA |  | 92262         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|(Address
    of principal executive offices)                                                                                                                                                                                                                                                                                                                                                                                             |  | (Zip
    Code)



Registrant’s
telephone number, including area code: (760)323-0233



Securities
registered pursuant to Section 12(b) of the Act: None



Securities
registered pursuant to Section 12(g) of the Act: None



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes [  ] No [X]



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. 
Yes  [  ] No [X]



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes  [X] No [  ]



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes  [  ] No [  ]



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [X]



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



|Large
    accelerated filer                                             | [  ] | Accelerated
    filer         | [  ]
|----------------------------------------------------------------------- | ---- | ----------------------------- | ----
|Non-accelerated
    filer (Do not check if a smaller reporting company) | [  ] | Smaller reporting
    company | [X] 



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



The
aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing
price as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $3,678,869.70.



The number
of shares outstanding of the registrant’s common stock, as of March 30, 2012, was 29,044,896




















TABLE OF CONTENT





|PART I   |                     |  |                                                                                                                  | 
|-------- | ------------------- |  | ---------------------------------------------------------------------------------------------------------------- | 
|         | Item 1.             |  | Business                                                                                                         | 
|         | Product Development |  |                                                                                                                 
|         | Item 1A.            |  | Risk Factors.                                                                                                    | 
|         | Item 1B.            |  | Unresolved Staff Comments.                                                                                       | 
|         | Item 2.             |  | Properties.                                                                                                      | 
|         | Item 3.             |  | Legal Proceedings.                                                                                               | 
|         | Item 4.             |  | Mine Safety Disclosure                                                                                           | 
|         |                     |  |                                                                                                                  | 
|PART II  |                     |  |                                                                                                                  | 
|         | Item 5.             |  | Stockholder
    Market For Registrant’s Common Equity, Related Matters and Issuer Purchases of Equity Securities | 
|         | Item 6.             |  | Selected Financial Data.                                                                                         | 
|         | Item 7.             |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                           | 
|         | Item 7A.            |  | Quantitative and Qualitative Disclosures about Market Risk.                                                      | 
|         | Item 8.             |  | Financial Statements and Supplementary Data.                                                                     | 
|         | Item 9.             |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.                            | 
|         | Item 9A(T).         |  | Controls and Procedures.                                                                                         | 
|         | Item 9B.            |  | Other Information.                                                                                               | 
|         |                     |  |                                                                                                                  | 
|PART III |                     |  |                                                                                                                  | 
|         | Item 10.            |  | Directors, Executive Officers and Corporate Governance.                                                          | 
|         | Item 11.            |  | Executive Compensation.                                                                                          | 
|         | Item 12.            |  | Security Ownership of Certain Beneficial owners and Management and Related Stockholder Matters.                  | 
|         | Item 13.            |  | Certain Relationships and Related Transactions, and Director Independence.                                       | 
|         | Item 14.            |  | Principal Accounting Fees and Services.                                                                          | 
|         |                     |  |                                                                                                                  | 
|PART IV  |                     |  |                                                                                                                  | 
|         |                     |  | Financial statements and notes                                                                                   | 



2







PART
I



ITEM
1. BUSINESS



Company
Overview



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 numbers are: (760) 323-0233 and (855) 687-5393. Our corporate 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)



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 (GUI) was launched
on November 28, 2010. Modifications to the Graphical User Interface continue, and the company has developed a strategic partnership
with a vendor to develop the Business Intelligence platform module for the GUI. Work on the Business Intelligence software platform
completed in December 2011. The Graphical User Interface and Business Intelligence Information systems software modules will be
available to BrioWave consumers through an annual license fee.



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



The
BrioWave 175p is near completion, and pilot units were delivered to a vendor on November 28, 2010. The BrioWave 325p is
currently in development and we expect to have units in production by November 2012. We expect to have BrioWave 175p units in
production for delivery by July 2012. We estimate initially we will need to sell 4,720 units of the BrioWave 175p and
4,720 service level agreements (SLA’s) for the use of the Graphical User Interface to meet current selling, general and
administrative expenses.



3







On
a go forward basis, the Company is seeking additional financing through equity private placements. The company had determined
that it would need approximately $4.3 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 $950,000 over the next 12 months until full funding occurs. On March 28, 2011 the company entered into
a Private Placement Agreement with Beacon Global, LLC to provide the company up to Four Million Three Hundred and Seventy Five
thousand dollars in capital financing. Under the terms of the agreement, Beacon Global, LLC purchased a total of Three Million
Two Hundred Fifty Nine Thousand Three Hundred and Seventy Five Shares of Restricted Class A Common Stock in exchange for One Million
Two Hundred Forty Three Thousand Seven Hundred and Fifty Dollars. The company continues to seek Three Million Dollars in capital
financing for inventory, operations and marketing expenses over the next two years. The company plans to soft launch its BrioWave
175p technology by end of June 2012 and is seeking Four Hundred Twenty Nine Thousand Dollars in capital to build out One Thousand
complete BrioWave 175 Smart Energy Controllers to fulfill short term sales projections, develop the supply chain, and insure total
quality management before moving to full production.



If we secure
all of this funding, we will be able to create an inventory of 4,720 BrioWave 175p units, hire various sales representatives,
, implement the company’s marketing communication strategy which includes television, print and digital marketing communications,
complete the business intelligence software module, complete development on the BrioWave 325p..



We have
generated insignificant 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.



ITEM
1A.  RISK FACTORS.



Not
applicable for smaller reporting companies. However, our principal risk factors are described under “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations.”



ITEM
1B.  UNRESOLVED STAFF COMMENTS.



Not
applicable.



ITEM
2.  PROPERTIES.



Our
corporate headquarters, including our principal administrative, marketing, technical support and research and development departments,
are presently located in Palm Springs, CA, in a leased office building of approximately 2,000 square feet. The monthly cost of
the lease is approximately $1,400 and expired on September 30th, 2011. Company management executed a Lease Modification and Extension
Agreement dated March 15th, 2010, reducing the monthly lease payment from $1,783.19 to $1,400.00 per month, extending the lease
term for an additional one year commencing October 1, 2010 and ending on September 30, 2011. On August 17, 2011, the lease was
extended for a period of one year beginning on October 1, 2011 and ending on September 30, 2012. With the extension, the Company
has the option to extend the lease for one more 24 month period commencing in 2012, but will negotiate rent at a market rate agreed
to by lessor and lessee. Under the lease agreement rent was set at $1,400 per month.



ITEM
3.  LEGAL PROCEEDINGS.



We
are not currently subject to any legal proceedings. From time to time, we have been party to litigation matters arising in connection
with the normal course of our business, none of which has or is expected to have a material adverse effect on us.



ITEM
4.  (REMOVED AND RESERVED).



4







PART
II



ITEM
5.  STOCKHOLDER MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.



Our
common stock is quoted on the Over-the-Counter Bulletin Board, or the Bulletin Board, under the symbol “AURT”.
The last reported sale price of our common stock as reported by the Bulletin Board on November 21, 2011 was $0.30 per share. As
of March 26, 2012, there were 239 holders of record. The following table provides the high and low bid price information for our
common stock for the periods indicated which reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions.



|Year |  | Quarter Ended |  |   | Bid Prices
|---- |  | ------------- |  | - | ----------
|     |  |               |  |   | High      
|     |  |               |  |   | ($)       
|     |  |               |  |   |           
|2011 |  | Mar-11        |  | $ | 0.51      
|     |  | Jun-11        |  | $ | 0.01      
|     |  | Sep-11        |  | $ | 0.20      
|     |  | Dec-11        |  | $ | 0.06      
|2010 |  | 30-Jun        |  | $ | 0.51      
|     |  | 30-Sep        |  | $ | 0.51      
|     |  | 31-Dec        |  | $ | 0.51      



(1)
We began trading on the Bulletin Board on July 26, 2010.



Dividend
Policy



We
have not paid any cash dividends on our common stock and do not plan to pay any such dividends in the foreseeable future. We currently
intend to use all available funds to develop our business. We can give no assurances that we will ever have excess funds available
to pay dividends.



The
Class B Participating Cumulative Preferred Super-voting Stock owned by certain of our officers and directors pays a cumulative
dividend at 6%.  For the years ended December 31, 2011, 2010 and 2009, 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, 2011 was $90,487.



Recent
Sales of Unregistered Securities



In
addition to those unregistered securities previously disclosed in reports filed with the Securities and Exchange Commission, or
the SEC, we have sold securities without registration under the Securities Act of 1933 in reliance upon the exemption provided
in Section 4(2) and Rule 506 thereunder, as described below.



5







|Name
    of Class   | Date
    Sold                                 | No. of
    Securities               | Reason
    for Issuance                 
|------------------- | --------------------------------------------- | ----------------------------------- | ----------------------------------------
|Investor            | January
    4, 2010 through March 26, 2010    | 399,716
    Class A Common Shares   | Investment                              
|Trade
    Creditor  | January
    4, 2010 through March 15, 2010    | 181,000
    shares of common stock  | Payment
    in lieu of cash             
|Trade
    Creditors | June
    7, 2010, through June 21, 2010       | 755,485
    shares of common stock  | Payment
    in lieu of cash             
|Investor            | April
    5, 2010 through June 1, 2010        | 553,185
    shares of common stock  | Investment                              
|Investor            | July
    30, 2010 through September 22, 2010  | 530,181
    shares of common stock  | Investment                              
|Investor            | October
    4, 2010 through December 23, 2010 | 664,041
    shares of common stock  | Investment                              
|Trade
    Creditor  | December
    31, 2010                         | 81,764
    share of common stock    | Payment
    in lieu of cash             
|Investor            | February
    2, 2011 through March 30, 2011   | 939,000
    Class A Common Shares   | Investment                              
|Investor            | April
    12, 2011 through May 16, 2011       | 5,273,750
    Class A Common Shares | Investment                              
|Trade
    Creditors | June
    28, 2011                             | 815,000
    Class A Common Shares   | Payment
    for services in lieu of cash
|Investor            | July
    5, 2011 through September 20, 2011   | 17,000
    Class A Common Shares    | Investment                              
|Trade
    Creditor  | August
    20, 2011                           | 50,000
    Class A Common Shares    | Payment
    in lieu of cash             
|Investor            | October
    1, 2011 through November 7, 2011  | 120,000
    Class A Common Shares   | Investment                              
|Trade
    Creditor  | November
    18, 2011                         | 100,000
    Class A Common Shares   | Payment
    in lieu of cash             



ITEM
6.  SELECTED FINANCIAL DATA.



Not applicable
to smaller reporting companies.



ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Overview



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.



During
2011, we accomplished significant milestones, including:



| | ● | In
                                                                                                                                                                                                                 2011
                                                                                                                                                                                                                 we
                                                                                                                                                                                                                 raised
                                                                                                                                                                                                                 $1,318,751
                                                                                                                                                                                                                 gross,
                                                                                                                                                                                                                 providing
                                                                                                                                                                                                                 us
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 funds
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 continue
                                                                                                                                                                                                                 our
                                                                                                                                                                                                                 product
                                                                                                                                                                                                                 development.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 signed
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 Technical
                                                                                                                                                                                                                 Information
                                                                                                                                                                                                                 License
                                                                                                                                                                                                                 Agreement
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 Itron.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 completed
                                                                                                                                                                                                                 major
                                                                                                                                                                                                                 enhancements
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 its
                                                                                                                                                                                                                 corporate
                                                                                                                                                                                                                 web
                                                                                                                                                                                                                 site.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | On
                                                                                                                                                                                                                 February
                                                                                                                                                                                                                 2012,
                                                                                                                                                                                                                 we
                                                                                                                                                                                                                 successfully
                                                                                                                                                                                                                 completed
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 pilot
                                                                                                                                                                                                                 program
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 TXU
                                                                                                                                                                                                                 Energy
                                                                                                                                                                                                                 Retail
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 was
                                                                                                                                                                                                                 asked
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 commercialize
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 technology
                                                                                                                                                                                                                 prior
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 purchasing.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | On
                                                                                                                                                                                                                 February
                                                                                                                                                                                                                 2012,
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 successfully
                                                                                                                                                                                                                 completed
                                                                                                                                                                                                                 phase
                                                                                                                                                                                                                 one
                                                                                                                                                                                                                 generation
                                                                                                                                                                                                                 4,
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 commercial
                                                                                                                                                                                                                 version
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 its
                                                                                                                                                                                                                 BrioWave
                                                                                                                                                                                                                 Technology.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | On
                                                                                                                                                                                                                 February
                                                                                                                                                                                                                 2012,
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 presented
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 Palm
                                                                                                                                                                                                                 Springs,
                                                                                                                                                                                                                 CA
                                                                                                                                                                                                                 Sustainability
                                                                                                                                                                                                                 Commission
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 purposes
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 endorsing
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 technology
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 participating
                                                                                                                                                                                                                 in
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 pilot
                                                                                                                                                                                                                 program.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6







| | ● | The
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 began
                                                                                                                                                                                                                 negotiating
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 FigTree,
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 purpose
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 having
                                                                                                                                                                                                                 its
                                                                                                                                                                                                                 BrioWave
                                                                                                                                                                                                                 Technology
                                                                                                                                                                                                                 approved
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 energy
                                                                                                                                                                                                                 efficient
                                                                                                                                                                                                                 rebates
                                                                                                                                                                                                                 issued
                                                                                                                                                                                                                 under
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 California
                                                                                                                                                                                                                 PACE
                                                                                                                                                                                                                 financing
                                                                                                                                                                                                                 program
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 is
                                                                                                                                                                                                                 in
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 process
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 establishing
                                                                                                                                                                                                                 sales
                                                                                                                                                                                                                 channels
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 has
                                                                                                                                                                                                                 approved
                                                                                                                                                                                                                 three
                                                                                                                                                                                                                 resellers
                                                                                                                                                                                                                 that
                                                                                                                                                                                                                 were
                                                                                                                                                                                                                 added
                                                                                                                                                                                                                 to
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 corporate
                                                                                                                                                                                                                 web
                                                                                                                                                                                                                 site
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 is
                                                                                                                                                                                                                 negotiating
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 mid
                                                                                                                                                                                                                 size
                                                                                                                                                                                                                 local
                                                                                                                                                                                                                 distributor
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 purpose
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 reselling
                                                                                                                                                                                                                 BrioWave
                                                                                                                                                                                                                 technology
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | In
                                                                                                                                                                                                                 February
                                                                                                                                                                                                                 2012,
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 met
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 executive
                                                                                                                                                                                                                 management
                                                                                                                                                                                                                 from
                                                                                                                                                                                                                 Imperial
                                                                                                                                                                                                                 Irrigation
                                                                                                                                                                                                                 District
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 purposes
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 negotiating
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 feasibility
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 pilot
                                                                                                                                                                                                                 program.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | On
                                                                                                                                                                                                                 March
                                                                                                                                                                                                                 7th,
                                                                                                                                                                                                                 Imperial
                                                                                                                                                                                                                 Irrigation
                                                                                                                                                                                                                 Districted
                                                                                                                                                                                                                 hosted
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 meeting
                                                                                                                                                                                                                 with
                                                                                                                                                                                                                 representatives
                                                                                                                                                                                                                 from
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 following
                                                                                                                                                                                                                 utility
                                                                                                                                                                                                                 companies,;
                                                                                                                                                                                                                 City
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 Azusa,
                                                                                                                                                                                                                 Anaheim
                                                                                                                                                                                                                 Public
                                                                                                                                                                                                                 Utilities
                                                                                                                                                                                                                 Dept,
                                                                                                                                                                                                                 City
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 Banning,
                                                                                                                                                                                                                 Burbank
                                                                                                                                                                                                                 Water
                                                                                                                                                                                                                 &
                                                                                                                                                                                                                 Power,
                                                                                                                                                                                                                 City
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 Colton,
                                                                                                                                                                                                                 Glendale
                                                                                                                                                                                                                 Water
                                                                                                                                                                                                                 &
                                                                                                                                                                                                                 Power,
                                                                                                                                                                                                                 Los
                                                                                                                                                                                                                 Angeles
                                                                                                                                                                                                                 Dept
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 Water
                                                                                                                                                                                                                 &
                                                                                                                                                                                                                 Power,
                                                                                                                                                                                                                 Riverside
                                                                                                                                                                                                                 Public
                                                                                                                                                                                                                 Utilities,
                                                                                                                                                                                                                 Pasadena
                                                                                                                                                                                                                 Water
                                                                                                                                                                                                                 &
                                                                                                                                                                                                                 Power,
                                                                                                                                                                                                                 Vernon
                                                                                                                                                                                                                 Light
                                                                                                                                                                                                                 &
                                                                                                                                                                                                                 Power
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 Southern
                                                                                                                                                                                                                 California
                                                                                                                                                                                                                 Public
                                                                                                                                                                                                                 Power
                                                                                                                                                                                                                 Authority
                                                                                                                                                                                                                 for
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 purpose
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 presenting
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 BrioWave
                                                                                                                                                                                                                 solution
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 negotiating
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 feasibility
                                                                                                                                                                                                                 of
                                                                                                                                                                                                                 a
                                                                                                                                                                                                                 pilot
                                                                                                                                                                                                                 program
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | On
                                                                                                                                                                                                                 March
                                                                                                                                                                                                                 15-17
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 company
                                                                                                                                                                                                                 showcased
                                                                                                                                                                                                                 its
                                                                                                                                                                                                                 BrioWave
                                                                                                                                                                                                                 technology
                                                                                                                                                                                                                 at
                                                                                                                                                                                                                 the
                                                                                                                                                                                                                 Western
                                                                                                                                                                                                                 Pool
                                                                                                                                                                                                                 and
                                                                                                                                                                                                                 Spa
                                                                                                                                                                                                                 show
                                                                                                                                                                                                                 in
                                                                                                                                                                                                                 Long
                                                                                                                                                                                                                 Beach,
                                                                                                                                                                                                                 CA
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Critical
Accounting Estimates



This
discussion and analysis of our financial condition presented in this section is based upon our financial statements which have
been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial
statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of
assets, liabilities, revenue, costs and expenses, and related disclosures. We believe that the estimates, assumptions and judgments
involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore,
consider these to be our critical accounting policies. On an ongoing basis, we evaluate our estimates and judgments, including
those related to accrued expenses, allowance for accounts receivable, purchase price fair value allocation for business combinations,
estimates of depreciable lives and valuation of property and equipment, valuations of discounts on debt,  valuation of beneficial
conversion features in convertible debt, valuation and amortization periods of intangible assets, valuation of goodwill, valuation
of stock based compensation and the deferred tax valuation allowance. We based our estimates on historical experience and on various
other assumptions that we believe 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 under different assumptions or conditions.



Stock
Based Compensation



We
adopted ASC 718-20-10, Share Based Payment (formerly SFAS No. 123R) establishes the financial accounting and reporting standards
for stock-based compensation plans. As required by ASC 718-20-10, we recognize the cost resulting from all stock-based payment
transactions including shares issued under our stock option plans in the financial statements. Stock based compensation is measured
at fair value at the time of the grant.



Valuation
of Long-Lived and Intangible Assets and Goodwill



Pursuant
to the ASC 350-10-05 Goodwill and Other Intangible Assets (formerly SFAS 142 and 144) and the Impairment or Disposal of Long-lived
Assets, we assess the impairment of identifiable intangibles, long-lived assets and goodwill annually or whenever events or circumstances
indicate that the carrying value of these assets may not be recoverable. Factors we consider include and are not limited to the
following:



Significant
changes in performance relative to expected operating results



Significant
changes in the use of the assets or the strategy of our overall business



Significant
industry or economic trends



7







As
determined in accordance with the ASC, if the carrying amount of goodwill of a reporting unit exceeds its fair value, the impairment
loss is measured as the amount by which the carrying amount exceeds the fair market value of the assets. In accordance with the
ASC, in determining if impairment exists, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition
of these assets. The impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair market
value of the assets.



Revenue
Recognition



We
recognize revenue when the following criteria have been met: persuasive evidence of an arrangement exists, the fees are fixed
or determinable, no significant company obligations remain, and collection of the related receivable is reasonably assured.



The
company recognizes revenue in the same period in which they are incurred from its business activities when goods are transferred
or services rendered.  The company’s revenue generating process consists of the sale of its proprietary technology
or the rendering of professional services consisting of consultation and engineering relating types of activity within the industry. 
The company’s current billing process consists of generating invoices for the sale of its merchandise or the rendering of
professional services.  Typically, invoices are accepted by vendor and payment is made against the invoice within 60 days
upon receipt.



New
Accounting Pronouncements



See
Note 1 to our consolidated financial statements included in this report for discussion of recent accounting pronouncements.



Results
of Operations



We
are still a development stage company with limited revenues. During the fourth quarter 2011 the company did not record any revenues.



Revenue:



Our
revenue for the year ended December 31, 2011 decreased 4.5% to $23,325 from $24,425 for the year ended December 31, 2010. The
decrease was primarily caused by the company focusing on commercializing its first product for use in the Texas and Southern California
markets.



In
the future, we expect our revenue to grow as we are able to launch our products to the market place.



Operating
Expenses:



During
the year ended December 31, 2011 our operating expenses increased by approximately $254,090, an increase of 25.1% over the year
ended December 31, 2010. $196,000 of this increase related to product development services to implement software and programming
changes to our products. In addition, software license maintenance costs increased by approximately $34,000. Professional fees
decreased in 2011 by approximately $7,600 and our subcontracted services decreased by $148,199 in 2011 from 2010, representing
a decrease of 97%.



Compensation
and related costs include salaries and payroll taxes. This compensation expense for the year ended December 31, 2011 increased
by $74,485 from $254,104 to $328,589 for the year ended December 31, 2010 to December 31, 2011.



Advertising
expense primarily consists of expenses related to design, print and promotion of future products. The Advertising expense for
the year ended December 31, 2011 decreased to $607 from $11,700 on December 31, 2010.



The
net loss for the year ended December 31, 2011 was $1,379,285 loss per share basic and diluted was $0.05.



8







Liquidity
and Capital Resources



In
2011, we used $1,096,024 in cash for operations. The cash used consisted of our net loss $1,379,285 offset by certain larger non-cash
items including stock granted for services of $250,050, the write-off or our patents and trademarks for $62,633 and the recognition
of our derivative liability of $87,116.



In
2011, we were provided $1,324,666 of cash in financing activities including $1,318,751 received from the sale of common stock,
and $40,000 in loans.



In
2011, our investing activities used net cash of $10,000 mainly attributable to the purchase of a software license and we recognized
$1,500 from the sale of a vehicle.



To
remain operational through the next 12 months, we will need to improve our cash flows. To accomplish this, our management has
been focused on raising additional capital, developing distributors to resell BrioWave technology, and launching the first of
its products into the marketplace. If we are unable to improve our cash flow, we may need to raise additional funds through equity
or debt financings. If required, additional financing may not be available on terms that are favorable to us, if at all. Any equity
financing may be dilutive to our existing shareholders. If we are unsuccessful in our attempts to increase cash flows to cover
our expenditures or raise additional funds in a financing, we may not be able to remain operational over the next 12 months.



Forward-Looking
Statements



The
statements in this report relating to our future liquidity, expectations regarding revenue and cost of revenue, expectations regarding
growth in the Briowave product line relative to our other services, its results on our revenue are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. Additionally, words such as “expects,”
“anticipates,” “intends,” “believes,” “will” and similar words are used to identify
forward-looking statements.



The
results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and
risks that may cause actual results to differ materially from these forward-looking statements are contained in the Risk Factors
that follow. We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of
new information, future events or otherwise. For more information regarding some of the ongoing risks and uncertainties of our
business, see the Risk Factors and our other filings with the SEC.



RISK
FACTORS



There
are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually
occur, our business, financial condition or results of operation may be materially adversely affected. In such case, the trading
price of our common stock could decline and investors could lose all or part of their investment.



Risk
Factors Relating to Our Company



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 significant revenues to date. Our auditors have raised substantial doubt as to
our ability to continue as a going concern. In total, the business needs approximately $4,375,000 to fully implement our business
plan. At December 31, 2011 we had $254,137 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.



9







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:



| | ● | 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.



Because
we depend and will depend upon third parties with whom we have no signed contracts for components used in manufacturing our product
and for the manufacturing of our products, if these manufactures fail to perform or if we lose our relationships with these suppliers,
our revenues could be reduced.



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.



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.



10







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.



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 any assurance that these measures will
prove to be effective in protecting our intellectual properties. We also cannot give 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 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 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 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.



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 trends 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.



11







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 71.04% 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 90.96% 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 and 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.



ITEM
7A.  QUANTITATIVE AND QUALITATIVE DISCOURSES ABOUT MARKET RISK.



Not
applicable to smaller reporting companies.



ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



Our
financial statements are contained in pages F-1 through F-33, which appear at the end of this report.



ITEM
9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.



None.



ITEM
9A.  CONTROLS AND PROCEDURES.



Not
applicable.



ITEM
9A(T).  CONTROLS AND PROCEDURES.



Disclosure
Controls



We
carried out an evaluation required by Rule 15d-15 of the Securities Exchange Act of 1934, or the Exchange Act, under the supervision
and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in the Exchange Act Rule 15d-15(e)).



Disclosure
controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in an issuer’s
reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
SEC rules and forms and (ii) information is accumulated and communicated to management, including our Chief Executive Officer
and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.



12







The
evaluation of our disclosure controls and procedures included a review of our objectives and processes and effect on the information
generated for use in this report. This type of evaluation is done quarterly so that the conclusions concerning the effectiveness
of these controls can be reported in our periodic reports filed with the SEC. We intend to maintain these controls as processes
that may be appropriately modified as circumstances warrant.



Based
on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures
(as defined in Rule 15d-15(e) of the Exchange Act) are not effective in timely alerting them to material information which is
required to be included in our periodic reports filed with the SEC as of the end of the period covering this report.



Management’s
Report on Internal Control Over Financial Reporting.



Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rule 15d-15(f). Under the supervision and with the participation of our management, including our Principal
Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over
financial reporting as of December 31, 2011 based on the criteria set forth in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the criteria set
forth in Internal Control — Integrated Framework, our management concluded that our internal control over financial
reporting was not effective as of December 31, 2011.



We are undertaking
to improve our internal control over financial reporting and improve our financial reporting controls and procedures. A material
weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be
prevented or detected on a timely basis. As of December 31, 2011, we had identified the following material weaknesses which still
exist as of December 31, 2011 and through the date of this report:



As of December
31, 2011 and as of the date of this report, we did not maintain effective controls over the control environment. Specifically,
our Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial
expert as defined in Item 407(d)(5)(ii) of Regulation S-B.



Evaluation
of Disclosure Controls and Procedures



Our
management is responsible for establishing and maintaining disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports under the Securities Exchange Act of 1934 (the “Exchange Act”)
is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and
Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure
based closely on the definition of “disclosure controls and procedures “in Rule 15d-15(e) under the Exchange Act.
In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no
matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and
management necessarily was required to apply our judgment in evaluating the cost-benefit relationship of possible controls and
procedures.



At the end
of the period covered by this Annual Report, we carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation
of our disclosure controls and procedures. Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded
that, as of December 31, 2011 our disclosure controls and procedures were not effective to ensure that the information required
to be disclosed in our Exchange Act reports was recorded, processed, summarized, and reported on a timely basis.



13







Changes
in Internal Control Over Financial Reporting



There were
no changes in our internal control over financial reporting that occurred during our fiscal year 2011 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.



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



ITEM
9B.  OTHER INFORMATION.



None.



14







PART
III



ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATION GOVERNANCE.



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(s)
|--------------------------- |  | --- | -- | -----------
|Shawn
    Davis             |  |     | 42 |            
|Thomas Bianco               |  |     | 47 |            
|Paul Davis                  |  |     | 65 |            
|Timothy Smith               |  |     | 73 |            
|Steve Bailey                |  |     | 58 |            
|Shawn Steib                 |  |     | 29 |            
|Raymond Kwok Cheung
    Tai |  |     | 61 |            
|Huiyou Zhu                  |  |     | 51 |            



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. 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 to present.



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.



15







Huiyou
Zhu was initially engaged by the company in the capacity of consultant on January 30, 2011 to provide software engineering and
technical assistance on a pilot project ongoing in the state of Texas prior to accepting the key position of Chief Technology
Officer. Mr. Zhu’s software engineering abilities in wireless networking and overseas experience in manufacturing and product
development will be key assets to the company required to advance the technology and grow the company as we prepare to launch
the technology. Mr. Zhu is a solution specialist that brings over 18 years of product development and multidisciplinary skills
acquired from past engagements with renowned companies such as Motorola, Bank of America, McAfee, Panasonic, AMD, Webex Communications,
and ABB. Mr. Zhu specializes in embedded system development and high performance server and system development. Mr Zhu has a B.S.,
in Computer Science from Shanghai Jiao Tong University and an M.S., in Computer Science from Illinois Institute of Technology.



Family
Relationships among Officers and or Directors



Shawn Davis,
C.E.O/Director and Paul Davis, Vice President/Director are father and son.  Timothy Smith, Secretary is Shawn Davis’
father-in-law.  Steve Bailey is Shawn Steib’s father in law.



Committees
of the Board



We
expect our Board, in the future, to appoint an audit committee, nominating committee and compensation committee, and to adopt
a charter relative to each such committee. We intend to appoint such persons to committees of the Board as are expected to
be required to meet the corporate governance requirements imposed by a national securities exchange, although we are not required
to comply with such requirement until we elect to seek listing on a national securities exchange.



Code
of Ethics



Our
Board has adopted a Code of Ethics that applies to all of our employees, including our Chief Executive Officers and Chief
Financial Officer. Although not required, the Code of Ethics also applies to our Board. The Code provides written standards
that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical
handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate,
timely and understandable disclosure and compliance with laws, rules and regulations, including insider trading, corporate
opportunities and whistle-blowing or the prompt reporting of illegal or unethical behavior. We will provide a copy of the
Code of Ethics to any person without charge, upon request. The code of ethics is also posted on the company’s web site
at www.attunertd.com under the “Investor Relations” tab, located in the “Corporate
Information” section, entitled, “Code of Ethics for Senior Executives and Financial Officers”. The request
for a copy can be made in writing to Attune RTD, 3700 E Tachevah Dr, #B117Palm Springs, CA, 92262 Attention: Thomas
Bianco.



Shareholder
Communications



Although
we do not have a formal policy regarding communications with the Board, shareholders may communicate with the Board by writing
to us at Attune RTD 3700 E Tachevah Dr, #B117, Palm Springs, CA 92262, Attention: Thomas Bianco. Shareholders who would
like their submission directed to a member of the Board may so specify, and the communication will be forwarded, as appropriate.



Director
Independence



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.



Board
Structure



We
have chosen to combine the Chief Executive Officer and Board Chairman positions. We believe that this Board leadership structure
is the most appropriate for Attune RTD. Because we are a small company and do not have significant revenues, it is more efficient
to combine them.



16







Board
Assessment of Risk



Our
risk management function is overseen by our Board. Our management keeps our Board apprised of material risks and provides our
directors access to all information necessary for them to understand and evaluate how these risks interrelate, how they affect
Attune RTD, and how management addresses those risks. Mr. Davis, as our Chairman and Chief Executive Officer, and Mr. Bianco,
our Chief Financial Officer, work closely together with the Board once material risks are identified on how to best address such
risk. If the identified risk poses an actual or potential conflict with management, our directors may conduct risk assessment
analysis. Presently, the primary risks affecting Attune RTD are the lack of working capital and the inability to generate sufficient
revenues so that we have positive cash flow from operations. The Board focuses on these key risks at each meeting and actively
interfaces with management on seeking solutions.



Board
Diversity



While
we do not have a formal policy on diversity, our Board considers as one of the factors the diversity of the composition of our
Board and the skill set, background, reputation, type and length of business experience of our Board members as well as a particular
nominee’s contributions to that mix. Although there are many other factors, the Committee seeks to attract individuals with
knowledge of Internet marketing.



ITEM
11.  EXECUTIVE COMPENSATION.



The
following table reflects the compensation paid to our Chief Executive Officer and the two other executive officers serving at
the end of the last fiscal year whose compensation exceeded $100,000, who we refer to as our Named Executive Officers.



2011Summary
Compensation Table



|Name
    and Principal Position           |  | Year |  | Salary |         |  | Stock
    Awards |  |   | Option
    Awards |  |  | Total  | 
|----------------------------------------- |  | ---- |  | ------ | ------- |  | ---------------- |  | - | ----------------- |  |  | ------ | 
|(a)                                       |  | (b)  |  | ($)(c) |         |  | ($)(e)(1)        |  |   | ($)(f)(1)         |  |  | ($)(j) | 
|Shawn
    Davis                           |  | 2011 |  |        | 120,000 |  |                  |  | - |                   |  |  |        | 
|Chief Executive
    Officer               |  |      |  |        |         |  |                  |  |   |                   |  |  | -      | 
|Thomas Bianco’                            |  | 2011 |  |        | 120,000 |  |                  |  | - |                   |  |  |        | 
|Chief Financial
    Officer and Treasurer |  |      |  |        |         |  |                  |  |   |                   |  |  |        | 



Employment
Agreements



Effective
March 26, 2008, the Company established two employment arrangements by resolution of the Board of Directors with Shawn Davis our
chief executive officer and Thomas Bianco our 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, 2011, the Company owed its officers $120,068 based on the terms of the agreement.



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



The
following table sets forth the number of shares of our common stock beneficially owned as of March 26, 2012 by (i) those persons
known by us to be owners of more than 5% of our common stock, (ii) each director, (iii) our Named Executive Officers, and (iv)
all of our executive officers and directors as a group:





17











|Title of Class                    |  | Name and Address of Beneficial
        Owner                |  | Amount of Shares Beneficially Owned (1) |  | Percent 
(1) |  
|--------------------------------- |  | ----------------------------------------------------------- |  | --------------------------------------- |  | ------------ | -
|                                  |  |                                                             |  |                                         |  |              |  
|Directors and Executive Officers: |  |                                                             |  |                                         |  |              |  
|                                  |  |                                                             |  |                                         |  |              |  
|Common Stock                      |  | (1)(2)(3) Shawn Davis                                       |  | 6,039,281                               |  | 20.79        | %
|Common Stock                      |  | (1)(2)(3)Thomas Bianco                                      |  | 6,039,281                               |  | 20.79%       | %
|Common Stock                      |  | (1)Raymond Tai                                              |  | 3,145,714                               |  | 10.83%       | %
|Common Stock                      |  | (1)(2)(3)Paul Davis                                         |  | 600,000                                 |  | 2.07%        | %
|Common Stock                      |  | (1)(2)(3)Timothy Smith                                      |  | 500,000                                 |  | 1.72%        | %
|Common Stock                      |  | (1)Steve Bailey                                             |  | 500,000                                 |  | 1.72%        | %
|Common Stock                      |  | (1)Shawn Steib                                              |  | 400,000                                 |  | 1.38%        | %
|Common Stock                      |  | (1)*Huiyou Zhu                                              |  | 150,000                                 |  | 0.52%        | %
|                                  |  | All executive officers and directors as a group (8 persons) |  | 17,374,276                              |  | 59.82%       | %
|                                  |  |                                                             |  |                                         |  |              |  
|5% Shareholders:                  |  |                                                             |  |                                         |  |              |  
|                                  |  |                                                             |  |                                         |  |              |  
|Common Stock                      |  | Beacon Global, LLC                                          |  | 3,259,375                               |  | 11.20%       | %



———————

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



|(1) | Applicable percentages
                                                                     are based on 29,044,896 shares outstanding adjusted as required
                                                                     by rules of the SEC. Beneficial ownership is determined under
                                                                     the rules of the SEC and generally includes voting or investment
                                                                     power with respect to securities. Shares of common stock
                                                                     subject to options, warrants and convertible notes currently
                                                                     exercisable or convertible, or exercisable or convertible
                                                                     within 60 days after the date of this report are deemed outstanding
                                                                     for computing the percentage of the person holding such
                                                                     securities but are not deemed outstanding for computing the percentage
                                                                     of any other person. Unless otherwise indicated in the footnotes
                                                                     to this table, we believe that each of the shareholders named
                                                                     in the table has sole voting and investment power with respect
                                                                     to the shares of common stock indicated as beneficially owned
                                                                     by them.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | An
    executive officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



|(3) | A
    director.
|--- | ---------------



ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.



We
owe Shawn Davis and Thomas Bianco $60,034 respectively for accrued compensation.



ITEM
14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.



On January
14, 2011, our Board of Directors approved the engagement of M&K CPAs, PLLC (“M&K”) to serve as our principal
independent public accountant to audit our financial statements for the years ended December 31, 2011 and 2010 respectively. As
of December 31, 2011 there were no Audit fees billed by M&K. Audit fees billed by our principal independent public accountants
for services rendered for the audit of our annual financial statements and review of our quarterly financial statements included
in Form 10-Q for the last two years are presented below. Audit-related fees, tax fees, and other fees for services billed by our
principal independent public accountant during each of the last two fiscal years are also presented in the following table:



18







|               |  | 2011 |        |  | 2010 | 
|-------------- |  | ---- | ------ |  | ---- | 
|               |  | ($)  |        |  | ($)  | 
|M&K CPAs, PLCC |  |      |        |  |      | 
|Audit Fees (1) |  |      | 18,500 |  |      | 
|               |  |      |        |  |      | 
|Tax Fees       |  |      |        |  |      | 
|All Other Fees |  |      |        |  |      | 



(1)
Audit fees – these fees relate to the audits of our annual consolidated financial statements and the review of our interim
quarterly consolidated financial statements.



Our
Board has not adopted a procedure for pre-approval of all fees charged by our independent auditors. The Board approves the engagement
letter with respect to audit, tax, review services and other services.



|Exhibit |  |                                                   |  | Incorporated
    by Reference |  | Filed
    or Furnished
|------- |  | ------------------------------------------------- |  | ----------------------------- |  | ----------------------
|#       |  | Exhibit
    Description                           |  | Form                          |  | Date                  
|3       |  | Articles of Incorporation                         |  | S-1                           |  | 12/8/2009             
|        |  | First Amendment
    to Articles of Incorporation  |  |                               |  |                       
|        |  | Second Amendment
    to Articles of Incorporation |  |                               |  |                       
|        |  |                                                   |  |                               |  |                       
|10      |  | Shareholder Loan
    Documents                    |  |                               |  |                       
|        |  |                                                   |  |                               |  |                       
|3       |  | By-Laws of Attune
    RTD                         |  | S-1                           |  | 2/11/2010             
|3       |  | Name Change Amendment
    to Articles             |  |                               |  |                       
|        |  |                                                   |  |                               |  |                       
|3       |  | Name Change Amendment
    to Article              |  | S-1                           |  | 3/29/2010             
|10      |  | Property Lease                                    |  |                               |  |                       
|        |  |                                                   |  |                               |  |                       
|10      |  | Agreement USFI
    Marketing Communication        |  |                               |  |                       
|10      |  | Form of employee
    proprietary rights agreement |  |                               |  |                       
|10      |  | Promissory Note – Davis                           |  | S-1/A                         |  | 4/26/2010             
|10      |  | Promissory Note
    - Bianco                      |  |                               |  |                       
|        |  |                                                   |  |                               |  |                       
|10.1    |  | Agreement with
    Itron                          |  | 8K                            |  | 9/20/2010             
|10.2    |  | Agreement with
    TXU Energy Retail Company      |  |                               |  |                       
|10.3    |  | Letter of Intent                                  |  |                               |  |                       
|99.1    |  | Press Release                                     |  |                               |  |                       



———————

*Management
Compensatory Plan or Arrangement.

**The
confidential disclosure schedules are not filed in accordance with SEC Staff policy, but will be provided to the Staff upon request.
Certain material agreements contain representations and warranties, which are qualified by the following factors:



|(i) | the
    representations and warranties contained in any agreements filed with this report were made for the purposes of allocating
    contractual risk between the parties and not as a means of establishing facts;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(ii) | the
    agreement may have different standards of materiality than standards of materiality under applicable securities laws;
|---- | -----------------------------------------------------------------------------------------------------------------------------



|(iii) | the
    representations are qualified by a confidential disclosure schedule that contains nonpublic information that is not material
    under applicable securities laws;
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(iv) | facts
    may have changed since the date of the agreements; and
|---- | ----------------------------------------------------------------



|(v) | only
    parties to the agreements and specified third-party beneficiaries have a right to enforce the agreements.
|--- | ------------------------------------------------------------------------------------------------------------------



Notwithstanding
the above, any information contained in a schedule that would cause a reasonable investor (or that a reasonable investor would
consider important in making a decision) to buy or sell our common stock has been included. We have been further advised by our
counsel that in all instances the standard of materiality under the federal securities laws will determine whether or not information
has been omitted; in other words, any information that is not material under the federal securities laws may be omitted. Furthermore,
information which may have a different standard of materiality will nonetheless be disclosed if material under the federal securities
laws.



Copies
of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to
our shareholders who make a written request to Attune RD Holdings, Inc., 3700 E Tachevah Dr, #B117, Palm Springs, CA 92262,Attention:
Thomas Bianco.



19









SIGNATURES



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.



| | Attune
    RTD Holdings, Inc.
| | -----------------------------
| |                              
| | By:                          
| |                              
| |                              



Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.



|Signature             |  | Title                                                                                |  | Date             
|--------------------- |  | ------------------------------------------------------------------------------------ |  | -----------------
|                      |  |                                                                                      |  |                  
|/s/
    Thomas Bianco |  | Chief Financial
    Officer (Principal Financial Offer and Chief Accounting Officer) |  | November 15, 2012
|Thomas Bianco         |  |                                                                                      |  |                  
|                      |  |                                                                                      |  |                  
|/s/                   |  | Director                                                                             |  | November 15, 2012
|                      |  |                                                                                      |  |                  
|                      |  |                                                                                      |  |                  
|/s/                   |  | Director                                                                             |  | November 15, 2012



20













Report of Independent Registered Public
Accounting Firm



To the Board of Directors and Stockholders

Attune RTD

(A Development Stage Company)



We have
audited the accompanying balance sheets of Attune RTD (A Development Stage Company) as of December 31, 2011 and 2010, and the
related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. These financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.



We conducted
our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.



In our
opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Attune
RTD (A Development Stage Company) as of December 31, 2011 and 2010, and the results of its operations and cash flows for the periods
described above in conformity with accounting principles generally accepted in the United States of America.



The
accompanying financial statements have been prepared assuming that Attune RTD will continue as a going concern. As discussed in
Note 2 to the financial statements, Attune RTD has suffered recurring losses from operations, has a working capital deficit and
is dependent on financing to continue operations. These issues raise substantial doubt about the Company’s ability to continue
as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements
do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification
of liabilities that may result should the Company be unable to continue as a going concern.



|/s/
    M&K CPAS, PLLC | 
|---------------------- | 
|www.mkacpas.com        | 
|Houston, Texas         | 
|March 30, 2012         | 



21







Attune RTD

(a development stage company)

Balance Sheets



|                                                                                                          |  | December 31, 2011 |            |   | December 31, 2010 |  
|--------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | -
|Assets                                                                                                    |  |                  
|                                                                                                          |  |                   |            |   |                   |  
|Current Assets                                                                                            |  |                   |            |   |                   |  
|Cash                                                                                                      |  | $                 | 254,137    |   |                   | $
|Accounts Receivable, net                                                                                  |  |                   | 9,783      |   |                   |  
|Prepaid Expenses                                                                                          |  |                   | 2,706      |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Total Current Assets                                                                                      |  |                   | 266,626    |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Property and Equipment, net                                                                               |  |                   | 107,211    |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Other Assets                                                                                              |  |                   |            |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Deferred Patent Costs, net                                                                                |  |                   | -          |   |                   |  
|Deferred Financing Costs                                                                                  |  |                   | 1,795      |   |                   |  
|Trademark                                                                                                 |  |                   | -          |   |                   |  
|Software License, net                                                                                     |  |                   | 97,725     |   |                   |  
|Security Deposit                                                                                          |  |                   | 1,800      |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Total Other Assets                                                                                        |  |                   | 101,320    |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Total Assets                                                                                              |  | $                 | 475,157    |   |                   | $
|                                                                                                          |  |                   |            |   |                   |  
|Liabilities and Stockholders’ (Deficit)                                                                   |  |                   |            |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Current Liabilities                                                                                       |  |                   |            |   |                   |  
|Accounts Payable                                                                                          |  | $                 | 132,324    |   |                   | $
|Accrued Salaries                                                                                          |  |                   | 120,068    |   |                   |  
|Accrued Expenses                                                                                          |  |                   | 844        |   |                   |  
|Liability to Guarantee Equity Value                                                                       |  |                   | 90,980     |   |                   |  
|Capital lease obligation                                                                                  |  |                   | 1,932      |   |                   |  
|Convertible Note Payable- net of discount of $31,123 and $0 at December 31, 2011 and 2010, respectively   |  |                   | 11,377     |   |                   |  
|Current Portion Long-term debt                                                                            |  |                   | 42,349     |   |                   |  
|Derivative Liability                                                                                      |  |                   | 121,546    |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Total Current Liabilities                                                                                 |  |                   | 521,420    |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Long Term Liabilities                                                                                     |  |                   |            |   |                   |  
|Long Term Debt - less current portion                                                                     |  |                   | 152,770    |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Total Liabilities                                                                                         |  |                   | 674,190    |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Commitments and Contingencies (See Note 9)                                                                |  |                   |            |   |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Stockholders’ (Deficit)                                                                                   |  |                   |            |   |                   |  
|Class B Participating Cumulative Preferred Super voting Stock, $0.0166 par value;                         |  |                   | 16,600     |   |                   |  
|1,000,000 shares authorized; 1,000,000 issued and outstanding at December 31, 2011 and 2010, respectively
|Class A Common Stock, $0.0166 par value; 59,000,000 shares authorized;                                    |  |                   | 481,548    |   |                   |  
|29,044,896 and 24,519,509 shares issued and outstanding at December 31, 2011 and 2010, respectively       |  |                   |            |   |                   |  
|Additional Paid-in Capital                                                                                |  |                   | 3,229,233  |   |                   |  
|Deficit accumulated during development stage                                                              |  |                   | (3,926,414 | ) |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Total Stockholders’ (Deficit)                                                                             |  |                   | (199,033   | ) |                   |  
|                                                                                                          |  |                   |            |   |                   |  
|Total Liabilities and Stockholders’ (Deficit)                                                             |  | $                 | 475,157    |   |                   | $



F-1







Attune RTD

(a development stage company)

Statements of Operations



|                                                      |  |                   |            |   |                   |   |            | Period from 
July 14, 2007       | 
|----------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | - | ---------- | -------------------------------- | 
|                                                      |  | Year Ended        |            |   | Year Ended        |   |            | (Inception of Development Stage) | 
|                                                      |  | December 31, 2011 |            |   | December 31, 2010 |   |            | to December 31, 2011 (uaudited)  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Revenues                                              |  | $                 | 23,325     |   |                   | $ | 24,425     |                                  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Operating Expenses                                    |  |                   |            |   |                   |   |            |                                  | 
|Advertising and Promotions                            |  |                   | 607        |   |                   |   | 11,700     |                                  | 
|Contributed Services                                  |  |                   | -          |   |                   |   | -          |                                  | 
|Depreciation Expense                                  |  |                   | 18,924     |   |                   |   | 3,532      |                                  | 
|Legal Expense                                         |  |                   | 49,145     |   |                   |   | 45,961     |                                  | 
|Marketing Expense                                     |  |                   | 21,940     |   |                   |   | 116,292    |                                  | 
|Payroll Expense                                       |  |                   | 328,589    |   |                   |   | 254,104    |                                  | 
|Product Development                                   |  |                   | 221,958    |   |                   |   | 25,855     |                                  | 
|Professional Fees                                     |  |                   | 55,809     |   |                   |   | 63,457     |                                  | 
|Rent Expense                                          |  |                   | 16,800     |   |                   |   | 20,301     |                                  | 
|Research and Development                              |  |                   | -          |   |                   |   | -          |                                  | 
|Subcontracted Services                                |  |                   | 5,000      |   |                   |   | 153,199    |                                  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Other Operating Expenses                              |  |                   | 545,828    |   |                   |   | 316,108    |                                  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Total Operating Expenses                              |  |                   | 1,264,600  |   |                   |   | 1,010,510  |                                  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Loss from Operations                                  |  |                   | (1,241,275 | ) |                   |   | (986,085   | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Other income (expense)                                |  |                   |            |   |                   |   |            |                                  | 
|Gain on asset theft, net                              |  |                   | -          |   |                   |   | -          |                                  | 
|Change in Fair Value-Derivative                       |  |                   | (87,116    | ) |                   |   | -          |                                  | 
|Impairment of Patent and Trademarks                   |  |                   | (62,634    | ) |                   |   | -          |                                  | 
|Interest Expense                                      |  |                   | (11,467    | ) |                   |   | (389       | )                                | 
|Interest Income                                       |  |                   | 173        |   |                   |   | 1          |                                  | 
|(Loss) Gain on Debt conversion                        |  |                   | 25,000     |   |                   |   | (49,615    | )                                | 
|Income Tax Expense                                    |  |                   | (1,966     | ) |                   |   | (850.00    | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Total Other income (expense)                          |  |                   | (138,010   | ) |                   |   | (50,853    | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Net Loss                                              |  |                   | (1,379,285 | ) |                   |   | (1,036,938 | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Preferred stock dividends                             |  |                   | (20,250    | ) |                   |   | (20,250    | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Net loss applicable to common stock                   |  | $                 | (1,399,535 | ) |                   | $ | (1,057,188 | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Net loss per common share applicable to common stock: |  |                   |            |   |                   |   |            |                                  | 
|Basic and diluted                                     |  | $                 | (0.05      | ) |                   | $ | (0.05      | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Weighted average number of common shares outstanding: |  |                   |            |   |                   |   |            |                                  | 
|Basic and diluted                                     |  |                   | 28,854,490 |   |                   |   | 22,799,345 |                                  | 



F-2







Attune RTD

(a development stage company)

Statements of Changes in Stockholders’
Equity (Deficit)

From July 14, 2007 (Inception of Development
Stage) to December 31, 2011



|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  | Deficit Accumulated |   |         |                 | 
|------------------------------------------------------------------------------ |  | ------------------------- | --------- |  | ---------------------- | - | ------ | ---------- |  |  | ----------- |  |  | --------------- | ------- |  | ------------------- | - | ------- | --------------- | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  | During              |   |         | Total           | 
|                                                                               |  | Preferred Stock - Class B |           |  | Common Stock - Class A |   |        | Additional |  |  | Development |  |  | Stockholders’   |        
|                                                                               |  | Shares                    |           |  | Amount                 |   |        | Shares     |  |  | Amount      |  |  | Paid-in Capital |         |  | Stage               |   |         | Equity(Deficit) | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Balance July 14, 2007 (Inception of Development Stage)                         |  |                           | -         |  |                        | $ | -      |            |  |  | -           |  |  | $               | -       |  |                     | $ | -       |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Issuance of common stock for cash                                              |  |                           | 133,333   |  |                        |   | 2,213  |            |  |  | 224,000     |  |  |                 | 3,718   |  |                     |   | 75,069  |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Offering Costs                                                                 |  |                           | -         |  |                        |   | -      |            |  |  | -           |  |  |                 | -       |  |                     |   | (2,500  | )               | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Issuance of stock for services                                                 |  |                           | 866,667   |  |                        |   | 14,387 |            |  |  | 14,050,000  |  |  |                 | 233,230 |  |                     |   | 53,213  |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Valuation of officer’s contributed services                                    |  |                           | -         |  |                        |   | -      |            |  |  | -           |  |  |                 | -       |  |                     |   | 111,781 |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Net loss, July 14, 2007, (Inception of Development Stage) to December 31, 2007 |  |                           | -         |  |                        |   | -      |            |  |  | -           |  |  |                 | -       |  |                     |   | -       |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Balance at 
December 31, 2007                                                  |  |                           | 1,000,000 |  |                        | $ | 16,600 |            |  |  | 14,274,000  |  |  | $               | 236,948 |  |                     | $ | 237,563 |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Issuance of common stock for cash                                              |  |                           | -         |  |                        |   | -      |            |  |  | 2,352,803   |  |  |                 | 39,057  |  |                     |   | 321,193 |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Offering costs                                                                 |  |                           | -         |  |                        |   | -      |            |  |  | -           |  |  |                 | -       |  |                     |   | (1,500  | )               | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Issuance of stock for services                                                 |  |                           | -         |  |                        |   | -      |            |  |  | 169,000     |  |  |                 | 2,805   |  |                     |   | 31,725  |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Issuance of stock for debt settlement                                          |  |                           | -         |  |                        |   | -      |            |  |  | 100,000     |  |  |                 | 1,660   |  |                     |   | 13,340  |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Net loss, year ended December 31, 2008                                         |  |                           | -         |  |                        |   | -      |            |  |  | -           |  |  |                 | -       |  |                     |   | -       |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Balance at
 December 31, 2008                                                  |  |                           | 1,000,000 |  |                        | $ | 16,600 |            |  |  | 16,895,803  |  |  | $               | 280,470 |  |                     | $ | 602,321 |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Issuance of common stock for cash                                              |  |                           | -         |  |                        |   | -      |            |  |  | 3,688,438   |  |  |                 | 61,228  |  |                     |   | 376,207 |                 | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Offering costs                                                                 |  |                           | -         |  |                        |   | -      |            |  |  | -           |  |  |                 | -       |  |                     |   | (7,000  | )               | 
|                                                                               |  |                           |           |  |                        |   |        |            |  |  |             |  |  |                 |         |  |                     |   |         |                 | 
|Issuance of stock for services                                                 |  |                           | -         |  |                        |   | -      |            |  |  | 66,333      |  |  |                 | 1,101   |  |                     |   | 10,049  |                 | 







F-3







|Issuance of stock for debt settlement              |  |  | -         |  |  |   | -      |  |  |  | 788,571    |   |  |   | 13,090  |   |  |   | 105,196   |   |  |   | -          |   |  |   | 118,286    |  
|-------------------------------------------------- |  |  | --------- |  |  | - | ------ |  |  |  | ---------- | - |  | - | ------- | - |  | - | --------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Net loss, year ended December 31, 2009             |  |  | -         |  |  |   | -      |  |  |  | -          |   |  |   | -       |   |  |   | -         |   |  |   | (645,946   | ) |  |   | (645,946   | )
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Balance at 
December 31, 2009                      |  |  | 1,000,000 |  |  | $ | 16,600 |  |  |  | 21,439,145 |   |  | $ | 355,889 |   |  | $ | 1,086,773 |   |  | $ | (1,510,191 | ) |  | $ | (50,929    | )
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Issuance of common stock for cash                  |  |  |           |  |  |   |        |  |  |  | 2,138,610  |   |  |   | 35,402  |   |  |   | 406,779   |   |  |   |            |   |  |   | 442,181    |  
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   | -          |  
|Issuance of stock for services                     |  |  |           |  |  |   |        |  |  |  | 1,076,000  |   |  |   | 17,708  |   |  |   | 323,297   |   |  |   |            |   |  |   | 341,005    |  
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   | -          |  
|Issuance of stock for debt settlement              |  |  |           |  |  |   |        |  |  |  | 247,249    |   |  |   | 4,104   |   |  |   | 92,853    |   |  |   |            |   |  |   | 96,957     |  
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   | -          |  
|Redemption of Stock by Officers for Loan Repayment |  |  |           |  |  |   |        |  |  |  | (521,439   | ) |  |   | (8,656  | ) |  |   | (167,169  | ) |  |   |            |   |  |   | (175,825   | )
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   | -          |  
|Stock issued to Shareholder                        |  |  |           |  |  |   |        |  |  |  | 139,944    |   |  |   | 2,323   |   |  |   | (2,323    | ) |  |   |            |   |  |   | -          |  
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   | -          |  
|Net loss, year ended December 31, 2010             |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   | (1,036,938 | ) |  |   | (1,036,938 | )
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Balance at
 December 31, 2010                      |  |  | 1,000,000 |  |  | $ | 16,600 |  |  |  | 24,519,509 |   |  | $ | 406,770 |   |  | $ | 1,740,210 |   |  | $ | (2,547,129 | ) |  | $ | (383,549   | )
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Issuance of common stock for cash                  |  |  | -         |  |  |   | -      |  |  |  | 6,349,750  |   |  |   | 105,063 |   |  |   | 1,213,688 |   |  |   | -          |   |  |   | 1,318,751  |  
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Issuance of stock for services                     |  |  | -         |  |  |   | -      |  |  |  | 965,000    |   |  |   | 16,019  |   |  |   | 234,031   |   |  |   | -          |   |  |   | 250,050    |  
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Stock Redemmed                                     |  |  | -         |  |  |   | -      |  |  |  | (29,988    | ) |  |   | (498    | ) |  |   | (4,502    | ) |  |   | -          |   |  |   | (5,000     | )
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Stock Rescinded from prior investment              |  |  | -         |  |  |   | -      |  |  |  | (2,759,375 | ) |  |   | (45,806 | ) |  |   | 45,806    |   |  |   | -          |   |  |   | -          |  
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Net loss, year ended December 31, 2011             |  |  | -         |  |  |   | -      |  |  |  | -          |   |  |   | -       |   |  |   | -         |   |  |   | (1,379,285 | ) |  |   | (1,379,285 | )
|                                                   |  |  |           |  |  |   |        |  |  |  |            |   |  |   |         |   |  |   |           |   |  |   |            |   |  |   |            |  
|Balance at
 December 31, 2011                      |  |  | 1,000,000 |  |  | $ | 16,600 |  |  |  | 29,044,896 |   |  | $ | 481,548 |   |  | $ | 3,229,233 |   |  | $ | (3,926,414 | ) |  | $ | (199,033   | )



F-4







Attune RTD

(a development stage company)

Statements of Cash Flows



|                                                                            |  | Year Ended   |            |   | Period from
 July 14, 2007       |  
|--------------------------------------------------------------------------- |  | ------------ | ---------- | - | -------------------------------- | -
|                                                                            |  | December 31, |            |   | (Inception of Development Stage) |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                       |  |              | 2011       |   |                                  |  
|Net Loss                                                                    |  | $            | (1,379,285 | ) |                                  | $
|Adjustments to Reconcile Net loss to Net Cash Used in Operating Activities: |  |              |            |   |                                  |  
|Class A Common stock and preferred stock granted for services               |  |              | 250,050    |   |                                  |  
|Contributed Capital                                                         |  |              |            |   |                                  |  
|Depreciation and Amortization                                               |  |              | 45,752     |   |                                  |  
|Interest expense on conversion to Class A common stock                      |  |              |            |   |                                  |  
|Loss on conversions of debt to Class A common stock                         |  |              | -          |   |                                  |  
|Gain on asset theft, net                                                    |  |              |            |   |                                  |  
|Impairment of Patent and Trademarks                                         |  |              | 62,633     |   |                                  |  
|Change in Fair Value-Derivative                                             |  |              | 87,116     |   |                                  |  
|Bad Debt Expense                                                            |  |              | 9,000      |   |                                  |  
|Gain on foregiveness of debt                                                |  |              | (25,000    | ) |                                  |  
|Changes in Assets and Liabilities:                                          |  |              |            |   |                                  |  
|Accounts Receivable                                                         |  |              | 9,639      |   |                                  |  
|Prepaid Expenses                                                            |  |              | (2,706     | ) |                                  |  
|Security Deposit                                                            |  |              | -          |   |                                  |  
|Accounts Payable                                                            |  |              | (27,594    | ) |                                  |  
|Accrued Expenses                                                            |  |              | (126,334   | ) |                                  |  
|Deferred Financing Costs                                                    |  |              | 705        |   |                                  |  
|Liability to Guarantee Equity Value                                         |  |              | -          |   |                                  |  
|                                                                            |  |              |            |   |                                  |  
|NET CASH USED IN OPERATING ACTIVITIES                                       |  |              | (1,096,024 | ) |                                  |  
|                                                                            |  |              |            |   |                                  |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                       |  |              |            |   |                                  |  
|Purchase of Equipment                                                       |  |              | -          |   |                                  |  
|Deferred Patent costs                                                       |  |              | -          |   |                                  |  
|Trademark costs                                                             |  |              | -          |   |                                  |  
|Loans receivable from Officers                                              |  |              | -          |   |                                  |  
|Insurance proceeds on asset theft                                           |  |              | -          |   |                                  |  
|Cash received for sale of fixed assets                                      |  |              | 1,500      |   |                                  |  
|Purchase of Software License                                                |  |              | (11,500    | ) |                                  |  
|                                                                            |  |              |            |   |                                  |  
|NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                         |  |              | (10,000    | ) |                                  |  
|                                                                            |  |              |            |   |                                  |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                       |  |              |            |   |                                  |  
|Sale of Class A - Common Stock                                              |  |              | 1,318,751  |   |                                  |  
|Offering costs related to the Sale of Class A - Common Stock                |  |              | -          |   |                                  |  
|Sale of Class B - Preferred Stock                                           |  |              | -          |   |                                  |  
|Principal Payments on Capital Lease Obligations                             |  |              | -          |   |                                  |  
|Loan Payable to Principal Stockholder                                       |  |              | -          |   |                                  |  
|Repayment of Loan Payable to Principal Stockholder                          |  |              | -          |   |                                  |  
|Borrowings on Debt                                                          |  |              | 40,000     |   |                                  |  
|Principal payment on truck loans                                            |  |              | (9,540     | ) |                                  |  
|Principal payments on Software Licensing                                    |  |              | (19,545    | ) |                                  |  
|Cash Paid for Redemption of Stock                                           |  |              | (5,000     | ) |                                  |  
|                                                                            |  |              |            |   |                                  |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                   |  |              | 1,324,666  |   |                                  |  



F-5







|NET INCREASE (DECREASE) IN CASH                                                                                    |  |   | 218,642 |  |  |   | (71,001 | ) |  |   | 254,137 | 
|------------------------------------------------------------------------------------------------------------------ |  | - | ------- |  |  | - | ------- | - |  | - | ------- | 
|                                                                                                                   |  |   |         |  |  |   |         |   |  |   |         | 
|CASH AT BEGINNING OF YEAR                                                                                          |  |   | 35,495  |  |  |   | 106,496 |   |  |   | -       | 
|                                                                                                                   |  |   |         |  |  |   |         |   |  |   |         | 
|CASH AT END OF YEAR                                                                                                |  | $ | 254,137 |  |  |   | 35,495  |   |  | $ | 254,137 | 
|                                                                                                                   |  |   |         |  |  |   |         |   |  |   |         | 
|Supplemental Disclosure of Cash Flow Information                                                                   |  |   |         |  |  |   |         |   |  |   |         | 
|Cash paid during the period:                                                                                       |  |   |         |  |  |   |         |   |  |   |         | 
|Interest Expense                                                                                                   |  | $ | 11,467  |  |  | $ | 389     |   |  | $ | 13,534  | 
|Income Tax                                                                                                         |  | $ | 1,966   |  |  | $ | 850     |   |  | $ | 2,816   | 
|                                                                                                                   |  |   |         |  |  |   |         |   |  |   |         | 
|Supplemental Disclosure of Non-Cash Investing and Financing Activities                                             |  |   |         |  |  |   |         |   |  |   |         | 
|Conversion of a Vendor Liability into Shares of Class A Common Stock                                               |  | $ | 25,000  |  |  | $ | 39,272  |   |  | $ | 40,000  | 
|Capital Lease Obligation Recorded as Property and Equipment                                                        |  | $ | -       |  |  | $ | -       |   |  | $ | 7,058   | 
|Conversion of a shareholder loan into shares of Class A common stock                                               |  | $ | -       |  |  | $ | -       |   |  | $ | 55,200  | 
|Reclassification of equity to liability to guarantee equity value due to price guarantee upon conversion           |  | $ | -       |  |  | $ | 35,000  |   |  | $ | 70,000  | 
|Reclassification of accounts payable to liability to guarantee equity value due to price guarantee upon conversion |  | $ | -       |  |  | $ | 24,000  |   |  | $ | 48,980  | 
|Issunace of Class A Common Stock for settlement of Debt                                                            |  | $ | -       |  |  | $ | -       |   |  | $ | -       | 
|Redemption of stock by officers for loan repayment                                                                 |  | $ | -       |  |  | $ | 175,825 |   |  | $ | 175,828 | 
|Capitalization of Deferred Financing Costs                                                                         |  | $ | 2,500   |  |  | $ | -       |   |  | $ | 2,500   | 
|Capitalizaiton of Derivative Laibility                                                                             |  | $ | -       |  |  | $ | -       |   |  | $ | -       | 
|Financing of Software costs                                                                                        |  | $ | 117,270 |  |  | $ | -       |   |  | $ | 117,270 | 
|Financing of Truck Purchase                                                                                        |  | $ | 114,190 |  |  | $ | -       |   |  | $ | 114,190 | 



F-6









ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



| | 1. | NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
| | -- | ------------------------------------------------------------------------------------------



NATURE OF OPERATIONS AND BASIS OF PRESENTATION



The Company was incorporated on December
19, 2001 under the name Catalyst Set Corporation and was dormant until July 14, 2007. On September 7, 2007, the Company changed
its name to Interfacing Technologies, Inc. On March 24, 2008, the name was changed to Attune RTD.



Attune RTD (“The Company”,
“us”, “we”, “our”) was formed in order to provide developed technology related to the operations
of energy efficient electronic systems such as swimming pool pumps, sprinkler controllers and heating and air conditioning controllers
among others.



The Company is presented as in the development
stage from July 14, 2007 (Inception of Development Stage) through December 31, 2011. To-date, the Company’s business activities
during development stage have been corporate formation, raising capital and the development and patenting of its products with
the hopes of entering the commercial marketplace in the near future.



USE OF ESTIMATES



The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates. Significant estimates in the accompanying financial statements include the estimates of depreciable
lives and valuation of property and equipment, allowances for losses on loans receivable, valuation of deferred patent costs, valuation
of equity based instruments issued for other than cash, valuation of officer’s contributed services, and the valuation allowance
on deferred tax assets.



The company recognizes expenses in the same period in which
they are incurred. The company recognizes revenue in the same period in which they are incurred from its business activities when
goods are transferred or services rendered. The company’s revenue generating process consists of the sale of its proprietary
technology or the rendering of professional services consisting of consultation and engineering relating types of activity within
the industry. The company’s current billing process consists of generating invoices for the sale of its merchandise or the
rendering of professional services. Typically, invoices are accepted by vendor and payment is made against the invoice within 60
days upon receipt.



CASH AND CASH EQUIVALENTS



For the purposes of the statements of
cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased
to be cash equivalents. There were no cash equivalents at December 31, 2011 or 2010, respectively.



PROPERTY AND EQUIPMENT



Property and equipment is recorded at
cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of five
years. Expenditures for additions and improvements are capitalized while maintenance and repairs are expensed as incurred.



F-7







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



REVENUE RECOGNITION



We recognize revenue when the following
criteria have been met: persuasive evidence of an arrangement exists, the fees are fixed or determinable, no significant company
obligations remain, and collection of the related receivable is reasonably assured.



The company recognizes revenue in the
same period in which they are incurred from its business activities when goods are transferred or services rendered. The company’s
revenue generating process consists of the sale of its proprietary technology or the rendering of professional services consisting
of consultation and engineering relating types of activity within the industry. The company’s current billing process consists
of generating invoices for the sale of its merchandise or the rendering of professional services. Typically, invoices are accepted
by vendor and payment is made against the invoice within 60 days upon receipt.



Revenues for the year end December 31,
2011 were concentrated solely from one customer.



LOANS RECEIVABLE FROM OFFICERS



Loans receivable consist of monies loaned
to our officers pursuant to loan agreements. The Company evaluates the loans for collectability and establishes an allowance for
losses as necessary. The Company charges off loans receivable against any allowance as determined by the Company. Under Sarbanes
Oxley, receivables from officers are prohibited, hence redemption of the loans in January 2010. As of December 31, 2011 there are
no officer loans present.



DEFERRED PATENT COSTS AND TRADEMARK



Patent costs are stated at cost (inclusive
of perfection costs) and will be reclassified to intangible assets and amortized on a straight-line basis over the estimated future
periods to be benefited (twenty years) if and once the patent has been granted by the United States Patent and Trademark office
(“USPTO”). The Company will write-off any currently capitalized costs for patents not granted by the USPTO. Currently,
the Company has four patents pending with the USPTO.



Trademark costs are capitalized on our balance sheet during
the period such costs are incurred. The trademark is determined to have an indefinite useful life and is not amortized until such
useful life is determined no longer indefinite. The trademark is reviewed for impairment annually. On December 31, 2011, the company
evaluated and fully impaired all patents and trademarks due to uncertainty regarding funding of future cost.



IMPAIRMENT OF LONG-LIVED ASSETS



The Company accounts for long-lived
assets in accordance with “Accounting for the Impairment or Disposal of Long-Lived Assets” (ASC 360-10). This statement
requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount
of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell.



In December 2011, the Company assessed
its patents and trademarks and based on uncertainty of future funding and commercialization the Company recognized a loss on its
trademark and patents in the amount of $62,633, the carrying value at the time of impairment.



SOFTWARE LICENSE



The Company capitalized its purchase of a software license
in March 2011. The license is being amortized over 60 months following the straight-line method and included in Other Assets on
the balance sheet in accordance to ASC 350. During the year ended December 31, 2011, the company recorded $19,545 of amortization
expense related to the license.



F-8







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



ACCOUNTING FOR DERIVATIVES



The Company evaluates its convertible
instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify
as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting
treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In
the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as
other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion
date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become
subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification
date.



We analyzed the derivative financial instruments (the Convertible
Note and tainted Warrant), in accordance with ASC 815. The objective is to provide guidance for determining whether an equity-linked
financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception which would
enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument
that falls within the scope of ASC 815-40-05 “Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock.
A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted
for as a liability. There is a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s
own stock. First, the instrument’s contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the
instrument’s settlement provisions.



The Company utilized multinomial lattice models that value
the derivative liability within the notes based on a probability weighted discounted cash flow model.



The Company utilized the fair valuestandard set forth
by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred)
or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.



RESEARCH AND DEVELOPMENT



In accordance generally accepted accounting
principles (ASC 730-10), expenditures for research and development of the Company’s products are expensed when incurred,
and are included in operating expenses.



ADVERTISING



The Company conducts advertising for
the promotion of its products and services. In accordance with generally accepted accounting principles (ASC 720-35), advertising
costs are charged to operations when incurred; such amounts aggregated $607 and $11,700 for the years ended December 31, 2011 and
2010, respectively.



STOCK-BASED COMPENSATION



Compensation expense associated with
the granting of stock based awards to employees and directors and non-employees is recognized in accordance with generally accepted
accounting principles (ASC 718-20) which requires companies to estimate and recognize the fair value of stock-based awards to employees
and directors. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite
service periods using the straight-line attribution method.



INCOME TAXES



The Company accounts for income taxes
pursuant to the provisions of SFAS No. 109, “Accounting for Income Taxes” (ASC 740-10), which requires, among other
things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition
of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts
and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which
management believes it is more likely than not that the net deferred asset will not be realized.



Additionally, the Company adopted the
provisions of the FASB’s Financial Interpretation Number 48 (FIN. 48) (ASC 740-10),“Accounting for Uncertain
Income Tax Positions”. When tax returns are filed, it is highly certain that some positions taken would be sustained
upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the
amount of the position that would be ultimately sustained. In accordance with the guidance of FIN 48, the benefit of a tax position
is recognized in the financial statements in the period during which, based on all available evidence, management believes it is
more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes,
if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not
recognition threshold are measured as the largest amount of tax benefit that is more than fifty percent likely of being realized
upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds
the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance
sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company
believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability
for unrecognized tax benefits. As of December 31, 2011, tax years 2007, 2008, 2009 and 2010 remain open for IRS audit. The Company
has received no notice of audit from the Internal Revenue Service for any of the open tax years.



F-9







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



The Company has also adopted FASB Staff
Position FIN 48-1, “Definition of Settlement in FASB Interpretation No. 48”, (“FSP FIN 48-1”) (ASC 740-10),
which was issued on May 2, 2007. FSP FIN 48-1 amends FIN 48 to provide guidance on how an entity should determine whether a tax
position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term “effectively
settled” replaces the term “ultimately settled” when used to describe recognition, and the terms “settlement”
or “settled” replace the terms “ultimate settlement” or “ultimately settled” when used to describe
measurement of a tax position under FIN 48. FSP FIN 48-1 clarifies that a tax position can be effectively settled upon the completion
of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an
entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained
based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of FSP FIN 48-1 did
not have an impact on the accompanying financial statements.



FAIR VALUE OF FINANCIAL INSTRUMENTS



The carrying amounts of the Company’s
financial instruments, including cash, loans receivable and current liabilities, approximate fair value because of their short
maturities. Based upon the Company’s estimate of its current incremental borrowing rate for loans with similar terms and
average maturities, the carrying amounts of loans payable, and capital lease obligations approximate fair value. The Company adopted
the provisions of ASC 820 on January 1, 2008.



BASIC AND DILUTED NET LOSS PER COMMON
SHARE



Basic net loss per share is computed
by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common
share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive,
potential common shares outstanding during the period. Potentially dilutive securities consist of the incremental common shares
issuable upon exercise of common stock equivalents such as stock options and convertible debt instruments. Potentially dilutive
securities are excluded from the computation if their effect is anti-dilutive. As of December 31, 2011 and 2010, there were no
potentially dilutive securities. As a result, the basic and diluted per share amounts for all periods presented are identical.



NEW ACCOUNTING PRONOUNCEMENTS



In October 2009, the FASB issued an amendment to the accounting
standards related to certain revenue arrangements that include software elements. This standard clarifies the existing accounting
guidance such that tangible products that contain both software and non-software components that function together to deliver the
product’s essential functionality, shall be excluded from the scope of the software revenue recognition accounting standards.
Accordingly, sales of these products may fall within the scope of other revenue recognition standards or may now be within the
scope of this standard and may require an allocation of the arrangement consideration for each element of the arrangement. This
standard will become effective on January 1, 2011.



In October 2009, FASB issued an amendment to the accounting
standards related to the accounting for revenue in arrangements with multiple deliverables including how the arrangement consideration
is allocated among delivered and undelivered items of the arrangement. Among the amendments, this standard eliminated the use of
the residual method for allocating arrangement considerations and requires an entity to allocate the overall consideration to each
deliverable based on an estimated selling price of each individual deliverable in the arrangement in the absence of having vendor-specific
objective evidence or other third party evidence of fair value of the undelivered items. This standard also provides further guidance
on how to determine a separate unit of accounting in a multiple-deliverable revenue arrangement and expands the disclosure requirements
about the judgments made in applying the estimated selling price method and how those judgments affect the timing or amount of
revenue recognition. This standard, for which the Company is currently assessing the impact, will become effective on January 1,
2011.



In January 2010, the FASB issued an amendment to ASC 820,
Fair Value Measurements and Disclosure, to require reporting entities to separately disclose the amounts and business rationale
for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding
purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard, for which the Company
is currently assessing the impact, is effective for interim and annual reporting periods beginning after December 15, 2009 with
the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective
for fiscal years beginning after December 15, 2010.

In January 2010, the FASB issued an
amendment to ASC 505, Equity, where entities that declare dividends to shareholders that may be paid in cash or shares at the election
of the shareholders are considered to be a share issuance that is reflected prospectively in EPS, and is not accounted for as a
stock dividend. This standard is effective for interim and annual periods ending on or after December 15, 2009 and is to be applied
on a retrospective basis. The adoption of this standard is not expected to have a significant impact on the Company’s financial
statements



F-10







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



In February 2010, the FASB Accounting Standards Update 2010-10
(ASU 2010-10), “Consolidation (Topic 810): Amendments for Certain Investment Funds.” The amendments in this Update
are effective as of the beginning of a reporting entity’s first annual period that begins after November 15, 2009 and for
interim periods within that first reporting period. Early application is not permitted. The Company’s adoption of provisions
of ASU 2010-10 did not have a material effect on the financial position, results of operations or cash flows.



In February 2010, the FASB issued ASU
No. 2010-09 “Subsequent Events (ASC Topic 855) “Amendments to Certain Recognition and Disclosure Requirements”
(“ASU No. 2010-09”). ASU No. 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through
the date that the financial statements are issued and removes the requirement for an SEC filer to disclose a date, in both issued
and revised financial statements, through which the filer had evaluated subsequent events. The adoption did not have an impact
on the Company’s financial position and results of operations.



In March 2010, the FASB (Financial Accounting
Standards Board) issued Accounting Standards Update 2010-11 (ASU 2010-11), “Derivatives and Hedging (Topic 815): Scope Exception
Related to Embedded Credit Derivatives.” The amendments in this Update are effective for each reporting entity at the beginning
of its first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of each entity’s
first fiscal quarter beginning after issuance of this Update. The Company does not expect the provisions of ASU 2010-11 to have
a material effect on the financial position, results of operations or cash flows of the Company.



In December 2010, the FASB Accounting Standards Update 2010-29
Business Combinations Topic 805, which requires a public entity to disclose pro forma information for business combinations that
occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the
current reporting period as though the acquisition date for all business combinations that occurred during the year had been as
of the beginning of the annual reporting period. If comparative financial statements are presented, the pro forma revenue and earnings
of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business
combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period.
Effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2010. The adoption did not have an impact on the Company’s financial position and results
of operations.



In April 2011, the FASB issued ASU 2011-02,
“Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”.
This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance,
the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR,
certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual eriods beginning
on or after June 15, 2011, and applies retrospectively to restructuring occurring on or after the beginning of the fiscal year
of adoption. The Company does not expect that the guidance effective in future periods will have a material impact on its financial
statements.



In June 2011, the FASB issued ASU 2011-05,
“Comprehensive Income (Topic 220): Presentation of Comprehensive Income”, which is effective for annual reporting periods
beginning after December 15, 2011. ASU 2011-05 will become effective for the Company on January 1, 2012. This guidance eliminates
the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity.
In addition, items of other comprehensive income that are reclassified to profit or loss are required to be presented separately
on the face of the financial statements. This guidance is intended to increase the prominence of other comprehensive income in
financial statements by requiring that such amounts be presented either in a single continuous statement of income and comprehensive
income or separately in consecutive statements of income and comprehensive income. The adoption of ASU 2011-05 is not expected
to have a material impact on our financial position or results of operations.



In May 2011, the FASB issued ASU 2011-04, “Fair Value
Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”,
which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and
disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level
3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used
by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2)
for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for
the difference; (3) for financial instruments not measured at fair value but for whichdisclosure of fair value is required, the
fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between
Level 1 and Level 2 of the fair value hierarchy. ASU 2011-04 will become effective for the Company on January 1, 2012. We are currently
evaluating ASU 2011-04 and have not yet determined the impact that adoption will have on our financial statements.



F-11







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



In September 2011, the Financial Accounting Standards Board
(FASB) issued Accounting Standards Update (ASU) No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill
for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make
a qualitative evaluation about the likelihood of goodwill impairment to etermine whether it should calculate the fair value of
a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that
an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value
of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that
an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an
impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual
and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted,
including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s
financial statements for the most recent annual or interim period have ot yet been issued. The adoption of this guidance is not
expected to have a material impact on the Company’s financial position or results of operations.



| | 2. | GOING CONCERN
| | -- | -------------



The accompanying financial statements
have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate
continuation of the Company as a going concern. For the years ended December 31, 2011 and 2010 the Company had a net loss of $1,379,285
and $1,036,938, respectively, and net cash used in operations of $1,096,024 and $486,879 respectively, and was a development stage
company with little to no revenues. In addition, as of December 31, 2011 the Company had a working capital deficit of $253,417
and a deficit accumulated during the development stage of $3,926,414.



These conditions
raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include
any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications
of liabilities that may result from the outcome of these uncertainties.



In order to execute its business plan,
the Company will need to raise additional working capital and generate revenues. There can be no assurance that the Company will
be able to obtain the necessary working capital or generate revenues to execute its business plan.



Management’s plan in this regard,
includes completing product development, generating marketing agreements with product distributors and raising additional funds
through a private placement offering of the Company’s common stock.



Management believes its business development
and capital raising activities will provide the Company with the ability to continue as a going concern.



3. LOANS RECEIVABLE FROM OFFICERS



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 $75,000 each at a rate of 5.75% (subsequently increased to $90,000). 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, 2011 and 2010 were $0, respectively. On January 31, 2010, the officers/shareholders redeemed 521,439 shares (collectively)
of their common stock in the Company, with a value of $0.35 to satisfy this outstanding debt obligation (See Note 12). Under Sarbanes
Oxley, receivables from officers are prohibited, hence redemption of the loans in January 2010. As of December 31, 2011 there are
no officer loans present.



F-12







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



|4. |  | PATENTS AND TRADEMARK
|-- |  | ---------------------



| |  | Patents and Trademarks consists of the following:
| |  | -------------------------------------------------



|                                    |  | Est. Useful Lives |  | December 31,  2011 |   |  | December 31, 2010 |  
|----------------------------------- |  | ----------------- |  | ------------------ | - |  | ----------------- | -
|Patent Costs                        |  | 20 Years          |  | $                  | - |  |                   | $
|Trademark                           |  | Indefinite        |  |                    | - |  |                   |  
|                                    |  |                   |  |                    |   |  |                   |  
|                                    |  |                   |  |                    | - |  |                   |  
|Less total Accumulated amortization |  |                   |  |                    | - |  |                   |  
|                                    |  |                   |  | $                  | - |  |                   | $



Total amortization expense relating
to the Company’s patents was $0 and $257 for the years ended December 31, 2011 and 2010, respectively.



In December 2011, the Company assessed its patents and trademarks
and due to uncertainty of future funding and commercialization the Company recognized a loss on its trademark and patents in the
amount of $62,634, the carrying value at the time of impairment.



|5. |  | PROPERTY AND EQUIPMENT
|-- |  | ----------------------



Property and equipment consists of the
following:



|                                    |  | Est. Useful Lives |  | December 31, 2011 |         |   | December 31, 2010 |  
|----------------------------------- |  | ----------------- |  | ----------------- | ------- | - | ----------------- | -
|Computer equipment                  |  | 5 Years           |  | $                 | 10,227  |   |                   | $
|Office Equipment                    |  | 5 Years           |  |                   | 5,605   |   |                   |  
|Vehicles                            |  | 5 Years           |  |                   | 114,190 |   |                   |  
|                                    |  |                   |  |                   | 130,022 |   |                   |  
|Less total Accumulated depreciation |  |                   |  |                   | (22,811 | ) |                   |  
|                                    |  |                   |  | $                 | 107,212 |   |                   | $



Total depreciation expense for the years
ended December 31, 2011 and 2010 was $18,924 and $3,532, respectively.



F-13







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



|6. |  | CAPITAL LEASES
|-- |  | --------------



Capital Lease obligations consisted of the following at December
31:



|                                                                                                                                                                                 |  | 2011 |       |  | 2010 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- | -
|Capital lease payable – payable in monthly installments for principal and interest of $189 through October 2011. The debt is personally guaranteed by an officer of the Company. |  | $    | 1,932 |  |      | $
|Less current portion:                                                                                                                                                            |  |      | -     |  |      |  
|Long-term capital lease obligation                                                                                                                                               |  | $    | 1,932 |  |      | $



Interest expense on the above capital
lease was $389 and $389 during the years ended December 31, 2011 and 2010 respectively.



|7. |  | LONG TERM DEBT
|-- |  | --------------



Long Term Debt consists of the flowing:



|                                                                                                                                    |  | December 31, 2011 |         |  |  | December 31, 2010 |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- |  |  | ----------------- | -
|Note payable related to software license, with monthly payments of $5,650 including interest                                        |  | $                 | 101,959 |  |  | $                 | -
|                                                                                                                                    |  |                   |         |  |  |                   |  
|Note Payable related to the purchase of 2 Company trucks, bearing interest at 1.9%, payable in monthly installments of $755.11 each |  |                   | 93,160  |  |  | $                 | -
|                                                                                                                                    |  |                   |         |  |  |                   |  
|Total                                                                                                                               |  |                   | 195,119 |  |  | $                 | -
|Less Current Portion                                                                                                                |  |                   | 42,349  |  |  | $                 | -
|Total Long Term Debt                                                                                                                |  | $                 | 152,770 |  |  | $                 | -



8. CONVERTIBLE NOTE AND FAIR VALUE MEASUREMENTS



On October 2011, the Company issued convertible promissory
note in the amount of $42,500. The convertible note has a maturity date of July 2012 and an annual interest rate of 8% per annum.
The holder of the note has the right to convert any outstanding principal and accrued interest into fully paid and non-assessable
shares of Common Stock. The note has a conversion price of 58% of the average of the three lowest closing bid stock prices over
the last ten days and contains no dilutive reset feature. Due to the indeterminable number of shares to be issued at conversion
the company recorded a derivative liability. The derivative feature of the note taints all existing convertible instruments, specifically
the 900,000 warrants (term of 3 years) the company issued on April 2010 with an exercise price of $0.40.



Fair Value Measurements –
Derivative liability:



The Company evaluated
the conversion feature embedded in the convertible notes to determine if such conversion feature should be bifurcated from its
host instrument and accounted for as a freestanding derivative. Due to the note not meeting the definition of a conventional debt
instrument because it contained a conversion rate that fluctuated with the Company’s stock price, the convertible note and
other dilutive securities were accounted for in accordance with ASC 815. According to ASC 815, the derivatives associated with
the convertible notes were recognized as a discount to the debt instrument, and the discount is being amortized over the life of
the note and any excess of the derivative value over the note payable value is recognized as additional interest expense at issuance
date.



F-14







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



Further, and in
accordance with ASC 815, the embedded derivatives are revalued at each balance sheet date and marked to fair value with the corresponding
adjustment as a “gain or loss on change in fair value of derivatives” in the consolidated statement of operations.
As of December 31, 2011, the fair value of the embedded derivatives included on the accompanying consolidated balance sheet was
$121,546. During the year ended December 31, 2011, the Company recognized a loss on change in fair value of derivative liability
totaling $87,116.



Key
assumptions used in the valuation of derivative liabilities associated with the convertible notes were as follows:



| | ● | The note face amount as of 12/31/11 is $42,500 with an initial conversion price of 58% of the 3 lowest lows out of the 10 previous
days (effective rate of 43.57%).
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ● | The projected volatility curve for each valuation period was based on the historical volatility of the company;
| | - | ---------------------------------------------------------------------------------------------------------------

| | ● | An event of default would occur 1% of the time, increasing 1.00% per quarter to a maximum of 10%;
| | - | -------------------------------------------------------------------------------------------------

| | ● | The Holder would redeem based on availability of alternative financing, increasing 2.0% monthly to a maximum of 10%; and
| | - | ------------------------------------------------------------------------------------------------------------------------

| | ● | The Holder would automatically convert the notes at maturity if the registration was effective and the company was not in default.
| | - | ----------------------------------------------------------------------------------------------------------------------------------



The 3 year warrants with an exercise
price of $0.40 and no reset features were valued using the Black Scholes model and the following assumptions: stock price at valuation,
$0.10; strike price, $0.40; risk free rate 0.12%; 3 year term; and volatility of 522% resulting in a relative fair value of $89,753
relating to these warrants.



The accounting guidance for fair value measurements provides
a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined
as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal
or most advantageous market in an orderly transaction between market participants on the measurement date. The accounting guidance
established a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. This hierarchy
prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs
that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the
full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used
to measure assets and liabilities at fair value. An asset or liability’s classification within the hierarchy is determined
based on the lowest level input that is significant to the fair value measurement.



Assets and liabilities measured at fair value on a recurring
and non-recurring basis consisted of the following at December 31, 2011:



|                     |  |                                     |         |  | Fair value Measurements at December 31, 2011 |  
|-------------------- |  | ----------------------------------- | ------- |  | -------------------------------------------- | -
|                     |  | Carrying Value at December 31, 2011 |         |  | (Level 1)                                    |  
|Derivative Liability |  | $                                   | 121,546 |  |                                              | $



The following is a summary of activity of Level 3 liabilities
for the period ended December 31, 2011:



|Balance at October 1, 2011         |  | $ | -       |  
|---------------------------------- |  | - | ------- | -
|Increase in liability due to debt  |  | $ | 34,430  |  
|Derivative Gain - Convertible note |  | $ | (2,637  | )
|                                   |  |   |         |  
|Derivative Loss - Tainted Warrants |  | $ | 89,753  |  
|Balance December 31, 2011          |  | $ | 121,546 |  



Changes in fair value of the embedded conversion option liability
are included in other income (expense) in the accompanying statements of operations.



F-15







The Company estimates the fair value of the embedded conversion
liability utilizing the Black-Scholes pricing model, which is dependent upon several variables such as the expected term (based
on contractual term), expected volatility of our stock price over the expected term (based on historical volatility), expected
risk-free interest rate over the expected term, and the expected dividend yield rate over the expected term. The Company believes
this valuation methodology is appropriate for estimating the fair value of the derivative liability. The following table summarizes
the assumptions the Company utilized to estimate the fair value of the embedded conversion option at December 31, 2011:



|Assumptions         |  | December 31, 2011 |     
|------------------- |  | ----------------- | ----
|Expected term       |  |                   | 1.0 
|Expected Volatility |  |                   | 107 
|Risk free rate      |  |                   | 0.21
|Dividend Yield      |  |                   | 0.00



There were no changes in the valuation techniques during
2011.The weighted average interest rate for short term notes as of December 31, 2011 was 9.62%.



F-16







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



|9. |  | COMMON STOCK
|-- |  | ------------



Upon formation, the Company was authorized
to issue 50,000 shares of common stock with no par value. On September 7, 2007, the Company amended its articles of incorporation
to increase the number of authorized common shares to 1,000,000. On September 7, 2007, the Company enacted a 280 for 1 forward
stock split pursuant to an Amended and Restated Articles of Incorporation filed with the Secretary of State of the State of Nevada.
All share and per share data in the accompanying financial statements has been retroactively adjusted to reflect the stock split.
On November 28, 2007, the Company again amended its articles of incorporation to establish two classes of stock. The first class
of stock is Class A Common Stock, par value $0.0166, of which 59,000,000 shares are authorized and the holders of the Class A Common
Stock are entitled to one vote per share. The second class of stock is Class B Participating Cumulative Preferred Super-voting
Stock, par value $0.0166, of which 1,000,000 shares are authorized. 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 Class B Participating Cumulative Preferred Super-voting Stock pays dividends at 6%. For
the years ended December 31, 2011, 2010, 2009, 2008, and 2007, the board of directors did not declare any dividends. Total undeclared
Class B Participating Cumulative Preferred Super-voting Stock dividends as of December 31, 2011 2010, 2009, 2008, and 2007 were
$90,487, $70,237, $49,987 and $29,737, and $9,487 respectively.



Class A Common Stock



Issuances of the Company’s common
stock during the years ended December 31, 2007, 2008, 2009, 2010 and 2011 included the following:



Shares Issued for Cash



During 2007, 224,000 shares of Class
A common stock were issued for $36,000 cash with various prices per share ranging from $0.15 to $0.25. Additionally, the Company
paid cash offering costs of $2,500.



During 2008, 2,352,803 shares of Class
A common stock were issued for $360,250 cash with various prices per share ranging from $0.13 to $0.25. Additionally, the Company
paid cash offering costs of $1,500.



In 2009, 3,688,438 shares of Class A
common stock were issued for $437,435 cash with various prices per share ranging from $0.04 to $0.35. Additionally, the company
paid cash offering costs of $7,000.



In 2010, 2,138,610 shares of Class A
common stock were issued for $442,181 cash with various prices per share ranging from $.18 to $.35.



In 2011, 6,349,750 shares of Class A
common stock were issued for $1,318,751 cash with various prices per share ranging from $.20 to $.35.



Shares Issued for Services



In 2007, 14,000,000 vested shares of
Class A common stock were issued to founders having a fair value of $232,400, based on a nominal value of $0.0166 per share. The
$232,400 was expensed upon issuance as the shares were fully vested.



In 2007, 50,000 shares of Class A common
stock were issued for legal services provided to the company with a value of $7,500 or $0.15 per share, based on a contemporaneous
cash sales price.



In 2008, 169,000 shares of Class A common
stock were issued for services having a fair value of $34,530 ranging from $0.13 to $0.25 per share, based on contemporaneous cash
sales prices.



In March 2009, 8,000 shares of Class
A common stock were issued for services provided to the Company with a value of $2,400 or $0.07 per share, based on a contemporaneous
cash sales price.



F-17







ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010 AND

THE PERIOD FROM JULY 14, 2007 (INCEPTION
OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



In June 2009, 17,333 shares of Class
A common stock were issued for services provided to the Company with a value of $2,600 or $0.15 per share, based on a contemporaneous
cash sales price.



In August 2009, 41,000 shares of Class
A common stock were issued for services provided to the Company with a value of $6,150 or $0.15 per share, based on a contemporaneous
cash sales price.



In February 2009, 500,000 shares of
contingently returnable Class A common stock were issued to a consultant pursuant to an agreement whereby the consultant must establish
a contract with a specific distributor and produce a sale of the Company’s product through such distribution channel. 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.



In January 2010,
21,000 shares of Class A common stock were issued for services provided to the Company with a value of $5,250 or $0.25 per share,
based on a contemporaneous cash sales price.



In June 2010, 750,000 shares of Class
A common stock were issued for services provided to the Company with a value of $270,200 at values ranging from $0.20 to $0.50
per share, based on a contemporaneous cash sales price.



In July 2010, 250,000 shares of Class
A common stock were issued for services provided to the Company with a value of $37,500 or $0.15 per share, based on a contemporaneous
cash sales price.



In December 2010, 55,000 shares of Class
A common stock were issued to 2 vendors for services with a value of $28,050, based on based on a contemporaneous cash sales price.



In June 2011, 815,000 shares of Class
A common stock were issued for services provided to the Company with a value of $220,050 at $0.27 per share, based upon the fair
value of the common stock on a quoted exchange at the date of grant.



In August 2011, 50,000 shares of Class A common stock were
issued for services provided to the Company with a value of $10,000 at $.20 per share, based upon the fair value of the common
stock on a quoted exchange at the date of grant.



In November 2011, 100,000 Shares of
Class A common stock were issued for services provided to the Company with a value of $20,000 at $0.20 per share, based upon the
fair value of the common stock on a quoted exchange at the date of grant.



Shares Issued in Conversion of
Other Liabilities



During 2008, 100,000 shares of Class
A common stock were issued upon conversion of a $35,000 liability to a vendor. The shares were valued at $0.15 per share or $15,000,
based on a contemporaneous cash sales price and the Company recorded a $20,000 gain on conversion of debt.



In July 2009, 139,944 shares of Class
A common stock were issued upon conversion of a $48,980 liability from a vendor. The shares were valued at $16,793 or $0.12, based
on a contemporaneous cash sales price. The Company agreed with the vendor, prior to conversion, that it would guarantee the value
of the stock, when sold by the vendor, up to the dollar value for the 2009 liability converted ($48,980) and the above mentioned
2008 conversion as it was the same vendor ($35,000) and any difference in value, if less than the liability, would be paid in cash
by the Company. As a result, the Company recorded the $48,980 conversion as a liability along with the prior year conversion of
$35,000 which resulted in an additional loss on conversion of $35,000. The total cumulative liability to guarantee equity value
from fiscal 2009 totaled $83,980 as relating to the above shares at December 31, 2009. These shares were actually issued in 2010;
however the liability was recorded in 2009 based on this guarantee



In August 2009, the Company converted
$55,200 of loans due to a shareholder 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. The Company recognized a loss on conversion of $62,637
and charged $449 to interest expense.



F-18







ATTUNE
RTD

NOTES
TO FINANCIAL STATEMENTS

FOR
THE YEARS ENDED DECEMBER 31, 2011 AND 2010 AND

THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



During
2010, 247,249 shares of Class A common stock were issued upon conversion of $39,272 of vendor liabilities. The shares were valued
from $0.10 to $.36 per share, based on a contemporaneous cash sales price and the Company recorded a $49,615 loss on conversion
of debt



In
March 2010, 120,000 shares of Class A common stock were issued upon conversion of a $24,000 liability from a vendor. The shares
were valued at $42,000 or $0.35 per share, based on a contemporaneous cash sales price and the Company recognized a loss on conversion
of $18,000. We agreed with the vendor, prior to conversion, that we would guarantee the value of the stock, when sold by the vendor,
up to the dollar value for the 2009 liability converted in 2010 of $24,000, plus an additional $11,000 for a total sales price
of $35,000 when sold by the vendor. Any difference in value, if less than the liability, will be paid by us in cash or through
the issuance of additional common stock. As a result, we recorded the $24,000 conversion as a liability along with the additional
$11,000 guarantee for a total guarantee liability of $35,000. During 2011, the vendor forgave $25,000 of the payable where the
company recorded as gain on forgiveness of debt. A cash payment of $3,000 was also made in relation to the total payable outstanding.



The
total cumulative liability to guarantee equity value totaled $90,980 as of December 31, 2011. No shares have been sold by the
vendor through December 31, 2011. 259,942 shares of the Company’s common stock are guaranteed to cover the existing liability.



In
2010 the Company issued 900,000 warrants to several investors in the Company. These warrants are attached to issuances of common
stock.



Warrant
Activity for the year ended December 31, 2010 is as follows:



|               |  | Warrant Shares |         |  | Exercise Price |   |      | Value if Exercised |  |   | Expiration Date | 
|-------------- |  | -------------- | ------- |  | -------------- | - | ---- | ------------------ |  | - | --------------- | 
|April 15, 2010 |  |                | 900,000 |  |                | $ | .040 |                    |  | $ | 360,000         | 



On
October 2011, the Company issued a Convertible Note which as a result taints all convertible instruments outstanding. As such
the Company recorded a derivative liability of $89,753 for warrant outstanding, refer to Note 8.



In
February 2011, the Company redeemed 30,000 shares of its Common Stock for a value of $5,000, the share prices was based on a share
price of $0.16 per share.



2010
Equity Incentive Plan



In
June 2010, we registered 4,000,000 shares of our Class A Common Stock pursuant to our 2010 Equity Incentive Plan which was also
enacted in June 2010. Our Board of Directors have authorized the issuance of the Class A Shares to employees upon effectiveness
of a recently issued Registration Statement. The Equity Incentive Plan is intended to compensate Employees for services rendered.
The Employees who will participate in the 2010 Equity Incentive Plan have agreed or will agree in the future to provide their
expertise and advice to us for the purposes and consideration set forth in their written agreements pursuant to the 2010 Equity
Incentive Plan. The services to be provided by the Employees will not be rendered in connection with: (i) capital-raising transactions;
(ii) direct or indirect promotion of our Class A Common Shares; (iii) maintaining or stabilizing a market for our Class A Common
Shares. The Board of Directors may at any time alter, suspend or terminate the Equity Incentive Plan.



As
of December 31, 2011, 800,000 shares were approved under this plan for issuance by the Board of Directors. 200,000 shares each
were approved for issuance to Shawn Davis, Thomas Bianco, Paul Davis and Raymond Tai.



As
of December 31, 2011, the balance sheet date, none of the shares under this plan were granted or issued.



Class
B Participating Cumulative Preferred Super-voting Stock



Issuances
of the Company’s preferred stock during the years ended December 31, 2007, 2008 and 2009 included the following:



F-19







ATTUNE
RTD

NOTES
TO FINANCIAL STATEMENTS

FOR
THE YEARS ENDED DECEMBER 31, 2011 AND 2010 AND

THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



Shares
Issued for Cash



In
2007, 133,333 shares of Class B preferred stock were issued for $45,000 cash or $0.3375 per share.



Shares
Issued for Services



In
2007, 866,667 shares of Class B preferred stock were issued to 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.



|10. |  | INCOME
                                                                                                                                                                                                TAXES
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



There
was no income tax expense in 2011 and 2010 due to the Company’s net taxable losses, other than the minimum Franchise Tax
due to the State of California of $800.



Deferred
tax asset and the valuation account is as follows:



|                                                     |  | Year ended December 31, |           
|---------------------------------------------------- |  | ----------------------- | ----------
|                                                     |  | 2011                    |           
|Deferred tax asset                                   |  |                         |           
|NOL Carryforward                                     |  | $                       | (1,255,851
|Valuation allowances                                 |  |                         | (1,255,851
|Total                                                |  | $                       | -         
|                                                     |  |                         |           
|The components of income tax expense are as follows: |  |                         |           
|Current Federal Tax                                  |  |                         | -         
|Current State Tax                                    |  | $                       | -         
|Change in NOL Benefit                                |  |                         | 522,285   
|Change in valuation allowance                        |  |                         | (522,285  
|                                                     |  |                         |           
|Income tax benefits                                  |  | $                       | -         



Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. At December 31, 2011 and 2010 the Company has net operating losses
(NOL) of approximately $1,379,285 and $644,496, respectively that will expire from 2027 to 2031. In the event that a significant
change in ownership of the Company occurs as a result of the Company’s issuance of common stock, the utilization of the
NOL carry forward will be subject to limitation under certain provisions of the Internal Revenue Code. Management does not presently
believe that such a change has occurred.



F-20







ATTUNE
RTD

NOTES
TO FINANCIAL STATEMENTS

FOR
THE YEARS ENDED DECEMBER 31, 2011 AND 2010 AND

THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



A
valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized.
Accordingly, a valuation allowance was established in 2011 and 2010 for the full amount of our deferred tax assets due to the
uncertainty of realization. Management believes that based upon its projection of future taxable operating income for the foreseeable
future, it is more likely than not that the Company will not be able to realize the benefit of the deferred tax assets at December
31, 2011 and 2010. The valuation allowance as of December 31, 2011 and 2010 was $1,255,851 and $787,272, respectively.



|11. |  | COMMITMENTS
                                                                                                                                                                                                AND
                                                                                                                                                                                                CONTINGIENCIES
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Employment
                                                                                                                                                                                      Agreements
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Effective
March 26, 2008, the Company entered into two employment agreements with its Chief Executive Officer and Chief Financial Officer.
These agreements established a yearly salary for each of $120,000. As of December 31, 2011 and 2010, the Company owed its officers
$120,068 and $242,636, respectively, based on the terms of the agreement.



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.



Operating
Leases



The
Company currently leases office space under a one year operating lease agreement expiring on September 30, 2012. Within sixty
days of expiration, the Company has the option to extend the lease for an additional two years. Under the lease agreement rent
was set at $1,400 per month



The
following is a schedule by years of future minimum rental payments required under the operating lease:



|2012  |  | $ | 12,600 | 
|----- |  | - | ------ | 
|      |  |   |        | 
|Total |  | $ | 12,600 | 



Rent
expense for the years ended December 31, 2011 and 2010 were $16,800 and $20,301 respectively.



Legal
Matters



From
time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business.
As of December 31, 2011 and 2010, there were no pending or threatened lawsuits that could reasonably be expected to have a material
effect on the results of our operations.



F-21







ATTUNE
RTD

NOTES
TO FINANCIAL STATEMENTS

FOR
THE YEARS ENDED DECEMBER 31, 2011 AND 2010 AND

THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31, 2011



In
March of 2010, Attune RTD engaged the services of a vendor to complete work described in the Scope of Services portion of a March
2010 agreement. Pursuant to the Agreement, the company paid the vendor a total of $70,618 towards the completion of services.
The agreement contained a “not to exceed cost” of $89,435. On or about September 21, 2010 the company issued vendor
250,000 shares of Restricted Class A Common Stock as an incentive for vendor to deliver services not later than March 1, 2011.
Vendor agreed to incrementally deliver work in process. No work in process was received from vendor. Vendor requested the company
pay an additional $18,817.50. On or about October 4, 2010, vendor repudiated the agreement. On February 23, 2011 The Company engaged
the services of legal counsel and made written demand for the return of the stock certificate and attempted to initiate settlement
negotiations. Vendor did not acknowledge receipt of letter.



As
of this date, the company is currently contemplating litigation with counsel to cancel the stock certificate. Attune's alleged
damages resulting from vendors failure to perform and subsequent repudiation of the contract, including the companies lost opportunity
costs, should it pursue litigation against vendor will need to be established by an economic expert. Vendor could conceivably
pursue litigation against the company for the $18,818, however the Company believes this is not probable and therefore a contingent
liability is not warranted.



|12. |  | RELATED
                                                                                                                                                                                                PARTY
                                                                                                                                                                                                TRANSACTIONS
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During
the years ended December 31, 2008 and 2007, the Company received funds from the issuance of a shareholder loan agreement to a
shareholder. 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. This debt was converted into 788,571 shares of Class A common stock in fiscal 2009 (See Note 9).



The
Company entered into two unsecured promissory notes with its Chief Executive Officer and Chief Financial officer (see Note 4).
The balance due under these loans was $175,825 as of December 31, 2009. As of December 31, 2009, the Company owed the same two
officers $175,239 based on the terms of their employment contracts (see Note 3). On January 31, 2010, the officers/shareholders
redeemed 521,439 shares (collectively) of their common stock in the Company, with a value of $0.35 to satisfy this outstanding
debt obligation. Under Sarbanes Oxley, receivables from officers are prohibited, hence redemption of the loans in January 2010.
As of December 31, 2011 there are no shareholder loans present.



As
of December 31, 2011 and 2010, the Company owed its 2 principal officers combined accrued salaries of $120,068 and $242,636, respectively.



|13. |  | SUBSEQUENT
                                                                   EVENTS
|--- |  | ------------------------------------------------------------------------------------



Subsequent
to December 31, 2011, the Company entered into an agreement to execute a convertible promissory note in the amount of $42,500
bearing interest at 8% per annum, with the note due and payable in July 2012. The note is convertible into shares of Class A common
stock at a variable conversion price based on 58% of the market value of the stock at the time of conversion. On January 5, 2012,
the funding was received by the company.



Management
evaluated all activity of the Company through March 30, 2012 (the issuance date of the Company’s financial statements) and
concluded that no subsequent events have occurred that would require recognition in the financial statements.



F-22