UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-K /A

(Amendment
No. 1)



|[X]                                            | ANNUAL REPORT PURSUANT TO SECTION
    13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|---------------------------------------------- | --------------------------------------------------------------------------------------------
|                                               |                                                                                             
|For
    the fiscal year endedDecember 31, 2012
|                                               |                                                                                             
|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.)
|                                                                                                                                                            |  |                                         
|3111
                                                                                                          Tahquitz Canyon Way
        Palm Springs, CA |  | 92263                                   
|(Address
    of principal executive offices)                                                                                                                |  | (Zip
    Code)                          



Registrant’s
telephone number, including area code:(760) 333-3842



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 [X]



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 $3,678,870.



The number of shares outstanding of the registrant’s common
stock, as of April 5, 2013, was 39,450,349.




















Table of Content





|             | Page
    No
|------------ | -----------
|PART
    I   | 4          
|             |            
|ITEM
    1.  |            
|             |            
|ITEM
    1A. |            
|             |            
|ITEM
    1B. |            
|             |            
|ITEM
    2.  |            
|             |            
|ITEM
    3.  |            
|             |            
|ITEM
    4.  |            







|PART
    II  | 7
|------------ | -
|             |  
|ITEM
    5.  |  
|             |  
|ITEM
    6.  |  
|             |  
|ITEM
    7.  |  
|             |  
|ITEM
    7A. |  
|             |  
|ITEM
    8.  |  
|             |  
|ITEM
    9.  |  
|             |  
|ITEM
    9A. |  
|             |  
|ITEM
    9B. |  







|PART
    III | 19
|------------ | --
|             |   
|ITEM
    10. |   
|             |   
|ITEM
    11. |   
|             |   
|ITEM
    12. |   
|             |   
|ITEM
    13. |   
|             |   
|ITEM
    14. |   







|PART
    IV                |  |  | 23
|-------------------------- |  |  | --
|                           |  |  |   
|SIGNATURES                 |  |  | 26
|                           |  |  |   
|EX-3.4
    (EXHIBIT 3.4)   |  |  |   
|                           |  |  |   
|EX-3.5
    (EXHIBIT 3.5)   |  |  |   
|                           |  |  |   
|EX-3.6
    (EXHIBIT 3.6)   |  |  |   
|                           |  |  |   
|EX-3.9
    (EXHIBIT 3.9)   |  |  |   
|                           |  |  |   
|EX-10.7
    (EXHIBIT 10.7) |  |  |   
|                           |  |  |   
|EX-10.8
    (EXHIBIT 10.8) |  |  |   
|                           |  |  |   
|EX-10.9
    (EXHIBIT 10.9) |  |  |   
|                           |  |  |   
|EX-21.1
    (EXHIBIT 21.1) |  |  |   
|                           |  |  |   
|EX-31.1
    (EXHIBIT 31.1) |  |  |   
|                           |  |  |   
|EX-31.2
    (EXHIBIT 31.2) |  |  |   
|                           |  |  |   
|EX-32.1
    (EXHIBIT 32.1) |  |  |   
|                           |  |  |   
|EX-32.2
    (EXHIBIT 32.2) |  |  |   







2







EXPLANATORY
NOTE



This Annual Report on Form
10-K/A is being filed as Amendment No. 1 to our Annual Report on Form 10-K (“Amendment No. 1”), which amends and restates
our Annual Report on Form 10-K for the year ended December 31, 2012 (the “Annual Report”), originally filed on April
8, 2013 with the Securities and Exchange Commission.



Following correspondence with
the Securities and Exchange Commission, this Amendment No. 1 is being filed to restate the following items:



| | ● | Part
                                         II, Item 8. Financial Statements and Supplementary Data;
| | - | ------------------------------------------------------------------------------------------------------



| | ● | Part
                                         II, Item 9A. Controls and Procedures; and
| | - | ---------------------------------------------------------------------------------------



| | ● | Part
                                         IV, Item 15. Exhibits and Financial Statement Schedules.
| | - | ------------------------------------------------------------------------------------------------------



In addition, as required by
Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal
financial officer are filed herewith as exhibits to this Amendment No. 1.



Special Note Regarding Amendment
No. 1



While the original Annual Report
is being amended and restated as a whole, except for the Items noted above, no other information included in the original Annual
Report is being amended or updated by this Amendment No. 1. This Amendment No. 1 continues to describe the conditions
as of the date of the original Annual Report and, except as contained therein, we have not updated or modified the disclosures
contained in the original Annual Report. Accordingly, this Amendment No. 1 should be read in conjunction with our filings
made with the Securities and Exchange Commission subsequent to the filing of the original Annual Report, including any amendment
to those filings.



3







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 3111 Tahquitz Canyon Way, Palm Springs, CA 92263. Our phone numbers are: (760) 333-3842 and (760)
406-1146. Our corporate website is www.attunertd.com. Our product website is www.briowave.net. 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 costs 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 175w”,and an interactiveGraphical
User Interface (GUI).Development of the BrioWave325p has been put on hold to conserve company resources.



When ready, the “BrioWave 325p”will be 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 deviceis also designed
to reduce potential costly swimming pool maintenance problems by monitoring pressure in a swimming pool’s 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 or WI-FI capability.



The BrioWave 175w contains a wireless module
that allows the device to connect to the company’s server for dashboard reporting, two way communications functionality,
and other value added functionality.



The BrioWave 175p is complete and ready for
resale. Finished units were delivered to the company in January 2013 for final inspection. The company refused to sign off on
the devices due to a minor firmware error that was related to a queuing issue when initially programming the device through its
touch membrane. On February 18, 2013, company management was notified by its vendor that the issue had been resolved and that
the first of the remaining forty five devices would begin being delivered by the end of March. The first four units were received
from our vendor on March 27, 2013 and delivered to a reseller for sale. The BrioWave 175w is the wireless enabled version of our
Smart Energy Management Controller, and is near completion. The company estimates it will need an additional $250,000 in capital
and approximately sixty days engineering development time to complete the graphical user interface that communicates through software
on our server to the wireless enabled device. The programming portion of the interface allowing parameters to be changed is complete;
with the majority of work, remaining confined to dashboard development, images branding and skinning and the development of backend
tools for demand curtailment. The wireless version relies on software the company purchased from its vendor, but has been unable
to make payments, and is in default. The vendor has not prevented us from using the software as of the date of this filing.



4







On November 28, 2010, developmental units
with wireless capability were delivered to Texas Energy Retail in a pilot program. Production of the BrioWave 175p has been delayed
until such time the company is able to raise the required $350,000 to build completed units for resale, or until such time it
can negotiate a structured financing agreement with its vendor. Current pricing is contingent upon producing one thousand circuit
boards and one thousand five hundred complete enclosures. Our vendor has indicated that they will need approximately twelve to
sixteen weeks from the time they receive capital to produce BrioWave printed circuit board technology, which includes lead time
to order components, prepare space in their facility for production, and begin delivering units at the end of that time frame.
Our vendor has also indicated that up to two hundred additional devices can be delivered every four weeks thereafter. BrioWave
technology utilizes commoditized components and prices are subject to demand and availability.



Based on current one thousand unit volume
pricing, we estimate initially we will need to sell 4,900 units of the BrioWave 175p and 3,100 units of the BrioWave 175w along
with 3,100 subscriptions of the company’s wireless interface to meet current selling, general and administrative expenses.
Management believes that as sales increase and production volumes increase, product costs will decrease.



On a go forward basis, the Company is seeking
additional financing through equity private placements. 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.
On August 29, 2011 when the agreement terminated, 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. In 2011, the company had initially 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. The company was able to raise $1,243,750 of this amount in a private
placement with Beacon Global Group. From August 29, 2011 through today’s date, the company continues to incur debt and relies
on outside sources to fund its business operations and will continue to do so until such time, if ever, it is self reliant on
its own revenue generating activities. The company continues to seek $4,100,000 in capital financing for inventory, operations
and marketing expenses over the next two years. 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 $1,400,500 over
the next 12 months or until full funding occurs. Our lack of capital has resulted in the delay of the company launching its BrioWave
175p technology which was scheduled for launch by end of June 2012.



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.



5







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.



On September 30, 2012,
the companies leased office space located at 3700 E. Tahquitz Drive, Suite 117, Palm Springs, CA 92262 expired.
Our corporate headquarters, including our principal administrative, marketing, technical support, and research and development
departments, are presently located in Palm Springs, CA, in office and warehouse provided by the Coachella Valley Economic Partnerships
(CVEP) iHub division. The company has been assigned two offices and one area suitable for assembling our technology, but has not
yet moved in. Management believes it will occupy the space by the end of March.



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. MINE SAFETY



Not applicable.



6







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”. Accordingly, there can be
no assurance as to the liquidity of any markets that may develop for our common stock, the ability of holders of our common stock
to sell our common stock, or the prices at which holders may be able to sell our common stock. The last reported sale price of
our common stock as reported by the Bulletin Board October 26, 2012 was $0.10 per share. As of March 29, 2013, there were approximately
331 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           |    
|     |  |                                                                                                      |  | ($)            |    
|     |  |                                                                                                      |  |                |    
|2012 |  | March
                                                                                          2012 |  | $              | .51
|     |  | June
                                                                               2012             |  | $              | .01
|     |  | September
                                                                               2012        |  | $              | .20
|     |  | December
                                                                               2012         |  | $              | .06
|2011 |  | March
                                                                               2011            |  | $              | .51
|     |  | June
                                                                               2011             |  | $              | .10
|     |  | September
                                                                               2011        |  | $              | .20
|     |  | December
                                                                               2011         |  | $              | .06



(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, 2012, 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, 2012 was $110,737.



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.



7









|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                 
|                  |  |                                               |  |                                                                                                                     |  |                                         
|Investor          |  | March 23, 2012                                |  | 50,000 Class A Common
    Shares                                                                                    |  | Investment                              
|                  |  |                                               |  |                                                                                                                     |  |                                         
|Trade Creditors   |  | March 31, 2012                                |  | 125,000 Class A Common
    Shares                                                                                   |  | Payment for services in lieu of cash    
|                  |  |                                               |  |                                                                                                                     |  |                                         
|Investor          |  | April 9, 2012 through
    
    June 1, 2012   |  | 1,230,000 Class A Common
    Shares                                                                                 |  | Investment                              
|                  |  |                                               |  |                                                                                                                     |  |                                         
|Trade Creditors   |  | April 15, 2012                                |  | 150,000 Class A Common
    Shares                                                                                   |  | Payment for services in lieu of cash    
|                  |  |                                               |  |                                                                                                                     |  |                                         
|Trade Creditors   |  | June 30, 2012                                 |  | 125,000 Class A Common
    Shares                                                                                   |  | Payment for services in lieu of cash    
|                  |  |                                               |  |                                                                                                                     |  |                                         
|Investor          |  | May 16, 2012                                  |  | 137,931 Class A Common
    Shares                                                                                   |  | Conversion of note payable into stock   
|                  |  |                                               |  |                                                                                                                     |  |                                         
|Investor          |  | August 15, 2012 through
    September 1, 2012 |  | 250,000 Class A Common
    Shares                                                                                   |  | Investment                              
|                  |  |                                               |  |                                                                                                                     |  |                                         
|Trade Creditors   |  | July 1, 2012 through
    September 30, 2012   |  | 1,013,900 Class A Common
    Shares                                                                                 |  | Payment for services in lieu of cash    
|                  |  |                                               |  |                                                                                                                     |  |                                         
|Trade Creditors   |  | December 31, 2012                             |  | 125,000 Class A Common
    Shares                                                                                   |  | Payment for services in lieu of cash    



8







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 2012, we accomplished significant milestones,
including:



| | ● | In
                                                                                                                                                                                                                                2012,
                                                                                                                                                                                                                                we
                                                                                                                                                                                                                                raised
                                                                                                                                                                                                                                $153,000
                                                                                                                                                                                                                                in
                                                                                                                                                                                                                                equity
                                                                                                                                                                                                                                to
                                                                                                                                                                                                                                continue
                                                                                                                                                                                                                                our
                                                                                                                                                                                                                                operations.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | ● | We
                                                                                                                                                                successfully
                                                                                                                                                                completed
                                                                                                                                                                a
                                                                                                                                                                pilot
                                                                                                                                                                program
                                                                                                                                                                with
                                                                                                                                                                TXU
                                                                                                                                                                Energy
                                                                                                                                                                Retail
                                                                                                                                                                and
                                                                                                                                                                the
                                                                                                                                                                company
                                                                                                                                                                was
                                                                                                                                                                asked
                                                                                                                                                                to
                                                                                                                                                                commercialize
                                                                                                                                                                the
                                                                                                                                                                technology
                                                                                                                                                                prior
                                                                                                                                                                to
                                                                                                                                                                purchasing.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



| | ● | 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.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | ● | ImperialIrrigation
                                                                                                                                                                                                  District
                                                                                                                                                                                                  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.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



9









| | ● | The
                                                                                                                                                                                                  company
                                                                                                                                                                                                  showcased
                                                                                                                                                                                                  its
                                                                                                                                                                                                  BrioWave
                                                                                                                                                                                                  technology
                                                                                                                                                                                                  at
                                                                                                                                                                                                  the
                                                                                                                                                                                                  Western
                                                                                                                                                                                                  Pool
                                                                                                                                                                                                  and
                                                                                                                                                                                                  Spa
                                                                                                                                                                                                  show
                                                                                                                                                                                                  in
                                                                                                                                                                                                  Long
                                                                                                                                                                                                  Beach,
                                                                                                                                                                                                  CA.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                                                  company
                                                                                                                                                                                                  completed
                                                                                                                                                                                                  and
                                                                                                                                                                                                  launched
                                                                                                                                                                                                  thewww.briowave.net
                                                                                                                                                                                                  product
                                                                                                                                                                                                  website.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                Company
                                                                                                                                                                had
                                                                                                                                                                a
                                                                                                                                                                meeting
                                                                                                                                                                with
                                                                                                                                                                Oncor
                                                                                                                                                                Energy
                                                                                                                                                                in
                                                                                                                                                                Houston,
                                                                                                                                                                TX.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Management
                                                                                                                                                                continued
                                                                                                                                                                monitoring
                                                                                                                                                                a
                                                                                                                                                                vendor’s
                                                                                                                                                                device
                                                                                                                                                                in
                                                                                                                                                                Dallas,
                                                                                                                                                                TX.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                company
                                                                                                                                                                installed
                                                                                                                                                                3
                                                                                                                                                                devices
                                                                                                                                                                in
                                                                                                                                                                Yucaipa,
                                                                                                                                                                CA.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                company
                                                                                                                                                                installed
                                                                                                                                                                a
                                                                                                                                                                device
                                                                                                                                                                in
                                                                                                                                                                San
                                                                                                                                                                Marino,
                                                                                                                                                                CA.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                company
                                                                                                                                                                installed
                                                                                                                                                                a
                                                                                                                                                                device
                                                                                                                                                                for
                                                                                                                                                                a
                                                                                                                                                                vendor
                                                                                                                                                                in
                                                                                                                                                                Lake
                                                                                                                                                                Havasu,
                                                                                                                                                                AZ.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                company
                                                                                                                                                                sold
                                                                                                                                                                a
                                                                                                                                                                device
                                                                                                                                                                to
                                                                                                                                                                a
                                                                                                                                                                customer
                                                                                                                                                                in
                                                                                                                                                                Palm
                                                                                                                                                                Desert,
                                                                                                                                                                CA
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                company
                                                                                                                                                                Installed
                                                                                                                                                                of
                                                                                                                                                                device
                                                                                                                                                                for
                                                                                                                                                                a
                                                                                                                                                                vendor
                                                                                                                                                                in
                                                                                                                                                                Indio,
                                                                                                                                                                CA
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                company
                                                                                                                                                                pre-sold
                                                                                                                                                                20
                                                                                                                                                                devices
                                                                                                                                                                to
                                                                                                                                                                a
                                                                                                                                                                vendor
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Company
                                                                                                                                                                management
                                                                                                                                                                met
                                                                                                                                                                with
                                                                                                                                                                Leslie’s
                                                                                                                                                                Pool
                                                                                                                                                                at
                                                                                                                                                                their
                                                                                                                                                                corporate
                                                                                                                                                                offices
                                                                                                                                                                in
                                                                                                                                                                Phoenix,
                                                                                                                                                                AZ
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                company
                                                                                                                                                                development
                                                                                                                                                                of
                                                                                                                                                                code/firmware
                                                                                                                                                                with
                                                                                                                                                                MEC
                                                                                                                                                                Innovation.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | One
                                                                                                                                                                of
                                                                                                                                                                the
                                                                                                                                                                company’s
                                                                                                                                                                vendor’s
                                                                                                                                                                sold
                                                                                                                                                                a
                                                                                                                                                                device
                                                                                                                                                                to
                                                                                                                                                                one
                                                                                                                                                                of
                                                                                                                                                                their
                                                                                                                                                                customers
                                                                                                                                                                in
                                                                                                                                                                Los
                                                                                                                                                                Angeles,
                                                                                                                                                                CA.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                company
                                                                                                                                                                opened
                                                                                                                                                                discussions
                                                                                                                                                                with
                                                                                                                                                                its
                                                                                                                                                                vendor
                                                                                                                                                                pertaining
                                                                                                                                                                to
                                                                                                                                                                payment
                                                                                                                                                                terms
                                                                                                                                                                that
                                                                                                                                                                could
                                                                                                                                                                be
                                                                                                                                                                more
                                                                                                                                                                favorable
                                                                                                                                                                to
                                                                                                                                                                the
                                                                                                                                                                company
                                                                                                                                                                and
                                                                                                                                                                help
                                                                                                                                                                facilitate
                                                                                                                                                                the
                                                                                                                                                                procurement
                                                                                                                                                                of
                                                                                                                                                                finished
                                                                                                                                                                printed
                                                                                                                                                                circuit
                                                                                                                                                                boards
                                                                                                                                                                for
                                                                                                                                                                resale.
                                                                                                                                                                The
                                                                                                                                                                outcome
                                                                                                                                                                of
                                                                                                                                                                those
                                                                                                                                                                negotiations
                                                                                                                                                                is
                                                                                                                                                                pending,
                                                                                                                                                                but
                                                                                                                                                                should
                                                                                                                                                                become
                                                                                                                                                                known
                                                                                                                                                                on
                                                                                                                                                                or
                                                                                                                                                                before
                                                                                                                                                                April
                                                                                                                                                                5,
                                                                                                                                                                2013
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The
                                                                                                                                                                company
                                                                                                                                                                received
                                                                                                                                                                its
                                                                                                                                                                first
                                                                                                                                                                shipment
                                                                                                                                                                of
                                                                                                                                                                four
                                                                                                                                                                BrioWave
                                                                                                                                                                Smart
                                                                                                                                                                Energy
                                                                                                                                                                Management
                                                                                                                                                                Controllers
                                                                                                                                                                that
                                                                                                                                                                were
                                                                                                                                                                delivered
                                                                                                                                                                to
                                                                                                                                                                its
                                                                                                                                                                vendor
                                                                                                                                                                on
                                                                                                                                                                March
                                                                                                                                                                28,
                                                                                                                                                                2013.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.



10







Stock Based Compensation



We adopted ASC 718-20-10,
Share Based Payment which 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 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
| | - | ---------------------------------------



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.



Basis of Presentation



These financial statements
and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed
in U.S. dollars. The Company’s fiscal year-end is December 31



Use of Estimates



The preparation of these
financial statements in conformity with generally accepted accounting principles in the United States 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. The Company
regularly evaluates estimates and assumptions related to valuation and amortization policies on property and equipment and valuation
allowances on deferred income tax losses. The Company bases its estimates and assumptions on current facts, historical experience
and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent
from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s
estimates. To the extent there are material differences between the estimates and the actual results, future results of operations
will be affected.



11







Basic and Diluted Net Income (Loss) Per
Share



The Company computes net
income (loss) per share in accordance with FASB codification standards. The standard requires presentation of both basic and diluted
earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to
common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible
preferred stock using the if converted method. In computing Diluted EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti-dilutive.



Income Taxes



Potential benefits of
income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted FASB codification
regarding the required tax asset benefit computations for net operating losses carry forward. The potential benefits of net operating
losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not
it will utilize the net operating losses carried forward in future years.



Impairment of Long-Lived
Assets



In accordance with ASC
360, Property Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes
in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include,
but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate
or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction
of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses
associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly
before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair
value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual
disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying
amount is not recoverable and exceeds fair value.



Long-lived assets held
and used by Attune RTD are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an
asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon historical results
and current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating
results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent
that carrying value exceeds discounted cash flows of future operations. Attune RTD recognize impairment losses of $74,269 and
$62,634 on the impairment of patent, trademarks and software assets during 2012 and 2011, respectively.



New Accounting Pronouncements



See Note 1 to our 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 2012, the company did not record any revenues. However, for the calendar year the
company recorded $1,877 in revenues.



Revenue:



Our revenue for the year ended December 31,
2012 decreased 92% to $1,877 from $23,325 for the year ended December 31, 2011. 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 revenues to grow
as we are able to launch our products to the market place.



12







Operating Expenses:



During the year ended December 31, 2012 our
operating expenses decreased by approximately $536,856, a decrease of 61% over the year ended December 31, 2011. $391,704 of this
decrease related to general and administrative expense. Majority of the balance relates to decrease in legal expense and compensation.



Advertising expense primarily consists of
expenses related to design, print, and promotion of future products. The Advertising expense for the year ended December 31, 2012
increased to $36,700 from $607 on December 31, 2011. The net loss for the year ended December 31, 2012 was $953,445 loss per share
basic and diluted was $0.03.



Liquidity and Capital Resources



In 2012, we used $434,260
in cash for operations. The cash used consisted of our net loss $953,445 offset by items including stock granted for services
of $200,890, the impairment of our software for $74,269, and the recognition of our derivative liability of ($38,946).



In 2012, we were provided
$190,123 of cash in financing activities including $153,000 received from the sale of common stock, and $55,684 in loans.



In 2012, we had a working
capital deficit of $731,606, which consisted of $124,217 in account payable, $181,538 in accrued salaries, a convertible note
payable of $120,304, debt due to related party of $10,184, derivative liability of $110,828 and other accrued liabilities of $184,535



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.



13







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, 2012 we had
a bank overdraft of approximately $1,000. We have no agreement, commitment or understanding to secure any such funding from any
other source. There is uncertainty regarding our ability to implement our business plan without additional financing. We have
a history of operating losses, limited funds and no agreements, commitments or understandings. Our future success is dependent
upon our ability to commence selling our products, generate cash from operating activities and obtain additional financing. There
is no assurance that we will be able to commence selling our product, generate sufficient cash from operations, sell additional
shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse affect
on our ability to continue in business and implement our business plan.



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



We have a limited operating history. We have
generated no revenues from the sales of our product. Our business plan is speculative and unproven. There is no assurance that
we will be successful in executing our business plan or that even if we successfully implement our business plan, we will ever
generate revenues or profits, which makes it difficult to evaluate our business. As a consequence, it is difficult, if not impossible,
to forecast our future results. Because of the uncertainties related to our lack of operating history, it is more difficult for
an investor to make an investment decision concerning our securities than if we were a profitable operating business.



The products we sell and install have
never been sold on a mass market commercial basis, and we do not know whether they will be accepted by the market.



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



| | ● | 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.



14







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
ourBrio 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, reduce our
market share, and cause sales to decline.



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



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



We rely on suppliers to comply with
intellectual property, copyright, hazardous materials and processes and trade secrecy laws and regulations and, if such laws and
regulations are not sufficiently followed, our business could suffer substantially.



We endeavor to comply with all law and regulation
regarding intellectual property law, manufacturing process law and regulation, however, in many cases it is our supplier that
must comply with such regulations and laws. Although we make efforts to ensure that products sourced from third parties comply
with required regulation and law and that the operation of our suppliers do as well, our business could suffer if a supplier was,
or suppliers were, found to be non compliant with regulation and law in our, our customers’ or our suppliers’ jurisdictions.



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 one patent, Patent No US 7,777,366
B2, issued by the USPTO on August 17, 2010, 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.



15







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.



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 58.68% 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 93.21% 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.



16







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- 22 , which appear at the end of this report.



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



There were no disagreements
related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure
during the two fiscal years and interim periods.



ITEM
9A. CONTROLS AND PROCEDURES



Evaluation
of Disclosure Controls and Procedures



We
maintain “disclosure controls and procedures,” as the Securities and Exchange Commission
(“SEC”) defines such term. We have designed these controls and procedures to reasonably assure that information
required to be disclosed in our reports filed under the Exchange Act, such as this annual report on Form 10-K, is recorded,
processed, summarized, and reported within the periods specified in the SEC’s rules and forms. We have also designed
our disclosure controls to provide reasonable assurance that such information is accumulated and communicated to our
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow them to make timely decisions regarding our required
disclosures.



Our
management has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of
the Securities Exchange Act of 1934) as of December 31, 2012. Based on this evaluation, our  Chief Executive Officer and
Chief Financial Officer have concluded that our Company’s disclosure controls and procedures, including the
accumulation and communication of disclosures to our Chief Executive Officer and Chief Financial Officer as appropriate
to allow timely decisions regarding required disclosure, were not effective as of December 31, 2012 to provide reasonable
assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Based on
this evaluation, we have concluded that there are material weaknesses in our disclosure controls and procedures and they were
not effective for the following reasons:



| | 1. | We
    do not have an Audit Committee – While we are not  legally obligated to have an audit committee, it is the
    management’s     view that such a committee, including a financial expert member, is important for control purposes. Currently the Board of Directors acts in the capacity of the Audit     Committee,
    and does not include a     member that is considered to be independent of management to provide the necessary     oversight
    over management’s activities.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | We
    did not maintain appropriate cash controls – As of December 31, 2012, our Company has not maintained sufficient internal
    controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions,
    and did not require dual signature on our Company’s bank accounts. Alternatively, the effects of poor cash controls
    were mitigated by the fact that our Company had limited transactions in their bank accounts.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | We
    did not implement appropriate information technology controls – As of December 31, 2012, our Company retained copies
    of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of our Company’s
    data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | Due
    to our Company’s relatively small size, we do not have segregation of duties which is a deficiency in our disclosure
    controls. We are     currently working on acquiring certain resources to cure this deficiency.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Accordingly,
our Company concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the
annual or interim financial statements will not be prevented or detected on a timely basis by our Company’s internal controls.



As
a result of the material weaknesses described above, management has concluded that our Company did not maintain effective internal
control over financial reporting as of December 31, 2012 based on criteria established in Internal Control—Integrated Framework
issued by COSO.



Management’s
Annual Report on Internal Control Over Financial Reporting .



Our
management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule
13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes.



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even
those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Our management,
including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures or
our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system
must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.
Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, have been detected. Management believes that the financial statements included in this
report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.



Our
management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of
our internal control over financial reporting as of December 31, 2012. In making this assessment, our management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control –
Integrated Framework. As a result of its review, management identified  material weaknesses in the internal control over financial
reporting as described above. Based on this evaluation, our management concluded that, as of December 31, 2012, our internal control
over financial reporting was not effective. Management acknowledges that as a smaller reporting entity, it is difficult to have
adequate accounting staff to perform appropriate additional reviews of the financial statements.



17







Changes
in Internal Control over Financial Reporting



Other
than as described above, there have been no changes in our internal control over financial reporting, that occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.



ITEM 9B. OTHER INFORMATION.



None.



18







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             |  | 43  |  | Chief
    Executive Officer/Director          
|                            |  |     |  |                                               
|Thomas
    Bianco           |  | 48  |  | Chief
    Financial Officer/Treasurer/Director
|                            |  |     |  |                                               
|Timothy
    Smith           |  | 74  |  | Secretary                                     
|                            |  |     |  |                                               
|Raymond
    Kwok Cheung Tai |  | 62  |  | Foreign
    Operations Officer                
|                            |  |     |  |                                               
|Huiyou Zhu                  |  | 52  |  | Chief Technology Officer                      



The
principal occupations for each of our current executive officers and directors are as follows:



Shawn
Davis, Co- founder, joined us in June 2007 as Chief Executive Officer and Director. 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, Co-founder, joined us in June 2007 as Treasurer, C.F.O, and Director. From June 1994 through October 2011, he was the
sole proprietor of Bianco & Son Fine Jewelry & Collectables a retail jewelry store. Mr. Bianco is the principal managing
member of “Pawnshield”, an ecommerce store. Mr. Bianco holds a Gemologist Degree received from the Gemological Institute
of America issued in December of 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.



Paul
Davis joined us in June 2007 as Vice President and Director. From 2002 to 2012, he was Senior Field Supervisor for Davis Companies,
Inc., a general contracting business specializing in property management and medium sized construction projects. Mr. Davis was
a director until he passed away July 7th, 2012.



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 and has been inactive in company operations. 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 and has been inactive in company operations. 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.



19







Raymond
Kwok Cheung Taijoined 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.



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



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,3111 Tahquitz Canyon Way,Palm Springs, CA, 92263 Attention: Thomas Bianco or Shawn Davis.



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, 3111 Tahquitz Canyon Way,Palm Springs, CA, 92263, Attention: Thomas Bianco or Shawn Davis. 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.



20









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, engineering, manufacturing, supply chain management and corporate finance.



Section
16(a) of the Securities and Exchange Act of 1934



Section
16 (a) of the Securities and Exchange Act of 1934 requires the Company’s officers and directors and persons who beneficially
own more than 10% of the Company’s common stock (collectively, “Reporting Persons”) to file reports of beneficial
ownership and changes in beneficial ownership with the SEC. Reporting Persons are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. We believe none of our Reporting Persons complied with all applicable reporting
requirements as of December 31, 2012.



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.



2012
Summary Compensation Table



|Name and Principal Position           |  | Year |      |  | Salary |  |         | Stock Awards |  |  | Option Awards |  |  | Total  | 
|------------------------------------- |  | ---- | ---- |  | ------ |  | ------- | ------------ |  |  | ------------- |  |  | ------ | 
|(a)                                   |  | (b)  |      |  | ($)(c) |  |         | ($)(e)(1)    |  |  | ($)(f)(1)     |  |  | ($)(j) | 
|Shawn Davis                           |  |      | 2012 |  |        |  | 120,000 |              |  |  |               |  |  |        | 
|Chief Executive Officer               |  |      |      |  |        |  |         |              |  |  |               |  |  |        | 
|                                      |  |      |      |  |        |  |         |              |  |  |               |  |  |        | 
|Thomas Bianco                         |  |      | 2012 |  |        |  | 120,000 |              |  |  |               |  |  |        | 
|Chief Financial Officer and Treasurer |  |      |      |  |        |  |         |              |  |  |               |  |  |        | 



Employment
Agreements



On
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. Because the employees have been, and are currently, employed by the company in critical managerial positions,
the company believes it to be in their best interests to provide both Employees with certain severance protections and accelerated
option vesting in certain circumstances. Effective December 3, 2012 through December 31, 2016, the company established two new
“Employment Agreements” and two new “Severance Agreements” by resolution of the board of directors with
Mr. Davis, our Chief Executive Officer, and Mr. Bianco, our Chief Financial Officer. The “Employment Agreements” establish
a yearly base salary of $185,000 for each, and are governed by separate “Severance Agreements”. The “Employee
Agreements” allow for employee benefits of medical and dental insurance, life insurance, disability insurance, sick pay,
paid leave, retirement, annual bonus and other benefits when the company is financially able to provide for them or as determined
by the Board of Directors.



21







The
“Severance Agreements” provide for aggregate severance amounts equal to 300% of the Employee’s annual base salary
in effect as of the date of such termination. In addition to the Severance Amount, the company shall provide Employees with full
medical, dental, and vision benefits through the third full year following the date of Employees termination. Company agrees that
Employee shall have one year from the Employee’s termination date in which to exercise all options that are vested as of
the date upon which Employee’s employment was terminated, subject to any trading window requirements or other restrictions
imposed under the Company’s insider trading policy. The Severance Agreements state that if during the period of time during
which Employee is employed by the Company a Change of Control occurs, 100% of the unvested portion of all options held by Employee
as of the date of Change of Control Event shall be deemed vested and Employee shall be entitled to exercise such options. The
company agrees that if the payments are deemed “Golden Parachute” payments under the Internal Revenue Code of 1984
and the employees are obligated to pay an excise tax, the company shall reimburse the Employees in full for both the amount of
the excise tax, or ordinary income taxes owed in connection with the payment.



As of December
31, 2012, the Company owed its officers $181,538 based on the terms of the agreements.



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, 2013 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:



|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                                       |  |                                             | 9,039,281  |  |             | 
|                                  |  |                                                             |  |                                             |            |  |             | 
|Common Stock                      |  | (1)(2)(3) Thomas Bianco                                     |  |                                             | 9,039,281  |  |             | 
|                                  |  |                                                             |  |                                             |            |  |             | 
|Common Stock                      |  | (1) Raymond Tai                                             |  |                                             | 3,145,714  |  |             | 
|                                  |  |                                                             |  |                                             |            |  |             | 
|Common Stock                      |  | (1)(2) Timothy Smith                                        |  |                                             | 500,000    |  |             | 
|                                  |  |                                                             |  |                                             |            |  |             | 
|Common Stock                      |  | (1) Steve Bailey                                            |  |                                             | 500,000    |  |             | 
|                                  |  |                                                             |  |                                             |            |  |             | 
|Common Stock                      |  | (1) Shawn Steib                                             |  |                                             | 400,000    |  |             | 
|                                  |  |                                                             |  |                                             |            |  |             | 
|Common Stock                      |  | (1) Huiyou Zhu                                              |  |                                             | 525,000    |  |             | 
|                                  |  |                                                             |  |                                             |            |  |             | 
|                                  |  | All executive officers and directors as a group (7 persons) |  |                                             | 23,149,276 |  |             | 
|                                  |  |                                                             |  |                                             |            |  |             | 
|5% Shareholders:                  |  |                                                             |  |                                             |            |  |             | 
|                                  |  |                                                             |  |                                             |            |  |             | 
|Common Stock                      |  | (1) Beacon Global, LLC                                      |  |                                             | 3,259,375  |  |             | 

———————

|* | Less
    than 1% of Common Stock
|- | --------------------------------



22







|(1) | Applicable
    percentages are based on 39,450,349 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 each of Shawn Davis and Thomas Bianco $90,769, respectively, for accrued compensation.



ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.



On
January 10, 2013, 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, 2012 and 2011 respectively.
As of December 31, 2012 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:



|               |  | 2012 |        |  | 2011 | 
|-------------- |  | ---- | ------ |  | ---- | 
|               |  | ($)  |        |  | ($)  | 
|M&K CPAs, PLCC |  |      |        |  |      | 
|Audit Fees (1) |  |      | 24,250 |  |      | 
|               |  |      |        |  |      | 
|Tax Fees       |  |      |        |  |      | 
|All Other Fees |  |      |        |  |      | 

———————

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



PART
IV



ITEM
15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES



a) Documents
filed as part of this Annual Report



1. Financial
Statements



2. Financial
Statement Schedules



3. Exhibits



|31.1 | Rule
    13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer
|---- | ----------------------------------------------------------------------
|31.2 | Rule
    13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer
|32.1 | Section
    1350 Certification of Chief Executive Officer             
|32.2 | Section
    1350 Certification of Chief Financial Officer             
|3.1  | Amendment to the Articles of Incorporation                            



23







|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                                                               |  |                               |  |                       
|10      |  | Shareholder
    Loan Documents                                                                                 |  |                               |  |                       
|3       |  | By-Laws
    of Attune RTD                                                                                      |  | S-1/A                         |  | 2/11/2010             
|3       |  | Name
    Change Amendment to Articles                                                                          |  |                               |  |                       
|3       |  | Name
    Change Amendment to Article                                                                           |  | S-1/A                         |  | 3/29/2010             
|10      |  | Property
    Lease                                                                                             |  |                               |  |                       
|10      |  | Form
    of employee proprietary rights agreement                                                              |  |                               |  |                       
|10      |  | Promissory
    Note – Davis                                                                                    |  | S-1/A                         |  | 4/26/2010             
|10      |  | Promissory
                                                                                     Note - Bianco  |  |                               |  |                       
|3.1     |  | Second Amendment to Articles of Incorporation                                                                  |  |                               |  | 3/15/2013             
|10.1    |  | Agreement
    with Itron                                                                                       |  | 8-K                           |  | 9/20/2010             
|10.3    |  | Letter
    of Intent                                                                                           |  |                               |  |                       
|99.1    |  | Press
    Release                                                                                              |  |                               |  |                       





24







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., 3111 Tahquitz Canyon Way, Palm Springs, CA 92263, Attention:
Thomas Bianco.



25







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                                               |  | December 30 ,
    2013
|                      |  | (Principal Financial Offer and Chief Accounting
    Officer) and Director |  |                       
|                      |  |                                                                           |  |                       
|/s/
    Shawn Davis   |  | Chairman
    (Director) and Chief Executive Officer                       |  | December 30 ,
    2013



26







Financial
Statement Index



|                                                            |  | Page
|----------------------------------------------------------- |  | ----
|                                                            |  |     
|Report
    of Independent Registered Public Accounting Firm |  | F-1 
|                                                            |  |     
|Report of Independent
    Registered Public Accounting Firm |  | F-2 
|                                                            |  |     
|Balance
    Sheets                                          |  | F-3 
|                                                            |  |     
|Statements
    of Operations                                |  | F-4 
|                                                            |  |     
|Statement
    of Changes in Stockholders’ Equity (Deficit)  |  | F-5 
|                                                            |  |     
|Statements
    of Cash Flows                                |  | F-6 
|                                                            |  |     
|Notes
    to Financial Statements                           |  | F-7 



27







REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board
of Directors and Stockholders of

ATTUNE RTD

(A Development
Stage Company)



We
have audited the accompanying balance sheets of ATTUNE RTD (A Development Stage Company) as of December 31, 2012 and 2011,
and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. The
financial statements for the period from inception (July 14, 2007) to December 31, 2009 were audited by other auditors whose
report expressed an unqualified opinion on those statements. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our
audits.



We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. An audit includes 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 internal control over financial reporting. Accordingly, we express no such opinion. 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 the
ATTUNE RTD as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States.



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 for the years ended December 31, 2012 and 2011 has suffered a net loss of $953,445
and $1,379,285, respectively, and a net cash used in operations of $434,260, and was a development stage company with little revenue.
In addition, as of December 31, 2012 the company had a working capital deficit of $731,606 and an accumulated deficit of $4,879,859.
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

April
5, 2013



F-1











Report
of Independent Registered Public Accounting Firm



To
the Board of Directors and Stockholders of:

Attune
RTD



We
have audited the period from July 14, 2007, (Inception of Development Stage) to December 31, 2009 of Attune RTD (a development
stage company) which includes revenues of zero and net loss of $1,510,191, which is included in accompanying statements of operations,
changes in stockholders’ equity (deficit), and cash flows for the period from July 14, 2007, (Inception of Development Stage)
to December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our audits.



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



In
our opinion, the financial statements referred to above present fairly, in all material respects, the results of Attune RTD’s
operations and its cash flows for the period from July 14, 2007 (Inception of Development Stage) to December 31, 2009, which is
included in accompanying statements of operations, changes in stockholders’ equity (deficit), and cash flows for the period
from July 14, 2007, (Inception of Development Stage) to December 31, 2012. in conformity with accounting principles generally
accepted in the United States of America.



The
accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note
2 to the financial statements, the Company has continuing net losses and cash flow deficits and is a development stage company
with no revenues. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s
plans as to these matters are also described in Note 2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.





|/S/
    Salberg & Company, P.A. | 
|------------------------------- | 



SALBERG
& COMPANY, P.A.

Boca
Raton, Florida

March 29,
2010



2295
NW Corporate Blvd., Suite 240 ● Boca Raton, FL 33431-7328

Phone:
(561) 995-8270 ● Toll Free: (866) CPA-8500 ● Fax: (561) 995-1920

www.salbergco.com
● info@salbergco.com

Member
National Association of Certified Valuation Analysts ● Registered with the PCAOB

Member
CPAConnect with Affiliated Offices Worldwide ● Member AICPA Center for Audit Quality





F-2







Attune RTD

(a development
stage company)

Balance
Sheets



|                                                                                                                                                                                                    |  | December 31, 2012 |            |   | December 31, 2011 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | -
|Assets                                                                                                                                                                                              |  |                   |            |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Current Assets                                                                                                                                                                                      |  |                   |            |   |                   |  
|Cash                                                                                                                                                                                                |  | $                 | -          |   |                   | $
|Accounts Receivable, net                                                                                                                                                                            |  |                   | -          |   |                   |  
|Prepaid Expenses                                                                                                                                                                                    |  |                   | -          |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Total Current Assets                                                                                                                                                                                |  |                   | -          |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Property and Equipment, net                                                                                                                                                                         |  |                   | 78,497     |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Other Assets                                                                                                                                                                                        |  |                   |            |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Deferred Financing Costs                                                                                                                                                                            |  |                   | -          |   |                   |  
|Software License, net                                                                                                                                                                               |  |                   | -          |   |                   |  
|Security Deposit                                                                                                                                                                                    |  |                   | -          |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Total Other Assets                                                                                                                                                                                  |  |                   | -          |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Total Assets                                                                                                                                                                                        |  | $                 | 78,497     |   |                   | $
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Liabilities and Stockholders’ Deficit                                                                                                                                                               |  |                   |            |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Current Liabilities                                                                                                                                                                                 |  |                   |            |   |                   |  
|Accounts Payable                                                                                                                                                                                    |  | $                 | 124,217    |   |                   | $
|Accrued Salaries                                                                                                                                                                                    |  |                   | 181,538    |   |                   |  
|Accrued Expenses                                                                                                                                                                                    |  |                   | 18,696     |   |                   |  
|Royalty Payable                                                                                                                                                                                     |  |                   | 22,000     |   |                   |  
|Deferred Revenue                                                                                                                                                                                    |  |                   | 10,000     |   |                   |  
|Liability to Guarantee Equity Value                                                                                                                                                                 |  |                   | 90,980     |   |                   |  
|Capital lease obligation                                                                                                                                                                            |  |                   | 1,384      |   |                   |  
|Convertible Note Payable-net of discount of $2,696
    and $31,123 at December 31, 2012 and 2011, respectively - in default                                                                         |  |                   | 120,304    |   |                   |  
|Related Party Debt                                                                                                                                                                                  |  |                   | 10,184     |   |                   |  
|Bank Overdraft                                                                                                                                                                                      |  |                   | 1,074      |   |                   |  
|Current Portion Long-term debt                                                                                                                                                                      |  |                   | 40,401     |   |                   |  
|Derivative Liability                                                                                                                                                                                |  |                   | 110,828    |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Total Current Liabilities                                                                                                                                                                           |  |                   | 731,606    |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Long Term Liabilities                                                                                                                                                                               |  |                   |            |   |                   |  
|Long Term Debt - less current portion                                                                                                                                                               |  |                   | 130,706    |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Total Liabilities                                                                                                                                                                                   |  |                   | 862,312    |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Commitments and Contingencies (See
    Note 11 )                                                                                                                                                    |  |                   |            |   |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Stockholders’ Deficit                                                                                                                                                                               |  |                   |            |   |                   |  
|Class B
    Participating Cumulative Preferred Super voting Stock, $0.0166 par value; 1,000,000 shares authorized;
    1,000,000 issued and outstanding at December 31, 2012 and 2011, respectively |  |                   | 16,600     |   |                   |  
|Class A Common Stock, $0.0166 par value; 59,000,000
    shares authorized; 32,126,727 and 29,044,896 shares issued and outstanding at December 31, 2012 and 2011, respectively                      |  |                   | 532,707    |   |                   |  
|Additional Paid-in Capital                                                                                                                                                                          |  |                   | 3,498,237  |   |                   |  
|Stock Payable                                                                                                                                                                                       |  |                   | 48,500     |   |                   |  
|Deficit accumulated during development stage                                                                                                                                                        |  |                   | (4,879,859 | ) |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Total Stockholders’
    Deficit                                                                                                                                                                     |  |                   | (783,815   | ) |                   |  
|                                                                                                                                                                                                    |  |                   |            |   |                   |  
|Total Liabilities and Stockholders’
    Deficit                                                                                                                                                     |  | $                 | 78,497     |   |                   | $



The accompanying notes are an integral
part of these Financial Statements



F-3







Attune RTD

(a development
stage company)

Statements
of Operations



|                                                      |  |                   |            |   |                   |   |            | Period from July 14, 2007        | 
|----------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | - | ---------- | -------------------------------- | 
|                                                      |  | Year Ended        |            |   | Year Ended        |   |            | (Inception of Development Stage) | 
|                                                      |  | December 31, 2012 |            |   | December 31, 2011 |   |            | to
    December 31, 2012         | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Revenues                                              |  | $                 | 1,877      |   |                   | $ | 23,325     |                                  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Operating Expenses                                    |  |                   |            |   |                   |   |            |                                  | 
|General and Administrative Expense                    |  |                   | 546,273    |   |                   |   | 937,977    |                                  | 
|Change in Fair Value-Derivative                       |  |                   | (38,946    | ) |                   |   | 87,116     |                                  | 
|Impairment of Patent and Trademarks                   |  |                   | -          |   |                   |   | 62,634     |                                  | 
|Loss on Software Impairment                           |  |                   | 74,269     |   |                   |   | -          |                                  | 
|Payroll Expense                                       |  |                   | 297,864    |   |                   |   | 328,589    |                                  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Total Operating Expenses                              |  |                   | 879,460    |   |                   |   | 1,416,316  |                                  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Loss from Operations                                  |  |                   | (877,583   | ) |                   |   | (1,392,991 | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Other income (expense)                                |  |                   |            |   |                   |   |            |                                  | 
|Gain on asset theft, net                              |  |                   | -          |   |                   |   | -          |                                  | 
|Interest Expense                                      |  |                   | (75,862    | ) |                   |   | (11,467    | )                                | 
|Interest Income                                       |  |                   | -          |   |                   |   | 173        |                                  | 
|(Loss) Gain on Debt conversion                        |  |                   | -          |   |                   |   | 25,000     |                                  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Total Other income (expense)                          |  |                   | (75,862    | ) |                   |   | 13,706     |                                  | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Net Loss                                              |  |                   | (953,445   | ) |                   |   | (1,379,285 | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Preferred stock dividends                             |  |                   | (20,250    | ) |                   |   | (20,250    | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Net loss applicable to common
    stock               |  | $                 | (973,695   | ) |                   | $ | (1,399,535 | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Net loss per common share applicable to common stock: |  |                   |            |   |                   |   |            |                                  | 
|Basic and diluted                                     |  | $                 | (0.03      | ) |                   | $ | (0.05      | )                                | 
|                                                      |  |                   |            |   |                   |   |            |                                  | 
|Weighted average number of common shares outstanding: |  |                   |            |   |                   |   |            |                                  | 
|Basic and diluted                                     |  |                   | 30,583,453 |   |                   |   | 28,854,490 |                                  | 



The accompanying notes are an integral
part of these Financial Statements



F-4







Attune RTD

(a development
stage company)

Statements
of Changes in Stockholders’ Equity (Deficit)

From July
14, 2007 (Inception of Development Stage) to December 31, 2012



|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           | Deficit Accumulated |  |   |                  | 
|---------------------------------------------------------------------------------- |  | ------------------------- | --------- |  | ---------------------- | - | ------ | ---------- |  |  | ---------- | - |  | --------------- | ------- | - | ------------- | - | --------- | ------------------- |  | - | ---------------- | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           | During              |  |   | Total            | 
|                                                                                   |  | Preferred Stock - Class B |           |  | Common Stock - Class A |   |        | Additional |  |  | Stock      |   |  | Development     |         |   | Stockholders’ |  
|                                                                                   |  | Shares                    |           |  | Amount                 |   |        | Shares     |  |  | Amount     |   |  | Paid-in Capital |         |   | Payable       |   |           | 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    |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Issuance
    of stock for debt settlement                                          |  |                           | -         |  |                        |   | -      |            |  |  | 788,571    |   |  |                 | 13,090  |   |               |   | 105,196   |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Net
    loss, year ended December 31, 2009                                         |  |                           | -         |  |                        |   | -      |            |  |  | -          |   |  |                 | -       |   |               |   | -         |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Balance
    at December 31, 2009                                                   |  |                           | 1,000,000 |  |                        | $ | 16,600 |            |  |  | 21,439,145 |   |  | $               | 355,889 |   |               | $ | 1,086,773 |                     |  | $ | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Issuance
    of common stock for cash                                              |  |                           |           |  |                        |   |        |            |  |  | 2,138,610  |   |  |                 | 35,402  |   |               |   | 406,779   |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Issuance
    of stock for services                                                 |  |                           |           |  |                        |   |        |            |  |  | 1,076,000  |   |  |                 | 17,708  |   |               |   | 323,297   |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Issuance
    of stock for debt settlement                                          |  |                           |           |  |                        |   |        |            |  |  | 247,249    |   |  |                 | 4,104   |   |               |   | 92,853    |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Redemption
    of Stock by Officers for Loan Repayment                             |  |                           |           |  |                        |   |        |            |  |  | (521,439   | ) |  |                 | (8,656  | ) |               |   | (167,169  | )                   |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Stock
    issued to Shareholder                                                    |  |                           |           |  |                        |   |        |            |  |  | 139,944    |   |  |                 | 2,323   |   |               |   | (2,323    | )                   |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Net
    loss, year ended December 31, 2010                                         |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Balance
    at December 31, 2010                                                   |  |                           | 1,000,000 |  |                        | $ | 16,600 |            |  |  | 24,519,509 |   |  | $               | 406,770 |   |               | $ | 1,740,210 |                     |  | $ | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Issuance
    of common stock for cash                                              |  |                           | -         |  |                        |   | -      |            |  |  | 6,349,750  |   |  |                 | 105,063 |   |               |   | 1,213,687 |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Issuance
    of stock for services                                                 |  |                           | -         |  |                        |   | -      |            |  |  | 965,000    |   |  |                 | 16,019  |   |               |   | 234,031   |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Stock
    Redeemed                                                                 |  |                           | -         |  |                        |   | -      |            |  |  | (29,988    | ) |  |                 | (498    | ) |               |   | (4,501    | )                   |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Stock
    Rescinded from prior investment                                          |  |                           | -         |  |                        |   | -      |            |  |  | (2,759,375 | ) |  |                 | (45,806 | ) |               |   | 45,806    |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Net
    loss, year ended December 31, 2011                                         |  |                           | -         |  |                        |   | -      |            |  |  | -          |   |  |                 | -       |   |               |   | -         |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Balance
    at December 31, 2011                                                   |  |                           | 1,000,000 |  |                        | $ | 16,600 |            |  |  | 29,044,896 |   |  | $               | 481,548 |   |               | $ | 3,229,233 |                     |  | $ | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Issuance
    of common stock for cash                                              |  |                           | -         |  |                        |   | -      |            |  |  | 1,530,000  |   |  |                 | 25,398  |   |               |   | 127,602   |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Issuance
    of stock for services                                                 |  |                           | -         |  |                        |   | -      |            |  |  | 1,413,900  |   |  |                 | 23,471  |   |               |   | 128,919   |                     |  |   | 48,500           | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Note
    Payable Conversion                                                        |  |                           | -         |  |                        |   | -      |            |  |  | 137,931    |   |  |                 | 2,290   |   |               |   | 5,710     |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Change
    in Fair Value of Derivative due to Conversion                           |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   | 6,773     |                     |  |   |                  | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Net
    loss, year ended December 31, 2012                                         |  |                           | -         |  |                        |   | -      |            |  |  | -          |   |  |                 |         |   |               |   | -         |                     |  |   | -                | 
|                                                                                   |  |                           |           |  |                        |   |        |            |  |  |            |   |  |                 |         |   |               |   |           |                     |  |   |                  | 
|Balance
    at December 31, 2012                                                   |  |                           | 1,000,000 |  |                        | $ | 16,600 |            |  |  | 32,126,727 |   |  | $               | 532,707 |   |               | $ | 3,498,237 |                     |  | $ | 48,500           | 



The accompanying notes are an integral
part of these Financial Statements



F-5







Attune RTD

(a development
stage company)

Statements
of Cash Flows



|                                                                                                                       |  | Year Ended   |          |   | Period from July 14, 2007        |  
|---------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | -------------------------------- | -
|                                                                                                                       |  | December 31, |          |   | (Inception of Development Stage) |  
|                                                                                                                       |  | 2012         |          |   | 2011                             |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                  |  |              |          |   |                                  |  
|Net Loss                                                                                                               |  | $            | (953,445 | ) |                                  | $
|Adjustments to Reconcile
    Net loss to Net Cash Used in Operating Activities:                                        |  |              |          |   |                                  |  
|Class A Common stock and preferred stock granted for
    services                                                      |  |              | 200,890  |   |                                  |  
|Contributed Capital                                                                                                    |  |              | -        |   |                                  |  
|Depreciation and Amortization                                                                                          |  |              | 97,703   |   |                                  |  
|Interest expense on conversion to Class A common stock                                                                 |  |              | 23,586   |   |                                  |  
|Loss on conversions of debt to Class A common stock                                                                    |  |              | -        |   |                                  |  
|Gain on asset theft, net                                                                                               |  |              | -        |   |                                  |  
|Impairment of Patent, Trademarks and Software                                                                          |  |              | 74,269   |   |                                  |  
|Change in Fair Value-Derivative                                                                                        |  |              | (38,946  | ) |                                  |  
|Bad Debt Expense                                                                                                       |  |              | -        |   |                                  |  
|Gain on forgiveness of debt                                                                                            |  |              | -        |   |                                  |  
|Penalty Expense on defaulting - Asher                                                                                  |  |              | 43,000   |   |                                  |  
|                                                                                                                       |  |              |          |   |                                  |  
|Changes in Assets and Liabilities:                                                                                     |  |              |          |   |                                  |  
|Accounts Receivable                                                                                                    |  |              | 9,783    |   |                                  |  
|Prepaid Expenses                                                                                                       |  |              | 2,706    |   |                                  |  
|Security Deposit                                                                                                       |  |              | 1,800    |   |                                  |  
|Accounts Payable and Accrued Expenses                                                                                  |  |              | 72,270   |   |                                  |  
|Accrued Salary                                                                                                         |  |              | -        |   |                                  |  
|Liability to Guarantee Equity Value                                                                                    |  |              | -        |   |                                  |  
|Deferred Financing Costs                                                                                               |  |              | 124      |   |                                  |  
|Deferred Revenue                                                                                                       |  |              | 10,000   |   |                                  |  
|Royalty Payable                                                                                                        |  |              | 22,000   |   |                                  |  
|                                                                                                                       |  |              |          |   |                                  |  
|NET CASH USED IN OPERATING
    ACTIVITIES                                                                              |  |              | (434,260 | ) |                                  |  
|                                                                                                                       |  |              |          |   |                                  |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                  |  |              |          |   |                                  |  
|Deferred Patent costs                                                                                                  |  |              | -        |   |                                  |  
|Trademark costs                                                                                                        |  |              | -        |   |                                  |  
|Loans receivable from Officers                                                                                         |  |              | -        |   |                                  |  
|Insurance proceeds on asset theft                                                                                      |  |              | -        |   |                                  |  
|Cash paid for purchase of fixed assets                                                                                 |  |              |          |   |                                  |  
|Cash received for sale of fixed assets                                                                                 |  |              | -        |   |                                  |  
|                                                                                                                       |  |              |          |   |                                  |  
|NET CASH PROVIDED BY (USED
    IN) INVESTING ACTIVITIES                                                                |  |              | -        |   |                                  |  
|                                                                                                                       |  |              |          |   |                                  |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                  |  |              |          |   |                                  |  
|Sale of Class A - Common Stock                                                                                         |  |              | 153,000  |   |                                  |  
|Offering costs related to the Sale of Class A - Common
    Stock                                                       |  |              | -        |   |                                  |  
|Sale of Class B - Preferred Stock                                                                                      |  |              | -        |   |                                  |  
|Principal Payments on Capital Lease Obligations                                                                        |  |              | (530     | ) |                                  |  
|Loan Payable to Principal Stockholder                                                                                  |  |              | 10,184   |   |                                  |  
|Repayment of Loan Payable to Principal Stockholder                                                                     |  |              | -        |   |                                  |  
|Borrowings on Debt                                                                                                     |  |              | 45,500   |   |                                  |  
|Principal payment on truck loans                                                                                       |  |              | (15,808  | ) |                                  |  
|Principal payments on Software Licensing                                                                               |  |              | (12,223  | ) |                                  |  
|Cash Paid for Redemption of Stock                                                                                      |  |              | -        |   |                                  |  
|                                                                                                                       |  |              |          |   |                                  |  
|NET CASH PROVIDED BY FINANCING
    ACTIVITIES                                                                          |  |              | 180,123  |   |                                  |  
|                                                                                                                       |  |              |          |   |                                  |  
|NET INCREASE (DECREASE) IN CASH                                                                                        |  |              | (254,137 | ) |                                  |  
|                                                                                                                       |  |              |          |   |                                  |  
|CASH AT BEGINNING OF YEAR                                                                                              |  |              | 254,137  |   |                                  |  
|                                                                                                                       |  |              |          |   |                                  |  
|CASH AT END OF YEAR                                                                                                    |  | $            | -        |   |                                  | $
|                                                                                                                       |  |              |          |   |                                  |  
|Supplemental Disclosure of Cash
    Flow Information                                                                   |  |              |          |   |                                  |  
|Cash paid during the period:                                                                                           |  |              |          |   |                                  |  
|Interest Expense                                                                                                       |  | $            | 75,862   |   |                                  | $
|Income Tax                                                                                                             |  |              | -        |   |                                  | $
|                                                                                                                       |  |              |          |   |                                  |  
|Supplemental Disclosure of Non-Cash
    Investing and Financing Activities                                             |  |              |          |   |                                  |  
|Conversion of a Vendor Liability into Shares
    of Class A Common Stock                                               |  |              |          |   |                                  | $
|Capital Lease Obligation Recorded as Property
    and Equipment                                                        |  |              | -        |   |                                  | $
|Conversion of a shareholder loan into shares
    of Class A common stock                                               |  |              | -        |   |                                  | $
|Reclassification of equity to liability to
    guarantee equity value due to price guarantee upon conversion           |  |              | -        |   |                                  | $
|Reclassification of accounts payable to liability
    to guarantee equity value due to price guarantee upon conversion |  |              | -        |   |                                  | $
|Capitalization of Deferred Financing Costs                                                                             |  |              | -        |   |                                  | $
|Debt Discount                                                                                                          |  | $            | 34,748   |   |                                  | $
|Conversion of Debt                                                                                                     |  | $            | 8,000    |   |                                  | $
|Derivative Adjustment due to Debt Conversion                                                                           |  | $            | 6,773    |   |                                  |  
|Redemption of stock by officers for loan repayment                                                                     |  | $            | -        |   |                                  | $
|Financing of Software costs                                                                                            |  | $            | -        |   |                                  | $
|Financing of Truck Purchase                                                                                            |  | $            | -        |   |                                  | $



The accompanying
notes are an integral part of these Financial Statements



F-6







ATTUNE
RTD

NOTES
TO FINANCIAL STATEMENTS

FOR
THE YEARS ENDED DECEMBER 31, 2012 AND 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, 2012.
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, 2012 or 2011 respectively.



PROPERTY
AND EQUIPMENT



Property
and equipment is recorded at cost less accumulated depreciation. Depreciation and amortization is calculated using the straight-line
method over the expected useful life of the asset, after the asset is placed in service. The Company generally uses the following
depreciable lives for its major classifications of property and equipment:



|Depreciation |  | Useful
    Lives
|------------ |  | ----------------
|Vehicles     |  | 5
    Years     
|Computers    |  | 5
    Years     
|Equipment    |  | 5
    Years     



F-7







CONCENTRATION
OF CREDIT RISK



Financial
instruments, which potentially subject us to concentrations of credit risk, consist principally of cash. Our cash balances are
maintained in accounts held by major banks and financial institutions located in the United States. The Company occasionally maintains
amounts on deposit with a financial institution that are in excess of the federally insured limit of $250,000. The risk is managed
by maintaining all deposits in high quality financial institutions. The Company had $0 of cash balances in excess of federally
insured limits at December 31, 2012 and 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, 2012 were concentrated solely from one customer.



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 one patent, patent No; US 7,777,366 B2, awarded by the “USPTO” on
August 17, 2010.



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 all of its trademark and patents in the amount of $62,633, the carrying value at the time of
impairment.



In
December 2012, the Company assessed its software and based on uncertainty of future funding and commercialization, the Company
recognized a loss on it software in the amount of $74,269, the carrying value at the time of impairment.



F-8







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. The terms and conditions of the license
arrangement that we have in place with our vendor for software is based on a sixty month buyout agreement for a Perpetual License
payable in equal consecutive monthly installments in the amount of $5,650. The monthly payment includes interest, a one-time software
license fee of $142,669 and associated maintenance fees, “the rider”. This agreement grants Attune the non exclusive,
non transferable right to use the specified software in object code form only on its designated servers. The Rider and the installments
may not be cancelled. If installments are not made when due, and the default continues for 30 days after notice, the remaining
unpaid balance of the One-Time License Fee shall be immediately due and payable. The company may prepay the balance of remaining
installments at any time, with an appropriate credit, as determined by IBI, for the future portion of the interest. Maintenance
will be provided for the balance of the designated period. Vendor may transfer and assign the Licensee’s payment obligation
hereunder. The “Buyout Fee” is subject to adjustment in the event of upgrades. As of September 30, 2012, under the
terms and conditions of the agreement, the company is in default on the license agreement. The company has been in contact with
IBI over the non-payment situation and as of the date of this filing, IBI has not prevented access to the software and continues
to bill the company. Due to insignificant revenue and lack of future contract, the company has recognized impairment of $74,269
as of the balance sheet date of December 31, 2012. The asset is fully impaired.



DERIVATIVE
FINANCIAL INSTRUMENTS



The
Company generally does not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks that may
affect the fair values of its financial instruments. The Company utilizes various types of financing to fund our business needs,
including preferred stock with warrants attached and other instruments not indexed to our stock. The Company is required to record
its derivative instruments at their fair value. Changes in the fair value of derivatives are recognized in earnings in accordance
with ASC 815. The Company utilized multinomial lattice models that value the derivative liability within the notes based on a
probability weighted discounted cash flow model.



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 $36,700 and $607 for
the years ended December 31, 2012 and 2011, 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 under the asset and liability method. Deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and are measured using the enacted tax rates and laws that will be in
effect when the differences are expected to reverse.



In
July, 2006, the FASB issued ASC 740, Accounting for Uncertainty in Income Taxes, which clarifies the accounting for uncertainty
in tax positions taken or expected to be taken in a return. ASC 740 provides guidance on the measurement, recognition, classification
and disclosure of tax positions, along with accounting for the related interest and penalties. ASC 740 became effective as of
January 1,2007 and had no impact on the Company’s financial statements.



F-9







The charge
for taxation is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated
using tax rates that have been enacted or substantively enacted

by
the balance sheet date.



FAIR
VALUE OF FINANCIAL INSTRUMENTS



In
accordance with ASC 820, the carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates
fair value due to the short-term maturity of these instruments. ASC 820 clarifies the definition of fair value, prescribes methods
for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:



Level
1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.



Level
2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar
assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived
from or corroborated by observable market data.



Level
3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants
would use in pricing the asset or liability based on the best available information.



The
carrying amounts reported in the balance sheets for cash, accounts payable and accrued expenses approximate their fair market
value based on the short-term maturity of these instruments. The following table presents assets and liabilities that are measured
and recognized at fair value as of December 31, 2012, on a recurring basis:



|Description          |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |   | Total    |  
|-------------------- |  | ------- |  |  | ------- |  |  | ------- |  | - | -------- | -
|Derivative Liability |  |         |  |  |         |  |  |         |  | $ | (110,828 | )
|Total                |  |         |  |  |         |  |  |         |  | $ | (110,828 | )



The following
table presents assets and liabilities that are measured and recognized at fair value as of December 31, 2011, on a recurring basis:



|Description          |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |   | Total    |  
|-------------------- |  | ------- |  |  | ------- |  |  | ------- |  | - | -------- | -
|Derivative Liability |  |         |  |  |         |  |  |         |  | $ | (121,546 | )
|Total                |  |         |  |  |         |  |  |         |  | $ | (121,546 | )



A
financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant
to the fair value measurement. The following is a description of the valuation methodology used to measure fair value, as well
as the general classification of such instruments pursuant to the valuation hierarchy.



The
method described above may produce a current fair value calculation that may not be indicative of net realizable value or reflective
of future fair values. If a readily determined market value became available or if actual performance were to vary appreciably
from assumptions used, assumptions may need to be adjusted, which could result in material differences from the recorded carrying
amounts. The Company believes its method of determining fair value is appropriate and consistent with other market participants.
However, the use of different methodologies or different assumptions to value certain financial instruments could result in a
different estimate of fair value.



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, 2012 and 2011, there were no potentially dilutive securities. As a result, the basic and diluted per share amounts for all
periods presented are identical.



F-10







NEW
ACCOUNTING PRONOUNCEMENTS



In
October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical
Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range
of Topics in the Accounting Standards Codification.



These
amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related
to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012.
The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.



In
August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs
Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114. , Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections
Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update
amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material
impact on our financial position or results of operations.



In
July 2012, the FASB issued ASU 2012-02, “Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible
Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles - Goodwill
and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative
factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining
whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill
and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed
for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment
tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual
or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption
of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.



In
December 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-12, Comprehensive Income. ASU 2011-12
deferred the new presentation requirements outlined by ASU 2011-05 regarding reclassification of items out of accumulated other
comprehensive income. This standard is effective for all annual period beginning after December 15, 2011. This standard is not
expected to have a material impact on the Company’s financial statements.



In
December 2011, the FASB issued ASU 2011-11, Balance Sheet: Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires
entities to disclose both the gross and net information about both instruments and transactions subject to an agreement similar
to a master netting arrangement and includes derivatives, sale and repurchase agreements, and securities borrowing and securities
lending arrangements. This standard is effective for all fiscal periods beginning on or after January 1, 2013. This standard is
not expected to have a material impact on the Company’s financial statements.



In
June 2011, the FASB issued ASU 2011-05, Comprehensive Income: Presentation of Comprehensive Income. ASU 2011- 05 eliminates the
option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity and
items reclassified to the statement of operations are required to be presented separately on the face of the financial statements.
This standard is effective for fiscal years beginning after December 15, 2011. This standard is not expected to have a material
impact on the Company’s 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.



F-11







In
May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measure and Disclosure
Requirements in US GAAP and IFRS. ASU 2011-04 amended the definition of fair value measurement to be more closely aligned with
IFRS including: (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 which disclosure
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. This standard is effective for all fiscal periods beginning
after December 15, 2011. This standard is not expected to have a material impact on the Company’s financial statements.



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 periods 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
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 determine
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
not 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, 2012 and
2011 the Company had a net loss of $953,445 and $1,379,285, respectively, and net cash used in operations of $434,260 and $1,096,024
respectively, and was a development stage company with little to no revenues. In addition, as of December 31, 2012 the Company
had a working capital deficit of $736,606 and a deficit accumulated during the development stage of $4,879,859.



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.



F-12









|3. | PATENTS
    AND TRADEMARK
|-- | -------------------------



Patents
and Trademarks consists of the following:



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.



In
December 2011, the Company recognized a loss on its trademark and patents in the amount of $62,634, the carrying value at the
time of impairment.



In
December 2012, the Company assessed its software and due to uncertainty of future funding and commercialization the Company recognized
a loss on its software in the amount of $74,269, the carrying value at the time of impairment.



|4. | PROPERTY
    AND EQUIPMENT
|-- | --------------------------



Property
and equipment consists of the following:



|                                    |  | Est.UsefulLives |  | December 31, 2012 |         |   | December 31, 2011 |  
|----------------------------------- |  | --------------- |  | ----------------- | ------- | - | ----------------- | -
|Computer equipment                  |  | 5 Years         |  | $                 | 10,227  |   |                   | $
|Office Equipment                    |  | 5 Years         |  |                   | 5,606   |   |                   |  
|Vehicles                            |  | 5 Years         |  |                   | 114,190 |   |                   |  
|                                    |  |                 |  |                   | 130,023 |   |                   |  
|Less total Accumulated depreciation |  |                 |  |                   | (51,526 | ) |                   |  
|                                    |  |                 |  | $                 | 78,497  |   |                   | $



Total
depreciation expense for the years ended December 31, 2012 and 2011 was $28,715 and $18,924, respectively.



|5. | CAPITAL
    LEASES
|-- | ------------------



Capital
Lease obligations consisted of the following at December 31, 2012:



|                                                                                                                                                                                     |  | 2012 |        |   | 2011 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------ | - | ---- | -
|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. |  | $    | (1,384 | ) |      | $
|Less current portion:                                                                                                                                                                |  |      | 1,384  |   |      |  
|Long-term capital lease obligation                                                                                                                                                   |  | $    | -      |   |      | $



Interest
expense on the above capital lease was $0 and $389 during the years ended December 31, 2012 and 2011 respectively.



F-13







|6. | LONG
    TERM DEBT
|-- | ------------------



Long Term
Debt consists of the following:



|                                                                                                                                        |  | December 31, 2012 |         |  | December 31, 2011 |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- |  | ----------------- | -
|Note payable related to software license, with monthly payments
    of $5,650 including interest                                        |  | $                 | 93,754  |  |                   | $
|                                                                                                                                        |  |                   |         |  |                   |  
|Note Payable related to the purchase of 2 Company trucks, bearing interest
    at 1.9%, payable in monthly installments of $755.11 each |  |                   | 77,353  |  |                   |  
|                                                                                                                                        |  |                   |         |  |                   |  
|Total                                                                                                                                   |  |                   | 171,107 |  |                   |  
|Less Current Portion                                                                                                                    |  |                   | 40,401  |  |                   |  
|Total Long Term Debt                                                                                                                    |  |                   | 130,706 |  |                   |  



|7. | 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. On May 16, 2012, the Company
issued 137,931 shares of Class A Common Stock to convert $8,000 of the convertible note into equity. The note was converted in
accordance with the conversion terms; therefore, no gain of loss was recognized. As of December 31, 2012, this convertible note
is in default under the terms of the note agreement.



On
January 5, 2012, 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. As of December
31, 2012, this convertible note is in default under the terms of the note agreement.



On
December 3, 2012, the Company issued convertible promissory note in the amount of $3,000. The convertible note has a maturity
date of September 5, 2013 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. 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.



Because
the company has failed to pay the remaining principal balance together with accrued and unpaid interest upon the maturity dates,
the company is now in default under the notes with maturity dates July 3, 2012 and September 12, 2012. On January 30, 2013 demand
for immediate payment as provided in the notes of $120,000, representing 150% of the remaining outstanding principal balance,
together with default interest was made by vendors counsel. As of the date of this filing, the company continues to work with
the investor who has advanced additional funds beyond the date of the demand letter. The excess of $43,000 represent penalty on
default and recorded as a loss in the income statement.



Due
to the indeterminable number of shares to be issued at conversion, the company recorded a derivative liability. The derivative
feature of the notes 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.



F-14







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.



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 statement of operations.
As of December 31, 2012, the fair value of the embedded derivatives included on the accompanying balance sheet was $110,828. During
the year ended December 31, 2012, the Company recognized a gain on change in fair value of derivative liability totaling $38,946.



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



| | - | The
    existing derivative instrument was valued as of 12/31/12. The following assumptions were used for the valuation of the derivative
    liability related to the Notes:
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | The
    Note #1 & #2 face amount as of 12/31/12 is $77,000 with an initial conversion price of 58% of the 3 lowest lows out of
    the 10 previous days (effective rate of 56.96%). Both notes are in default and obligated to pay the 50% penalty and accrued
    interest – we therefore assumed the note balances of $53,766 and $66,234 (total $120,000) and no additional interest
    is being accrued.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | The
    Note #3 face amount as of 12/31/12 is $3,000 with an initial conversion price of 50% of the 3 lowest lows out of the 10 previous
    days (effective rate of 49.10%).
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



1
Year

12/31/12
157%



| | - | For
    Notes #1 & #2 an event of default would occur 10% of the time, increasing 5.00% per quarter to a maximum of 50%; for Note
    #3 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 0.14%; 3 year term; and volatility of 157% resulting
in a relative fair value of $49,229 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, 2012:



|                     |  | Carrying Value at |         |  | Fair value Measurements at December 31, 2012 |  
|-------------------- |  | ----------------- | ------- |  | -------------------------------------------- | -
|                     |  | December 31, 2012 |         |  | (Level 1)                                    |  
|Derivative Liability |  | $                 | 110,828 |  |                                              | $



F-15











The following
is a summary of activity of Level 3 liabilities for the period ended December 31, 2012:



|Balance at December 31, 2011       |  | $ | 121,546 |  
|---------------------------------- |  | - | ------- | -
|Increase in liability due to debt  |  | $ | 35,002  |  
|Derivative Loss – Convertible note |  | $ | 1,552   |  
|Derivative Gain – Tainted Warrants |  | $ | (40,498 | )
|Note Conversion                    |  | $ | (6,774  | )
|Balance December 31, 2012          |  | $ | 110,828 |  



Changes
in fair value of the embedded conversion option liability are included in Operating expense in the accompanying statements of
operations.



The
Company estimates the fair value of the tainted warrant 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, 2012:



|Assumptions         |  |  | December
                                                                          31, 2012 |  
|------------------- |  |  | ------------------------------------------------------------------------------------------- | -
|Expected term       |  |  | 1.0                                                                                         |  
|Expected Volatility |  |  | 157                                                                                         | %
|Risk free rate      |  |  | 0.14                                                                                        | %
|Dividend Yield      |  |  | 0.00                                                                                        | %



There
were no changes in the valuation techniques during 2012.The weighted average interest rate for short term notes as of
December 31, 2012 was 9.62%.



|8. | 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, 2012, 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, 2012, 2011, 2010, 2009, 2008, and 2007 were $110,737, $90,487, $70,237, $49,987 and $29,737, and $9,487, respectively.



F-16







Class
A Common Stock



Issuances
of the Company’s common stock during the years ended December 31, 2007, 2008, 2009, 2010, 2011 and 2012 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 $1,318,750 cash with various prices per share ranging from $.20
to $.35.



In
2012, 1,530,000 shares of Class A common stock were issued for $153,000 cash with $.10 price per share.



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 Fair Market Value 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 Fair Market Value 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 Fair Market Value sales price.



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 Fair Market Value 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 Market Value 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 Fair Market Value 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 Fair Market Value 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 Fair Market Value sales price.



F-17







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 Fair Market Value 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 on a Fair Market Value sales price.



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 on a Fair Market Value sales price.



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 on a Fair Market Value sales price.



In
March 2012, 125,000 shares of Class A common stock were issued for services provided to the Company with a value of $12,500 at
$.10 per share, based on a Fair Market Value sales price.



In
June 2012, 125,000 shares of Class A common stock were issued for services provided to the Company with a value of $12,500 at
$.10 per share, based on a Fair Market Value sales price.



In
July 2012, 888,900 shares of Class A common stock were issued for services provided to the Company with a value of $88,890 at
$.10 per share, based on a Fair Market Value sales price.



In
September 2012, 275,000 shares of Class A common stock were issued for services provided to the Company with a value of $33,500
at $.10 per share, based on a Fair Market Value sales price.



In
October 2012, 360,000 shares of Class A common stock were authorized for services provided to the Company with a value of $36,000
at $.10 per share, based on a Fair Market Value sales price. As of December 31, 2012, the shares have not been issued and are
recorded as stock payable.



In
December 2012, 125,000 shares of Class A common stock were authorized for services provided to the Company with a value of $12,500
at $.10 per share, based on a Fair Market Value sales price. As of December 31, 2012, the shares have not been issued and are
recorded as stock payable.



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.



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





F-18







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 $40,498 for warrant outstanding, refer to Note 8.



On
May 16, 2012, the Company issued 137,931 shares of Class A Common Stock to convert $8,000 of the convertible note into equity.
The note was converted in accordance with the conversion terms, therefore, no gain of loss was recognized.



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, 2012, 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:



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.



|9. | GUARANTEE
    OF EQUITY VALUE
|-- | -----------------------------



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, 2012. No shares have been sold by the
vendor through December 31, 2012.



F-19







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



There
was no income tax expense in 2012 and 2011 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, |         
|---------------------------------------------------- |  | --------------------------- | --------
|                                                     |  | 2012                        |         
|Deferred tax asset                                   |  |                             |         
|NOL Carry forward                                    |  | $                           | (637,426
|Valuation allowances                                 |  |                             | (637,426
|Total                                                |  | $                           | -       
|                                                     |  |                             |         
|The components of income tax expense are as follows: |  |                             |         
|Current Federal Tax                                  |  |                             | -       
|Current State Tax                                    |  | $                           | -       
|Change in NOL Benefit                                |  |                             | 745,373 
|Change in valuation allowance                        |  |                             | (745,373
|                                                     |  |                             |         
|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, 2012 and 2011, the Company has net
operating losses (NOL) of approximately $2,129,636 and $1,492,210, respectively that will expire from 2027 to 2032. 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.



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 2012 and 2011 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, 2012 and 2011.  The valuation allowance as of December 31, 2012 and 2011 was $745,373 and $522,285, respectively.



|11. | COMMITMENTS
    AND CONTINGENCIES
|--- | ---------------------------------



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, 2012 and 2011, the Company owed its
officers $181,537 and $120,068, respectively, based on the terms of the agreement.



Operating
Leases



The
Company is in the process of negotiating a lease for new office space through the Coachella Valley Economics Partnership, iHub
division.



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





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



F-20







Rent
expense for the years ended December 31, 2012 and 2011 were $11,600 and $16,800 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, 2010 and 2009, there were no pending or threatened lawsuits that could reasonably be expected to have a material
effect on the results of our operations.



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 $18,818.  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. Company has placed a “Stop”
on the certificate with its Transfer Agent to prevent its consumption.



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 NOTE PAYABLE
|--- | ------------------------------



During
the period, Company received $10,182 from related parties. The note is unsecured and remained unpaid as of the December 31, 2012.
Due to the cash received toward the end of the year, the Company evaluated for imputed interest and have determined that it does
not have significant financial impact.



|13. | 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 8).



The
Company entered into two unsecured promissory notes with its Chief Executive Officer and Chief Financial officer. 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. 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.



On
July 23, 2012, our Secretary Timothy Smith loaned the company $10,000. The note is unsecured and remains unpaid as of the date
of this filing April 5, 2013.



Beginning
with the quarter starting October 1, 2012, the Stock Grant Agreement executed by the company and Mr. Zhu on December 10, 2011
has been placed on hold until such time when the company has the required capital to resume development on the server and wireless
code at which point in time it will again resume.



|14. | CONFIDENTIAL
    OFFER
|--- | ----------------------



On
October 5, 2012, the companyoffered an investment opportunity that paid participating investors up to a maximum of five
times their initial investment. Under the terms and conditions of the offer, the investment was to be pooled and the return on
investment paid to investors was based on the amount they invested and the size of the pool which was fixed at $159,560.00 Half
of the proceeds received from the sale of devices would be consumed by the company to cover expenses and the other half used to
distribute a royalty payment to investors based on their percentage. Three investors participated in the offer and the total amount
invested was $22,000. Based on the amounts invested, the company is obligated to pay the three investors a royalty payment of
6.27%, 6.27%, and 1.25% of the remaining 50% of the proceeds not consumed by the company, up to a maximum cumulative payout over
time equal to five times their initial investment, at which point the investors will be considered to have been paid in full and
the agreement terminates. The agreement does not specify when funds are to be distributed, or time duration. As of December 31,
2012, the $22,000 is presented on the balance sheet as a royalty payable.





F-21







|15. | SUBSEQUENT
    EVENTS
|--- | ---------------------



On
January 30, 2013, 6,000,000 shares of Class A common stock were issued for services provided to the Company with a value of $60,000
at $.01 per share, based on a Fair Market Value sales price.



On
January 31, 2013, 360,000 shares of Class A common stock were issued for services provided to the Company with a value of $18,000
at $.05 per share, based on a Fair Market Value sales price.



On
February 13, 2013, 72,500 shares of Class A common stock were issued for services provided to the Company with a value of $7,250
at $.10 per share, based on a Fair Market Value sales price.



On
February 15, 2013, The Company signed a twelve month “Consulting Agreement” with a vendor for the purpose of providing
services related to business development, SEC compliance matters, liase with corporate finance groups, liase with legal and accounting
professionals and advise on potential mergers or acquisitions as opportunities may arise. The services are valued at $52,000.



On
February 21, 2013, the Company entered into an agreement to execute a convertible promissory note in the amount of $50,000 bearing
interest at 8% per annum, with the note due and payable in November 25, 2013. 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 February 26,
2013, the funding was received by the company.



On
February 26, 2013, the Company signed a “Letter of Engagement” with Anubis Partners for the purpose of assisting the
Company in preparation of financial communications documents, materials, and Company presentations (“Financial Communications
Documents”), including press releases, online communications, and The Company’s website. The company agreed to pay
a service fee of $5,000 and 300,000 shares of its restricted common stock.



On
February 27, 2013, 300,000 shares of Class A common stock were issued for services provided to the Company with a value of $30,000
at $.10 per share, based on a Fair Market Value sales price.



On
March 4, 2013, stockholders holding 72.40% of the shares in the corporation, representing a majority of the voting power, voted
in favor to amend the Fourth Article of the Articles of Incorporation to (a) Increase the number of authorized shares of Common
Stock from fifty nine million (59,000,000) shares of Common Stock to twenty billion (20,000,000,000) shares of Common Stock; (b)
Amend the par value of Common Stock from a par value $0.0166 per share to a par value of $0.00004897 per share; (c) Amend the
Class B Preferred shares such that the voting rights of Class B shareholders are increased from one hundred votes per share to
twenty thousand votes per share; (d) Authorize the issuance of five million (5,000,000) shares of “blank check”
preferred stock, 0.0166 par value per share, to be issued in series, and all properties of such preferred stock to be determined
by the Company’s Board of Directors. The amendment was filed with the Nevada Secretary of State and became effective on
March 4, 2013.



On
March 5, 2013, 591,133 shares of common stock were converted on $12,000 of the principal of the note dated September 28, 2011
as amended by amendment No. 1 dated October 17th, 2011.



Management
evaluated all activity of the Company through March 31, 2013 (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