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EX-23.1 - ATTUNE RTD | v178929_ex23-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment
No. 2
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
ATTUNE
RTD
(Name of
small business issuer in our charter)
Nevada
|
32-0212241
|
|
|
|
|
(State or other jurisdiction of
|
(I.R.S.
employer
|
|
incorporation
or organization)
|
identification
number)
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3700
B Tachevah Road
|
||
Palm
Springs CA
|
92262
|
|
|
||
(Address
of principal executive offices)
|
(Zip
code)
|
Registrant's
telephone number: (760) 323-0233
CORPORATE
SERVICES GROUP, LLC
723 S
CASINO CENTER BLVD 2ND FL
LAS VEGAS
NV 89101
1-800-354-4004
[Name,
address and telephone number of Agent for Service]
Approximate
date of commencement of proposed sale to the public: From time to time after
this Registration Statement becomes effective.
If any of
the Securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended, check the following box: ¨
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act of 1933, please check the following box and list
the Securities Act of 1933 registration number of the earlier effective
registration statement for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act of 1933, check the following box and list the Securities Act of
1933 registration statement number of the earlier effective registration
statement for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act of 1933, check the following box and list the Securities Act of
1933 registration statement number of the earlier effective registration
statement for the same offering. ¨
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.
CALCULATION
OF REGISTRATION FEE
Title of each
class of
securities to
be
registered
|
Amount to be
registered
|
Proposed
maximum
offering
price
per unit
|
Proposed
maximum
aggregate
offering
price
|
Amount of
registration
fee [1] [2]
|
||||||||||||
Common
Stock offered by our
Selling
Stockholders [3]
|
1,555,326
|
$
|
0.35
|
$
|
544,364.10
|
$
|
30.38
|
|||||||||
TOTAL
|
1,555,326
|
$
|
0.35
|
$
|
544,364.10
|
$
|
30.38
|
(1) Estimated
in accordance with Rule 457(a) of the Securities Act of 1933 solely for the
purpose of computing the amount of the registration fee based on recent prices
of private transactions.
(2) Calculated
under Section 6(b) of the Securities Act of 1933 as .00005580 of the aggregate
offering price.
(3) Represents
shares of the registrant’s common stock being registered for resale that have
been issued to the selling shareholders named in this registration
statement.
We hereby
amend this registration statement on such date or dates as may be necessary to
delay our effective date until we will file a further amendment which
specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until
this Registration Statement shall become effective on such date as the
Commission, acting pursuant to Section 8(a) may determine.
PROSPECTUS
ATTUNE
RTD
1,555,326
Shares of Common Stock
Selling
shareholders are offering up to 1,555,326 shares of common stock. The selling
shareholders will offer their shares at $0.35 per share until our shares are
quoted on the OTC Bulletin Board and thereafter at prevailing market prices or
privately negotiated prices. We will not receive proceeds from the sale of
shares from the selling shareholders.
Prior to
this offering, there has been no market for our securities. Our common stock is
not currently listed on any national securities exchange, the NASDAQ stock
market or the Over the Counter Bulletin Board. There is no assurance that our
securities will ever become qualified for quotation on the OTC Bulletin Board.
There is no assurance that the selling shareholders will sell their shares or
that a market for our shares will develop even if our shares are quoted on the
OTC Bulletin Board.
This
offering is highly speculative and these securities involve a high degree of
risk and should be considered only by persons who can afford the loss of their
entire investment. See “Risk Factors” beginning on page 8.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the accuracy or
adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
The date
of this prospectus is ________, 2010.
2
TABLE OF
CONTENTS
4
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||
RISK
FACTORS
|
8
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SPECIAL
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
|
16
|
|
USE
OF PROCEEDS
|
17
|
|
DETERMINATION
OF OFFERING PRICE
|
17
|
|
DILUTION
|
17
|
|
SELLING
SECURITY HOLDERS
|
17
|
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PLAN
OF DISTRIBUTION
|
22
|
|
LEGAL
PROCEEDINGS
|
25
|
|
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
|
25
|
|
EXECUTIVE
COMPENSATION
|
29
|
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
32
|
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TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL
PERSON
|
33
|
|
DESCRIPTION
OF SECURITIES
|
35
|
|
EXPERTS
|
36
|
|
INTEREST
OF NAMED EXPERTS
|
36
|
|
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES
|
36
|
|
DESCRIPTION
OF BUSINESS
|
37
|
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
43
|
|
DESCRIPTION
OF PROPERTY
|
57
|
|
58
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||
FINANCIAL
STATEMENTS
|
61
|
3
SUMMARY
INFORMATION
You
should carefully read all information in the prospectus, including the financial
statements and their explanatory notes, under “Financial Statements” prior to
making an investment decision.
Organization
ATTUNE
RTD is a Nevada corporation which was originally incorporated as Catalyst Set
Corporation on December 19, 2001 and changed its name in September 2007 to
Interfacing Technologies, Inc and again changed to our current name in March
2008.
We
maintain our principal place of business and corporate headquarters at 3700 B
Tachevah Road, Suite 117 Palm Springs, CA 92262. Our phone
number is: (760)323-0233. Our website is
www.attunertd.com. Nothing on our website is part of this
registration statement.
ATTUNE
RTD uses its patented-pending, proprietary technology in products designed to
promote energy conservation and save cost for owners of swimming
pools. It is also designed to prevent potential costly maintenance
problems from occurring in swimming pool filtration systems.
We
currently have two models of our product, the “BrioWave
175p” and “BrioWave 325p”,
and an interactive Graphical User
Interface (GUI).
The “BrioWave
325p” is designed to conserve energy and reduce costs through an
electrical control center with timing mechanisms linking the pool owner’s air
conditioning/heating, or HVAC, unit and the pool circulation and filtration
system. It coordinates the timing of operation of the HVAC unit and
the pool circulation and filtration system. The device is
also designed to reduce potential costly swimming pool maintenance problems by
monitoring pressure in a swimming pools filtration system. The
BrioWave 325p is designed with all of the functionality of the BrioWave 175p,
however, the BrioWave 325p is designed to monitor pressure in the swimming pools
filtration system and react to overpressure conditions by reading from a
pressure switch that must be installed in line on the filtration system plumbing
lines and wired to a feature on the BrioWave 325p controller. When an
over pressure condition exists, a signal is sent to the automatic in line valve
controls, which are not included and plumbed in line and powered separately, to
rotate one hundred and eighty degrees to reverse the flow of water in the
filtration system to clear dirt or debris from the filter, which are ejected
into a small holding tank which must be purchased separately. The device is
Wi-Fi enabled allowing it to communicate directly to the newly developed
globally implemented smart meter that allows the utilities to measure energy
inflow and outflows during time of use, allowing for integration within the
utilities newly developed smart grid infrastructure. The Graphical
User Interface is a server based software platform that allows users of both
BrioWave control units to access, control, change and view BrioWave parameters
from remote locations. The Graphical User Interface is expected to be
completed by end of June 2010, and will be available to BrioWave consumers
through an annual license fee.
4
The
“BrioWave 175p” model
does not contain the pressure monitoring/automatic backwash system.
The
BrioWave 175p controllers are near completion with two pilot units expected by
March 31, 2010 for the BrioWave 175p and by January 2011 for the BrioWave
325p. By September 2010, we expect to have BrioWave 175p units in
production for delivery by October 2010. We estimate initially we
will need to build 4,500 units of the BrioWave 175p’s.
On a go
forward basis, the Company is seeking additional financing through equity
private placements. The company had determined that it would need approximately
$3.5 million in funding to meet all of its planned obligations to fund product
development expenditures, meet current selling, general and administrative
expenses, future expenses, purchase technology equipment and hire new sales
staff necessary to implement and roll out its business strategy over the next
18-24 months. This funding is not required to be funded all at once,
as the business can continue to operate and meet its current administrative and
software development expenses on a limited basis requiring $750,000 over the
next 12 months until full funding occurs.
If we
secure this funding, we will be able to create an inventory of 4,500 BrioWave
175p units, hire various sales representatives and create a web infrastructure
for our Graphical User Interface.
We have
not generated any revenue from the sale of our products. There is
substantial doubt about our ability to continue as a going concern over the next
twelve months.
The
Offering
As of the
date of this prospectus, we had 21,505,511 shares of common stock issued and
outstanding.
Selling
shareholders are offering up to 1,555,326 shares of common stock. The selling
shareholders will offer their shares at $0.35 per share until our shares are
quoted on the OTC Bulletin Board and thereafter at prevailing market prices or
privately negotiated prices.
There is
no assurance that our securities will ever become qualified for quotation on the
OTC Bulletin Board. There is no assurance that the selling shareholders will
sell their shares or that a market for our shares will develop even if our
shares are quoted on the OTC Bulletin Board. To be quoted on the OTC Bulletin
Board, a market maker must file an application on our behalf in order to make a
market for our common stock. The current absence of a public market for our
common stock may make it more difficult for you to sell shares of our common
stock that you own.
5
Our
shares will be "penny stocks" as that term is generally defined in the
Securities Exchange Act of 1934. Our shares thus will be subject to rules that
impose sales practice and disclosure requirements on broker-dealers who engage
in certain transactions involving a penny stock. Because of these regulations,
broker-dealers may encounter difficulties in their attempt to sell shares of our
common stock, which may affect the ability of selling shareholders or other
holders to sell their shares in the secondary market and have the effect of
reducing the level of trading activity in the secondary market. These additional
sales practice and disclosure requirements could impede the sale of our
securities, if our securities become publicly traded. In addition, the liquidity
for our securities may be decreased, with a corresponding decrease in the price
of our securities. Therefore, our shareholders will, in all likelihood, find it
difficult to sell their securities.
6
Financial
Summary
Because
this is only a financial summary, it does not contain all the financial
information that may be important to you. Therefore, you should carefully read
all the information in this prospectus, including the financial statements and
their explanatory notes before making an investment decision.
Statements
of Operations Data
Attune RTD
|
||||||||
Year Ended
|
Year Ended
|
|||||||
December 31, 2009
|
December 31, 2008
|
|||||||
Revenue
|
$
|
-
|
$
|
-
|
||||
Net
Income (Loss)
|
$
|
(645,946
|
)
|
$
|
(422,612
|
)
|
||
Net
Income (Loss) Per share
|
$
|
(0.03
|
)
|
$
|
(0.03
|
)
|
||
Weighted
average number of common shares outstanding-basic and fully
diluted
|
19,545,125
|
15,456,779
|
Balance
Sheet Data
|
December 31, 2009
|
December 31, 2008
|
||||||
Cash
|
$
|
106,496
|
$
|
22,513
|
||||
Working
Capital (Deficit)
|
$
|
(281,962
|
)
|
$
|
(171,717
|
)
|
||
Total
Assets
|
$
|
339,308
|
$
|
240,767
|
||||
Total
Current Liabilities
|
$
|
388,458
|
$
|
201,961
|
||||
Deficit
Accumulated During Development Stage
|
$
|
(1,510,191
|
)
|
$
|
(864,245
|
)
|
||
Total
Stockholders' Equity(Deficit)
|
$
|
(50,929)
|
$
|
35,146
|
7
RISK
FACTORS
In
addition to the other information provided in this prospectus, you should
carefully consider the following risk factors in evaluating our business before
purchasing any of our common stock.
There is substantial doubt
about our ability to continue as a going concern as a result of our lack of
revenues and if we are unable to generate significant revenue or secure
financing, we may be required to cease or curtail our
operations.
We are
a development stage company. We have generated no revenues to
date. Our auditors have raised substantial doubt as to our ability to
continue as a going concern. The business needs approximately
$3,500,000 to fully implement our business plan. At March 22, 2010, we had
$57,766 cash in the bank. We have no agreement, commitment or
understanding to secure any such funding from any other source. There is
uncertainty regarding our ability to implement our business plan without
additional financing. We have a history of operating losses, limited funds
and no agreements, commitments or understandings. Our future success is
dependent upon our ability to commence selling our products, generate cash from
operating activities and obtain additional financing. There is no assurance that
we will be able to commence selling our product, generate sufficient cash from
operations, sell additional shares of common stock or borrow additional funds.
Our inability to obtain additional cash could have a material adverse affect on
our ability to continue in business and implement our business
plan.
Our lack of operating
history makes it difficult for an investor to evaluate our future business
prospects.
We have a
limited operating history. We have generated no revenues from the
sales of our product. Our business plan is speculative and
unproven. There is no assurance that we will be successful in executing
our business plan or that even if we successfully implement our business plan,
we will ever generate revenues or profits, which makes it difficult to evaluate
our business. As a consequence, it is difficult, if not impossible,
to forecast our future results. Because of the uncertainties related to
our lack of operating history, it is more difficult for an investor to make an
investment decision concerning our securities than if we were a profitable
operating business.
The products we sell and
install have never been sold on a mass market commercial basis, and we do not
know whether they will be accepted by the market.
The
market for our Brio Wave products for use by residential, commercial, industrial
and governmental users is at a relatively early stage of development and the
extent to which the products we sell and install will be widely adopted is
uncertain. If these products are not accepted by the market, our business plans,
prospects, results of operations and financial condition will suffer. Moreover,
demand for the products we sell and install may not develop or may develop to a
lesser extent than we anticipate. The development of a successful market for our
products and our ability to sell our products at a lower price per watt may be
affected by a number of factors, many of which are beyond our control, including
but not limited to:
8
¨
|
The
failure of our products to compete favorably against other similar energy
conservation products on the basis of cost, quality and
performance.
|
¨
|
Our
failure to develop and maintain successful relationships with
suppliers.
|
¨
|
Customer
acceptance of our Brio Wave.
|
If our
proposed products fail to gain sufficient market acceptance, our business plans,
prospects, results of operations and financial condition will
suffer.
We will
rely on various third party suppliers for the components used in the production
of our swimming pool electronic control products and for the manufacturing of
our products. Specifically, we are outsourcing all production,
including, but not limited to, the design of our printed circuit board
technology, firmware, and software assembly to MEC Northwest. We
maintain tooling in Guangzhou China for the purpose of manufacturing our
polyethylene enclosure. We do not have any signed contracts
pertaining to any of our manufacturing which exposes us to a greater risk of
losing these suppliers or manufacturers than if we had written
agreements.
If we
lose these suppliers, there can be no assurance that we will be able to
negotiate new supplier or manufacturer agreements on acceptable terms, if at
all, or that current or future supplier or manufacturer arrangements will be
successful. With respect to any products supplied or manufactured by third
parties, there can be no assurance that any third-party supplier will
perform acceptably or that failures by third parties will not delay or
impair our ability to deliver products on a timely basis, which could reduce our
revenues.
Technological changes in our
industry could render our Brio Wave products obsolete, which could prevent us
from achieving sales and market share.
The
failure of us or our suppliers to refine our, or their, technology and to
develop and introduce new products could cause our, or their, products to become
uncompetitive or obsolete, which could prevent us from increasing our sales and
becoming profitable. The industry related to components using our Brio Wave products is
rapidly evolving and highly competitive. Development efforts may be rendered
obsolete by the technological advances of others, and other technologies may
prove more advantageous for the commercialization of products using our
products. If this occurs, our sales could be diminished.
9
Problems with product
quality or product performance, including defects, in the Brio Wave products we
distribute and install, could result in a decrease in customers and revenue,
unexpected expenses and loss of market share.
Our Brio
Wave products may contain undetected errors or defects, especially when first
introduced. For example, components in our Brio Wave products may contain
defects that are not detected until after they are shipped or are installed
because we cannot test for all possible scenarios. These defects could cause us
to, or may cause us to request that suppliers incur significant re-engineering
costs, divert the attention of our personnel from product selling efforts and
significantly affect our customer relations and business reputation. If we
deliver components with errors or defects, or if there is a perception that our
components contain errors or defects, our credibility and the market acceptance
and sales of our products could be harmed. Similarly, if we deliver components
with errors or defects, or if there is a perception that such components contain
errors or defects, our credibility and the market acceptance and sales of our
Brio Wave products could be harmed. Furthermore, widespread product
failures may damage our market reputation and reduce our market share and cause
sales to decline.
Like other retailers,
distributors and manufacturers of products that are used by consumers, we face
an inherent risk of exposure to product liability claims in the event that the
use of the component products in our energy systems results in
injury.
Our
business may be subject to warranty and product liability claims in the event
that our Brio Wave fails to perform as expected or if a failure of our Brio Wave
results, or is alleged to result, in bodily injury, property damage or other
damages. Because our Brio Wave is used with products that involve the use
of electricity, it is possible that our products could result in injury, whether
by product malfunctions, defects, improper installation or other causes.
Moreover, we may not have adequate resources in the event of a successful claim
against us. We have no product liability insurance in addition, quality issues
can have various other ramifications, including delays in the recognition of
revenue, loss of revenue, loss of future sales opportunities, increased costs
associated with repairing or replacing products, and a negative impact on our
goodwill and reputation, which could also adversely affect our business and
operating results. Our business’ exposure to product liability claims is
expected to increase significantly in connection with the implementation of our
business plan.
We rely on suppliers to
comply with intellectual property, copyright, hazardous materials and processes
and trade secrecy laws and regulations and, if such laws and regulations are not
sufficiently followed, our business could suffer
substantially.
We
endeavor to comply with all law and regulation regarding intellectual property
law manufacturing process law and regulation, however, in many cases it is our
supplier that must comply with such regulations and laws. Although we
make efforts to ensure that products sourced from third parties comply with
required regulation and law and that the operation of our suppliers do as well,
our business could suffer if a supplier was, or suppliers were, found to be non
compliant with regulation and law in our, our customers’ or our suppliers’
jurisdictions.
10
Our inability to protect our
intellectual property rights could allow competitors to use our property rights
and technologies in competition against our company, which would reduce our
sales. In such an event we would not be able to grow as quickly as
expected, and the loss of anticipated revenues will also reduce our ability to
fully fund our operations and to otherwise execute our business
plan.
We rely
on a combination of only three patents pending, copyright, trademark and trade
secret laws, proprietary rights agreements and non-disclosure agreements to
protect our intellectual properties. We cannot give you any assurance that
these measures will prove to be effective in protecting our intellectual
properties. We also cannot give you any assurance that our existing
patents will not be invalidated, that any patents that we currently or
prospectively apply for will be granted, or that any of these patents will
ultimately provide significant commercial benefits. Further, competing companies
may circumvent any patents that we may ultimately hold by developing products
which closely emulate but do not infringe our patents. We can give you no
assurance that we will be able to successfully defend our patents if and when
received and proprietary rights in any action we may file for patent
infringement. Similarly, we cannot give you any assurance that we will not
be required to defend against litigation involving the patents if and when
received or proprietary rights of others, or that we will be able to obtain
licenses for these rights. Legal and accounting costs relating to
prosecuting or defending patent infringement litigation may be
substantial.
We also
rely on proprietary designs, technologies, processes and know-how not eligible
for patent protection. We cannot give you any assurance that our
competitors will not independently develop the same or superior designs,
technologies, processes and know-how.
We have a
policy concerning proprietary rights with our employees giving us proprietary
rights to certain technology developed by those employees while engaged by our
company; however, we can give you no assurance that courts of competent
jurisdiction will enforce this policy.
Our lack of an established
brand name and relative lack of resources could negatively impact our ability to
effectively compete in the market for applications using our Brio Wave which
could reduce the value of your investment.
We do not
have an established brand name or reputation in the business of sales and
installation of our Brio Wave products. We also have a relative lack of
resources to conduct our business operations. Thus, we may have difficulty
effectively competing with companies that have greater name recognition and
resources than we do. Our inability to promote and/or protect our brand name may
have an adverse effect on our ability to compete effectively in the energy
systems market.
11
Because our sales history
may involve variations in sales by season, our financial results may vary from
period to period which could affect our stock price if our securities become
qualified for quotation on the Over the Counter Bulletin
Board.
The
history of swimming pool electronic control products indicates that our busiest
delivery periods tend to be March through September. October through
February are slower periods. Accordingly, our financial results may
vary from period to period which could affect our stock price if our securities
become qualified for quotation on the Over the Counter Bulletin
Board.
Because
insiders control our activities, they may cause us to act in a manner that is
most beneficial to them and not to outside shareholders, which could cause us
not to take actions that outside investors might view favorably and which could
prevent or delay a change in control.
Our
executive officers, directors, and holders of 5% or more of our outstanding
common stock beneficially own approximately 82.14% of our outstanding common
stock and 100% or all 1,000,000 authorized shares of our Class B preferred stock
which has 100 votes per share. As the Class B preferred stock votes with common
stock, these individuals collectively hold 95.82% of the voting rights of our
company. As a result, they effectively control all matters requiring
director and stockholder approval, including the election of directors, the
approval of significant corporate transactions, such as mergers and related
party transactions. These insiders also have the ability to delay or perhaps
even block, by their ownership of our stock, an unsolicited tender offer. This
concentration of ownership could have the effect of delaying, deterring or
preventing a change in control of our company that you might view
favorably.
Our management decisions are
made by our management team, Shawn Davis, Thomas Bianco and Raymond Kwok Cheung
Tai; if we lose their services, our revenues may be reduced.
Our
success is dependent in part upon the availability of our senior executive
officers. The loss or unavailability to us of any of these individuals could
have a material adverse effect on our business, prospects, financial condition
and operating results. Specifically, we are substantially dependent on the
continued services of Shawn Davis, Thomas `Bianco and Raymond Kwok Cheung Tai.
If Shawn Davis, Thomas Bianco and Raymond Kwok Cheung Tai are not able to
continue as an officer, our prospects could be adversely affected and, as a
result, the loss of Mr. Davis, Mr. Bianco and Mr. Tai’s services could
materially adversely affect our operations. Shawn Davis and
Thomas Bianco have an employment contract. We do not maintain Key man
insurance.
The persons responsible for
managing our business will devote less than full time to our business, which may
impede our ability to implement our business plan.
None of
our management devotes full time to their duties to our business, as
follows:
12
Name
|
Percentage of Time
Currently Devoted to
Our Business
|
Percentage of Time
Currently to be Devoted to
Our Business upon
completion of funding and
commencement of full-scale
operations
|
||||
Shawn
Davis
|
60
|
100
|
||||
Thomas
Bianco
|
60
|
100
|
||||
Paul
Davis
|
5
|
80
|
||||
Timothy
Smith
|
2
|
20
|
||||
Steve
Bailey
|
2
|
20
|
||||
Shawn
Steib
|
2
|
100
|
||||
Raymond
Kwok Cheung Tai
|
35
|
50
|
As a
result, our management may not currently be able to devote the time necessary to
our business to assure successful implementation of our business
plan.
We will be subject to penny
stock regulations and restrictions and you may have difficulty selling shares of
our common stock.
The SEC
has adopted regulations which generally define so-called “penny stocks” to be an
equity security that has a market price less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exemptions. Our common
stock is a “penny stock”, we will become subject to Rule 15g-9 under the
Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales
practice requirements on broker-dealers that sell such securities to persons
other than established customers. For transactions covered by Rule 15g-9, a
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser’s written consent to the transaction prior to
sale. As a result, this rule may affect the ability of broker-dealers to sell
our securities and may affect the ability of purchasers to sell any of our
securities in the secondary market.
For any
transaction involving a penny stock, unless exempt, the rules require delivery,
prior to any transaction in a penny stock, of a disclosure schedule prepared by
the SEC relating to the penny stock market. Disclosure is also required to be
made about sales commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities. Finally,
monthly statements are required to be sent disclosing recent price information
for the penny stock held in the account and information on the limited market in
penny stock.
Our
common stock will not initially qualify for exemption from the Penny Stock Rule.
In any event, even if our common stock were exempt from the Penny Stock Rule, we
would remain subject to Section 15(b)(6) of the Exchange Act, which gives the
SEC the authority to restrict any person from participating in a distribution of
penny stock, if the SEC finds that such a restriction would be in the public
interest.
13
This prospectus permits
selling security holders to resell their shares. If they do so, the market price
for our shares may fall and purchasers of our shares may be unable to resell
them.
This
prospectus includes 1,555,326 shares being offered by existing stockholders. To
the extent that these shares are sold into the market for our shares, if
developed, there may be an oversupply of shares and an undersupply of
purchasers. If this occurs the market price for our shares may decline
significantly and investors may be unable to sell their shares at a profit, or
at all.
Our management has limited
experience in managing the day to day operations of a public company and, as a
result, we may incur additional expenses associated with the management of our
business.
The
management team of Shawn Davis, Thomas Bianco and Raymond Kwok Cheung Tai is
responsible for our operations and reporting. The requirements of operating as a
small public company are new to the management team and the employees as a
whole. This may require us to obtain outside assistance from legal, accounting,
investor relations, or other professionals that could be more costly than
planned. We may also be required to hire additional staff to comply with
additional SEC reporting requirements and compliance under the Sarbanes-Oxley
Act of 2002. Our failure to comply with reporting requirements and other
provisions of securities laws could negatively affect our stock price and
adversely affect our results of operations, cash flow and financial
condition.
We are exposed to increased
expenses from recent legislation requiring companies to evaluate internal
control over financial reporting which could reduce our
revenues.
Section
404 of the Sarbanes-Oxley Act of 2002 ("Section 404") requires our
management to report on the operating effectiveness of our Internal
Controls over financial reporting for the year ended December 31 in the fiscal
year after the fiscal year in which this registration statement is declared
effective. Salberg & Company, P.A., is our independent registered public
accounting firm and may be required to attest to the effectiveness of our
internal control over financial reporting beginning for our fiscal year ended
December 31, 2011. We must establish an ongoing program to perform the system
and process evaluation and testing necessary to comply with these requirements.
We expect that the cost of this program will require us to incur expenses and to
devote resources to Section 404 compliance on an ongoing basis which will reduce
our revenues.
14
Sales of our common stock
under Rule 144 could reduce the price of our stock.
As of
December 31, 2009, there were 4,315,431 shares of our common stock held by
non-affiliates, 2,337,776 of which have been held for more than one year and
thus are not restricted, and 705,326 of which are being registered hereunder,
and 17,255,658 shares of our common stock held by affiliates, all of which are
restricted as per Rule 144 of the Securities Act of 1933 defines as restricted
securities, 850,000 of which are being registered hereunder. All
shares being registered hereunder are available for resale as of the date of
effectiveness of this registration statement. Of the shares not being
registered hereunder, all of the non-restricted shares held by non-affiliates as
well as the restricted securities held by affiliates, subject to the limitations
on amounts and manner of sale in Rule 144, could be available for sale in a
public market, if developed, beginning 90 days after the date of this
prospectus. The availability for sale of substantial amounts of common stock
under Rule 144 could reduce prevailing market prices for our
securities.
Investors may have
difficulty in reselling their shares due to the lack of market or state Blue Sky
laws.
Our
common stock is currently not quoted on any market. No market may ever develop
for our common stock, or if developed, may not be sustained in the
future.
The
holders of our shares of common stock and persons who desire to purchase them in
any trading market that might develop in the future should be aware that there
may be significant state law restrictions upon the ability of investors to
resell our shares. Accordingly, even if we are successful in having the Shares
available for trading on the OTCBB, investors should consider any secondary
market for the Company's securities to be a limited one. We intend to seek
coverage and publication of information regarding the company in an accepted
publication which permits a "manual exemption." This manual exemption permits a
security to be distributed in a particular state without being registered if the
company issuing the security has a listing for that security in a securities
manual recognized by the state. However, it is not enough for the security to be
listed in a recognized manual. The listing entry must contain (1) the names of
issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a
profit and loss statement for either the fiscal year preceding the balance sheet
or for the most recent fiscal year of operations. We may not be able
to secure a listing containing all of this information. Furthermore,
the manual exemption is a non issuer exemption restricted to secondary trading
transactions, making it unavailable for issuers selling newly issued securities.
Most of the accepted manuals are those published in Standard and Poor's, Moody's
Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and
many states expressly recognize these manuals. A smaller number of states
declare that they “recognize securities manuals” but do not specify the
recognized manuals. The following states do not have any provisions and
therefore do not expressly recognize the manual exemption: Alabama, Georgia,
Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and
Wisconsin.
Accordingly,
our shares should be considered totally illiquid, which inhibits investors’
ability to resell their shares.
15
Because we do not have an
audit or compensation committee, shareholders will have to rely on the entire
board of directors, no members of which are independent, to perform these
functions.
We do not
have an audit or compensation committee comprised of independent directors. We
do not have any audit or compensation committee. These functions are performed
by the board of directors as a whole. None of the members of the board of
directors are independent directors under the definition set forth in the
listing standards of the NASDAQ Stock Market, Inc. Thus, there is a potential
conflict in that board members who are management will participate in
discussions concerning management compensation and audit issues that may affect
management decisions.
Although we will be a
mandatory reporting company under Section 15(d) of the Securities Act of 1933
until and through fiscal year end December 31, 2010, if we do not file a
Registration Statement on Form 8-A to become a mandatory reporting company under
Section 12(g) of the Securities Exchange Act of 1934, we will continue as a
voluntary reporting company and will not be subject to the proxy statement or
other information requirements of the 1934 Act, our securities can no longer be
quoted on the OTC Bulletin Board, and our officers, directors and 10%
stockholders will not be required to submit reports to the SEC on their stock
ownership and stock trading activity, all of which could reduce the value of
your investment and the amount of publicly available information about
us.
As a
result of this offering as required under Section 15(d) of the Securities
Exchange Act of 1934, we will file periodic reports with the Securities and
Exchange Commission through December 31, 2010, including a Form 10-K for the
year ended December 31, 2010, assuming this registration statement is declared
effective before that date. At or prior to December 31, 2010, we intend
voluntarily to file a registration statement on Form 8-A which will subject us
to all of the reporting requirements of the 1934 Act. This will require us to
file quarterly and annual reports with the SEC and will also subject us to the
proxy rules of the SEC. In addition, our officers, directors and 10%
stockholders will be required to submit reports to the SEC on their stock
ownership and stock trading activity. We are not required under Section
12(g) or otherwise to become a mandatory 1934 Act filer unless we have more than
500 shareholders and total assets of more than $10 million on December 31,
2010. If we do not file a registration statement on Form 8-A at or prior
to December 31, 2010, we will continue as a voluntary reporting company and will
not be subject to the proxy statement or other information requirements of the
1934 Act, our securities can no longer be quoted on the OTC Bulletin Board, and
our officers, directors and 10% stockholders will not be required to submit
reports to the SEC on their stock ownership and stock trading
activity.
SPECIAL
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
Some of
the statements in this prospectus are “forward-looking statements.” These
forward-looking statements involve certain known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements. These
factors include, among others, the factors set forth above under “Risk Factors.”
The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar
expressions identify forward-looking statements. We caution you not to place
undue reliance on these forward-looking statements. However, the Private
Securities Litigation Reform Act of 1995 is not available to us as a
non-reporting issuer. Further, Section 27A(b)(1)(C) of the Securities Act and
Section 21E(b)(1)(C) provide that the safe harbor for forward looking statements
does not apply to statements made by companies such as ours that issue penny
stock. Further, Section 27A(b)(2)(D) of the Securities Act and Section
21E(b)(2)(D) of the Securities Exchange Act expressly state that the safe harbor
for forward looking statements does not apply to statements made in connection
with an initial public offering.
16
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of shares offered by the selling
shareholders.
DETERMINATION
OF OFFERING PRICE
The
offering price has been arbitrarily determined and does not bear any
relationship to our assets, results of operations, or book value, or to any
other generally accepted criteria of valuation. Prior to this offering, there
has been no market for our securities. In order to assure that
selling shareholders will offer their shares at $0.35 per share until our shares
are quoted on the OTC Bulletin Board, we will notify our shareholders and our
Transfer Agent that no sales will be allowed prior to the date our shares are
quoted on the OTC Bulletin Board without proof of the selling
price.
DILUTION
Not
applicable. We are not offering any shares in this registration statement. All
shares are being registered on behalf of our selling shareholders.
SELLING
SECURITY HOLDERS
The
selling security holders named below are selling the securities. The table
assumes that all of the securities will be sold in this offering. However, any
or all of the securities listed below may be retained by any of the selling
security holders, and therefore, no accurate forecast can be made as to the
number of securities that will be held by the selling security holders upon
termination of this offering. These selling security holders acquired their
shares in various exempt transactions under Section 4(2) of the 1933 Act during
the past two years as follows:
17
2007
Davis,
Shawn
|
7/14/2007
|
21,429 | ||||
Bianco,
Thomas Scott
|
7/14/2007
|
21,429 | ||||
Bailey,
Steve
|
7/14/2007
|
1,786 | ||||
Davis,
Paul
|
7/14/2007
|
1,786 | ||||
Smith,
Timothy
|
7/14/2007
|
1,786 | ||||
Steib,
Shawn
|
7/14/2007
|
1,786 | ||||
After
1 For 280 Split On 9/7/2007
|
||||||
Davis,
Shawn
|
7/14/2007
|
6,000,000 | ||||
Bianco,
Thomas Scott
|
7/14/2007
|
6,000,000 | ||||
Bailey,
Steve
|
7/14/2007
|
500,000 | ||||
Davis,
Paul
|
7/14/2007
|
500,000 | ||||
Smith,
Timothy
|
7/14/2007
|
500,000 | ||||
Steib,
Shawn
|
7/14/2007
|
500,000 | ||||
Simmons,
Jacqui
|
11/20/2007
|
100,000 | ||||
Valenzuela,
Deattria. Raye
|
11/21/2007
|
8,000 | ||||
Tokatli,
Joseph
|
11/30/2007
|
8,000 | ||||
Valenzuela,
James and Deattria
|
12/15/2007
|
8,000 | ||||
Simmons,
Jacqui
|
12/20/2007
|
100,000 |
2,352,803
shares of Class A common stock were issued to 27 individuals who are selling
security holders.
2008
Dunn,
Gary
|
1/22/2008
|
8,000 | ||||
Steib,
Mike
|
1/23/2008
|
8,000 | ||||
Tokatli,
Joseph
|
2/5/2008
|
12,000 | ||||
Simmons,
Jacqui
|
2/22/2008
|
50,000 | ||||
Sanchez,
Mike & Tracy
|
3/23/2008
|
8,000 | ||||
Davis,
Shane & Jeannette
|
3/23/2008
|
100,000 | ||||
Parson,
Doug & Rosaura
|
3/23/2008
|
8,000 | ||||
Schaible,
Mark W. & Patty
|
3/27/2008
|
8,000 | ||||
Landress,
William & Freda
|
3/31/2008
|
8,000 | ||||
Tai,
Raymond
|
6/4/2008
|
700,000 | ||||
Slesinger,
Patty
|
6/24/2008
|
100,000 | ||||
Multimedia
Ventures, Ron Paxson Principal
|
7/22/2008
|
200,000 | ||||
Multimedia
Ventures, Ron Paxson Principal
|
8/6/2008
|
200,000 | ||||
Multimedia
Ventures, Ron Paxson Principal
|
8/12/2008
|
200,000 | ||||
Multimedia
Ventures, Ron Paxson Principal
|
8/27/2008
|
200,000 | ||||
Multimedia
Ventures, Ron Paxson Principal
|
10/7/2008
|
130,310 | ||||
Davis,
Shane & Jeannette
|
10/17/2008
|
100,000 | ||||
Stys,
Philip R.
|
10/20/2008
|
40,000 | ||||
Ramos,
Richard & Thelma
|
10/21/2008
|
13,636 | ||||
Ramos,
Richard Rito & Belen
|
10/21/2008
|
13,636 | ||||
Reason,
Michael D & Denise
|
11/21/2008
|
40,000 | ||||
Belia,
Mariscal & Davis, Jeannette
|
12/4/2008
|
27,777 | ||||
Loyd,
David T.
|
12/4/2008
|
8,000 | ||||
Sisneros,
Orlando & Linda
|
12/4/2008
|
27,777 |
18
Shares of
Class A common stock were issued for to individuals who are selling security
holders.
Shares
Issued for Services:
2007
50,000
shares of Class A common stock were issued for legal services provided to the
company to one individual.
Williams,
Michael
|
11/1/2007
|
50,000 |
2008
169,000
shares of Class A common stock were issued for services to 7 individuals who are
selling security holders.
Tai,
Raymond
|
1/31/2008
|
100,000 | |||
Curtin,
Robert
|
2/20/2008
|
8,000 | |||
George
Fog III
|
8/20/2008
|
8,000 | |||
Conley,
Bill
|
8/20/2008
|
15,000 | |||
Royce,
Robert
|
8/20/2008
|
8,000 | |||
Curtin,
Robert
|
9/21/2008
|
15,000 | |||
Lostlen,
Tad
|
9/27/2008
|
15,000 |
Shares
Issued in Conversion of other liabilities:
2008
100,000
shares of Class A common stock were issued to a vendor.
USFI
Marketing Communications
|
12/2/2008
|
100,000 |
2007
866,667
shares of Class B preferred stock were issued to 6 founders for services
rendered during 2007 with a value of $0.3375 per share based on the above
contemporaneous sale of Class B preferred stock.
19
Bailey,
Steve
|
133,333.33
|
10/5/2007
|
||
Bianco,
Thomas
|
133,333.33
|
10/5/2007
|
||
Davis,
Paul
|
133,333.33
|
10/5/2007
|
||
Davis,
Shawn
|
200,000.00
|
10/5/2007
|
||
Smith,
Timothy
|
133,333.33
|
10/5/2007
|
||
Steib,
Shawn
|
133,333.33
|
10/5/2007
|
We
relied upon Section 4(2) of the Securities Act of 1933, as amended for the above
issuances. We believed that Section 4(2) was available because:
o
|
None
of these issuances involved underwriters, underwriting discounts or
commissions.
|
o
|
Restrictive
legends were and will be placed on all certificates issued as described
above.
|
o
|
The
distribution did not involve general solicitation or
advertising.
|
o
|
The
distributions were made only to accredited investors or investors who were
sophisticated enough to evaluate the risks of the investment who
understood the speculative nature of their
investment.
|
In
connection with the above transactions, although some of the investors may have
also been accredited, we provided the following to all
investors:
|
o
|
Access
to all our books and records.
|
|
o
|
Access
to all material contracts and documents relating to our
operations.
|
|
o
|
The
opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given
access.
|
Prospective
investors were invited to review at our offices at any reasonable hour, after
reasonable advance notice, any materials available to us concerning our
business. Prospective Investors were also invited to visit our
offices.
We
believe that the selling security holders listed in the table have sole voting
and investment powers with respect to the securities indicated. We will not
receive any proceeds from the sale of the securities by the selling security
holders. None of our selling security holders is or is affiliated
with a broker-dealer.
20
Selling
Security Holders Table:
Name
|
Total
Shares
Owned
|
Shares
Registered
|
Percentage
Before
Offering
|
Number
of
Shares
after
Offering
(1)
|
Percentage
After
Offering (1)
|
Relationship
to Attune
RTD
|
||||||||||||||||
Bailey,
Steve
|
5,00,000 | 100,000 | 2.32 | % | 400,000 | 2.00 | % |
Operations
Officer
|
||||||||||||||
Bianco,
Thomas
|
5,739,281 | 100,000 | 26.69 | % | 5,639,281 | 28.27 | % |
Treasurer,
C.F.O, Director
|
||||||||||||||
Conley,
Bill
|
15,000 | 8,000 | 0.07 | % | 7,000 | 0.04 | % |
Services/PCB
Development 8/20/2008
|
||||||||||||||
Curtin,
Rob
|
23,000 | 11,500 | 0.11 | % | 11,500 | 0.06 | % |
Services/Consulting
on HVAC 2/20/2008, 9/21/2008
|
||||||||||||||
Davis,
Paul
|
500,000 | 100,000 | 2.32 | % | 400,000 | 2.00 | % |
Vice
President, Director
|
||||||||||||||
Davis,
Shane & Jeannette
|
300,000 | 100,000 | 1.39 | % | 200,000 | 1.00 | % | |||||||||||||||
Davis,
Shawn
|
5,739,281 | 100,000 | 26.69 | % | 5,639,281 | 28.27 | % |
Principal
Executive Officer, Director
|
||||||||||||||
Dunn,
Gary
|
20,000 | 8,000 | 0.09 | % | 12,000 | 0.06 | % | |||||||||||||||
Fog III,
George
|
8,000 | 8,000 | 0.04 | % | 0 | 0.00 | % |
Services/Equipment
Testing 8/20/2008
|
||||||||||||||
Landress,
William & Freda
|
8,000 | 8,000 | 0.04 | % | 0 | 0.00 | % | |||||||||||||||
Lostlen,
Tad
|
15,000 | 15,000 | 0.07 | % | 0 | 0.00 | % |
Services/Contracting
Services 9/27/2008
|
||||||||||||||
Loyd,
David T.
|
8,000 | 8,000 | 0.04 | % | 0 | 0.00 | % | |||||||||||||||
Mariscal,
Belia & Davis, Jeannette
|
27,777 | 27,777 | 0.13 | % | 0 | 0.00 | % | |||||||||||||||
Multimedia
Ventures, Ron Paxson Principal
|
1,240,283 | 100,000 | 5.77 | % | 1,140,283 | 5.72 | % | |||||||||||||||
Parsons,
Douglas & Rosaura
|
8,000 | 8,000 | 0.04 | % | 0 | 0.00 | % | |||||||||||||||
Ramos,
Richard & Belen
|
20,303 | 13,636 | 0.09 | % | 6,667 | 0.03 | % | |||||||||||||||
Ramos,
Richard & Thelma
|
13,636 | 13,636 | 0.06 | % | 0 | 0.00 | % | |||||||||||||||
Reason,
Michael & Denise
|
40,000 | 40,000 | 0.19 | % | 0 | 0.00 | % | |||||||||||||||
Royce,
Robert
|
8,000 | 8,000 | 0.04 | % | 0 | 0.00 | % |
Services/Enclosure
Engineering 8/20/2008
|
||||||||||||||
Sanchez,
Mike & Tracy
|
8,000 | 8,000 | 0.04 | % | 0 | 0.00 | % | |||||||||||||||
Schaible,
Mike & Patti
|
16,000 | 8,000 | 0.07 | % | 8,000 | 0.04 | % | |||||||||||||||
Simmons,
Jacqui
|
350,000 | 100,000 | 1.63 | % | 250,000 | 1.25 | % | |||||||||||||||
Sisneros,
Orlando & Linda
|
27,777 | 27,777 | 0.13 | % | 0 | 0.00 | % | |||||||||||||||
Slesinger,
Patty
|
100,000 | 100,000 | 0.46 | % | 0 | 0.00 | % | |||||||||||||||
Smith,
Timothy
|
500,000 | 100,000 | 2.32 | % | 400,000 | 2.00 | % |
Secretary
|
||||||||||||||
Steib,
Mike
|
8,000 | 8,000 | 0.04 | % | 0 | 0.00 | % | |||||||||||||||
Steib,
Shawn
|
500,000 | 100,000 | 2.32 | % | 400,000 | 2.00 | % |
Executive
Technical Officer
|
||||||||||||||
Stys,
Philip R.
|
106,667 | 40,000 | 0.50 | % | 66,667 | 0.33 | % | |||||||||||||||
Tai,
Raymond
|
2,945,714 | 100,000 | 13.70 | % | 2,845,714 | 14.26 | % |
Foreign
Operations Officer
|
||||||||||||||
Tokatli,
Joseph
|
20,000 | 20,000 | 0.09 | % | 0 | 0.00 | % | |||||||||||||||
USFI
Marketing Faisal Ahmad Principal
|
239,944 | 100,000 | 1.12 | % | 139,944 | 0.70 | % |
Services/Marketing
Communications On Going
|
||||||||||||||
Valenzuela,
Deattria Raye
|
8,000 | 8,000 | 0.04 | % | 0 | 0.00 | % | |||||||||||||||
Valenzuela,
James & Deattria
|
8,000 | 8,000 | 0.04 | % | 0 | 0.00 | % | |||||||||||||||
Williams,
Michael
|
170,000 | 50,000 | 0.79 | % | 120,000 | 0.60 | % |
Attorney-
On going
|
||||||||||||||
Total
|
21,505,511 | 1,555,326 | 100.00 | % | 19,950,184.00 | 100.00 | % |
[1]
Assuming sale of all shares registered hereunder.
21
Blue Sky
The
holders of our shares of common stock and persons who desire to purchase them in
any trading market that might develop in the future should be aware that there
may be significant state law restrictions upon the ability of investors to
resell our shares. Accordingly, even if we are successful in having the Shares
available for trading on the OTCBB, investors should consider any secondary
market for the Company's securities to be a limited one. We intend to seek
coverage and publication of information regarding the company in an accepted
publication which permits a "manual exemption." This manual exemption permits a
security to be distributed in a particular state without being registered if the
company issuing the security has a listing for that security in a securities
manual recognized by the state. However, it is not enough for the security to be
listed in a recognized manual. The listing entry must contain (1) the names of
issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a
profit and loss statement for either the fiscal year preceding the balance sheet
or for the most recent fiscal year of operations. We may not be able
to secure a listing containing all of this information. Furthermore,
the manual exemption is a non issuer exemption restricted to secondary trading
transactions, making it unavailable for issuers selling newly issued securities.
Most of the accepted manuals are those published in Standard and Poor's, Moody's
Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and
many states expressly recognize these manuals. A smaller number of states
declare that they “recognize securities manuals” but do not specify the
recognized manuals. The following states do not have any provisions and
therefore do not expressly recognize the manual exemption: Alabama, Georgia,
Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and
Wisconsin.
PLAN
OF DISTRIBUTION
Our
common stock is currently not quoted on any market. No market may ever develop
for our common stock, or if developed, may not be sustained in the future.
Accordingly, our shares should be considered totally illiquid, which inhibits
investors’ ability to resell their shares.
22
Selling
shareholders are offering up to 1,555,326 shares of common stock. The selling
shareholders will offer their shares at $0.35 per share until our shares are
quoted on the OTC Bulletin Board and thereafter at prevailing market prices or
privately negotiated prices. We will not receive proceeds from the sale of
shares from the selling shareholders.
The
securities offered by this prospectus will be sold by the selling shareholders.
We are not aware of any underwriting arrangements that have been entered into by
the selling shareholders. The distribution of the securities by the selling
shareholders may be effected in one or more transactions that may take place in
the over-the-counter market, including broker's transactions or privately
negotiated transactions.
The
selling shareholders may pledge all or a portion of the securities owned as
collateral for margin accounts or in loan transactions, and the securities may
be resold pursuant to the terms of such pledges, margin accounts or loan
transactions. Upon default by such selling shareholders, the pledge in such loan
transaction would have the same rights of sale as the selling shareholders under
this prospectus. The selling shareholders may also enter into exchange traded
listed option transactions, which require the delivery of the securities listed
under this prospectus. After our securities are qualified for quotation on the
over the counter bulletin board, the selling shareholders may also transfer
securities owned in other ways not involving market makers or established
trading markets, including directly by gift, distribution, or other transfer
without consideration, and upon any such transfer the transferee would have the
same rights of sale as such selling shareholders under this
prospectus.
In
addition to the above, each of the selling shareholders will be affected by the
applicable provisions of the Securities Exchange Act of 1934, including, without
limitation, Regulation M, which may limit the timing of purchases and sales of
any of the securities by the selling shareholders or any such other person. We
have instructed our selling shareholders that they may not purchase any of our
securities while they are selling shares under this registration
statement.
Upon this
registration statement being declared effective, the selling shareholders may
offer and sell their shares from time to time until all of the shares registered
are sold; however, this offering may not extend beyond two years from the
initial effective date of this registration statement.
There can
be no assurances that the selling shareholders will sell any or all of the
securities. In various states, the securities may not be sold unless these
securities have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and is complied
with.
All of
the foregoing may affect the marketability of our securities. Pursuant to oral
promises we made to the selling shareholders, we will pay all the fees and
expenses incident to the registration of the securities.
23
Should
any substantial change occur regarding the status or other matters concerning
the selling shareholders or us, we will file a post-effective amendment to this
registration statement disclosing such matters.
OTC Bulletin Board
Considerations
To be
quoted on the OTC Bulletin Board, a market maker must file an application on our
behalf in order to make a market for our common stock. We anticipate that after
this registration statement is declared effective, market makers will enter
“piggyback” quotes and our securities will thereafter trade on the OTC Bulletin
Board.
The OTC
Bulletin Board is separate and distinct from the NASDAQ stock market. NASDAQ has
no business relationship with issuers of securities quoted on the OTC Bulletin
Board. The SEC’s order handling rules, which apply to NASDAQ-listed securities,
do not apply to securities quoted on the OTC Bulletin Board.
Although
the NASDAQ stock market has rigorous listing standards to ensure the high
quality of its issuers, and can delist issuers for not meeting those standards,
the OTC Bulletin Board has no listing standards. Rather, it is the market maker
who chooses to quote a security on the system, files the application, and is
obligated to comply with keeping information about the issuer in its files.
FINRA cannot deny an application by a market maker to quote the stock of a
company. The only requirement for inclusion in the bulletin board is that the
issuer be current in its reporting requirements with the SEC.
Although
we anticipate listing on the OTC Bulletin board will increase liquidity for our
stock, investors may have greater difficulty in getting orders filled because it
is anticipated that if our stock trades on a public market, it initially will
trade on the OTC Bulletin Board rather than on NASDAQ. Investors’ orders may be
filled at a price much different than expected when an order is placed. Trading
activity in general is not conducted as efficiently and effectively as with
NASDAQ-listed securities.
Investors
must contact a broker-dealer to trade OTC Bulletin Board securities. Investors
do not have direct access to the bulletin board service. For bulletin board
securities, there only has to be one market maker.
Bulletin
board transactions are conducted almost entirely manually. Because there are no
automated systems for negotiating trades on the bulletin board, they are
conducted via telephone. In times of heavy market volume, the limitations of
this process may result in a significant increase in the time it takes to
execute investor orders. Therefore, when investors place market orders - an
order to buy or sell a specific number of shares at the current market price -
it is possible for the price of a stock to go up or down significantly during
the lapse of time between placing a market order and getting
execution.
Because
bulletin board stocks are usually not followed by analysts, there may be lower
trading volume than for NASDAQ-listed securities.
24
LEGAL
PROCEEDINGS
We are
not aware of any pending or threatened legal proceedings in which we are
involved.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The board
of directors elects our executive officers annually. A majority vote of the
directors who are in office is required to fill vacancies. Each director shall
be elected for the term of one year, and until his successor is elected and
qualified, or until his earlier resignation or removal. Our directors and
executive officers are as follows:
Name
|
Age
|
Position
|
|||
Shawn
Davis
|
40
|
Chief
Executive Officer/Director
|
|||
Thomas
Bianco
|
45
|
Treasurer/Director
|
|||
Paul
Davis
|
62
|
Vice
President/Director
|
|||
Timothy
Smith
|
71
|
Secretary
|
|||
Steve
Bailey
|
55
|
Operations
Officer
|
|||
Shawn
Steib
|
27
|
Executive
Technical Officer
|
|||
Raymond
Kwok
Cheung
Tai
|
|
58
|
|
Foreign
Operations Officer
|
Family Relationships among
Officers and or Directors
Shawn
Davis and Paul Davis are father and son. Timothy Smith is Shawn
Davis’ father-in-law. Steve Bailey is Shawn Steib’s father in
law.
Shawn
Davis joined us in June 2007 as Chief Executive Officer. From June
2007 to present, Mr. Davis has been the C.E.O of Attune RTD. From
1995 to present owner of S.D. Electric. From March 2005 to
2007, worked for Davis Companies as V.P. of Operations. From
1998 to 2002, employed by El Monte Unified High School District as a school
teacher. In 1997 earned a B.S. in Business from Azusa Pacific
University. In 1995 obtained a C-10 Electrical Contractors
License. In 2009 obtained a certificate from “Boots on the Roof” as a
certified photovoltaic installer.
Thomas
Bianco joined us in June 2007 as Treasurer and Director. From June
1994 to date, he has been the owner of Bianco & Son Fine Jewelry &
Collectables. He holds a Gemologist Degree received from the
Gemological Institute of America issued in December 1994. He is
a current Member of the National Association of Jewelry Appraisers # 94070 since
October 1994. In December 2005, he received a Bachelor Degree in
Business Science (BSB/M) from University Phoenix. In May 2007, he
received a Masters Degree in Business Administration (MBA) from Colorado State
University. He holds a Second Hand Dealers License issued by the Palm
Springs Police Department in July 2007.
25
Paul
Davis joined us in June 2007 as Vice President and Director. From
2002 to date, he has been Senior Field Supervisor for Davis Companies, Inc., a
general contracting business specializing in property management and medium
sized construction projects.
Timothy
Smith joined us in June 2007 as Secretary. From 1966 to date, he has
been an Engineer, in the Quotation Department for National Technical Systems,
which specializes in engineering, testing and evaluation, certification
servicing and technical resources.
Steve
Bailey joined us in June 2007 as Operations Officer. From 2007 to
date, he has been president and CEO of American Patriot Building
Contractors. From 2006 to 2007, he was Vice President of Operations
for Davis Companies, Inc. From 2004 to 2006, he was Director of Human
Resources for Stronghold Engineering, Inc. From 2002 to 2006, he was
Project Manager for Stronghold Engineering, Inc. He received a
Doctorate in Education from Pepperdine University in 2002, a Master's Degree in
Education from California State University, San Bernardino in 1994 and a
Bachelor's Degree in Business from University of Redlands in 1992.
Shawn
Steib joined us in June 2007 as Executive Technical Officer. From
July 2000 to December 2005, he was a Tile Setter at Peterson Tile
Inc. From December 2005 to March 2007, he was Vice President of Davis
Companies, Inc. From March 2007 to date, he has been Vice President
of Operations at American Patriot, an organization specializing in general
construction of small to medium sized construction projects.
Raymond
Kwok Cheung Tai joined us in July 2007
and became the Foreign Operations Officer. From April 1989 to date, he has
worked at Aqua Lung American Inc., as the Design and Development Manager. Aqua
Lung America specializes in the design and manufacture of diving
equipment. Mr. Tai had a personal bankruptcy under Chapter 13 which
was discharged in October 2005.
None of
our management devotes full time to their duties to our business, as
follows:
Name
|
|
Percentage of Time
Currently Devoted to
Our Business
|
|
Percentage of Time
Currently to be Devoted to
Our Business upon
completion of funding and
commencement of full-scale
operations [1]
|
|
Shawn
Davis
|
60
|
100
|
|||
Thomas
Bianco
|
60
|
100
|
|||
Paul
Davis
|
5
|
80
|
|||
Timothy
Smith
|
2
|
20
|
|||
Steve
Bailey
|
2
|
20
|
|||
Shawn
Steib
|
2
|
100
|
|||
Raymond
Kwok
Cheung
Tai
|
|
35
|
|
50
|
26
As a
result, our management may not currently be able to devote the time necessary to
our business to assure successful implementation of our business
plan.
[1]
Completion of funding and commencement of full-scale operations means the
following:
The
following additional business activities can be completed with approximately
$1,700,000 in capital:
Activity
|
Number
of Units
|
cost per
unit
|
Total
|
|||||||||
Inventory
|
||||||||||||
BrioWave
175p Units
|
4,500 | $ | 170.00 | $ | 765,000.00 | |||||||
$ | 765,000.00 | |||||||||||
Operations
|
||||||||||||
Existing
SG&A Expense
|
$ | 472,000.00 | ||||||||||
Hire
Sales Representative E. Coast
|
1 | $ | 85,000.00 | |||||||||
Hire
Sales Representative W. Coast
|
1 | $ | 85,000.00 | |||||||||
HP
Servers Cloud Computing
|
3 | $ | 14,681.10 | |||||||||
Web
Infrastructure
|
1 | $ | 33,126.11 | |||||||||
$ | 689,807.21 | |||||||||||
Marketing
|
||||||||||||
Marketing
Services to drive revenue
|
$ | 245,192.79 | ||||||||||
$ | 245,192.79 | |||||||||||
Total
|
$ | 1,700,000.00 |
Approximately
four thousand five hundred BrioWave 175p units can be produced. The
additional inventory can be marketed and promoted in additional territories,
outside of California and Texas through two additional sales representatives,
and marketed through a new promotional and positioning marketing plan that
targets segmented consumer profiles.
A
scalable web infrastructure consisting of three specially configured servers
running VM Ware software in a cloud computing environment, housing Attune RTD’s
proprietary Graphical User Interface could be purchased in line with its value
proposition to save consumers money to allow for the remote monitoring,
changing, and manipulation of its BrioWave 175 controllers for the purposes of
conserving energy and reducing energy consumption to save
money.
27
Hybrid Motor Development
Expense
|
||||||||||||
Motor
Development Expense
|
$ | 125,000.00 | ||||||||||
PCB
Controller Expense
|
$ | 90,000.00 | ||||||||||
Tooling
Expense, Moulds
|
$ | 70,000.00 | ||||||||||
$ | 285,000.00 | |||||||||||
Inventory
|
||||||||||||
Hybrid
Motor
|
4,500 | $ | 130.00 | $ | 585,000.00 | |||||||
Controller
|
4,500 | $ | 64.00 | $ | 288,000.00 | |||||||
$ | 873,000.00 | |||||||||||
Operations
|
||||||||||||
Existing
SG&A Expense
|
$ | 472,000.00 | ||||||||||
Hire
IT Personnel
|
1 | $ | 85,000.00 | |||||||||
Hire
Computer Code Programmer
|
1 | $ | 85,000.00 | |||||||||
$ | 642,000.00 | |||||||||||
Total
|
$ | 1,800,000.00 |
The
remaining $1,800,000 in capital detailed in the above table fully capitalizes
Attune RTD’s business plan, and constitutes completion of funding and
commencement of full-scale operations.
Family
Relationships
Shawn
Davis and Paul Davis are father and son. Timothy Smith is Shawn
Davis’ father-in-law. Steve Bailey is Shawn Steib’s father in
law.
Board
Committees
We
currently have no compensation committee or other board committee performing
equivalent functions. Currently, all members of our board of directors
participate in discussions concerning executive officer
compensation.
Legal
Proceedings
Except as
set forth above, no officer, director, or persons nominated for such positions,
promoter or significant employee has been involved in the last five years in any
of the following:
|
o
|
Any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that
time,
|
28
|
o
|
Any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses),
|
|
o
|
Being
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking
activities,
|
|
o
|
Being
found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or
vacated.
|
Corporate
Governance
Our Board
of Directors has three directors and has not established Audit, Compensation,
and Nominating or Governance Committees as standing committees. The Board does
not have an executive committee or any committees performing a similar function.
We are not currently listed on a national securities exchange or in an
inter-dealer quotation system that has requirements that a majority of the board
of directors be independent. The Board has determined that the no members of the
Board are “independent” under the definition set forth in the listing standards
of the NASDAQ Stock Market, Inc., which is the definition that the Board has
chosen to use for the purposes of the determining independence, as the OTCBB
does not provide such a definition. Therefore, none of our current Board members
are independent.
EXECUTIVE
COMPENSATION
Summary Compensation
Table
The table
below summarizes all compensation awarded to, earned by, or paid to our
Principal Executive Officer, our two most highly compensated executive officers
other than our PEO who occupied such position at the end of our latest fiscal
year and up to two additional executive officers who would have been included in
the table below except for the fact that they were not executive officers at the
end of our latest fiscal year, by us, or by any third party where the purpose of
a transaction was to furnish compensation, for all services rendered in all
capacities to us for the latest two fiscal years ended December 31, 2009 and
2008.
29
Name
|
Title
|
Year
|
Salary
|
Bonus
|
Stock
awards
|
Option
awards
|
Non
qualified
deferred
compensation
|
All other
compensation
|
Total
|
|||||||||||||||||||||||
Shawn
Davis
|
CEO/Director
|
2008
|
$ | 92,054.00 | 0 | 0 | 0 | $ | 48,715.50 | 0 | 140,770 | |||||||||||||||||||||
Thomas
Bianco
|
Treasurer/Director
|
2008
|
$ | 92,054.00 | 0 | 0 | 0 | $ | 48,715.50 | 0 | 140,770 | |||||||||||||||||||||
Shawn
Davis
|
CEO/Director
|
2009
|
$ | 81,095.00 | 0 | 0 | 0 | $ | 38,905.00 | 0 | 120,000 | |||||||||||||||||||||
Thomas
Bianco
|
Treasurer/Director
|
2009
|
$ | 81,095.00 | 0 | 0 | 0 | $ | 38,905.00 | 0 | 120,000 |
Summary Equity Awards
Table
The
following table sets forth certain information for our executive officers
concerning unexercised options, stock that has not vested, and equity incentive
plan awards as of December 31, 2008, and 2009:
OUTSTANDING EQUITY AWARDS AT
FISCAL YEAR-END December 31, 2008 and 2009
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number
Of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)
|
|
||||||||
Shawn
Davis
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||||||
Thomas
Bianco
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
30
Narrative disclosure to
summary compensation and option tables
Set forth
below are the material terms of each named executive officer's employment
agreement or arrangement, whether written or unwritten:
Effective
March 26, 2008, the Company established two employment arrangements by
resolution of the Board of Directors with Shawn Davis, its Chief Executive
Officer and Thomas Bianco, Chief Financial Officer. These arrangements
established a yearly salary for each of $120,000. The amounts due to
the officers represent accrued salaries covering payroll periods from both 2008
and 2009, for which the officers did not receive
compensation. No formal employment agreement has been executed
between the parties. As of December 31, 2009, the Company owed its
officers an aggregate of $175,239 based on the terms of the
agreement. Additionally, during the year ended December 31, 2007,
neither officer was paid for his services. Based on the value of the
above agreement, the Company recorded the estimated value of contributed
services from its officers of $111,781 representing work performed from
formation of the Company through December 31, 2007.
During
both 2008 and 2009 the officers’ accrued salaries based on the $120,000 per year
each as the employment agreement stipulated. The officers only received cash
compensation as funds were available and therefore reduced the accrual by those
amounts. Therefore, at 12/31/08 and 12/31/09 the accrual of salaries would not
tie directly to the base salary of $120,000 for each officer.
Board of
Directors
Director
Compensation for years ended December 31, 2009 and 2008.
Name
|
Fees
earned
or paid
in cash
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Non-equity
incentive plan
compensation
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All other
compensation
($)
|
Total
($)
|
|||||||||||||||||||||
Shawn
Davis
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
||||||||||||||
Thomas
Bianco
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
||||||||||||||
Paul
Davis
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
Narrative
to Director Compensation Table
We have
no compensation arrangements (such as fees for retainer, committee service,
service as chairman of the board or a committee, and meeting attendance) with
directors.
31
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following tables set forth the ownership of our common stock by each person
known by us to be the beneficial owner of more than 5% of our outstanding voting
securities, our directors, our executive officers, and our executive officers
and directors as a group. To the best of our knowledge, the persons named
have sole voting and investment power with respect to such shares, except as
otherwise noted. There are not any pending or anticipated arrangements that may
cause a change in control.
The
information presented below regarding beneficial ownership of our voting
securities has been presented in accordance with the rules of the Securities and
Exchange Commission and is not necessarily indicative of ownership for any other
purpose. Under these rules, a person is deemed to be a "beneficial owner" of a
security if that person has or shares the power to vote or direct the voting of
the security or the power to dispose or direct the disposition of the security.
A person is deemed to own beneficially any security as to which such person has
the right to acquire sole or shared voting or investment power within 60 days
through the conversion or exercise of any convertible security, warrant, option
or other right. More than one person may be deemed to be a beneficial owner of
the same securities. The percentage of beneficial ownership by any person as of
a particular date is calculated by dividing the number of shares beneficially
owned by such person, which includes the number of shares as to which such
person has the right to acquire voting or investment power within 60 days, by
the sum of the number of shares outstanding as of such date plus the number of
shares as to which such person has the right to acquire voting or investment
power within 60 days. Consequently, the denominator used for calculating such
percentage may be different for each beneficial owner. Except as otherwise
indicated below and under applicable community property laws, we believe that
the beneficial owners of our common stock listed below have sole voting and
investment power with respect to the shares shown. The business address for all
persons is 3700 B Tachevah Road, Suite 117 Palm Springs,
CA 92262.
Class A Common
Stock
Name
|
Total Shares Owned
|
Percentage
|
||||||
Bianco,
Thomas
|
5,739,281
|
26.69
|
%
|
|||||
Davis,
Shawn
|
5,739,281
|
26.69
|
%
|
|||||
Tai,
Raymond
|
2,945,714
|
13.70
|
%
|
|||||
Multimedia
Ventures, Inc. (Ron Paxson, beneficial owner)
|
1,204,283
|
5.77
|
%
|
|||||
All
officers and directors as a group [ 7 persons]
|
16,945,714
|
76.37
|
%
|
Class B Preferred
Stock
Name
|
Total Shares Owned
|
Percentage
|
||||||
Davis,
Shawn
|
200,000
|
20.00
|
%
|
|||||
Bianco,
Thomas
|
133,333.33
|
13.33
|
%
|
|||||
Davis,
Paul
|
133,333.33
|
13.33
|
%
|
|||||
Smith,
Timothy
|
133,333.33
|
13.33
|
%
|
|||||
Bailey,
Steve
|
133,333.33
|
13.33
|
%
|
|||||
Steib,
Shawn
|
133,333.33
|
13.33
|
%
|
|||||
Kwok
Cheung Tai, Raymond
|
133,333.33
|
13.33
|
%
|
|||||
TOTAL
|
1,000,000.00
|
100.00
|
%
|
32
This
table is based upon information derived from our stock records. Unless otherwise
indicated in the footnotes to this table and subject to community property laws
where applicable, each of the shareholders named in this table has sole or
shared voting and investment power with respect to the shares indicated as
beneficially owned. Except as set forth above, applicable percentages are based
upon 21,505,511 shares of common stock and 1,000,000 shares of Class B Preferred
Stock outstanding as of March 22, 2010.
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSON
On July
14, 2007 14,000,000 post split vested shares of Class A common stock were issued
to 6 founders having a fair value of $232,400, based on a nominal value of
$0.0166 per share. The six founders who were issued shares and the
number of shares issued to each is as follows:
Davis,
Paul Shawn
|
7/14/2007
|
6,000,000
|
Post
Split
|
|||
Bianco,
Thomas Scott
|
7/14/2007
|
6,000,000
|
Post
Split
|
|||
Bailey,
Steve
|
7/14/2007
|
500,000
|
Post
Split
|
|||
Davis,
Paul
|
7/14/2007
|
500,000
|
Post
Split
|
|||
Smith,
Timothy
|
7/14/2007
|
500,000
|
Post
Split
|
|||
Steib,
Shawn
|
7/14/2007
|
500,000
|
Post
Split
|
On
October 5, 2007, 866,667 shares of Class B preferred stock were issued to 6
founders for services rendered during 2007 with a value of $0.3375 per share
based on the above contemporaneous sale of Class B preferred
stock. The six founders who were issued shares and the number of
shares issued to each is as follows:
Bailey,
Steve
|
133,333.33
|
10/5/2007
|
||
Bianco,
Thomas
|
133,333.33
|
10/5/2007
|
||
Davis,
Paul
|
133,333.33
|
10/5/2007
|
||
Davis,
Shawn
|
200,000.00
|
10/5/2007
|
||
Smith,
Timothy
|
133,333.33
|
10/5/2007
|
||
Steib,
Shawn
|
133,333.33
|
10/5/2007
|
33
During
the years ended December 31, 2008 and 2007, the Company received funds from
the issuance of a shareholder loan agreement to Mr. Tai. During the
year ended December 31, 2007, the Company had received $30,000 under this
agreement. During the year ended December 31, 2008, the Company
received and additional $30,000 and repaid $4,800. The outstanding balance as of
December 31, 2008 was $55,200. On August 10, 2009, the Company
converted $55,200 of loans due to Mr. Tai into 788,571 shares of common stock
which were valued at $118,286 or $0.15 per share. Based on
contemporaneous cash sales prices of the Company's common stock. Mr.
Tai owns 2,945,714 shares of our common stock, or 13.70% of our issued and
outstanding common stock, and thus is considered a related person.
Pursuant
to two separate unsecured promissory notes with our chief executive officer and
our chief financial officer (borrowers) dated August 1, 2007, each borrower may
borrow an amount equal to or less than $90,000 each at a rate of
5.75%. Principal and interest are due under the terms of the loans on
or before January 31, 2017. Total principal and interest due under
the loans as of December 31, 2009 and December 31, 2008 was $175,825 and
$166,625 respectively. As of 1/31/2010 the officers redeemed 521,439
shares of its common stock with a value of $0.35 per share to the company, to
satisfy this outstanding debt obligation.
The Class
B Participating Cumulative Preferred Super-voting Stock owned by certain of our
officers and directors as set forth in “Security Ownership of Certain Beneficial
Owners and Management,” above, pays cumulative dividends at 6%. For
the years ended December 31, 2009 and 2008, the board of directors did not
declare any dividends and dividends will not be declared until we have
sufficient cash from profits to do so. Total undeclared Class B
Participating Cumulative Preferred Super-voting Stock dividends as of December
31, 2009 was $49,987.
Effective
March 26, 2008, the Company established two employment arrangements by
resolution of the Board of Directors with its Chief Executive Officer and, Chief
Financial Officer. These arrangements established a yearly salary for each of
$120,000. No formal employment agreement has been executed between
the parties. As of December 31, 2009, the Company owed its officers
$175,239 based on the terms of the agreement. Additionally, during
the year ended December 31, 2007, neither officer was paid for his
services. Based on the value of the above agreement, the Company
recorded the estimated value of contributed services from its officers of
$111,781 representing work performed from formation of the Company through
December 31, 2007. These arrangements are with Shawn Davis and
Thomas Bianco.
The
amounts and terms of the above transactions may not necessarily be indicative of
the amounts and terms that would have been incurred had comparable transactions
been entered into with independent third parties.
34
DESCRIPTION
OF SECURITIES
The
following description is a summary of the material terms of the provisions of
our articles of incorporation and bylaws. The articles of incorporation and
bylaws have been filed as exhibits to the registration statement of which this
prospectus is a part.
Common
Stock
We are
authorized to issue 59,000,000 shares of common stock of which 59,000,000 are
designated Class A common stock with $0.0166 par value per share. As of the date
of this registration statement, there were 21,505,511 shares of Class A common
stock issued and outstanding held by 90 shareholders of record. As of the date
of this registration statement, there were 1,000,000 shares of Class B preferred
cumulative participating super voting stock issued and outstanding held by
executive officers of record.
Each
share of Class A common stock entitles the holder to one vote, either in person
or by proxy, at meetings of shareholders.
Holders
of common stock are entitled to receive ratably such dividends, if any, as may
be declared by the Board of Directors out of funds legally available- see same
amendment- preferred get preference in payment and then share with common. We
have not paid any dividends since our inception, and we presently anticipate
that all earnings, if any, will be retained for development of our business. Any
future disposition of dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings,
operating and financial condition, capital requirements, and other
factors.
Holders
of our common stock have no preemptive rights or other subscription rights,
conversion rights, redemption or sinking fund provisions. Upon our liquidation,
dissolution or winding up, the holders of our common stock will be entitled to
share ratably in the net assets legally available for distribution to
shareholders after the payment of all of our debts and other
liabilities.
Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of Class B preferred cumulative
participating super voting stock with $0.0166 par value per share entitled to
100 votes per share. The Class B Participating Cumulative Preferred
Super-voting Stock pays dividends at 6%. As of the date of this
Prospectus, all 1,000,000 Class B preferred cumulative participating super
voting stock is issued and outstanding.
Each
share of Class B preferred stock entitles the holder to one hundred votes,
either in person or by proxy, at meetings of shareholders. The holders are
permitted to vote their shares cumulatively as one class with the common stock.
Accordingly, the shareholders of our Class B preferred stock who hold, in the
aggregate, more than fifty percent of the total voting rights of our Class B
preferred stock can elect all of our directors and, in such event, the holders
of the remaining minority shares will not be able to elect any of such
directors. The vote of the holders of a majority of the issued and outstanding
shares of common stock and Class B preferred stock entitled to vote thereon is
sufficient to authorize, affirm, ratify or consent to such act or action, except
as otherwise provided by law. This provision in our Articles of
Incorporation would prevent or delay change in our control.
35
As of the
date of this Prospectus, all 1,000,000 Class B preferred cumulative
participating super voting stock is issued and outstanding. Each share of Class
B preferred stock entitles the holder to one hundred votes, either in person or
by proxy, at meetings of shareholders. The holders are permitted to vote their
shares cumulatively as one class with the common stock. The total
percentage of voting control on a combined basis that is held by officers,
directors and affiliates is 95.82%.
The Board
of Directors is authorized without limitation to fix by resolution the dividend
rights and dividend rates of Class B Participating Cumulative Preferred
Supervoting Stock which has been set at 6% by resolution of the
Board.
EXPERTS
Salberg
& Company, P.A., an independent registered public accounting firm, audited
our financial statements filed herein for the years ended December 31, 2009
and 2008, and for the period from July 14, 2007 (Inception of development stage)
to December 31, 2009, which is set forth in their report which is included in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
INTEREST
OF NAMED EXPERTS
The
legality of the shares offered under this registration statement is being passed
upon by Williams Law Group, P.A., Tampa, FL. Michael T. Williams, principal of
Williams Law Group, P.A. owns 50,000 shares of our common stock, all of which
are being registered in this registration statement.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
LIABILITIES
Our
by-laws, subject to the provisions of Nevada Corporation Law, contain provisions
which allow the corporation to indemnify any person against liabilities and
other expenses incurred as the result of defending or administering any pending
or anticipated legal issue in connection with service to us if it is determined
that person acted in good faith and in a manner which he reasonably believed was
in the best interest of the corporation. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to our
directors, officers and controlling persons, we have been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable.
36
DESCRIPTION
OF BUSINESS
Organization
ATTUNE
RTD is a Nevada corporation which was originally incorporated as Catalyst Set
Corporation on December 19, 2001 and changed its name in September 2007 to
Interfacing Technologies, Inc and again changed to our current name in March
2008.
We
maintain our principal place of business and corporate headquarters at 3700 B
Tachevah Road, Suite 117 Palm Springs, CA 92262. Our phone
number is: (760)323-0233. Our website is www.attunertd.com. Nothing
on our website is part of this registration statement.
Business
ATTUNE
RTD uses its patented pending, proprietary technology in products designed to
promote energy conservation and save cost for owners of swimming
pools. It is also designed to prevent potential costly maintenance
problems from occurring in swimming pool filtration systems.
We
currently have two models of our product, the “BrioWave
175p” and “BrioWave 325p”,
and an interactive Graphical User
Interface (GUI).
We have
not generated any revenue from the sale of our products. There is
substantial doubt about our ability to continue as a going concern over the next
twelve months.
Products
The “BrioWave
175p” is designed to conserve energy and reduce costs through an
electrical control center with timing mechanisms linking the pool owner’s air
conditioning/heating, or HVAC, unit and the pool circulation and filtration
system. A swimming pool filtration system does not need to run 24
hours a day. Typically, an average 18,000 gallon swimming pool system
with a filtration system moving 60 gallons per minute would need to run a
minimum of 5.0 hours a day to accomplish their purpose. The
electronic control center gives the household HVAC system use priority and only
allows the swimming pool system to turn on when the HVAC system is
off. At the end of the day, if the pool filtration system has not run
for the required amount of time, the system will allow both the HVAC and pool
filtration systems to operate simultaneously for the remainder of the day, but
not during pre-determined peak energy times of use, as determined by the utility
industry. Peak time of use are those periods during the summer
typically between the hours of 12 p.m. and 6 p.m., when energy rates increase 14
times the standard rate. Further, in those areas of the country which
have or will have variable power pricing, with electricity costing more during
certain peak periods, the device is designed to reduce or eliminate the time the
pool filtration system runs during the higher-cost peak load times. There is
override capability to allow for the air conditioning and pool equipment to run
at the same time for maintenance purposes. Additionally, our device
filtrates in real time, by measuring ambient air temperatures and comparing that
data to 30 year average daily temperatures compiled by the department of energy,
and then makes adjustments to actual filtration times either increasing
filtration or decreasing filtration.
37
The
device is
also designed to reduce potential costly swimming pool maintenance problems by
monitoring pressure in a swimming pools filtration system. Excess
pressure in a filtration system can cause costly damage such as grid breakage
and overheating of induction motors. Our device activates when a
predetermined amount of pressure exceeds a pre-set ceiling or threshold by automatically
opening an electronic valve to allow a minimal amount of water to bypass,
relieving the over-pressure condition between the pump and
filter. After the system has run for the prescribed period of time
during a day, the device then rotates three different valves, restarts and
backwashes the system. Backwashing purges the filter of dirt and
debris which likely may have resulted in the overpressure condition in the first
place. When local regulations require, the backwashed water is pumped
10 or 20 gallon PVC holding tank and the water is then recycled back into the
pools system. When the backwash is completed, usually within several
minutes, the system shuts itself down and rotates the valves back to their
normal operating positions, the swimming pools circulation and filtration system
is ready for the next day’s cycle of normal run time. This feature is
also designed to conserve energy in that it will only allow the backwashing
cycle to take place in the evening when the air conditioning load is generally
less.
The
“BrioWave
175p” model does not contain the pressure monitoring/automatic backwash
system contained in our BrioWave
325p.”
Current
retail pricing projections for the BrioWave 175p are $472.22 retail to consumer
which includes 40% margins to distributor and 40% margin mark up to consumer,
and $629.00 retail to consumer for the BrioWave 325p with 40% margins to
distributor and 40% margin mark up to consumer.
The
“BrioWave
325p” is designed to conserve energy and reduce costs through an
electrical control center with timing mechanisms linking the pool owner’s air
conditioning/heating, or HVAC, unit and the pool circulation and filtration
system. It coordinates the timing of operation of the HVAC unit and
the pool circulation and filtration system. The device is
also designed to reduce potential costly swimming pool maintenance problems by
monitoring pressure in a swimming pools filtration system. It is
designed with all of the functionality of the BrioWave 175p, however, the
BrioWave 325p is designed to monitor pressure in the swimming pools filtration
system and react to overpressure conditions by reading from a pressure switch
that must be installed in line on the filtration system plumbing lines and wired
to a future on the BrioWave 325p controller. When an over pressure
condition exists, a signal is sent to automatic in line valve controls, which
are not included and plumbed in line and powered separately, to rotate one
hundred and eighty degrees to reverse the flow of water in the filtration system
to clear dirt or debris from the filter, which are ejected into a small holding
tank which must be purchased separately. The device is ZigBee Wi-Fi
enabled. The term, ZigBee Wi-Fi denotes a high level wireless
networking communication protocol utilizing small, low cost low power radios
allowing the device to communicate directly to the newly developed globally
implemented smart meter that allows the utilities to measure energy inflow and
outflows during time of use, allowing for integration within the utilities newly
developed smart grid infrastructure. Additionally, each BrioWave unit
has the ability to integrate within the home wireless network by having its own
internally installed wireless communications module with built in web
server. The Graphical User Interface is a server based software
platform that allows users of both BrioWave control units to access, control,
change and view BrioWave parameters from remote
locations.
38
The
BrioWave 175p and BrioWave 325p are near completion with pilot units expected by
end of March 2010 for the BrioWave 175p and by January 2011 for the BrioWave
325p. The Graphical User Interface is expected to be completed by end
of April 2010, and will be available to BrioWave consumers through an annual
license fee. By May 2010, we expect to have BrioWave 175p units in
production for delivery by October 2010. We initially we will need to
build 5,000 units of the BrioWave 175p’s. We will need approximately
$1,700,000 to fund business operations and implement our marketing
strategy. Any delay in securing this funding will delay the launch of
our products.
Manufacturing
We are
outsourcing all production, including, but not limited to, the design of our
printed circuit board technology, firmware, and software assembly to MEC
Northwest. MEC Northwest Engineers, namely Marck Slezak, Norm Simon
and Larry Holton discuss the deliverables with Attune project managers namely
Shawn Davis and Thomas Bianco which results in MEC generating a project
schedule. Once work is completed and accepted according to the
project schedule, MEC Northwest generates an invoice, and payments are made
accordingly as work progresses according to the project schedule. MEC
and Attune RTD have in the past agreed to a payment schedule where
pre-determined payments are made consisting of a predetermined amount on a
monthly basis. This amount is subject to change as design changes are
implemented, or the scope of the technology changes. MEC warrants
that all products delivered will be suitable for their intended use or purpose
and free from defects in material and workmanship and shall be manufactured in
compliance with IPC-A-610 Class 2 workmanship We maintain tooling in
Guangzhou China for the purpose of manufacturing our polyethylene
enclosure. We do not have any signed contracts pertaining to any of
our manufacturing.
Sales and
Distribution
Our
website is not fully developed yet. When fully developed by the end
of May 2010, our website will provide information and customer support in
addition to products and services for current customer access. Online
demonstrations will include tours providing information on the “BrioWave
175p” system.
Marketing
collateral in the form of brochures and newsletters will be created that
includes information to promote the company and the “BrioWave
175p”. They will contain the company logo, website
information, contact information, a variety of services, and hardware and
software components. In addition, testimonials from current customers
and the benefits associated with the product will be listed on the company
website, brochures, and newsletters.
39
Smaller,
more direct advertisements will be made available through renewable energy type
magazines and relevant trade publications. Provided we have adequate
funding, the advertisements will also be made available in local media
newspapers, Realtor® Magazine and lore magazines targeting the pool and spa
industry. These ads will consist of a 3-inch in column ad, in black
and white emphasizing the “BrioWave
175p” and its benefits, URL of website location to verify and collect
contact information, and a brief sentence of how we can reduce consumer energy
costs, by balancing electrical loads at competitive pricing.
We also
may in the future hire a direct sales force and to promote our product and
services at trade shows.
We have
retained the services of USFI Marketing Communications to implement our
marketing and business development strategies. We have a written
agreement with USFI for their services. USFI will receive 5% of
total revenues plus 5% of revenue payable in stock grants at $0.32 cents per
share for three years beginning in December 2008 and ending on November 30,
2011, with monthly service billing for business and marketing communications
strategy services not to exceed $3,000 per month. USFI Marketing communications
has converted $83,980 in debt accrued since inception through July 31, 2009 in
exchange for 239,944 shares of Class A Common Stock. USFI Marketing
Communications has accepted these shares in exchange for Attune RTD past debt
accruals on the following basis: USFI Marketing Communications must
be able to sell all or a portion of the equity over a period of time to realize
cash greater than or equal to the original $83,980 in debt accrued
since inception through July 31, 2009 and any amount less than the original
$83,980 will be reimbursed by the company in cash and not in
equity.
Attune
RTD plans on selling its product through consumer facing retail utility
producers such as TXU Energy and Southern California Edison as we believe this
is the shortest path to the consumer. Attune RTD also plans to sell
its product through mass merchandisers such as Wal-Mart, Walmart.com, Sam’s
Club, Samsclub.com, Costco, Costco.com, Sears and Sears.com. As such,
we have retained the professional services of Sheldon Gottlieb, who maintains
contact with several key personnel from these organizations. Since
Attune RTD is not producing revenue, we have an agreement in place with Sheldon
Gottlieb. The agreement states that Mr. Gottlieb will open
communications with these key personnel to establish dialogue and provide
consultation in developing, cultivating and maintaining these distribution
channels once established. In exchange for Mr. Gottlieb’s
performance, Attune RTD has agreed to give Mr. Gottlieb 500,000 shares of Class
A Common Stock. As of the date of this filing, no sales have
occurred under the contract and the shares are not considered issued or
outstanding for accounting purposes.
40
Seasonality
Although
we have not yet delivered any products, the history of swimming pool electronic
control products indicates that our busiest delivery periods tend to be March
through September. October through February are slower
periods.
Warrantees
We will
offer the following for our product once developed: Three-year warranty on our
product, repair or replacement at our discretion.
Intellectual
Property
We have
the following patent applications which are pending:
Patent
|
|
Filed On
|
|
Duration
when
Granted
|
11,608,467
An Energy saving
system
for use with swimming
pool
filter systems (Inventor:
Shawn
Davis, CEO/Director;
Timothy
Smith, Secretary; Steven
Bailey,
Shawn Steib, Paul Davis,
Vice
President/Director))
|
December
8, 2006
|
20
Years
|
||
12/147,069
An Irrigation System (Inventor: Paul Shawn Davis, CEO & Thomas Bianco,
Treasurer)
|
June
26, 2008
|
20
Years
|
||
12/204,135
Spa Control System (Inventor: Paul Shawn Davis, CEO/Director, Thomas
Bianco, Treasurer/Director and Raymond Tai)
|
|
September
4, 2008
|
|
20
Years
|
Product Liability
Insurance
We will
have product liability in place prior to selling our product, but currently
maintain no product liability insurance.
Research and
Development
We spent
$0 and $7,000 for research and development for the fiscal years ending
December 31, 2009 and December 31, 2008, respectively.
41
Competition
We face
significant competition in our swimming pool filtration market. Our market area
of is highly competitive, and we will face direct competition from a significant
number of companies in the pool filtration market, many with a local, state-wide
or regional presence and, in some cases, a national presence. Many of these
competitors are significantly larger and have greater financial resources than
we do. These national, regional and local companies have substantial resources
to enable them to compete.
Our
competitors in this area include:
¨
|
The
Intelliflo© by Pentair Pool Products claims to reduce pool pump energy
consumption by as much as 90% through the use of a high tech variable
speed permanent magnet synchronous motor as opposed to conventional motor
induction technology which is 45% to 75% less
efficient.
|
¨
|
Hayward
Pool Products© manufactures heavy duty high performance energy saving pool
pumps and filters both in single and dual speed, but not variable
speed. These pumps utilize low watt motors that save energy
through improved flow
characteristics.
|
¨
|
Sta-Rite©
uses efficient motor technology to reduce
costs.
|
¨
|
Astral
manufactures an automatic backwashing unit, however, the unit does not
interface between the household HVAC, and is primarily directed towards
the commercial market. The Astral unit comes in two versions, a
deluxe and semi auto version, the former costing over $10,000 and the
latter over $6,000.
|
¨
|
Pool
suppliers such as Superior Pool Products, Leslies Pool Products,
California Pool Suppliers, Pool Electrical Products and Aqua Pool Stores
which act as suppliers and distributors for manufacturers such as Hayward
and Pentair.
|
None of
competitors, however, produce a product similar to the “BrioWave
175p” that we are aware of. Most competitors are focused on
achieving cost reductions through the use of variable speed motors.
We do not
intend to compete on the same variables such as those that exist in an already
saturated and crowded pump, filtration, or motor manufacturing market already
dominated by the biggest players such as Sta-Rite, Pentair, and
Hayward. We intend to compete by focusing on cost savings through
intelligent load management which works in conjunction with our competitors
variable speed motors and filtration systems to help these motors and systems
achieve their ideal rated output.
We cannot
assure you that we will be able to:
•
|
compete
successfully with our existing or potential new
competitors,
|
•
|
develop
market share,
|
42
•
|
use,
or compete effectively with competitors that adopt new energy saving
methods and technologies,
|
•
|
keep
pace with discoveries or improvements in the pool filtration system
products industries such that our existing technologies or products that
we currently rely upon will not become obsolete,
or
|
•
|
commit
a portion of our revenues to investment in product/service development and
improvement in order to periodically enhance our existing
products/services and successfully introduce new
products/services.
|
Employees
We
have two persons working for us at this time, all members of
management, are part time.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
The
following discussion and analysis should be read in conjunction with our
financial statements and related notes appearing elsewhere in this Report. In
addition to historical information, this discussion and analysis contains
forward-looking statements that involve risks, uncertainties, and assumptions.
Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including but not
limited to those set forth under "Risk Factors" and elsewhere in this Report on
Form S-1, Amendment No.2.
Management’s
discussion and analysis of financial condition and results of operations is
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues,
and expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates and assumptions. We base our estimates
on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates and assumptions.
43
Company
Overview
Attune
RTD Inc. is a research, technology and services company dedicated to solving
demand energy, energy efficiency, critical water recovery, and everyday
challenges through its proprietary and innovative solutions currently all
related to swimming pools. Since inception, the Company’s strategy has focused
on the following areas: (1) Invent a technology that addresses a major
industrial and environmental problem, (2) Develop the technology from concept
design to patenting and prototype, (3) Begin the commercialization of the
technology through manufacturing, sales, and services, (4) Identify a partner
who will be able to take it to the next level, (5) Create shareholder value
through licensing or sale of the technology to market leaders. The Company has
swimming pool technologies that are in the various stages of
development.
The
Company does not have a history of successfully developing and monetizing its
technologies. The company expects to achieve sales and revenue of its BrioWave
175p™ technology by third quarter of 2010. Since October 2008, the
company has been negotiating with TXU Energy of Dallas Texas. By way of
background, TXU Energy is the dominant retail to consumer energy provider in
Texas. Before deregulation in 2002, they were the state utility. As
part of the divestiture, TXU's holding company, Texas Energy Future Holdings,
has committed $100 million to marketing initiatives that reduce
demand. At present, Attune RTD is engaged in the business of
designing and building high volume smart energy controlling equipment that
addresses demand energy problems.
The
company met with TXU Energy on February 16, 2010 to discuss the substance and
status of the proposed pilot program. As a result of our meeting with
TXU Energy on February 16, 2010, the company is presently engaged in the process
of negotiating terms and conditions pursuant to a yet to be agreed upon Letter
of Intent outlying the pilot program, cost of the pilot program and a new
separate agreement that defines our business relationship through a licensing
Agreement. Negotiations with TXU Energy are ongoing; we expect to
have both agreements completed by April 12, 2010. There is no
assurance we will enter into a binding agreement with TXU Energy or that any
such agreement would obligate TXU Energy to fund these amounts or assume these
obligations. We have no alternative sources of funding
identified.
The
Company is presently in the process of finalizing development of two prototype
pilot units to be used for preliminary testing to be completed by March 31, 2010
by MEC Northwest, and then building 50 pilot units for TXU Energy to be
installed in the Dallas Fort Worth and Houston, Texas areas by end of June
2010.
Attune
RTD is in advanced discussions with Southern California Edison for the testing
of its technology. A successful pilot project with TXU Energy is designed to
prove the technology is commercially viable, and may lead to the development of
additional applications of our technologies, which will allow energy companies
to optimize their revenues, smooth out the demand energy curve and reduce
consumer energy consumption.. The substance and status of Attune
RTD’s negotiations with SCE are ongoing, but not as far along as they are with
TXU Energy. Attune RTD’s engineers have been maintaining ongoing
dialogue with SCE engineers, and are awaiting a UL tested device which should be
ready by April 2010. Attune RTD intends on delivering a UL tested
device to SCE which should be complete by June 7, 2010, and continue
negotiations.
44
The
Company manufactured and began testing the prototype of the BrioWave 175p™ in
the third quarter of 2009. Management believes the BrioWave 175p™ smart energy
controller will be an important addition to our product line to the utility
industry.
Attune
RTD identifies the TXU Energy pilot program as a major milestone for the
organization. Attune RTD is challenged with creating a successful
pilot program. A successful outcome would present additional
opportunities. A successful outcome would equate to TXU Energy
validating the BrioWave 175p value proposition, in that the device functions as
it was intended, reading ambient air temperatures and reducing unnecessary
filtration, resulting in savings and economic benefit for the intended
consumer. Pursuant to a successful outcome, TXU Energy directors have
agreed to endorse the BrioWave 175p technology, which could potentially increase
acceptance of our device in other markets, resulting in additional
sales. A failed outcome would have negative consequences if the
device fails to perform as expected and the pilot program as a whole
fails. This outcome would negatively affect the organizations ability
to continue raising the necessary capital to fund business
operations. Should the BrioWave 175p pilot program fail to yield less
than desirable energy savings results, Attune RTD would be forced to change its
marketing strategy, and re-direct its efforts towards developing and cultivating
mass-market distribution channels which are more costly and time consuming to
develop and cultivate, and re-examine the technology making costly revisions to
the hardware and firmware delaying the products launch to market.
In order
to leverage our success, Attune RTD management has created an advisory board
which reports to the Chairman and Treasurer, approved by the Board of
Directors. The purpose of the advisory board is to assist Attune RTD
management in developing and deploying innovative products or
solutions. Attune’s purpose in establish an Advisory Board is to
ensure it remains a “listening” organization that values “outside-in” thinking
and innovative ideas helping management aligning its vision with its mission to
develop both long term and short term business strategy that anticipates the
future, for the purpose of designing and developing the “what’s next” product
that creates consumer value. Attune RTD is seeking experts in
Consumer Marketing, Technology Development, Electric Industry Policy, Economics
and Business Management and Administration to serve on the Advisory
Board. Attune RTD has identified Thomas Rose, a retired Energy Future
Holdings Employee who has accepted the Advisory Board Chairman’s
position. Mr. Rose is a nuclear engineer that is a well qualified 34
year veteran of the energy sector. On March 22, 2010 Faisal Ahmad
principal owner of USFI Marketing Communications has accepted a position on the
Advisory Board. Mr. Ahmad brings 26 years of extensive knowledge in
marketing strategy, marketing communications, technology development, web
support and logistics and supply chain experience. On March 22, 2010
Kyle Priest principal owner of The Priest Group has accepted a position on the
Advisory Board. Mr. Priest has led programs for prominent consumer companies
including Pepsi-Cola, Mercedes-Benz, Pizza Hut, Nextel, Ocean Spray, Radio
Shack, and others. Priest's extensive work in product, service, and
distribution channel launches includes creating strategic plans and managing
comprehensive, integrated launches for dozens of offerings from Fortune 500 and
startup companies alike. Priest has proven expertise in marketing and
crafting business solutions related to VoIP, contact center software, ERP, CRM
and other web-based services. As a former Vice President of marketing for
an international telecom company, Priest has led global teams for international
branding and marketing communications initiatives.
45
In order
to attract and retain key Advisory Board members, Attune is in the process of
negotiating the following terms: 1) Limit meetings to a one-half day
brainstorming session per quarter, 2) cover travel expenses, 3) issue a $1000
stipend paid in cash or class a common stock equivalent to each Advisory Board
member for each brainstorming session, 4) limit emails to once a month requests
for feedback on product development and use. As of the date of this
filing, no consideration or compensation has been issued to any of the members
on this board. Presently, negotiations are ongoing and expected to be
completed by June 2010.
The
BrioWave 175p™ process is an advanced load management process that we have
developed to load manage the two largest energy consuming devices in the
residential household dynamically. These devices are the air conditioning unit
and the pool circulation pump. Since late 2007, the Company has been designing,
testing and improving its BrioWave 175p™ load management process. Management
feels one of the most promising applications for its technology is in the
utility industry to help energy companies deliver cleaner power, manage
conditions that might contribute to the overloading of energy providers
resulting in brown out conditions, or excessive maintenance costs related to
ramping up energy generation facilities to meet unplanned spikes in consumer
energy delivery.
Attune
RTD developed the BrioWave 175p™ process in the third half of 2007 and began
testing it in early 2008 and mid 2009 under the guidance of National Technical
Systems and MEC Midwest. From the testing, the Company learned that the BrioWave
175p™ process is able to efficiently and in a cost effective manner, eliminate
excessive pool filtration periods by reading ambient air temperatures and water
temperatures in real time. BrioWave 175p™ technology is designed to
wirelessly communicate and collaborate with the new generation of Smart Meters
currently being deployed by the utility industry that are Zigbee Wireless
Enabled. “ZigBee Wireless Enabled” is ZigBee Smart Energy, a wireless
communications protocol enabling wireless communication between utilities and
common household devices such as smart thermostats and appliances.
In
addition to the BrioWave 175p™ technology, the Company presently owns several
other patent pending technologies as described below that are in the early
development stage. Currently, these technologies are in the early development
phase and the company projects commercialization of these devices by third
quarter 2012.
46
The
following is a list of the Company’s existing intellectual property
estate:
• U.S. Patent Pending - Energy
Saving System for Use with Pool Filter System. Relates to the BrioWave 175p and
325p technology.
• U.S. Patent Pending -
Irrigation System. Relates to residential irrigation/sprinkler system. planned
for commercialization by third quarter 2013.
• U.S. Patent Pending - Spa
Control. Planned for commercialization by third quarter 2013.
• U.S. Patent Applied For –
Solar Brushless DC Motor Pump. Relates to hybrid motor development,
planned for commercialization by third quarter 2012.
2009
Highlights
The most
significant material accomplishments during 2009 was the organization's ongoing
communications and initial meeting with TXU Energy. The continued
design and development of the BrioWave 175p™ Smart Energy Controllers and the
submission of initial designs related to the filing of its Irrigation System and
energy saving Spa Controllers. The company was able to identify,
develop, design and test the commercial viability of its BrioSpa™
technology. BrioSpa™ controllers are designed to eliminate the use of
multiple induction motors, control water temperatures by zone, increase
efficiency and reduce energy consumption. The company projects
commercialization of this technology by third quarter of
2012. Further, the company conducted a Private Placement which
provided us with the necessary capital to provide the financing needed to
continue operating the Company. From inception through the end of the year,
December 31, 2009 the company had been able to raise approximately $834,000
gross, from its Private Placement and direct investment by its
shareholders.
In
accordance with generally accepted accounting principles, expenditures for
research and development of the Company's products are expensed when incurred,
and are included in operating expenses. The Company recognized research and
development costs of $0 and $7,000 for the years ended December 31, 2009 and
2008, respectively.
Plan of
Operations
Set
forth below is our future Plan of Operations:
Milestone or Step
|
Expected Manner
of Occurrence or
Method of
Achievement
|
Date When Step
Should be
Accomplished
|
Cost of
Completion
|
||||
Prototype
printed circuit board build designed with WI-FI module and Zigbee wireless
module
|
MEC
Northwest beginning on November 2009
|
Ending
on 3/31/2010
|
$78,400
|
47
Advance
Programming Interface development and Graphical User Interface
Build
|
HiLn
Co. beginning on December 2009
|
Ending
on 6/10/2010
|
$89,435
|
|||
TXU
Energy Conducting market testing
|
Define
market goals, design market research, collect results and create report
beginning on 12/04/2009
|
Ending
on 12/25/2009
|
Costs
covered directly by TXU Energy
|
|||
Capital
required to cover Attune Selling General & Administrative
expenses
|
Beginning
on January 1, 2010
|
Through
December 31, 2010
|
$750,000
projected
|
|||
Meet
with TXU Energy to discuss pilot program
|
Beginning
on 2/16/2010 in Dallas, TX
|
Ending
on 2/16/2010
|
$6,000
|
|||
Letter
of Intent with TXU Energy defining terms of the pilot
program
|
Negotiating
with TXU Energy beginning on 3/08/2010
|
Negotiations
projected to end on 4/2/2010
|
Estimated
cost of pilot program to be paid by TXU Energy of
$58,700
|
|||
Signed
Partnership/Licensing Agreement and Letter of Intent with TXU
Energy. Licensing Agreement consideration to be
negotiated
|
Negotiating
with TXU Energy beginning on 3/08/2010
|
Ending
on 4/2/2010
|
$12,000
in projected legal fees
|
|||
Pilot
Build, build out 50 pilot units
|
MEC
Northwest, beginning on 5/12/2010
|
Ending
on 5/14/2010
|
$12,500,
Units costs covered in Letter of Intent with Texas
Energy
|
|||
Obtain
UL and FCC Testing Certification
|
UL
Laboratories, beginning on 5/17/2010
|
Ending
on 6/7/2010
|
$13,500
|
|||
Zigbee
Wireless development, develop protocol, implement Zigbee pilot
testing
|
Obtain
Zigbee Certification through Zigbee Alliance Beginning on
5/17/2010
|
Ending
on 8/17/2010
|
$3,000
|
|||
Installation
of 25 Pilot units in Dallas, TX and 25 units in Houston,
TX
|
Beginning
on 5/17/2010
|
Ending
on 6/11/2010
|
$10,000
cost covered by Texas Energy in Letter of
Intent
|
48
Go
to market with TXU Energy, units in production for
delivery
|
Begin
delivering first BrioWave Control units on October 26,
2010
|
Projected
delivery of 4,500 units completed by May 2011
|
$765,000
cost of BrioWave control units paid by TXU Energy
|
|||
Hire
two sales representatives
|
August
2011
|
Through
August 2012
|
$170,000
|
|||
Conduct
cost benefit analysis to assess if HP Servers, Cloud Computing and
additional Web Infrastructure needed
|
Beginning
November 2011
Purchase
equipment and deploy
|
Ending
February 2012
|
$47,807
|
|||
Selling
General and Administrative costs, hire 2 IT personnel
|
January
2011
|
December
2011
|
$642,000
|
|||
Start
up marketing phase. Marketing services to drive
revenue
|
Define
market goals, design market research, collect results, create report
beginning on January 2012
|
Ending
on June 2012.
|
Estimated
projected budget between $245,192 and $433,657
|
|||
Hybrid
Motor development, printed circuit board for motor, motor control, tooling
and moulds
|
MEC
Northwest, beginning on January 2012
|
Ending
on April 2012
|
Estimated
cost $285,000
|
|||
Build
out 4,500 hybrid motors and 4,500 controls
|
MEC
Northwest, beginning May 2012
|
Ending
October 2012
|
$873,000
|
[1]
Funding anticipated to be received under current letter of intent with TXU
Energy. There is no assurance we will enter into a binding agreement with
TXU Energy or that any such agreement would obligate TXU Energy to fund these
amounts or assume these obligations. We have no alternative sources of
funding identified.
CRITICAL ACCOUNTING
ESTIMATES
In
response to the SEC’s financial reporting release, FR-60, Cautionary Advice
Regarding Disclosure About Critical Accounting Policies, the Company has
selected its more subjective accounting estimation processes for purposes of
explaining the methodology used in calculating the estimate, in addition to the
inherent uncertainties pertaining to the estimate and the possible effects on
the Company’s financial condition. The three accounting estimates are discussed
below. These estimates involve certain assumptions that if incorrect could
create a material adverse impact on the Company’s results of operations and
financial condition. Some of the estimates are based upon the intellectual
property and related assets and inventory.
49
Revenue
Recognition
As
mentioned above the Company is currently in the design and implementation phase
of its business and has not had any sales to date. However, revenue from sales
of equipment is intended to be recognized when products are delivered to and
accepted by the customer, and when economic risk of loss has passed to the
customer, price is fixed or determinable, collection is probable, and any future
obligations of the Company are insignificant. Revenue from the BrioWave 175p™
Smart Energy Controllers will be earned based upon sales to retail providers or
direct sales to utility providers and is intended to be recognized in the period
the product or service is provided. Payments received in advance of the
performance of services or of the delivery of goods will be deferred as
liabilities until the services are performed or the goods are delivered. The
Company will include shipping and handling fees billed to customers as revenues
and shipping and handling costs as cost of revenues.
Useful
Lives and Impairment of Machinery and Equipment and Patents
The
Company capitalizes machinery and equipment currently, all with useful lives of
5 years. The Company determines the useful lives of machinery and equipment
based on the forecasted durability of the technologies utilized in the system.
While some of the individual components of the Company’s systems may
individually have longer useful lives than the Company’s estimate for the useful
life of the entire system (i.e., 10 years or longer), 5 years, management
believes, is reasonable for the industry for which they operate in.
The
Company determines the useful lives of its patents based on the remaining life
of the patent issued by the U.S. Patent Office. Management believes the legal
life of the patent is a reasonable period of time over which the Company expects
to realize the benefits of its intellectual property rights because of the broad
nature of the Company’s patents and the Company’s intent to protect its
intellectual property rights over the lives of its patents.
The
Company reviews for impairment its machinery and equipment used in its products,
whenever events or changes in circumstances indicate that the carrying amount of
its assets may not be recoverable. Such events or changes in circumstances might
occur when a new version of a product is launched or when a major technological
advancement becomes available.
From
inception through the year ended December 31, 2009, there has not been any
impairment of assets.
50
Stock-Based
Compensation
Under
generally accepted accounting principles, the company will recognize an
expense for the fair value of our outstanding stock options and warrants as they
vest, whether held by employees or others.
We will
estimate the fair value of each stock option at the grant date by using the
Black-Scholes option pricing model based upon certain assumptions. The
Black-Scholes model requires the input of highly subjective assumptions
including the expected stock price volatility. Because our stock options and
warrants will have characteristics different from those of traded options, and
because changes in the subjective input of assumptions can materially affect the
fair value estimate, in our management’s opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of such stock
options.
Currently,
the Company has not adopted a stock based compensation plan.
RESULTS OF
OPERATIONS
FOR THE YEARS ENDED DECEMBER
31, 2009 AND 2008
Year
Ended
|
Year
Ended
|
|||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Revenues
|
$
|
-
|
$
|
-
|
||||
Operating
Expenses
|
||||||||
Advertising
and Promotions
|
4,500
|
77,300
|
||||||
Depreciation
Expense
|
3,423
|
1,127
|
||||||
Legal
Expense
|
12,000
|
1,500
|
||||||
Marketing
Expense
|
36,735
|
3,500
|
||||||
Payroll
Expense
|
252,673
|
192,230
|
||||||
Product
Development
|
124,176
|
-
|
||||||
Professional
Fees
|
45,897
|
87,842
|
||||||
Rent
Expense
|
22,203
|
9,252
|
||||||
Research
and Development
|
-
|
7,000
|
||||||
Other
operating Expenses (including stock based compensation expense of $11,150
and $34,530 for the years ended December 31, 2009 and 2008
respectively)
|
83,571
|
68,840
|
||||||
Total
Operating Expenses
|
585,178
|
448,591
|
||||||
Loss
from Operations
|
(585,178
|
)
|
(448,591
|
)
|
||||
Other
Income (expense)
|
||||||||
Interest
Expense
|
(1,456
|
)
|
(222
|
) | ||||
Interest
Income
|
9,200
|
6,201
|
||||||
Gain
on asset theft, net
|
29,125
|
-
|
||||||
Gain(loss)
on Debt conversion
|
(97,637
|
) |
20,000
|
|||||
Total
Other Income(Expense)
|
(60,768
|
) |
25,979
|
|||||
Net
Loss
|
$
|
(645,946
|
) |
$
|
(422,612
|
)
|
51
Revenues:
The
Company, for the years ended December 31, 2009 and 2008 did not record and/or
recognize any revenues as the Company is the development stage of its initial
product.
Operating
Expenses
Advertising
and Promotions: The decrease from December 31, 2008 to December 31, 2009 was
approximately $72,800. This decrease was mainly caused by the Company reducing
its marketing campaign to focus its efforts on finalizing its new technology and
product and producing prototypes for introduction to TXU as mentioned
above.
Depreciation
Expense: In 2009 the increase in depreciation expense was approximately $2,300
resulting from the company placing assets into service as it moved through its
development stage. The depreciation related to assets such as computers and
office equipment.
52
Legal
Expense: Legal expense, increased by $10,500 from 2008. This increase was
mainly caused by the client retaining counsel at the end of 2008 to assist in
legal filings during 2009, some of which related to the work on the Company’s
first S-1 filing with the Securities Exchange Commission.
Marketing
Expense: The increase from December 31, 2008 to December 31, 2009 was
approximately $33,000. This increase was mainly caused by the Company beginning
its marketing campaign to introduce its new technology and products to the
marketplace. During 2008 the company had just started its marketing campaigns
and therefore had yet to incur any significant marketing costs and or
expenses.
Payroll
Expense: During 2009 payroll expense increased by approximately $60,000. During
2008 the Company placed its 2 employees (officers) on payroll. However, they
were not on payroll for the entire year. The officers’ compensation has been
accrued, utilizing the $120,000 employment contract each of the 2 officers has
with the Company. The difference between the $240,000 of accrued salary and the
overall payroll expense of approximately $252,000 relates to payroll taxes on
the payroll.
Product
Development: During 2009 the company began classifying its costs related to
developing its products and prototypes in a new account called “Product
Development”. This was done in order for management to timely focus and see it
results and costs related to the actual development of the initial products.
During 2008, the company was still in its engineering phase (as mentioned below)
and the need to track the development cost was not as significant. However, with
the company moving rapidly towards production, it was necessary to begin
focusing in this area.
Professional
Fees: Professional fees during 2009 decreased by approximately $41,000, an
approximate 47% decrease from approximately $87,000 in 2008. This decrease was
mainly attributed to the Company not relying on external engineers and other
consultants in 2009 that were present in 2008 to help develop the products and
assist in corporate structuring.
Rent
Expense: In 2009 rent expense increased by approximately 140% to $22,203 from
$9,252 in 2008. This increase represented a full years worth of rent at its new
location, whereas in 2008 the company only incurred approximately 5 months of
rent at its former location.
Research
and Development: Research and development expense in 2009 declined from 2008 by
100%. The decline was mainly caused by the company moving towards production and
finalization of its initial product at the end 2008, thus eliminating research
and development costs in 2009.
Other
Operating Expenses: When comparing the 2009 Other Expenses to 2008, there has
been an increase in this area of approximately 21% over 2008. The main increase
was due to a higher amount of travel in 2009. The increase in travel was
approximately $24,000 over 2008. This large increase was mainly caused by the
company spending a significant amount of time travelling to both Texas to meet
with TXU and with travels to China to coordinate production of its components
for its product. Other areas including telephone, utilities, office supplies,
among others saw relatively little increase and in some cases minor decreases in
costs.
53
Other
income and Expense: During 2008 the company entered into a capitalized lease for
computer equipment which resulted in the increase in interest expense in 2009
since a full year of interest was incurred on the lease. In addition,
the interest income in 2009 versus 2008, an increase of approximately $3,000,
was due to the company recognizing interest income on its loans to the 2
officers of the Company, as mentioned previously these loans to the officers
were paid back to the Company on January 31, 2010, by the officers’ redeeming
some of their common stock to settle the debt obligation. The $20,000 gain on
extinguishment of debt, in 2008 was related to the conversion of debt into
common stock; however, in 2009 the Company recognized a loss on similar
transactions of converting debt into stock of approximately $98,000. During 2009
there was a break in at the Company’s offices and computer equipment was stolen,
this resulted in reimbursement from the insurance company on the claim and the
Company recognizing an overall gain on the asset theft of approximately
$29,000.
Liquidity
and Capital Resources
Management
believes that it will need $750,000 to continue operations for the next twelve
months. Approximately $629,000 is needed to fund Selling, General and
Administrative operations. Approximately $121,000 will be needed for
software and hardware development costs. On a go forward basis, the
Company is seeking additional financing through equity private placements. The
company had determined that it would need approximately $3.5 million in funding
to meet all of its planned obligations to fund product development expenditures,
meet current selling, general and administrative expenses, future expenses,
purchase technology equipment and hire new sales staff necessary to implement
and roll out its business strategy over the next 18-24 months. This
funding is not required to be funded all at once, as the business can continue
to operate and meet its current administrative and software development expenses
on a limited basis requiring $750,000 over the next 12 months until full funding
occurs.
Net
cash used in operating activities during the year ended December 31, 2009
totaled approximately $348,000 compared to approximately $236,000 in 2008. This
resulted primarily from a loss from operations of approximately $646,000 in 2009
and $423,000 in 2008 offset by stock based compensation of $11,150 and $34,530
respectively, and changes in assets and liabilities. In
addition, in 2009, the Company had losses on the conversion of debt to common
stock of approximately $98,000 offset by a gain on asset theft of
$29,125.
Net cash
from in investing activities for the year ended December 31, 2009 totaled
approximately $3,400. This resulted primarily from the purchase of equipment,
deferred patent costs and loans to the officers, netted against the insurance
proceeds from the theft loss of approximately $31,000.
54
Net cash
provided by financing activities for the years ended December 31, 2009 and 2008
was approximately $429,000 and $382,000 respectively. This resulted
primarily from the sale of common stock in 2009 and 2008 of approximately
$437,000 and $360,000, respectively and a loan to the Company by a principal
stockholder of $30,000 in 2008.
On a go
forward basis the Company is seeking additional financing through equity,
private placements into public entity. The company had determined that it would
need approximately $3.5 million in funding to meet all of its planned
obligations. This funding is not required to be funded all at once as the
business can continue to operate and meet its goals on a limited basis until
full funding occurs.
Preferred
Stock Dividends
Undeclared
Cumulative Preferred stock dividends were $20,250 for each of the year’s
ended December 31, 2009 and 2008. Dividends reflect Company obligations to
preferred shareholders that have not been paid as the board of directors has yet
to declare such dividends. Cumulative Preferred Stock dividends as of December
31, 2009 were $49,987.
New
Accounting Pronouncements
In
December 2007, the FASB issued (ASC 810-45) SFAS No. 160,
“Non-controlling Interests in Consolidated Financial Statements” (“SFAS
160”). This Statement amends Accounting Research Bulletin No. 51,
“Consolidated Financial Statements,” to establish accounting and reporting
standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. SFAS 160 is required to be adopted
simultaneously with SFAS 141R and is effective for the Company beginning January
1, 2009. The Company does not have any non-controlling interests in its
subsidiaries, and accordingly, the adoption of SFAS 160 did not have a material
impact on its financial position, cash flows or results of
operations.
On
January 1, 2008, the Company adopted the provisions of Statement of
Financial Accounting Standards (ASC 825-10) (“SFAS”) No. 159, “The
Fair Value Option for Financial Assets and Financial Liabilities — Including an
amendment of FASB Statement No. 115”. SFAS No. 159 permits all entities to
choose to measure and report many financial instruments and certain other items
at fair value at specified election dates. If such an election is made,
any unrealized gains and losses on items for which the fair value option has
been elected are required to be reported in earnings at each subsequent
reporting date. In addition, SFAS No. 159 establishes presentation and
disclosure requirements designed to facilitate comparisons between companies
that choose different measurement attributes for similar types of assets and
liabilities. The adoption of SFAS No. 159 did not have a material effect
on the Company’s financial position or results of operations and cash
flows.
55
In March
2008, the FASB issued (ASC 815-10) SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 requires
enhanced disclosures about an entity’s derivative and hedging activities and
thereby improves the transparency of financial reporting. It is
intended to enhance the current disclosure framework in SFAS 133 by requiring
that objectives for using derivative instruments be disclosed in terms of
underlying risk and accounting designation. This disclosure better
conveys the purpose of derivative use in terms of the risks that the entity is
intending to manage. The new disclosure standard is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Statement
encourages, but does not require, comparative disclosures for earlier periods at
initial adoption. As of December 31, 2009 and 2008, the
Company was not involved in any derivative or hedging activities.
In June
2008, the Emerging Issues Task Force of the FASB issued (ASC 815-40) EITF Issue
No. 07-5, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to
an Entity’s Own Stock” (“EITF 07-5”), which is effective for fiscal years ending
after December 15, 2008, with earlier application not permitted by entities that
has previously adopted an alternative accounting policy. The adoption of
EITF 07-5’s requirements will affect accounting for convertible instruments and
warrants with provisions that protect holders from declines in the stock price
(“round-down” provisions). Warrants with such provisions will no longer be
recorded in equity. EITF 07-5 guidance is to be applied to outstanding
instruments as of the beginning of the fiscal year in which the Issue is
applied. The cumulative effect of the change in accounting principle shall
be recognized as an adjustment to the opening balance of retained earnings (or
other appropriate components of equity) for that fiscal year, presented
separately. The cumulative-effect adjustment is the difference between the
amounts recognized in the statement of financial position before initial
application of this Issue and the amounts recognized in the statement of
financial position at initial application of this Issue. The amounts
recognized in the statement of financial position as a result of the initial
application of this Issue shall be determined based on the amounts that would
have been recognized if the guidance in this Issue had been applied from the
issuance date of the instrument. The Company implemented this standard for
the fiscal year ended December 31, 2008.
In May
2009, the Financial Accounting Standards Board (“FASB”) issued an accounting
standard that became part of ASC Topic 855, “Subsequent Events”. ASC Topic
855 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. ASC Topic 855 sets forth (1) the
period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, (2) the circumstances
under which an entity should recognize events or transactions occurring after
the balance sheet date in its financial statements and (3) the disclosures that
an entity should make about events or transactions that occurred after the
balance sheet date. ASC Topic 855 is effective for interim or annual
financial periods ending after June 15, 2009. The adoption of ASC Topic
855 did not have a material effect on the Company’s financial
statements.
56
In June
2009, the FASB issued an accounting standard whereby the FASB Accounting
Standards Codification (“Codification”) will be the single source of
authoritative non-governmental United States of America generally accepted
accounting principles. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. ASC Topic 105 is effective for interim and annual periods
ending after September 15, 2009. All existing accounting standards are
superseded as described in ASC Topic 105. All other accounting literature
not included in the Codification is non-authoritative. The Codification
has not had a significant impact on the Company’s financial
statements.
Related
Party Transactions
For
information on related party transactions and their financial impact, see Note
11 to the accompanying December 31, 2009 and December 31, 2008 audited Financial
Statements contained in this report.
During
the year ended December 31, 2007, the Company received funds from the
issuance of a shareholder loan agreement to a shareholder (Mr. Raymond
Tai). 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. During 2009 this debt was subsequently
converted into Class A common stock.
The Company entered into two
unsecured promissory notes with its Chief Executive Officer and Chief Financial
Officer, Mr. Davis and Mr. Bianco. As of December 31, 2009, the company was owed
$175,825 under the notes. As of December 31, 2009, the Company owed
the same two officers $175,239 based on the terms of their employment contracts.
Subsequent to year end, 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 their outstanding debt obligation.
DESCRIPTION
OF PROPERTY
We rent
the following property which is adequate for our current needs:
¨
|
Address:
3700 B Tachevah Road, Suite 117, Palm Springs, CA 92262
|
|
¨
|
Number
of Square Feet:1,385
|
¨
|
Name
of Landlord: Bernard White & Sons
|
|
¨
|
Term
of Lease: October 1, 2008 through September 30,
2010
|
¨
|
Monthly
Rental:$1,731.25
|
Within
sixty days of expiration, we have the option to extend the lease for an
additional five years. The following is a schedule by years of future minimum
rental payments required under the operating lease:
Total
|
||||
2010
|
$ |
15,581
|
||
Total
|
$
|
15,581
|
57
We have
no policy with respect to investments in real estate development or interests in
real estate and no policy with respect to investments in real estate mortgages.
Further, we have no policy with respect to investments in securities of or
interests in persons primarily engaged in real estate activities.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market
Information
There
is no established public trading market for our securities and a regular trading
market may not develop, or if developed, may not be sustained. A shareholder in
all likelihood, therefore, will not be able to resell his or her securities
should he or she desire to do so when eligible for public resale's. Furthermore,
it is unlikely that a lending institution will accept our securities as pledged
collateral for loans unless a regular trading market develops. We have no plans,
proposals, arrangements, or understandings with any person with regard to the
development of a trading market in any of our securities.
Penny Stock
Considerations
Our
shares will be "penny stocks" as that term is generally defined in the
Securities Exchange Act of 1934 to mean equity securities with a price of less
than $5.00. Our shares thus will be subject to rules that impose sales practice
and disclosure requirements on broker-dealers who engage in certain transactions
involving a penny stock.
Under the
penny stock regulations, a broker-dealer selling a penny stock to anyone other
than an established customer must make a special suitability determination
regarding the purchaser and must receive the purchaser's written consent to the
transaction prior to the sale. In addition, under the penny stock regulations
the broker-dealer is required to:
¨
|
Deliver,
prior to any transaction involving a penny stock, a disclosure schedule
prepared by the Securities and Exchange Commissions relating to the penny
stock market, unless the broker-dealer or the transaction is otherwise
exempt;
|
|
¨
|
Disclose
commissions payable to the broker-dealer and our registered
representatives and current bid and offer quotations for the
securities;
|
¨
|
Send
monthly statements disclosing recent price information pertaining to the
penny stock held in a customer's account, the account's value and
information regarding the limited market in penny stocks;
and
|
|
¨
|
Make
a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement
to the transaction, prior to conducting any penny stock transaction in the
customer's account.
|
58
Because
of these regulations, broker-dealers may encounter difficulties in their attempt
to sell shares of our common stock, which may affect the ability of selling
shareholders or other holders to sell their shares in the secondary market and
have the effect of reducing the level of trading activity in the secondary
market. These additional sales practice and disclosure requirements could impede
the sale of our securities, if our securities become publicly traded. In
addition, the liquidity for our securities may be decreased, with a
corresponding decrease in the price of our securities. Our shares in all
probability will be subject to such penny stock rules and our shareholders will,
in all likelihood, find it difficult to sell their securities.
OTC Bulletin Board
Qualification for Quotation
To have
our shares of common stock on the OTC Bulletin Board, a market maker must file
an application on our behalf in order to make a market for our common stock. We
have not engaged in any discussions with a FINRA Market Maker to file our
application on Form 211 with FINRA.
Sales of Stock under Rule
144
As of
December 31, 2009, there were 4,315,431 shares of our common stock held by
non-affiliates, 2,337,776 of which have been held for more than one year and
thus are not restricted, and 705,326 of which are being registered hereunder,
and 17,255,658 shares of our common stock held by affiliates, all of which are
restricted as per Rule 144 of the Securities Act of 1933 defines as restricted
securities, 850,000 of which are being registered hereunder. All
shares being registered hereunder are available for resale as of the date of
effectiveness of this registration statement. Of the shares not being
registered hereunder, all of the non-restricted shares held by non-affiliates as
well as the restricted securities held by affiliates, subject to the limitations
on amounts and manner of sale in Rule 144, could be available for sale in a
public market, if developed, beginning 90 days after the date of this
prospectus. The availability for sale of substantial amounts of common stock
under Rule 144 could reduce prevailing market prices for our
securities.
Holders
As of the
date of this registration statement, we had 90 holders of record of our common
stock.
Dividends
We have
not declared any cash dividends on our common stock since our inception and do
not anticipate paying such dividends in the foreseeable future. The Class B
Participating Cumulative Preferred Super-voting Stock pays cumulative dividends
at 6%. For the years ended December 31, 2009 and 2008, the board of
directors did not declare any dividends and dividends will not be declared until
we have sufficient cash from profits to do so. Total undeclared Class B
Participating Cumulative Preferred Super-voting Stock dividends as of December
31, 2009 was $49,987. We plan to retain any future earnings for use
in our business. Any decisions as to future payments of dividends will depend on
our earnings and financial position and such other facts, as the board of
directors deems relevant.
59
Reports to
Shareholders
As a
result of this offering as required under Section 15(d) of the Securities
Exchange Act of 1934, we will file periodic reports with the Securities and
Exchange Commission through December 31, 2010, including a Form 10-K for the
year ended December 31, 2010, assuming this registration statement is declared
effective before that date. At or prior to December 31, 2010, we
intend voluntarily to file a registration statement on Form 8-A which will
subject us to all of the reporting requirements of the 1934 Act. This will
require us to file quarterly and annual reports with the SEC and will also
subject us to the proxy rules of the SEC. In addition, our officers, directors
and 10% stockholders will be required to submit reports to the SEC on their
stock ownership and stock trading activity. We are not required under
Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have
more than 500 shareholders and total assets of more than $10 million on December
31, 2010. If we do not file a registration statement on Form 8-A at
or prior to December 31, 2010, we will continue as a voluntary reporting company
and will not be subject to the proxy statement or other information requirements
of the 1934 Act, our securities can no longer be quoted on the OTC Bulletin
Board, and our officers, directors and 10% stockholders will not be required to
submit reports to the SEC on their stock ownership and stock trading activity.
We currently intend to voluntarily send an annual report to shareholders
containing audited financial statements.
Where You Can Find
Additional Information
We have
filed with the Securities and Exchange Commission a registration statement on
Form S-1. For further information about us and the shares of common stock to be
sold in the offering, please refer to the registration statement and the
exhibits and schedules thereto. The registration statement and exhibits may be
inspected, without charge, and copies may be obtained at prescribed rates, at
the SEC's Public Reference Room at 100 F St., N.E., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The registration statement and other
information filed with the SEC are also available at the web site maintained by
the SEC at http://www.sec.gov.
60
ATTUNE
RTD
(a
development stage company)
Financial
Statements
For
the Years Ended December 31, 2009 and 2008
and
the Period from July 14, 2007 (Inception of Development Stage) to December 31,
2009
61
TABLE
OF CONTENTS
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Balance
Sheets at December 31, 2009 and 2008
|
F-3
|
Statements
of Operations for the years ended December 31, 2009 and 2008
and
|
|
the
period from July 14, 2007 (Inception of Development Stage) to December 31,
2009
|
F-4
|
Statements
of Changes in Stockholders' Equity (Deficit) for the years ended December
31, 2009 and 2008
|
|
and
the period from July 14, 2007 (Inception of Development Stage) to December
31, 2009
|
F-5
|
Statements
of Cash Flows for the years ended December 31, 2009 and 2008
and
|
|
the
period from July 14, 2007 (Inception of Development Stage) to December 31,
2009
|
F-6
|
Notes
to Financial Statements
|
F-7
|
F-1
Report
of Independent Registered Public Accounting Firm
To the
Board of Directors and Stockholders of:
Attune
RTD
We have
audited the accompanying balance sheets of Attune RTD (a development stage
company) as of December 31, 2009 and 2008, and the related statements of
operations, changes in stockholders’ equity (deficit), and cash flows for the
years ended December 31, 2009 and 2008, and for the period from July 14, 2007,
(Inception of Development Stage) to December 31, 2009. 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 financial position of Attune RTD, as of December 31, 2009
and 2008, and the results of its operations and its cash flows for the years
ended December 31, 2009 and 2008, for the period from July 14, 2007 (Inception
of Development Stage) to December 31, 2009, 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 reported a net loss of $645,946 and had cash used in
operating activities of $348,224 for the year ended December 31,
2009. Additionally, as of December 31, 2009, the Company had a
working capital deficit, a stockholders’ deficit and a deficit accumulated
during development stage of $281,962, $50,929 and $1,510,191, respectively, and
was 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.
SALBERG
& COMPANY, P.A.
Boca
Raton, Florida
March 29,
2010
F-2
Attune
RTD
(a
development stage company)
Balance
Sheets
December 31,
|
December 31,
|
|||||||
2009
|
2008
|
|||||||
Assets
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 106,496 | $ | 22,513 | ||||
Prepaid
Expenses
|
- | 7,731 | ||||||
Total
Current Assets
|
106,496 | 30,244 | ||||||
Property
and Equipment, net
|
13,809 | 11,696 | ||||||
Other
Assets
|
||||||||
Loans
Receivable from Officers
|
175,825 | 166,625 | ||||||
Deferred
Patent Costs
|
41,378 | 30,402 | ||||||
Security
Deposit
|
1,800 | 1,800 | ||||||
Total
Other Assets
|
219,003 | 198,827 | ||||||
Total
Assets
|
$ | 339,308 | $ | 240,767 | ||||
Liabilities
and Stockholders' Equity (Deficit)
|
||||||||
Current
Liabilities
|
||||||||
Accounts
Payable
|
$ | 127,358 | $ | 36,186 | ||||
Accrued
Salaries
|
175,239 | 97,431 | ||||||
Accrued
Expenses
|
- | 11,503 | ||||||
Liability
to Guarantee Equity Value
|
83,980 | - | ||||||
Loans
Payable to Principal Stockholder/Officer
|
- | 55,200 | ||||||
Capital
Lease Obligation
|
1,881 | 1,641 | ||||||
Total
Current Liabilities
|
388,458 | 201,961 | ||||||
Long
Term Liabilities
|
||||||||
Capital
Lease Obligation - Less Current Portion
|
1,779 | 3,660 | ||||||
Total
Liabilities
|
390,237 | 205,621 | ||||||
Commitments
and Contingencies (See Note 10)
|
||||||||
Stockholders'
Equity (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, 2009 and 2008, respectively
|
16,600 | 16,600 | ||||||
Class
A Common Stock, $0.0166 par value; 59,000,000 shares
authorized; 21,439,145 and 16,895,803 shares issued and outstanding
at December 31, 2009 and 2008, respectively
|
355,889 | 280,470 | ||||||
Additional
Paid-in Capital
|
1,086,773 | 602,321 | ||||||
Deficit
Accumulated During Development Stage
|
(1,510,191 | ) | (864,245 | ) | ||||
Total
Stockholders' Equity (Deficit)
|
(50,929 | ) | 35,146 | |||||
Total
Liabilities and Stockholders' Equity (Deficit)
|
$ | 339,308 | $ | 240,767 |
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 December 31,
|
(Inception of
Development Stage)
to
|
|||||||||||
2009
|
2008
|
December 31, 2009
|
||||||||||
Revenues
|
$ | - | $ | - | $ | - | ||||||
Operating
Expenses
|
||||||||||||
Advertising
and Promotions
|
4,500 | 77,300 | 81,860 | |||||||||
Contributed
Services
|
- | - | 111,781 | |||||||||
Depreciation
Expense
|
3,423 | 1,127 | 4,564 | |||||||||
Legal
Expense
|
12,000 | 1,500 | 13,500 | |||||||||
Marketing
Expense
|
36,735 | 3,500 | 40,235 | |||||||||
Payroll
Expense
|
252,673 | 192,230 | 444,903 | |||||||||
Product
Development
|
124,176 | - | 124,176 | |||||||||
Professional
Fees
|
45,897 | 87,842 | 148,789 | |||||||||
Rent
Expense
|
22,203 | 9,252 | 32,580 | |||||||||
Research
and Development
|
- | 7,000 | 15,682 | |||||||||
Other
Operating Expenses (including stock based compensation expense of
$11,150 and $34,530 in 2009 and 2008, respectively
|
83,571 | 68,840 | 457,757 | |||||||||
Total
Operating Expenses
|
585,178 | 448,591 | 1,475,826 | |||||||||
Loss
from Operations
|
(585,178 | ) | (448,591 | ) | (1,475,826 | ) | ||||||
Other
Income (Expense)
|
||||||||||||
Gain
on Asset Theft, net
|
29,125 | - | 29,125 | |||||||||
Interest
Expense
|
(1,456 | ) | (222 | ) | (1,678 | ) | ||||||
Interest
Income
|
9,200 | 6,201 | 15,825 | |||||||||
(Loss)
Gain on Debt Conversion
|
(97,637 | ) | 20,000 | (77,637 | ) | |||||||
Total
Other Income (Expense)
|
(60,768 | ) | 25,979 | (34,365 | ) | |||||||
Net
Loss
|
(645,946 | ) | (422,612 | ) | (1,510,191 | ) | ||||||
Preferred
Stock Dividends
|
(20,250 | ) | (20,250 | ) | (49,987 | ) | ||||||
Net
Loss Applicable to Common Stock
|
$ | (666,196 | ) | $ | (442,862 | ) | $ | (1,560,178 | ) | |||
Net
Loss Per Common Share Applicable to Common Stock:
|
||||||||||||
Basic
and Diluted
|
$ | (0.03 | ) | $ | (0.03 | ) | $ | (0.09 | ) | |||
Weighted
Average Number of Common Shares Outstanding:
|
||||||||||||
Basic
and Diluted
|
19,545,125 | 15,456,779 | 16,826,298 |
The
accompanying notes are an integral part of these Financial
Statements
F-4
(a
development stage company)
Statements
of Changes in Stockholders' Equity (Deficit)
for
the years ended December 31, 2009 and 2008, and
the
period from July 14, 2007 (Inception of Development Stage) to December 31,
2009
Deficit Accumulated
|
||||||||||||||||||||||||||||
During
|
Total
|
|||||||||||||||||||||||||||
Preferred Stock – Class B
|
Common Stock – Class A
|
Additional
|
Development
|
Stockholders'
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Paid-in Capital
|
Stage
|
Equity
|
||||||||||||||||||||||
Balance
July 14, 2007 (Inception of Development Stage)
|
- | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
Issuance
of Common Stock for Cash
|
133,333 | 2,213 | 224,000 | 3,718 | 75,069 | - | 81,000 | |||||||||||||||||||||
Offering
Costs
|
- | - | - | - | (2,500 | ) | - | (2,500 | ) | |||||||||||||||||||
Issuance
of Stock for Services
|
866,667 | 14,387 | 14,050,000 | 233,230 | 53,213 | - | 300,830 | |||||||||||||||||||||
Valuation
of Officer's Contributed Services
|
- | - | - | - | 111,781 | - | 111,781 | |||||||||||||||||||||
Net
Loss, July 14, 2007 (Inception of Development Stage) to December 31,
2007
|
- | - | - | - | - | (441,633 | ) | (441,633 | ) | |||||||||||||||||||
Balance
at December 31, 2007
|
1,000,000 | $ | 16,600 | 14,274,000 | $ | 236,948 | $ | 237,563 | $ | (441,633 | ) | $ | 49,478 | |||||||||||||||
Issuance
of Common Stock for Cash
|
- | - | 2,352,803 | 39,057 | 321,193 | - | 360,250 | |||||||||||||||||||||
Offering
Costs
|
- | - | - | - | (1,500 | ) | - | (1,500 | ) | |||||||||||||||||||
Issuance
of Stock for Services
|
- | - | 169,000 | 2,805 | 31,725 | - | 34,530 | |||||||||||||||||||||
Issuance
of Stock for Debt Settlement
|
- | - | 100,000 | 1,660 | 13,340 | - | 15,000 | |||||||||||||||||||||
Net
Loss, December 31, 2008
|
- | - | - | - | - | (422,612 | ) | (422,612 | ) | |||||||||||||||||||
Balance
at December 31, 2008
|
1,000,000 | $ | 16,600 | 16,895,803 | $ | 280,470 | $ | 602,321 | $ | (864,245 | ) | $ | 35,146 | |||||||||||||||
Issuance
of Common Stock for Cash
|
- | - | 3,688,438 | 61,228 | 376,207 | - | 437,435 | |||||||||||||||||||||
Offering
Costs
|
- | - | - | - | (7,000 | ) | - | (7,000 | ) | |||||||||||||||||||
Issuance
of Stock for Services
|
- | - | 66,333 | 1,101 | 10,049 | - | 11,150 | |||||||||||||||||||||
Issuance
of Stock for Debt Settlement
|
- | - | 788,571 | 13,090 | 105,196 | - | 118,286 | |||||||||||||||||||||
Net
Loss, December 31, 2009
|
- | - | - | - | - | (645,946 | ) | (645,946 | ) | |||||||||||||||||||
Balance
at December 31, 2009
|
1,000,000 | $ | 16,600 | 21,439,145 | $ | 355,889 | $ | 1,086,773 | $ | (1,510,191 | ) | $ | (50,929 | ) |
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)
|
|||||||||||
2009
|
2008
|
to December 31, 2009
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
Loss
|
$ | (645,946 | ) | $ | (422,612 | ) | $ | (1,510,191 | ) | |||
Adjustments
to Reconcile Net loss to Net Cash Used in Operating
Activities:
|
||||||||||||
Class
A Common stock and preferred stock granted for
services
|
11,150 | 34,530 | 346,510 | |||||||||
Contributed
Capital
|
- | - | 111,781 | |||||||||
Depreciation
and Amortization
|
3,423 | 1,127 | 4,564 | |||||||||
Interest
expense on conversion to Class A common stock
|
449 | - | 449 | |||||||||
Loss
on conversions of debt to Class A common stock
|
97,637 | - | 97,637 | |||||||||
Gain
on asset theft, net
|
(29,125 | ) | - | (29,125 | ) | |||||||
Changes
in Assets and Liabilities:
|
||||||||||||
Prepaid
Expenses
|
7,731 | (7,731 | ) | - | ||||||||
Security
Deposit
|
- | (1,800 | ) | (1,800 | ) | |||||||
Accounts
Payable
|
140,152 | 51,186 | 191,336 | |||||||||
Accrued
Expenses
|
(11,503 | ) | 11,503 | - | ||||||||
Accrued
Salaries
|
77,808 | 97,431 | 175,239 | |||||||||
NET
CASH USED IN OPERATING ACTIVITIES
|
(348,224 | ) | (236,366 | ) | (613,600 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase
of Equipment
|
(7,372 | ) | (4,994 | ) | (13,151 | ) | ||||||
Deferred
Patent costs
|
(10,976 | ) | (23,777 | ) | (41,378 | ) | ||||||
Loans
receivable from Officers
|
(9,200 | ) | (121,201 | ) | (175,825 | ) | ||||||
Insurance
proceeds on asset theft
|
30,961 | - | 30,961 | |||||||||
NET
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
3,413 | (149,972 | ) | (199,393 | ) | |||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Sale
of Class A - Common Stock
|
437,435 | 360,250 | 833,685 | |||||||||
Offering
costs related to the Sale of Class A - Common Stock
|
(7,000 | ) | (1,500 | ) | (11,000 | ) | ||||||
Sale
of Class B - Preferred Stock
|
- | - | 45,000 | |||||||||
Principal
Payments on Capital Lease Obligations
|
(1,641 | ) | (1,757 | ) | (3,398 | ) | ||||||
Loan
Payable to Principal Stockholder
|
- | 30,000 | 60,000 | |||||||||
Repayment
of Loan Payable to Principal Stockholder
|
- | (4,800 | ) | (4,800 | ) | |||||||
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
428,794 | 382,193 | 919,487 | |||||||||
NET
INCREASE (DECREASE) IN CASH
|
83,983 | (4,145 | ) | 106,494 | ||||||||
CASH
AT BEGINNING OF YEAR
|
22,513 | 26,658 | - | |||||||||
CASH
AT END OF YEAR
|
$ | 106,496 | 22,513 | $ | 106,494 | |||||||
Supplemental
Disclosure of Cash Flow Information
|
||||||||||||
Cash
paid during the period:
|
||||||||||||
Interest
Expense
|
$ | 1,456 | $ | 222 | $ | 1,678 | ||||||
Income
Tax
|
$ | - | $ | - | $ | - | ||||||
Supplemental
Disclosure of Non-Cash Investing and Financing
Activities
|
||||||||||||
Conversion
of a Vendor Liability into Shares of Class A Common
Stock
|
$ | - | $ | 15,000 | $ | 15,000 | ||||||
Capital
Lease Obligation Recorded as Property and Equipment
|
$ | - | $ | 7,058 | $ | 7,058 | ||||||
Conversion
of a shareholder loan into shares of Class A common
stock
|
$ | 55,200 | $ | - | $ | 55,200 | ||||||
Reclassification
of equity to liability to guarantee equity value due to price guarantee
upon conversion
|
$ | 35,000 | $ | - | $ | 35,000 | ||||||
Reclassification
of accounts payable to liability to guarantee equity value due to price
guarantee upon conversion
|
$ | 48,980 | $ | - | $ | 48,980 |
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, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
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, 2009. To-date, the
Company’s business activities during development stage has 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.
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, 2009 or 2008, respectively.
PROPERTY
AND EQUIPMENT
Property
and equipment is recorded at cost. Depreciation is computed using the
straight-line method based on the estimated useful lives of the related assets
of five years. Expenditures for additions and improvements are capitalized
while maintenance and repairs are expensed as incurred.
LOANS
RECEIVABLE FROM OFFICERS
Loans
receivable consist of monies loaned to our officers pursuant to loan
agreements. The Company evaluates the loans for collectability and
establishes an allowance for losses as necessary. The Company charges
off loans receivable against any allowance as determined by the
Company.
DEFERRED
PATENT COSTS
Patent
costs are stated at cost 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 three patents pending with the
USPTO.
F-7
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
IMPAIRMENT
OF LONG-LIVED ASSETS
The
Company accounts for long-lived assets in accordance with the provisions of ASC
360-10 (SFAS No. 144), “Accounting for the Impairment or Disposal of
Long-Lived Assets”. 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.
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 $4,500 and $77,300 for the years ended December 31, 2009 and 2008,
respectively.
STOCK-BASED
COMPENSATION
Compensation
expense associated with the granting of stock based awards to employees and
directors and non-employees is recognized in accordance with generally accepted
accounting principles (ASC 718-20) which requires companies to estimate and
recognize the fair value of stock-based awards to employees and directors.
The value of the portion of an award that is ultimately expected to vest
is recognized as an expense over the requisite service periods using the
straight-line attribution method.
INCOME
TAXES
The
Company accounts for income taxes pursuant to the provisions of (ASC 740-10)
SFAS No. 109, “Accounting for Income Taxes”, which requires, among other
things, an asset and liability approach to calculating deferred income
taxes. The asset and liability approach requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax bases of assets
and liabilities. A valuation allowance is provided to offset any net
deferred tax assets for which management believes it is more likely than not
that the net deferred asset will not be realized.
Additionally,
the Company adopted the provisions of (ASC 740-10) Financial Interpretation
Number 48 (FIN 48), “Accounting for
Uncertain Income Tax Positions”. When tax returns
are filed, it is highly certain that some positions taken would be sustained
upon examination by the taxing authorities, while others are subject to
uncertainty about the merits of the position taken or the amount of the position
that would be ultimately sustained. In accordance with the guidance of FIN
48, the benefit of a tax position is recognized in the financial statements in
the period during which, based on all available evidence, management believes it
is more likely than not that the position will be sustained upon examination,
including the resolution of appeals or litigation processes, if any. Tax
positions taken are not offset or aggregated with other positions. Tax
positions that meet the more-likely-than-not recognition threshold are measured
as the largest amount of tax benefit that is more than fifty percent likely
of being realized upon settlement with the applicable taxing authority.
The portion of the benefits associated with tax positions taken that
exceeds the amount measured as described above should be reflected as a
liability for unrecognized tax benefits in the accompanying balance sheet along
with any associated interest and penalties that would be payable to the taxing
authorities upon examination. The Company believes its tax positions are
all highly certain of being upheld upon examination. As such, the Company
has not recorded a liability for unrecognized tax benefits. As of December
31, 2009, tax years 2007, 2008 and 2009 remain open for IRS
audit. The Company has received no notice of audit from the Internal
Revenue Service for any of the open tax years.
F-8
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
The
Company has also adopted (ASC 740-10), “Definition of Settlement in FASB
Interpretation No. 48”, which was issued on May 2, 2007. FSP FIN
48-1 amends FIN 48 to provide guidance on how an entity should determine whether
a tax position is effectively settled for the purpose of recognizing previously
unrecognized tax benefits. The term “effectively settled” replaces the
term “ultimately settled” when used to describe recognition, and the terms
“settlement” or “settled” replace the terms “ultimate settlement” or “ultimately
settled” when used to describe measurement of a tax position under FIN 48.
FSP FIN 48-1 clarifies that a tax position can be effectively settled upon
the completion of an examination by a taxing authority without being legally
extinguished. For tax positions considered effectively settled, an entity
would recognize the full amount of tax benefit, even if the tax position is not
considered more likely than not to be sustained based solely on the basis of its
technical merits and the statute of limitations remains open. The adoption
of FSP FIN 48-1 did not have an impact on the accompanying financial
statements.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
The
carrying amounts of the Company’s financial instruments, including cash, loans
receivable and current liabilities, approximate fair value because of their
short maturities. Based upon the Company’s estimate of its current
incremental borrowing rate for loans with similar terms and average maturities,
the carrying amounts of loans payable, and capital lease obligations
approximate fair value. The Company adopted the provisions of SFAS
157 (ASC 820) on January 1, 2008.
BASIC
AND DILUTED NET LOSS PER COMMON SHARE
Basic net
loss per share is computed by dividing the net loss by the weighted average
number of common shares outstanding during the period. Diluted net
loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding for the period and, if dilutive,
potential common shares outstanding during the period. Potentially
dilutive securities consist of the incremental common shares issuable upon
exercise of common stock equivalents such as stock options and convertible debt
instruments. Potentially dilutive securities are excluded from the
computation if their effect is anti-dilutive. As of December 31, 2009
and 2008, there were no potentially dilutive securities. As a result,
the basic and diluted per share amounts for all periods presented are
identical.
NEW
ACCOUNTING PRONOUNCEMENTS
In
December 2007, the FASB issued (ASC 810-45) SFAS No. 160,
“Non-controlling Interests in Consolidated Financial Statements” (“SFAS
160”). This Statement amends Accounting Research Bulletin
No. 51, “Consolidated Financial Statements,” to establish accounting and
reporting standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. SFAS 160 is required to be adopted
simultaneously with SFAS 141R and is effective for the Company beginning January
1, 2009. The Company does not have any non-controlling interests in
its subsidiaries, and accordingly, the adoption of SFAS 160 did not have a
material impact on its financial position, cash flows or results of
operations.
On
January 1, 2008, the Company adopted the provisions of Statement of
Financial Accounting Standards (ASC 825-10) SFAS No. 159, “The Fair
Value Option for Financial Assets and Financial Liabilities — Including an
amendment of FASB Statement No. 115”. SFAS No. 159 permits all
entities to choose to measure and report many financial instruments and certain
other items at fair value at specified election dates. If such an
election is made, any unrealized gains and losses on items for which the fair
value option has been elected are required to be reported in earnings at each
subsequent reporting date. In addition, SFAS No. 159 establishes
presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types
of assets and liabilities. The adoption of SFAS No. 159 did not have
a material effect on the Company’s financial position or results of operations
and cash flows.
F-9
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
In March
2008, the FASB issued (ASC 815-10) SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 requires
enhanced disclosures about an entity’s derivative and hedging activities and
thereby improves the transparency of financial reporting. It is
intended to enhance the current disclosure framework in SFAS 133 by requiring
that objectives for using derivative instruments be disclosed in terms of
underlying risk and accounting designation. This disclosure better
conveys the purpose of derivative use in terms of the risks that the entity is
intending to manage. The new disclosure standard is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Statement
encourages, but does not require, comparative disclosures for earlier periods at
initial adoption. As of December 31, 2009 and 2008, the
Company was not involved in any derivative or hedging activities.
In June
2008, the Emerging Issues Task Force of the FASB issued (ASC 815-40) EITF Issue
No. 07-5, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to
an Entity’s Own Stock” (“EITF 07-5”), which is effective for fiscal years ending
after December 15, 2008, with earlier application not permitted by entities that
has previously adopted an alternative accounting policy. The adoption of
EITF 07-5’s requirements will affect accounting for convertible instruments and
warrants with provisions that protect holders from declines in the stock price
(“round-down” provisions). Warrants with such provisions will no longer be
recorded in equity. EITF 07-5 guidance is to be applied to outstanding
instruments as of the beginning of the fiscal year in which the Issue is
applied. The cumulative effect of the change in accounting principle shall
be recognized as an adjustment to the opening balance of retained earnings (or
other appropriate components of equity) for that fiscal year, presented
separately. The cumulative-effect adjustment is the difference between the
amounts recognized in the statement of financial position before initial
application of this Issue and the amounts recognized in the statement of
financial position at initial application of this Issue. The amounts
recognized in the statement of financial position as a result of the initial
application of this Issue shall be determined based on the amounts that would
have been recognized if the guidance in this Issue had been applied from the
issuance date of the instrument. The Company implemented this standard for
the fiscal year ended December 31, 2008.
In May
2009, the Financial Accounting Standards Board (“FASB”) issued an accounting
standard that became part of ASC Topic 855, “Subsequent Events”. ASC
Topic 855 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. ASC Topic 855 sets forth (1) the
period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements, (2) the circumstances
under which an entity should recognize events or transactions occurring after
the balance sheet date in its financial statements and (3) the disclosures that
an entity should make about events or transactions that occurred after the
balance sheet date. ASC Topic 855 is effective for interim or annual
financial periods ending after June 15, 2009. The adoption of ASC
Topic 855 did not have a material effect on the Company’s financial
statements.
In June
2009, the FASB issued an accounting standard whereby the FASB Accounting
Standards Codification (“Codification”) will be the single source of
authoritative non-governmental United States of America generally accepted
accounting principles (“GAAP”). Rules and interpretive releases of
the United States of America Securities and Exchange Commission (“SEC”) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. ASC Topic 105 is effective for interim and annual
periods ending after September 15, 2009. All existing accounting
standards are superseded as described in ASC Topic 105. All other
accounting literature not included in the Codification is
non-authoritative. The Codification has not had a significant impact
on the Company’s financial statements.
F-10
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
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, 2009 and 2008 the Company had a net loss of $645,946 and
$422,612, respectively, and net cash used in operations of $348,224 and
$236,366, respectively. Additionally, as of December 31, 2009, the company
had a working capital deficit, a stockholders’ deficit and a deficit accumulated
during development stage of $281,962, $50,929 and $1,510,191, respectively, and
was a development stage company with no revenues.
These
conditions raise substantial doubt about the Company’s ability to continue as a
going concern. These financial statements do not include any adjustments
to reflect the possible future effect on the recoverability and classification
of assets or the amounts and classifications of liabilities that may result from
the outcome of these uncertainties.
In order
to execute its business plan, the Company will need to raise additional working
capital and generate revenues. There can be no assurance that the Company
will be able to obtain the necessary working capital or generate revenues to
execute its business plan.
Management’s
plan in this regard, includes completing product development, generating
marketing agreements with product distributors and raising additional funds
through a private placement offering of the Company’s common stock.
Management
believes its business development and capital raising activities will provide
the Company with the ability to continue as a going concern.
3.
|
PREPAID
EXPENSES AND OTHER CURRENT ASSETS
|
Prepaid
expenses and other current assets are summarized as follows:
December 31,
2009
|
December 31,
2008
|
|||||||
Prepaid
professional fees
|
$ | - | $ | 6,000 | ||||
Prepaid
rent
|
- | 1,731 | ||||||
Total
prepaid expenses and other current assets
|
$ | - | $ | 7,731 |
4.
|
LOANS
RECEIVABLE FROM OFFICERS
|
Pursuant
to two separate unsecured promissory notes with our chief executive officer and
our chief financial officer (borrowers) dated August 1, 2007, each borrower may
borrow an amount equal to or less than $75,000 each (subsequently increased to
$90,000) at a rate of 5.75%. Principal and interest are due under the
terms of the loans on or before January 31, 2017. Total principal and
interest due under the loans as of December 31, 2009 and 2008 were $175,825 and
$166,625, respectively. The Company evaluated collectability on the
above loans and determined no allowance was necessary for the years ended
December 31, 2009 or 2008. Subsequent to year-end, on
January 31, 2010, the officers/shareholders redeemed 521,439 shares
(collectively) of their common stock in the Company, with a value of $0.35 to
satisfy this outstanding debt obligation (See Note 12).
F-11
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
5.
|
PROPERTY
AND EQUIPMENT
|
Property
and equipment consists of the following:
Est.
Useful
Lives
|
December 31,
2009
|
December 31,
2008
|
||||||||
Computer
equipment
|
5 Years
|
$ | 7,058 | $ | 7,843 | |||||
Office
equipment
|
5
Years
|
5,605 | 4,994 | |||||||
Vehicle
|
5
Years
|
5,000 | - | |||||||
17,663 | 12,837 | |||||||||
Less
total accumulated depreciation
|
(3,854 | ) | (1,141 | ) | ||||||
$ | 13,809 | $ | 11,696 |
Total
depreciation expense for the years ended December 31, 2009 and 2008 was $3,423
and $1,127, respectively.
During
the year ended December 31, 2009, the Company wrote off $1,836 of the net book
value of computer equipment, which was stolen during a break-in at the Company’s
location. This amount was off-set against insurance proceeds received
(which totaled $30,961 and mainly related to intellectual property stored
on the computers) resulting in the recording of a net gain on asset theft of
$29,125 in the accompanying financial statements.
6.
|
ACCRUED
EXPENSES
|
The major
components of accrued expenses are summarized as follows:
December 31,
2009
|
December 31,
2008
|
|||||||
Accrued
advertising
|
$ | - | $ | 3,600 | ||||
Accrued
legal fees
|
- | 1,500 | ||||||
Accrued
consulting
|
- | 2,000 | ||||||
Other
accrued expenses
|
- | 4,403 | ||||||
Total
accrued expenses
|
$ | - | $ | 11,503 |
7.
|
LOANS
PAYABLE TO PRINCIPAL STOCKHOLDER AND CAPITAL
LEASES
|
Loans Payable to Principal
Stockholder/Officer
On
November 6, 2007, the Company entered into a shareholder loan
agreement. The agreement allowed for advances to the Company up to
$65,000. The Company received one advance in 2007 for $30,000, and
net advances in 2008 amount to $25,200. As discussed in Note 8, these
advances were converted into 788,517 shares of common stock in fiscal 2009,
which resulted in the Company recording a loss on conversion of $62,637 as the
principal stockholder is also an officer of the Company.
F-12
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
Loans
payable to principal stockholder consisted of the following at December
31:
2009
|
2008
|
|||||||
Loans
payable to principal stockholder
|
$ | - | $ | 55,200 |
Capital
Leases
Capital
lease obligations consisted of the following at December 31:
2009
|
2008
|
|||||||
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.
|
$ | 3,660 | $ | 5,301 | ||||
Less
current portion:
|
(1,881 | ) | (1,641 | ) | ||||
Long-term
capital lease obligation
|
$ | 1,779 | $ | 3,660 |
Interest
expense on the above capital lease was $629 and $222 during the years ended
December 31, 2009 and 2008 respectively.
Future
minimum lease payments for capital leases are as follows for years ending
December 31:
2010
|
$ | 1,881 | ||
2011
|
1,779 | |||
Total
|
$ | 3,660 |
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 and the holders of the Class B Participating Cumulative
Preferred Super-voting Stock are entitled to one hundred votes per
share. The Class B Participating Cumulative Preferred Super-voting
Stock pays dividends at 6%. For the years ended December 31, 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, 2009, 2008, and 2007 were $49,987 and $29,737, and
$9,487 respectively.
F-13
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
Class A Common
Stock
Issuances
of the Company’s common stock during the years ended December 31, 2007,
2008 and 2009 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.
Shares Issued
for
Services
In 2007,
14,000,000 vested shares of Class A common stock were issued to founders having
a fair value of $232,400, based on a nominal value of $0.0166 per
share. The $232,400 was expensed upon issuance as the shares were
fully vested.
In 2007,
50,000 shares of Class A common stock were issued for legal services provided to
the company with a value of $7,500 or $0.15 per share, based on a
contemporaneous cash sales price.
In 2008,
169,000 shares of Class A common stock were issued for services having a fair
value of $34,530 ranging from $0.13 to $0.25 per share, based
on contemporaneous cash sales prices.
In March
2009, 8,000 shares of Class A common stock were issued for services provided to
the Company with a value of $2,400 or $0.30 per share, based on a
contemporaneous cash 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
contemporaneous cash sales price.
In August
2009, 41,000 shares of Class A common stock were issued for services provided to
the Company with a value of $6,150 or $0.15 per share, based on a
contemporaneous cash sales price.
In
February 2009, 500,000 shares of contingently returnable Class A common stock
were issued to a consultant pursuant to an agreement whereby the consultant
must establish a contract with a specific distributor and produce a sale of the
Company’s product through such distribution channel. As of the date
of this filing, no sales have occurred under the contract and the shares are not
considered issued or outstanding for accounting purposes.
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.
F-14
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
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 for a total liability of $83,980, which resulted in a loss
on conversion in 2009 of $35,000. These shares are not considered
issued or outstanding for accounting purposes.
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.
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.
|
INCOME
TAXES
|
There was
no income tax expense in 2009 and 2008 due to the Company’s net taxable
losses.
The
reconciliation of income tax benefit computed at the United States federal tax
rate of 34% to income tax expense (benefit) is as follows:
Year ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Tax
benefit at the United States statutory rate
|
$ | (219,622 | ) | $ | (143,688 | ) | ||
State
income tax, net of federal benefit
|
(22,823 | ) | (14,058 | ) | ||||
Stock
based compensation
|
3,791 | 11,750 | ||||||
Meals
|
2,061 | 270 | ||||||
Change
in valuation allowance
|
236,593 | 145,726 | ||||||
Income
tax benefits
|
$ | - | $ | - |
F-15
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
The tax
effect of temporary differences that give rise to significant portions of the
deferred tax assets is as follows:
Year ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Net
operating loss carryforward
|
$ | 325,689 | $ | 119,554 | ||||
Accrued
salary
|
65,942 | 36,663 | ||||||
Depreciation
expense
|
1,961 | 429 | ||||||
Valuation
allowance
|
(393,592 | ) | (156,646 | ) | ||||
Net
deferred tax assets
|
$ | - | $ | - |
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, 2009
and 2008, the Company has net operating losses (NOL) of approximately $548,000
and $318,000, respectively, that will expire from 2027 to 2029. 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 2009 and 2008 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, 2009 and
2008. The valuation allowance as of December 31, 2009 and 2008 was
approximately $394,000 and $157,000, respectively. The net change in
the valuation allowance during the years ended December 31, 2009 and 2008 was
an approximate increase
of $237,000 and $146,000, respectively.
10.
|
COMMITMENTS
AND CONTINGIENCIES
|
Employment
and operating 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, 2009 and 2008, the Company owed its officers $175,239 and
$97,431, respectively, based on the terms of the agreement.
During
the year ended December 31, 2007, neither officer was paid for his
services. Based on the value of the above agreement, the Company
recorded the estimated value of contributed services from its officers of
$111,781 representing work performed from formation of the Company through
December 31, 2007.
We have a
written agreement with a marketing Company for their services. The
Company will receive 5% of total revenues plus 5% of revenue payable in stock
grants at $0.32 cents per share for three years beginning in December 2008 and
ending in November 2011. No revenues have been generated to
date.
F-16
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
Operating
Leases
The
Company currently leases office space under a long-term operating lease
agreement expiring on September 30, 2010. Within sixty days
of expiration, the Company has the option to extend the lease for an additional
five years. The following is a schedule by years of future minimum rental
payments required under the operating lease:
2010
|
$ | 15,581 | ||
Total
|
$ | 15,581 |
Rent
expense for the years ended December 31, 2009 and 2008 were $22,203 and $9,252
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, 2009,
there were no pending or threatened lawsuits that could reasonably be expected
to have a material effect on the results of our operations.
11.
|
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 an 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 (see Note 4). The balance due
under these loans was $175,825 as of December 31, 2009. As of
December 31, 2009, the Company owed the same two officers $175,239 based on
the terms of their employment contracts (see Note 10). Subsequent to
year-end, on January 31, 2010, the officers/shareholders redeemed 521,439 shares
(collectively) of their common stock in the Company, with a value of $0.35 to
satisfy this outstanding debt obligation. (See Note 12)
12.
SUBSEQUENT EVENTS
During
the period from January 1, 2010 through March 29, 2010, the Company sold 271,146
shares of class A common stock ranging from $0.25 to $0.35 per share for gross
proceeds of $71,501.
During
the period from January 1, 2010 through March 29, 2010, the Company issued a
total of 20,000 shares of class A common stock for services at $0.35 per share
based on a contemporaneous cash sales price. The total value of the
shares issued for services was $7,000.
On
January 4, 2010, the Company issued 20,000 shares of class A common stock for
conversion of a $6,000 vendor liability. The shares were valued at
$0.35 per share which was based on contemporaneous cash sales
prices. The Company recorded a $1,000 loss on
conversion.
On
January 4, 2010, the Company gifted 21,000 shares of common stock to three
unrelated parties at $0.35 per share based on a contemporaneous cash sales
prices. The total value of the share gifts were $7,350 which was
expensed.
F-17
ATTUNE
RTD
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008 AND
THE
PERIOD FROM JULY 14, 2007 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2009
On
January 31, 2010, the Company's Chief Executive Officer and Chief
Financial Officer redeemed 521,439 shares (collectively) of their common stock
in the Company, with a value of $0.35 per share, based on contemporaneous cash
sales, to satisfy an outstanding debt obligation with the Company arising from
two separate unsecured promissory notes dated August 1, 2007. The
value of the note receivable was $182,504 upon conversion.
On March
15, 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. 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 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 the Company in cash or through the
issuance of additional common stock. As a result, the Company
recorded the $24,000 conversion as a liability along with the additional $11,000
guarantee for a total liability of $35,000. These shares are not
considered issued or outstanding for accounting purposes.
Management
evaluated all activity of the Company through March 29, 2010 (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-18
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
62
PROSPECTUS
ATTUNE
RTD
Dated
_____________, 2010
Selling
shareholders are offering up to 1,555,326 shares of common stock. The
selling shareholders will offer their shares at $0.35 per share until our shares
are quoted on the OTC Bulletin Board and thereafter at prevailing market prices
or privately negotiated prices.
Our
common stock is not now listed on any national securities exchange, the NASDAQ
stock market or the OTC Bulletin Board.
Dealer Prospectus Delivery
Obligation
Until
_________ (90 days from the date of this prospectus) all dealers that effect
transactions in these securities, whether or not participating in this offering,
may be required to deliver a prospectus. This is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
63
Part
II-INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION
OF OFFICERS AND DIRECTORS
Our
Articles of Incorporation and By-laws, subject to the provisions of Nevada law,
contain provisions that allow the corporation to indemnify any person under
certain circumstances.
Nevada
law provides the following:
17-16-851. Authority
to indemnify.
(a)
Except as otherwise provided in this section, a corporation may indemnify an
individual who is a party to a proceeding because he is a director against
liability incurred in the proceeding if:
(i)
He conducted himself in good faith; and
(ii)
He reasonably believed that his conduct was in or at least Not opposed to the
corporation's best interests; and
(iii)
In the case of any criminal proceeding, he had no reasonable cause to believe
his conduct was unlawful; or
(iv)
He engaged in conduct for which broader indemnification has been made
permissible or obligatory under a provision of the articles of incorporation, as
authorized by W.S. 17-16-202(b)(v).
(b)
A director's conduct with respect to an employee benefit plan for a purpose he
reasonably believed to be in the interests of the participants in and
beneficiaries of the plan is conduct that satisfies the requirement of paragraph
(a)(ii) of this section.
(c)
The termination of a proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent is not, of itself,
determinative that the director did not meet the standard of conduct described
in this section.
(d) Unless
ordered by a court under W.S. 17-16-854(a)(iii) a corporation may not indemnify
a director under this section:
(i)
In connection with a proceeding by or in the right of the corporation, except
for reasonable expenses incurred in connection with the proceeding if it is
determined that the director has met the standard of conduct under subsection
(a) of this section; or
64
(ii)
In connection with any proceeding with respect to conduct for which he was
adjudged liable on the basis that he received a financial benefit to which he
was not entitled.
(e)
Repealed By Laws 1997, ch. 190,ss.3.
17-16-852. Mandatory
indemnification.
A
corporation shall indemnify a director who was wholly successful, on the merits
or otherwise, in the defense of any proceeding to which he was a party because
he was a director of the corporation against reasonable expenses incurred by him
in connection with the proceeding.
17-16-853. Advance
for expenses.
(a)
A corporation may, before final disposition of a proceeding, advance funds to
pay for or reimburse the reasonable expenses incurred by a director who is a
party to a proceeding because he is a director if he delivers to the
corporation:
(i)
A written affirmation of his good faith belief that he has met the standard of
conduct described in W.S. 17-16-851 or that the proceeding involves conduct for
which liability has been eliminated under a provision of the articles of
incorporation as authorized by W.S. 17-16-202(b)(iv); and
(ii)
His written undertaking to repay any funds if he is not entitled to
mandatory indemnification under W.S. 17-16-852 and it is ultimately determined
that he has not met the standard of conduct described in W.S.
17-16-851.
(iii)
Repealed By Laws 1997, ch. 190,ss.3.
(b)
The undertaking required by paragraph (a)(ii) of this section shall be an
unlimited general obligation of the director but need not be secured and may be
accepted without reference to the financial ability of the director to make
repayment.
(c)
Authorizations under this section shall be made:
(i)
By the board of directors:
(A)
If there are two (2) or more disinterested directors, by a majority vote of all
the disinterested directors (a majority of whom shall for such purpose
constitute a quorum) or by a majority of the members of a committee of two (2)
or more disinterested directors appointed by such a vote; or
(B) If
there are fewer than two (2) disinterested directors, by the vote necessary for
action by the board in accordance with W.S. 17-16-824(c), in which authorization
directors who do not qualify as disinterested directors may participate;
or
65
(ii)
By the shareholders, but shares owned by or voted under the control of a
director who at the time does not qualify as a disinterested director may not be
voted on the authorization.
17-16-854. Court-ordered
indemnification and advance for expenses.
(a)
A director who is a party to a proceeding because he is a director may apply for
indemnification or an advance for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. After
receipt of an application and after giving any notice it considers necessary,
the court shall:
(i)
Order indemnification if the court determines that the director is entitled to
mandatory indemnification under W.S. 17-16-852;
(ii)
Order indemnification or advance for expenses if the court determines that the
director is entitled to indemnification or advance for expenses pursuant to a
provision authorized by W.S. 17-16-858(a); or
(iii)
Order indemnification or advance for expenses if the court determines, in view
of all the relevant circumstances, that it is fair and reasonable:
(A)
To indemnify the director; or
(B)
To advance expenses to the director, even if he has not met the standard of
conduct set forth in W.S. 17-16-851(a), failed to comply with W.S. 17-16-853 or
was adjudged liable in a proceeding referred to in
W.S. 17-16-851(d)(i) or (ii), but if he was adjudged so liable his
indemnification shall be limited to reasonable expenses incurred in connection
with the proceeding.
(b)
If the court determines that the director is entitled to indemnification under
paragraph (a)(i) of this section or to indemnification or advance for expenses
under paragraph (a)(ii) of this section, it shall also order the corporation to
pay the director's reasonable expenses incurred in connection with obtaining
court-ordered indemnification or advance for expenses. If the court determines
that the director is entitled to indemnification or advance for expenses under
paragraph (a)(iii) of this section, it may also order the corporation to pay the
director's reasonable expenses to obtain court-ordered indemnification or
advance for expenses.
17-16-855. Determination
and authorization of indemnification.
(a)
A corporation may not indemnify a director under W.S. 17-16-851 unless
authorized for a specific proceeding after a determination has been made that
indemnification of the director is permissible because he has met the standard
of conduct set forth in W.S. 17-16-851.
(b)
The determination shall be made:
66
(i)
If there are two (2) or more disinterested directors, by the board of directors
by majority vote of all the disinterested directors (a majority of whom shall
for such purpose constitute a quorum), or by a majority of the members of a
committee of two (2) or more disinterested directors appointed by such a
vote;
(ii)
Repealed By Laws 1997, ch. 190,ss.3.
(iii)
By special legal counsel:
(A) Selected
in the manner prescribed in paragraph (i) of this subsection; or
(B)
If there are fewer than two (2) disinterested directors, selected by the board
of directors (in which selection directors who do not qualify as disinterested
directors may participate); or
(iv)
By the shareholders, but shares owned by or voted under the control of a
director who at the time does not qualify as a disinterested director may not be
voted on the determination.
(c) Authorization
of indemnification shall be made in the same manner as the determination that
indemnification is permissible, except that if there are fewer than
two (2) disinterested directors, authorization of indemnification shall be made
by those entitled under paragraph (b)(iii) of this section to select special
legal counsel.
17-16-856. Officers.
(a) A
corporation may indemnify and advance expenses under this subarticle to an
officer of the corporation who is a party to a proceeding because he is an
officer of the corporation:
(i)
To the same extent as a director; and
(ii)
If he is an officer but not a director, to such further extent as may be
provided by the articles of incorporation, the bylaws, a resolution of the board
of directors or contract, except for:
(A)
Liability in connection with a proceeding by or in the right of the corporation
other than for reasonable expenses incurred in connection with the proceeding;
or
(B)
Liability arising out of conduct that constitutes:
(I)
Receipt by him of a financial benefit to which he is not entitled;
(II)
An intentional infliction of harm on the corporation or the shareholders;
or
67
(III)
An intentional violation of criminal law.
(iii)
A corporation may also indemnify and advance expenses to a Current or former
officer, employee or agent who is not a director to the Extent, consistent with
public policy that may be provided by its articles of incorporation, bylaws,
general or specific action of its board of directors or contract.
(b)
The provisions of paragraph (a)(ii) of this section shall apply to an officer
who is also a director if the basis on which he is made a party to the
proceeding is an act or omission solely as an officer.
(c)
An officer of a corporation who is not a director is entitled to mandatory
indemnification under W.S. 17-16-852, and may apply to a court under W.S.
17-16-854 for indemnification or an advance for expenses, in each case to the
same extent to which a director may be entitled to indemnification or advance
for expenses under those provisions.
Our
By-Laws also provide for indemnification to the fullest extent permitted under
Nevada law.
With
regard to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred or
paid by a director, officer or controlling person of the Corporation in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by us is against
public policy as expressed in the Securities Act of 1933, as amended, and will
be governed by the final adjudication of such case.
OTHER
EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table is an itemization of all expenses, without consideration to
future contingencies, incurred or expected to be incurred by our Corporation in
connection with the issuance and distribution of the securities being offered by
this prospectus. Items marked with an asterisk (*) represent estimated expenses.
We have agreed to pay all the costs and expenses of this offering. Selling
security holders will pay no offering expenses.
ITEM
|
Amount
|
|||
SEC
Registration Fee*
|
40
|
|||
Legal
Fees and Expenses
|
36,000
|
|||
Accounting
Fees and Expenses*
|
40,000
|
|||
Miscellaneous*
|
5,000
|
|||
Total*
|
$
|
81,040
|
*
Estimated Figure
68
RECENT
SALES OF UNREGISTERED SECURITIES:
Class
A Common Stock
Issuances
of the Company’s common stock during the years ended December 31, 2008 and
2007, respectively, included the following:
Shares
Issued for Cash
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 to 4 individuals for aggregate
consideration of $38,500.
Simmons,
Jacqui
|
11/20/2007
|
100,000 | |||
Valenzuela,
Deattria. Raye
|
11/21/2007
|
8,000 | |||
Tokatli,
Joseph
|
11/30/2007
|
8,000 | |||
Valenzuela,
James and Deattria
|
12/15/2007
|
8,000 | |||
Simmons,
Jacqui
|
12/20/2007
|
100,000 |
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 to 22 individuals:
Dunn,
Gary
|
1/22/2008
|
8,000 | |||
Steib,
Mike
|
1/23/2008
|
8,000 | |||
Tokatli,
Joseph
|
2/5/2008
|
12,000 | |||
Simmons,
Jacqui
|
2/22/2008
|
50,000 | |||
Sanchez,
Mike & Tracy
|
3/23/2008
|
8,000 | |||
Davis,
Shane & Jeannette
|
3/23/2008
|
100,000 | |||
Parson,
Doug & Rosaura
|
3/23/2008
|
8,000 | |||
Schaible,
Mark W. & Patty
|
3/27/2008
|
8,000 | |||
Landress,
William & Freda
|
3/31/2008
|
8,000 | |||
Tai,
Raymond
|
6/4/2008
|
700,000 | |||
Slesinger,
Patty
|
6/24/2008
|
100,000 | |||
Multimedia
Ventures, Ron Paxson Principal
|
7/22/2008
|
200,000 |
69
Multimedia
Ventures, Ron Paxson Principal
|
8/6/2008
|
200,000 | |||
Multimedia
Ventures, Ron Paxson Principal
|
8/12/2008
|
200,000 | |||
Multimedia
Ventures, Ron Paxson Principal
|
8/27/2008
|
200,000 | |||
Multimedia
Ventures, Ron Paxson Principal
|
10/7/2008
|
130,310 | |||
Davis,
Shane & Jeannette
|
10/17/2008
|
100,000 | |||
Stys,
Philip R.
|
10/20/2008
|
40,000 | |||
Ramos,
Richard & Thelma
|
10/21/2008
|
13,636 | |||
Ramos,
Richard Rito & Belen
|
10/21/2008
|
13,636 | |||
Reason,
Michael D & Denise
|
11/21/2008
|
40,000 | |||
Belia,
Mariscal & Davis, Jeannette
|
12/4/2008
|
27,777 | |||
Loyd,
David T.
|
12/4/2008
|
8,000 | |||
Sisneros,
Orlando & Linda
|
12/4/2008
|
27,777 | |||
Vanderwall,
Terry
|
12/31/2008
|
25,000 | |||
Olinger,
George
|
12/31/2008
|
50,000 | |||
Olinger,
Jeffrey
|
12/31/2008
|
66,667 |
Shares
Issued for Services
2007
14,000,000
vested shares of Class A common stock were issued to 6 founders having a fair
value of $232,400, based on a nominal value of $0.0166 per share.
Davis,
Shawn
|
7/14/2007
|
21,429 | |||
Bianco,
Thomas Scott
|
7/14/2007
|
21,429 | |||
Bailey,
Steve
|
7/14/2007
|
1,786 | |||
Davis,
Paul
|
7/14/2007
|
1,786 | |||
Smith,
Timothy
|
7/14/2007
|
1,786 | |||
Steib,
Shawn
|
7/14/2007
|
1,786 | |||
After
1 For 280 Split On 9/7/2007
|
|||||
Davis,
Paul Shawn
|
7/14/2007
|
6,000,000 | |||
Bianco,
Thomas Scott
|
7/14/2007
|
6,000,000 | |||
Bailey,
Steve
|
7/14/2007
|
500,000 | |||
Davis,
Paul
|
7/14/2007
|
500,000 | |||
Smith,
Timothy
|
7/14/2007
|
500,000 | |||
Steib,
Shawn
|
7/14/2007
|
500,000 |
50,000
shares of Class A common stock were issued for legal services provided to the
company to one individual with a value of $7,500 or $0.15 per share, based on a
contemporaneous cash sales price.
Williams,
Michael
|
11/1/2007
|
50,000
|
70
2008
169,000
shares of Class A common stock were issued for services having a fair value of
$34,530 ranging from $0.13 to $0.25 per share, based on contemporaneous cash
sales prices to 7 individuals.
Tai,
Raymond
|
1/31/2008
|
100,000 | |||
Curtin,
Robert
|
2/20/2008
|
8,000 | |||
George
Fog III
|
8/20/2008
|
8,000 | |||
Conley,
Bill
|
8/20/2008
|
15,000 | |||
Royce,
Robert
|
8/20/2008
|
8,000 | |||
Curtin,
Robert
|
9/21/2008
|
15,000 | |||
Lostlen,
Tad
|
9/27/2008
|
15,000 |
Shares
Issued in Conversion of other liabilities
2008
100,000
shares of Class A common stock were issued 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.
USFI
Marketing Communications
|
12/2/2008
|
100,000 |
Class
B Participating Cumulative Preferred Super-voting Stock
Shares
Issued for Cash
2007
133,333
shares of Class B preferred stock were issued to 1 individual for aggregate
consideration of $45,000 cash or $0.3375 per share.
Tai,
Raymond Kwok Cheung
|
10/5/2008
|
133,333.33 |
Shares
Issued for Services
2007
866,667
shares of Class B preferred stock were issued to 6 founders for services
rendered during 2007 with a value of $0.3375 per share based on the above
contemporaneous sale of Class B preferred stock.
71
Bailey,
Steve
|
133,333.33 |
10/5/2007
|
|||
Bianco,
Thomas
|
133,333.33 |
10/5/2007
|
|||
Davis,
Paul
|
133,333.33 |
10/5/2007
|
|||
Davis,
Shawn
|
200,000.00 |
10/5/2007
|
|||
Smith,
Timothy
|
133,333.33 |
10/5/2007
|
|||
Steib,
Shawn
|
133,333.33 |
10/5/2007
|
Issuances of the Company’s common
stock during the year ended December 31, 2009, included the
following:
Shares
Issued for Cash:
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 to 46 individuals.
Rapalee,
Earnest & Rapalee Barbara & Drake, Pat
|
1/7/2009
|
100,000 | |||
Multimedia
Ventures
|
2/2/2009
|
273,973 | |||
Chesler,
Thomas
|
2/5/2009
|
10,000 | |||
Tai,
Raymond
|
2/25/2009
|
1,000,000 | |||
Tai,
Raymond
|
4/3/2009
|
357,143 | |||
Perez,
David G.
|
4/6/2009
|
6,667 | |||
Menchaca,
Jason H.
|
4/6/2009
|
6,667 | |||
Lara,
Sylvia Eloise
|
4/6/2009
|
13,334 | |||
Lara,
John J.
|
4/6/2009
|
3,334 | |||
Barillas,
Jonathon G.
|
4/6/2009
|
3,334 | |||
Campos,
Louis
|
4/6/2009
|
13,334 | |||
Rodriguez,
Victor S. & Lilly A.
|
4/10/2009
|
20,000 | |||
Collins,
Dwayne K. & Pelais, Kathy
|
4/11/2009
|
6,667 | |||
Muniz,
Johnny
|
4/14/2009
|
8,000 | |||
Scott,
Lee G. & Joan A.
|
4/15/2009
|
100,000 | |||
Sam
Vince Trust
|
4/21/2009
|
33,000 | |||
Sam
Vince Trust
|
4/21/2009
|
333 | |||
Stys,
Philip R.
|
5/4/2009
|
66,667 | |||
Dunn,
Gary
|
5/15/2009
|
8,000 | |||
McCloud,
Spencer & Kassandra
|
5/18/2009
|
13,333 | |||
Kelly,
Jason B.
|
5/28/2009
|
66,667 | |||
Coomes,
Todd and Marnie
|
5/28/2009
|
100,000 |
72
Ramos,
Richard Rito & Belen
|
6/9/2009
|
6,667 | |||
Starr,
Samuel R. & Roberta L.
|
6/12/2009
|
10,000 | |||
Neill,
Raymond & Delores A.
|
6/14/2009
|
10,000 | |||
Sutfin,
Christina M.
|
6/15/2009
|
3,334 | |||
Neill,
Daniel A.
|
6/17/2009
|
10,000 | |||
Neill,
Laurel A. & Baglieri, Philip
|
6/17/2009
|
6,666 | |||
Wightman,
Keri & Ardath
|
6/19/2009
|
6,667 | |||
Davis,
Shane & Jeannette
|
6/23/2009
|
82,667 | |||
Jimenez,
Frank & Ordaz, Patricia Loera
|
6/26/2009
|
15,000 | |||
Byrd,
Theresa
|
6/26/2009
|
15,000 | |||
Vanderwall,
Terry
|
6/29/2009
|
100,000 | |||
Bin,
Zhu Kai
|
7/7/2009
|
500,000 | |||
Starr,
Donna L. & Wells, Leah
|
7/8/2009
|
6,000 | |||
Wells,
Christopher M. & Leah S.
|
7/9/2009
|
1,700 | |||
Starr,
Samuel R. & Roberta L.
|
7/15/2009
|
6,667 | |||
Robesh,
Robert A. & Hammons, Janet J.
|
8/30/2009
|
5,714 | |||
Ho
Tai Yee Wanhangho Tai Yee Wan
|
9/10/2009
|
333,333 | |||
Sermersheim,
Michael D.
|
9/14/2009
|
26,667 | |||
Coomes,
Todd and Marnie
|
9/15/2009
|
6,667 | |||
Green,
Dale and Angela
|
9/21/2009
|
5,714 | |||
Neill,
Marcie
|
9/29/2009
|
6,666 | |||
Schaible,
Mark W. & Patty
|
10/21/2009
|
8,000 | |||
Davis,
Bill & Margaret
|
10/29/2009
|
5,714 | |||
Mercado,
Kristal V.
|
10/29/2009
|
2,857 | |||
Davis,
Margaret
|
11/2/2009
|
2,857 | |||
Kwon,
Frank
|
11/2/2009
|
40,000 | |||
Rose,
Thomas
|
11/16/2009
|
20,000 | |||
Woolsey
Family Trust
|
12/4/2009
|
58,000 | |||
Nixon,
Earl & Sandra
|
12/5/2009
|
11,428 | |||
Dunn,
Gary
|
12/11/2009
|
4,000 | |||
Landress,
Faron R.
|
12/16/2009
|
11,429 | |||
Sermersheim,
Michael D.
|
12/16/2009
|
8,571 | |||
ANDONNA
NG OI-YIN & EDMOND WONG WAI-KWONG
|
12/21/2009
|
140,000 |
Shares
Issued for Services:
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 $0.30 per share, based on a
contemporaneous cash sales price to 1 individual.
Scharbrough,
Rick 3/12/2009 8,000
73
In June
2009, 17,333 shares of Class A common stock were issued for services provided to
the company with a value of $2,600 or $0.15 per share, based on a
contemporaneous cash sales price to 2 individuals.
Davis,
Shane & Jeannette 6/23/2009 17,333
In August
2009, 41,000 shares of Class A common stock were issued for services provided to
the company with a value of $6,150 or $0.15 per share, based on a
contemporaneous cash sales price to 1 individual.
Chu, Moon
Sun 8/29/2009 41,000
Shares
Issued in Conversion of liabilities:
In
July 2009, 139,944 shares of Class A common stock were issued to a
vendor. The shares were valued at $16,793 or $0.12, based on a
contemporaneous cash sales price.
USFI
Marketing Communications, Faisal Ahmad Principal
In August
2009, the Company converted $55,200 of loans due to a shareholder into 788,571
shares of common stock to 1 individual.
Raymond
Kwok Cheung Tai 8/10/2009
Additional
Sales (2010)
During
the period from January 2010 through the date of this report, the company
Sold
271,146 shares of class A common stock for $71,501 cash with various prices per
share ranging from $0.25 to $0.35 to 10 individuals:
.
Kohrell,
Kevin, Michael & Jesse L.
|
1/7/2010
|
14,286 | |||
Gordon
Ray Campbell & Iris Fern Campbell
|
1/7/2010
|
5,715 | |||
Coomes,
Todd and Marnie
|
1/8/2010
|
7,143 | |||
Zhang
Xiao Cheng
|
1/23/2010
|
96,000 | |||
Shackleford,
Brian
|
1/25/2010
|
5,715 | |||
Multimedia
Ventures, Ron Paxson principal
|
2/10/2010
|
36,000 | |||
Simmons,
Jacqui
|
2/11/2010
|
100,000 | |||
Crites,
Jocelyn
|
2/11/2010
|
2,000 | |||
Dale
& Angela Green,
|
3/16/2010
|
1,430 | |||
Robert
R. Mariscal
|
3/17/2010
|
2,857 |
74
On
January 4, 2010, the company donated 21,000 shares of class A common stock at
$0.35 per share to three individuals. The total value of the shares was
$7,350.
Starr,
Donna
|
1/4/2010
|
7,000 | |||
Martin,
Marilyn
|
1/4/2010
|
7,000 | |||
Hodges,
Patsy
|
1/4/2010
|
7,000 |
On
January 4, 2010, the company converted $6,000 in debt for 20,000 shares of class
A common stock at $0.35 per share to one individual:
Gregory
D. Barton 1/4/2010 20,000
On
March 15, 2010, the company converted $24,000 in debt for 120,000 shares of
class A common stock at $0.35 per share to one individual:
Williams,
Michael 3/15/2010 120,000
On
February 9, 2010, the company issued 20,000 shares of class A common stock at
$0.35 per share to one individual for services:
Frank
D. Persina 2/9/2010 20,000
On
January 31, 2010 two officers redeemed 521,439 shares of its common stock with a
value of $0.35 per share to the company, to satisfy an outstanding debt
obligation.
Shawn
Davis, 1/31/2010 260,719.50
Thomas
Bianco 1/31/2010 260,719.50
We relied
upon Section 4(2) of the Securities Act of 1933, as amended for the above
issuances. We believed that Section 4(2) was available because:
o
|
None
of these issuances involved underwriters, underwriting discounts or
commissions.
|
|
o
|
Restrictive
legends were and will be placed on all certificates issued as described
above.
|
o
|
The
distribution did not involve general solicitation or
advertising.
|
|
o
|
The
distributions were made only to accredited investors or investors who were
sophisticated enough to evaluate the risks of the investment who
understood the speculative nature of their
investment.
|
In
connection with the above transactions, although some of the investors may have
also been accredited, we provided the following to all investors:
o
|
Access
to all our books and records.
|
|
o
|
Access
to all material contracts and documents relating to our
operations.
|
o
|
The
opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given
access.
|
75
Prospective
investors were invited to review at our offices at any reasonable hour, after
reasonable advance notice, any materials available to us concerning our
business. Prospective Investors were also invited to visit our
offices.
EXHIBITS
Item
3
1
|
Articles
of Incorporation
|
|
2
|
First
Amendment to Articles of
Incorporation
|
3
|
Second
Amendment to Articles of Incorporation
|
|
4
|
By-laws
of Attune RTD
|
|
5
|
Name
Change Amendment to Articles *
|
Item
4
5
|
1
|
Form
of common stock Certificate of the Attune RTD
(1)
|
Item
5
1
|
Legal
Opinion of Williams Law Group, P.A.
|
Item
10
1.
|
Shareholder
Loan Documents
|
|
2.
|
Property
Lease *
|
|
3.
|
Agreement
USFI Marketing Communications*
|
|
4.
|
Form
of employee proprietary rights agreements
*
|
Item
23
1
|
Consent
of Salberg and Company, P.A. *
|
|
2
|
Consent
of Williams Law Group, P.A. (included in Exhibit
5.1)
|
*Filed
herewith
All other
Exhibits called for by Rule 601 of Regulation S-1or SK are not applicable to
this filing.
(1)
Information pertaining to our common stock is contained in our Articles of
Incorporation and By-Laws.
76
UNDERTAKINGS
The
undersigned registrant hereby undertakes:
1.
|
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration
statement:
|
i.
|
To
include any prospectus required by section
10(a)(3) of the Securities Act of
1933;
|
ii.
|
To
reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement.
|
|
iii.
|
To
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement;
|
2.
|
That,
for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
|
3.
|
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
|
4.
|
That,
for the purpose of determining liability under the Securities Act of 1933
to any purchaser: Each prospectus filed pursuant to Rule 424(b)
as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included
in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made
in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration
statement will, as to a purchaser with a time of contract of sale prior to
such first use, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date of
first use.
|
77
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to our directors, officers and controlling persons, we have been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by a director, officer or controlling person of the
corporation in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by a controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by us is
against public policy as expressed in the Securities Act of 1933, as amended,
and will be governed by the final adjudication of such case.
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Palm Springs, State of
California on February 10, 2010.
ATTUNE
RTD
Name
|
Date
|
Signature
|
||||
/s/
Shawn Davis
|
By: Shawn
Davis,
President
|
February
10, 2010
|
/s/
Shawn Davis
|
In
accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
SIGNATURE
|
NAME
|
TITLE
|
DATE
|
|||
/s/
Shawn Davis
|
Shawn
Davis
|
Director,
Principal
Executive
Officer
|
March
29, 2010
|
|||
/s/
Thomas Bianco
|
Thomas
Bianco
|
Treasurer
and
Principal
Financial
Officer
and
Principal
Accounting
Officer,
Director
|
March
29, 2010
|
|||
/s/
Paul Davis
|
Paul
Davis
|
Vice
President,
Director
|
March
29, 2010
|
|||
/s/
Timothy Smith
|
Timothy
Smith
|
Secretary
|
March
29, 2010
|
78