ATTUNE RTD - FORM 10-K/A - January 27, 2014

Attached files

file	filename
EX-31.1 - EXHIBIT 31.1 - ATTUNE RTD	ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - ATTUNE RTD	ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - ATTUNE RTD	ex31-2.htm
EX-32.2 - EXHIBIT 32.2 - ATTUNE RTD	ex32-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K /A

(Amendment No. 2)

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

For the fiscal year ended December 31, 2012

OR

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

For the transition period from ____________ to ____________

Commission file number: 333-147247

Attune RTD

(Exact name of registrant as specified in its charter)

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

3111 Tahquitz Canyon Way Palm Springs, CA		92263
(Address of principal executive offices)		(Zip Code)

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

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

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

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

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

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

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

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

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

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

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the closing price as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $3,678,870.

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

EXPLANATORY NOTE

This Annual Report on Form 10-K/A is being filed as Amendment No. 2 to our Annual Report on Form 10-K (“Amendment No. 2”) to amend our Annual Report on Form 10-K for the year ended December 31, 2012 (the “Annual Report”), originally filed on April 8, 2013 with the Securities and Exchange Commission and subsequently amended and restated by Amendment No. 1 to our Annual Report on December 30, 2013 (“Amendment No. 1”).

The purpose of this Amendment No. 2 is to amend and restate Part II, Item 8. Financial Statements and Supplementary Data for the purpose of revising certain portions of the Report of Independent Registered Public Accounting Firm filed with the Annual Report, as amended and restated by Amendment No. 1. In conjunction with the amendment and restatement of the Report of Independent Registered Public Accounting Firm, we are also restating the financial statements filed with the Annual Report, as amended and restated by Amendment No. 1, but the information contained therein such financial statements has not been amended or restated.

In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal financial officer are filed herewith as exhibits to this Amendment No. 2.

Special Note Regarding Amendment No. 2

Other than as described above, no other information included in the Annual Report, as amended and restated by Amendment No. 1, is being amended or updated by this Amendment No. 2. This Amendment No. 2 does not reflect subsequent events occurring after the filing date of the Annual Report, nor does it update or modify the disclosures contained in the original Annual Report, as amended and restated by Amendment No. 1. Accordingly, this Amendment No. 2 should be read in conjunction with our filings made with the Securities and Exchange Commission subsequent to the filing of the original Annual Report, including any amendment to those filings.

Financial Statement Index

		Page

Report of Independent Registered Public Accounting Firm		F-1

Report of Independent Registered Public Accounting Firm		F-2

Balance Sheets		F-3

Statements of Operations		F-4

Statement of Changes in Stockholders’ Equity (Deficit)		F-5

Statements of Cash Flows		F-6

Notes to Financial Statements		F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Attune RTD

(A Development Stage Company)

We have audited the accompanying balance sheets of Attune RTD (A Development Stage Company) as of December 31, 2012 and 2011, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended and for the period from January 1, 2010 to December 31, 2012. The financial statements for the period from July 14, 2007 (Inception) to December 31, 2009 were audited by other auditors whose report expressed an unqualified opinion on those statements. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Attune RTD as of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended and for the period from January 1, 2010 to December 31, 2012 in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that Attune RTD will continue as a going concern. As discussed in Note 2 to the financial statements, Attune RTD for the years ended December 31, 2012 and 2011 has suffered a net loss of $953,445 and $1,379,285, respectively, and a net cash used in operations of $434,260, and was a development stage company with little revenue. In addition, as of December 31, 2012 the company had a working capital deficit of $731,606 and an accumulated deficit of $4,879,859. These issues raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.

/s/ M&K CPAS, PLLC

www.mkacpas.com

Houston, Texas

April 5, 2013

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of:

Attune RTD

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

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

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

/S/ Salberg & Company, P.A.

SALBERG & COMPANY, P.A.

Boca Raton, Florida

March 29, 2010

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

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

www.salbergco.com ● info@salbergco.com

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

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

F-2

Attune RTD

(a development stage company)

Balance Sheets

	December 31, 2012			December 31, 2011
Assets

Current Assets
Cash	$	-		$	254,137
Accounts Receivable, net		-			9,783
Prepaid Expenses		-			2,706

Total Current Assets		-			266,626

Property and Equipment, net		78,497			107,211

Other Assets

Deferred Financing Costs		-			1,795
Software License, net		-			97,725
Security Deposit		-			1,800

Total Other Assets		-			101,320

Total Assets	$	78,497		$	475,157

Liabilities and Stockholders’ Deficit

Current Liabilities
Accounts Payable	$	124,217		$	132,324
Accrued Salaries		181,538			120,068
Accrued Expenses		18,696			844
Royalty Payable		22,000			-
Deferred Revenue		10,000			-
Liability to Guarantee Equity Value		90,980			90,980
Capital lease obligation		1,384			1,932
Convertible Note Payable-net of discount of $2,696 and $31,123 at December 31, 2012 and 2011, respectively - in default		120,304			11,377
Related Party Debt		10,184			-
Bank Overdraft		1,074			-
Current Portion Long-term debt		40,401			42,349
Derivative Liability		110,828			121,546

Total Current Liabilities		731,606			521,420

Long Term Liabilities
Long Term Debt - less current portion		130,706			152,770

Total Liabilities		862,312			674,190

Commitments and Contingencies (See Note 11)

Stockholders’ Deficit
Class B Participating Cumulative Preferred Super voting Stock, $0.0166 par value; 1,000,000 shares authorized; 1,000,000 issued and outstanding at December 31, 2012 and 2011, respectively		16,600			16,600
Class A Common Stock, $0.0166 par value; 59,000,000 shares authorized; 32,126,727 and 29,044,896 shares issued and outstanding at December 31, 2012 and 2011, respectively		532,707			481,548
Additional Paid-in Capital		3,498,237			3,229,233
Stock Payable		48,500			-
Deficit accumulated during development stage		(4,879,859	)		(3,926,414	)

Total Stockholders’ Deficit		(783,815	)		(199,033	)

Total Liabilities and Stockholders’ Deficit	$	78,497		$	475,157

The accompanying notes are an integral part of these Financial Statements

F-3

Attune RTD

(a development stage company)

Statements of Operations

							Period from July 14, 2007
	Year Ended			Year Ended			(Inception of Development Stage)
	December 31, 2012			December 31, 2011			to December 31, 2012

Revenues	$	1,877		$	23,325		$	49,627

Operating Expenses
General and Administrative Expense		546,273			937,977			3,298,286
Change in Fair Value-Derivative		(38,946	)		87,116			48,170
Impairment of Patent and Trademarks		-			62,634			62,634
Loss on Software Impairment		74,269			-			74,269
Payroll Expense		297,864			328,589			1,287,003

Total Operating Expenses		879,460			1,416,316			4,770,362

Loss from Operations		(877,583	)		(1,392,991	)		(4,720,735	)

Other income (expense)
Gain on asset theft, net		-			-			29,125
Interest Expense		(75,862	)		(11,467	)		(81,997	)
Interest Income		-			173			15,999
(Loss) Gain on Debt conversion		-			25,000			(122,252	)

Total Other income (expense)		(75,862	)		13,706			(159,124	)

Net Loss		(953,445	)		(1,379,285	)		(4,879,859	)

Preferred stock dividends		(20,250	)		(20,250	)		(110,737	)

Net loss applicable to common stock	$	(973,695	)	$	(1,399,535	)	$	(4,990,596	)

Net loss per common share applicable to common stock:
Basic and diluted	$	(0.03	)	$	(0.05	)

Weighted average number of common shares outstanding:
Basic and diluted		30,583,453			28,854,490

The accompanying notes are an integral part of these Financial Statements

F-4

Attune RTD

(a development stage company)

Statements of Changes in Stockholders’ Equity (Deficit)

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

																Deficit Accumulated
																During			Total
	Preferred Stock - Class B				Common Stock - Class A						Additional			Stock		Development			Stockholders’
	Shares		Amount		Shares			Amount			Paid-in Capital			Payable		Stage			Equity (Deficit)

Balance July 14, 2007 (Inception of Development Stage)		-	$	-		-		$	-		$	-		$	-	$	-		$	-

Issuance of common stock for cash		133,333		2,213		224,000			3,718			75,069			-		-			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, year ended 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, year ended December 31, 2009		-		-		-			-			-			-		(645,946	)		(645,946	)

Balance at December 31, 2009		1,000,000	$	16,600		21,439,145		$	355,889		$	1,086,773		$	-	$	(1,510,191	)	$	(50,929	)

Issuance of common stock for cash						2,138,610			35,402			406,779			-					442,181
																				-
Issuance of stock for services						1,076,000			17,708			323,297			-					341,005
																				-
Issuance of stock for debt settlement						247,249			4,104			92,853			-					96,957
																				-
Redemption of Stock by Officers for Loan Repayment						(521,439	)		(8,656	)		(167,169	)		-					(175,825	)
																				-
Stock issued to Shareholder						139,944			2,323			(2,323	)		-					-
																				-
Net loss, year ended December 31, 2010																	(1,036,938	)		(1,036,938	)

Balance at December 31, 2010		1,000,000	$	16,600		24,519,509		$	406,770		$	1,740,210		$	-	$	(2,547,129	)	$	(383,549	)

Issuance of common stock for cash		-		-		6,349,750			105,063			1,213,687			-		-			1,318,750

Issuance of stock for services		-		-		965,000			16,019			234,031			-		-			250,050

Stock Redeemed		-		-		(29,988	)		(498	)		(4,501	)		-		-			(4,999	)

Stock Rescinded from prior investment		-		-		(2,759,375	)		(45,806	)		45,806			-		-			-

Net loss, year ended December 31, 2011		-		-		-			-			-			-		(1,379,285	)		(1,379,285	)

Balance at December 31, 2011		1,000,000	$	16,600		29,044,896		$	481,548		$	3,229,233		$	-	$	(3,926,414	)	$	(199,033	)

Issuance of common stock for cash		-		-		1,530,000			25,398			127,602			-		-			153,000

Issuance of stock for services		-		-		1,413,900			23,471			128,919			48,500		-			200,890

Note Payable Conversion		-		-		137,931			2,290			5,710			-		-			8,000

Change in Fair Value of Derivative due to Conversion												6,773								6,773

Net loss, year ended December 31, 2012		-		-		-						-			-		(953,445	)		(953,445	)

Balance at December 31, 2012		1,000,000	$	16,600		32,126,727		$	532,707		$	3,498,237		$	48,500	$	(4,879,859	)	$	(783,815	)

The accompanying notes are an integral part of these Financial Statements

F-5

Attune RTD

(a development stage company)

Statements of Cash Flows

	Year Ended						Period from July 14, 2007
	December 31,						(Inception of Development Stage)
	2012			2011			to December 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(953,445	)	$	(1,379,285	)	$	(4,879,859	)
Adjustments to Reconcile Net loss to Net Cash Used in Operating Activities:
Class A Common stock and preferred stock granted for services		200,890			250,050			1,138,455
Contributed Capital		-			-			111,781
Depreciation and Amortization		97,703			45,752			153,603
Interest expense on conversion to Class A common stock		23,586			-			24,035
Loss on conversions of debt to Class A common stock		-			-			147,252
Gain on asset theft, net		-			-			(29,125	)
Impairment of Patent, Trademarks and Software		74,269			62,634			136,902
Change in Fair Value-Derivative		(38,946	)		87,116			48,170
Bad Debt Expense		-			9,000			9,000
Gain on forgiveness of debt		-			(25,000	)		(25,000	)
Penalty Expense on defaulting - Asher		43,000			-			43,000

Changes in Assets and Liabilities:
Accounts Receivable		9,783			9,639			(9,000	)
Prepaid Expenses		2,706			(2,706	)		-
Security Deposit		1,800			-			(1,794	)
Accounts Payable and Accrued Expenses		72,270			(153,928	)		316,117
Accrued Salary		-			-			117,874
Liability to Guarantee Equity Value		-			-			35,000
Deferred Financing Costs		124			704			829
Deferred Revenue		10,000			-			10,000
Royalty Payable		22,000			-			22,000

NET CASH USED IN OPERATING ACTIVITIES		(434,260	)		(1,096,025	)		(2,630,760	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Deferred Patent costs		-			-			(41,378	)
Trademark costs		-			-			(21,254	)
Loans receivable from Officers		-			-			(175,825	)
Insurance proceeds on asset theft		-			-			30,961
Cash paid for purchase of fixed assets					(10,000	)		(27,820	)
Cash received for sale of fixed assets		-			-			1,500

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		-			(10,000	)		(233,816	)
					-
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of Class A - Common Stock		153,000			1,318,751			2,747,617
Offering costs related to the Sale of Class A - Common Stock		-			-			(11,000	)
Sale of Class B - Preferred Stock		-			-			45,000
Principal Payments on Capital Lease Obligations		(530	)		-			(5,810	)
Loan Payable to Principal Stockholder		10,184			-			70,184
Repayment of Loan Payable to Principal Stockholder		-			-			(4,800	)
Borrowings on Debt		45,500			40,000			85,500
Principal payment on truck loans		(15,808	)		(9,540	)		(25,348	)
Principal payments on Software Licensing		(12,223	)		(19,545	)		(31,768	)
Cash Paid for Redemption of Stock		-			(4,999	)		(4,999	)
								-
NET CASH PROVIDED BY FINANCING ACTIVITIES		180,123			1,324,667			2,864,576

NET INCREASE (DECREASE) IN CASH		(254,137	)		218,642			-

CASH AT BEGINNING OF YEAR		254,137			35,495			-

CASH AT END OF YEAR	$	-		$	254,137		$	-

Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest Expense	$	75,862		$	11,467		$	77,929
Income Tax		-		$	-		$	-

Supplemental Disclosure of Non-Cash Investing and Financing Activities
Conversion of a Vendor Liability into Shares of Class A Common Stock				$	25,000		$	40,000
Capital Lease Obligation Recorded as Property and Equipment		-		$	-		$	7,058
Conversion of a shareholder loan into shares of Class A common stock		-		$	-		$	55,200
Reclassification of equity to liability to guarantee equity value due to price guarantee upon conversion		-		$	-		$	70,000
Reclassification of accounts payable to liability to guarantee equity value due to price guarantee upon conversion		-		$	-		$	48,980
Capitalization of Deferred Financing Costs		-		$	2,500		$	2,500
Debt Discount	$	34,748		$	-		$	34,748
Conversion of Debt	$	8,000		$	-		$	8,000
Derivative Adjustment due to Debt Conversion	$	6,773					$	6,773
Redemption of stock by officers for loan repayment	$	-		$	-		$	175,828
Financing of Software costs	$	-		$	117,270		$	117,270
Financing of Truck Purchase	$	-		$	114,190		$	114,190

The accompanying notes are an integral part of these Financial Statements

F-6

ATTUNE RTD

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

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

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

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

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

The Company is presented as in the development stage from July 14, 2007 (Inception of Development Stage) through December 31, 2012. To-date, the Company’s business activities during development stage have been corporate formation, raising capital and the development and patenting of its products with the hopes of entering the commercial marketplace in the near future.

USE OF ESTIMATES

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

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

CASH AND CASH EQUIVALENTS

For the purposes of the statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at December 31, 2012 or 2011 respectively.

PROPERTY AND EQUIPMENT

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

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

F-7

CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash. Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States. The Company occasionally maintains amounts on deposit with a financial institution that are in excess of the federally insured limit of $250,000. The risk is managed by maintaining all deposits in high quality financial institutions. The Company had $0 of cash balances in excess of federally insured limits at December 31, 2012 and 2011.

REVENUE RECOGNITION

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

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

Revenues for the year end December 31, 2012 were concentrated solely from one customer.

DEFERRED PATENT COSTS AND TRADEMARK

Patent costs are stated at cost (inclusive of perfection costs) and will be reclassified to intangible assets and amortized on a straight-line basis over the estimated future periods to be benefited (twenty years) if and once the patent has been granted by the United States Patent and Trademark office (“USPTO”). The Company will write-off any currently capitalized costs for patents not granted by the USPTO. Currently, the Company has one patent, patent No; US 7,777,366 B2, awarded by the “USPTO” on August 17, 2010.

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

IMPAIRMENT OF LONG-LIVED ASSETS

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

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

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

F-8

SOFTWARE LICENSE

The Company capitalized its purchase of a software license in March 2011. The license is being amortized over 60 months following the straight-line method and included in Other Assets on the balance sheet in accordance to ASC 350. During the year ended December 31, 2011, the company recorded $19,545 of amortization expense related to the license. The terms and conditions of the license arrangement that we have in place with our vendor for software is based on a sixty month buyout agreement for a Perpetual License payable in equal consecutive monthly installments in the amount of $5,650. The monthly payment includes interest, a one-time software license fee of $142,669 and associated maintenance fees, “the rider”. This agreement grants Attune the non exclusive, non transferable right to use the specified software in object code form only on its designated servers. The Rider and the installments may not be cancelled. If installments are not made when due, and the default continues for 30 days after notice, the remaining unpaid balance of the One-Time License Fee shall be immediately due and payable. The company may prepay the balance of remaining installments at any time, with an appropriate credit, as determined by IBI, for the future portion of the interest. Maintenance will be provided for the balance of the designated period. Vendor may transfer and assign the Licensee’s payment obligation hereunder. The “Buyout Fee” is subject to adjustment in the event of upgrades. As of September 30, 2012, under the terms and conditions of the agreement, the company is in default on the license agreement. The company has been in contact with IBI over the non-payment situation and as of the date of this filing, IBI has not prevented access to the software and continues to bill the company. Due to insignificant revenue and lack of future contract, the company has recognized impairment of $74,269 as of the balance sheet date of December 31, 2012. The asset is fully impaired.

DERIVATIVE FINANCIAL INSTRUMENTS

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

RESEARCH AND DEVELOPMENT

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

ADVERTISING

The Company conducts advertising for the promotion of its products and services. In accordance with generally accepted accounting principles (ASC 720-35), advertising costs are charged to operations when incurred; such amounts aggregated $36,700 and $607 for the years ended December 31, 2012 and 2011, respectively.

STOCK-BASED COMPENSATION

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

INCOME TAXES

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

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

F-9

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

by the balance sheet date.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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

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

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

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

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

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

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

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

BASIC AND DILUTED NET LOSS PER COMMON SHARE

Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon exercise of common stock equivalents such as stock options and convertible debt instruments. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. As of December 31, 2012 and 2011, there were no potentially dilutive securities. As a result, the basic and diluted per share amounts for all periods presented are identical.

F-10

NEW ACCOUNTING PRONOUNCEMENTS

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

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

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

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

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

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

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

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

F-11

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement: Amendments to Achieve Common Fair Value Measure and Disclosure Requirements in US GAAP and IFRS. ASU 2011-04 amended the definition of fair value measurement to be more closely aligned with IFRS including: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. This standard is effective for all fiscal periods beginning after December 15, 2011. This standard is not expected to have a material impact on the Company’s financial statements.

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

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

2.	GOING CONCERN

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. For the years ended December 31, 2012 and 2011 the Company had a net loss of $953,445 and $1,379,285, respectively, and net cash used in operations of $434,260 and $1,096,024 respectively, and was a development stage company with little to no revenues. In addition, as of December 31, 2012 the Company had a working capital deficit of $736,606 and a deficit accumulated during the development stage of $4,879,859.

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

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

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

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

F-12

3.	PATENTS AND TRADEMARK

Patents and Trademarks consists of the following:

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

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

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

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

4.	PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	Est. Useful Lives	December 31, 2012			December 31, 2011
Computer equipment	5 Years	$	10,227		$	10,227
Office Equipment	5 Years		5,606			5,605
Vehicles	5 Years		114,190			114,190
			130,023			130,022
Less total Accumulated depreciation			(51,526	)		(22,811	)
		$	78,497		$	107,211

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

5.	CAPITAL LEASES

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

	2012			2011
Capital lease payable – payable in monthly installments for principal and interest of $189 through October 2011. The debt is personally guaranteed by an officer of the Company.	$	(1,384	)	$	(1,932	)
Less current portion:		1,384			1,932
Long-term capital lease obligation	$	-		$	-

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

F-13

6.	LONG TERM DEBT

Long Term Debt consists of the following:

	December 31, 2012		December 31, 2011
Note payable related to software license, with monthly payments of $5,650 including interest	$	93,754	$	101,958

Note Payable related to the purchase of 2 Company trucks, bearing interest at 1.9%, payable in monthly installments of $755.11 each		77,353		93,160

Total		171,107		195,119
Less Current Portion		40,401		42,349
Total Long Term Debt		130,706		152,770

7.	CONVERTIBLE NOTE AND FAIR VALUE MEASUREMENTS

On October 2011, the Company issued convertible promissory note in the amount of $42,500. The convertible note has a maturity date of July 2012 and an annual interest rate of 8% per annum. The holder of the note has the right to convert any outstanding principal and accrued interest into fully paid and non-assessable shares of Common Stock. The note has a conversion price of 58% of the average of the three lowest closing bid stock prices over the last ten days and contains no dilutive reset feature. Due to the indeterminable number of shares to be issued at conversion the company recorded a derivative liability. On May 16, 2012, the Company issued 137,931 shares of Class A Common Stock to convert $8,000 of the convertible note into equity. The note was converted in accordance with the conversion terms; therefore, no gain of loss was recognized. As of December 31, 2012, this convertible note is in default under the terms of the note agreement.

On January 5, 2012, the Company issued convertible promissory note in the amount of $42,500. The convertible note has a maturity date of July 2012 and an annual interest rate of 8% per annum. The holder of the note has the right to convert any outstanding principal and accrued interest into fully paid and non-assessable shares of Common Stock. The note has a conversion price of 58% of the average of the three lowest closing bid stock prices over the last ten days and contains no dilutive reset feature. Due to the indeterminable number of shares to be issued at conversion the company recorded a derivative liability. As of December 31, 2012, this convertible note is in default under the terms of the note agreement.

On December 3, 2012, the Company issued convertible promissory note in the amount of $3,000. The convertible note has a maturity date of September 5, 2013 and an annual interest rate of 8% per annum. The holder of the note has the right to convert any outstanding principal and accrued interest into fully paid and non-assessable shares of Common Stock. The note has a conversion price of 58% of the average of the three lowest closing bid stock prices over the last ten days and contains no dilutive reset feature. The holder of the note has the right to convert any outstanding principal and accrued interest into fully paid and non-assessable shares of Common Stock. The note has a conversion price of 58% of the average of the three lowest closing bid stock prices over the last ten days and contains no dilutive reset feature. Due to the indeterminable number of shares to be issued at conversion the company recorded a derivative liability.

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

Due to the indeterminable number of shares to be issued at conversion, the company recorded a derivative liability. The derivative feature of the notes taints all existing convertible instruments, specifically the 900,000 warrants (term of 3 years) the company issued on April 2010 with an exercise price of $0.40.

F-14

Fair Value Measurements – Derivative liability:

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

Further, and in accordance with ASC 815, the embedded derivatives are revalued at each balance sheet date and marked to fair value with the corresponding adjustment as a “gain or loss on change in fair value of derivatives” in the statement of operations. As of December 31, 2012, the fair value of the embedded derivatives included on the accompanying balance sheet was $110,828. During the year ended December 31, 2012, the Company recognized a gain on change in fair value of derivative liability totaling $38,946.

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

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

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

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

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

1 Year

12/31/12 157%

For Notes #1 & #2 an event of default would occur 10% of the time, increasing 5.00% per quarter to a maximum of 50%; for Note #3 an event of default would occur 1% of the time, increasing 1.00% per quarter to a maximum of 10%;

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

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

The 3 year warrants with an exercise price of $0.40 and no reset features were valued using the Black Scholes model and the following assumptions: stock price at valuation, $0.10; strike price, $0.40; risk free rate 0.14%; 3 year term; and volatility of 157% resulting in a relative fair value of $49,229 relating to these warrants. The accounting guidance for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The accounting guidance established a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Assets and liabilities measured at fair value on a recurring and non-recurring basis consisted of the following at December 31, 2012:

	Carrying Value at		Fair value Measurements at December 31, 2012
	December 31, 2012		(Level 1)		(Level 2)		(Level 3)
Derivative Liability	$	110,828	$	-	$	-	$	110,828

F-15

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

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

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

The Company estimates the fair value of the tainted warrant utilizing the Black-Scholes pricing model, which is dependent upon several variables such as the expected term (based on contractual term), expected volatility of our stock price over the expected term (based on historical volatility), expected risk-free interest rate over the expected term, and the expected dividend yield rate over the expected term. The Company believes this valuation methodology is appropriate for estimating the fair value of the derivative liability. The following table summarizes the assumptions the Company utilized to estimate the fair value of the embedded conversion option at December 31, 2012:

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

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

8.	COMMON STOCK

Upon formation, the Company was authorized to issue 50,000 shares of common stock with no par value. On September 7, 2007, the Company amended its articles of incorporation to increase the number of authorized common shares to 1,000,000. On September 7, 2007, the Company enacted a 280 for 1 forward stock split pursuant to an Amended and Restated Articles of Incorporation filed with the Secretary of State of the State of Nevada. All share and per share data in the accompanying financial statements has been retroactively adjusted to reflect the stock split. On November 28, 2007, the Company again amended its articles of incorporation to establish two classes of stock. The first class of stock is Class A Common Stock, par value $0.0166, of which 59,000,000 shares are authorized and the holders of the Class A Common Stock are entitled to one vote per share. The second class of stock is Class B Participating Cumulative Preferred Super-voting Stock, par value $0.0166, of which 1,000,000 shares are authorized. Each share of Class B preferred stock entitles the holder to one hundred votes, either in person or by proxy, at meetings of shareholders. The holders are permitted to vote their shares cumulatively as one class with the common stock. The Class B Participating Cumulative Preferred Super-voting Stock pays dividends at 6%. For the years ended December 31, 2012, 2011, 2010, 2009, 2008, and 2007, the board of directors did not declare any dividends. Total undeclared Class B Participating Cumulative Preferred Super-voting Stock dividends as of December 31, 2012, 2011, 2010, 2009, 2008, and 2007 were $110,737, $90,487, $70,237, $49,987 and $29,737, and $9,487, respectively.

F-16

Class A Common Stock

Issuances of the Company’s common stock during the years ended December 31, 2007, 2008, 2009, 2010, 2011 and 2012 included the following:

Shares Issued for Cash

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

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

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

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

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

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

Shares Issued for Services

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

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

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

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

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

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

In February 2009, 500,000 shares of contingently returnable Class A common stock were issued to a consultant pursuant to an agreement whereby the consultant must establish a contract with a specific distributor and produce a sale of the Company’s product through such distribution channel. As of the date of this filing, no sales have occurred under the contract and the shares are not considered issued or outstanding for accounting purposes.

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

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

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

F-17

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

In June 2011, 815,000 shares of Class A common stock were issued for services provided to the Company with a value of $220,050 at $0.27 per share, based on a Fair Market Value sales price.

In August 2011, 50,000 shares of Class A common stock were issued for services provided to the Company with a value of $10,000 at $.20 per share, based on a Fair Market Value sales price.

In November 2011, 100,000 Shares of Class A common stock were issued for services provided to the Company with a value of $20,000 at $0.20 per share, based on a Fair Market Value sales price.

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

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

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

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

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

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

Shares Issued in Conversion of Other Liabilities

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

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

In August 2009, the Company converted $55,200 of loans due to a shareholder into 788,571 shares of common stock, which were valued at $118,286 or $0.15 per share, based on contemporaneous cash sales prices of the Company’s common stock. The Company recognized a loss on conversion of $62,637 and charged $449 to interest expense.

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

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

F-18

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

		Warrant Shares				Exercise Price				Value if Exercised				Expiration Date
April 15, 2010			900,000			$	.040			$	360,000			April 15, 2013

On October 2011, the Company issued a Convertible Note which as a result taints all convertible instruments outstanding. As such the Company recorded a derivative liability of $40,498 for warrant outstanding, refer to Note 8.

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

2010 Equity Incentive Plan

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

As of December 31, 2011, 800,000 shares were approved under this plan for issuance by the Board of Directors. 200,000 shares each were approved for issuance to Shawn Davis, Thomas Bianco, Paul Davis and Raymond Tai. As of December 31, 2012, the balance sheet date, none of the shares under this plan were granted or issued.

Class B Participating Cumulative Preferred Super-voting Stock

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

Shares Issued for Cash

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

Shares Issued for Services

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

9.	GUARANTEE OF EQUITY VALUE

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

The total cumulative liability to guarantee equity value totaled $90,980 as of December 31, 2012. No shares have been sold by the vendor through December 31, 2012.

F-19

10.

INCOME TAXES

There was no income tax expense in 2012 and 2011 due to the Company’s net taxable losses, other than the minimum Franchise Tax due to the State of California of $800.

Deferred tax asset and the valuation account is as follows:

	Year ended December 31,
	2012			2011
Deferred tax asset
NOL Carry forward	$	(637,426	)	$	(1,255,851	)
Valuation allowances		(637,426	)		(1,255,851	)
Total	$	-		$	-

The components of income tax expense are as follows:
Current Federal Tax		-			$ - -
Current State Tax	$	-		$	-
Change in NOL Benefit		745,373			522,285
Change in valuation allowance		(745,373	)		(522,285	)

Income tax benefits	$	-		$	-

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. At December 31, 2012 and 2011, the Company has net operating losses (NOL) of approximately $2,129,636 and $1,492,210, respectively that will expire from 2027 to 2032. In the event that a significant change in ownership of the Company occurs as a result of the Company’s issuance of common stock, the utilization of the NOL carry forward will be subject to limitation under certain provisions of the Internal Revenue Code. Management does not presently believe that such a change has occurred.

A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. Accordingly, a valuation allowance was established in 2012 and 2011 for the full amount of our deferred tax assets due to the uncertainty of realization. Management believes that based upon its projection of future taxable operating income for the foreseeable future, it is more likely than not that the Company will not be able to realize the benefit of the deferred tax assets at December 31, 2012 and 2011. The valuation allowance as of December 31, 2012 and 2011 was $745,373 and $522,285, respectively.

11.

COMMITMENTS AND CONTINGENCIES

Employment Agreements

Effective March 26, 2008, the Company entered into two employment agreements with its Chief Executive Officer and Chief Financial Officer. These agreements established a yearly salary for each of $120,000. As of December 31, 2012 and 2011, the Company owed its officers $181,537 and $120,068, respectively, based on the terms of the agreement.

Operating Leases

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

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

2012	$	12,600

Total	$	12,600

F-20

Rent expense for the years ended December 31, 2012 and 2011 were $11,600 and $16,800 respectively.

Legal Matters

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of December 31, 2010 and 2009, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

In March of 2010, Attune RTD engaged the services of a vendor to complete work described in the Scope of Services portion of a March 2010 agreement. Pursuant to the Agreement, the company paid the vendor a total of $70,618 towards the completion of services. The agreement contained a “not to exceed cost” of $89,435. On or about September 21, 2010 the company issued vendor 250,000 shares of Restricted Class A Common Stock as an incentive for vendor to deliver services not later than March 1, 2011. Vendor agreed to incrementally deliver work in process. No work in process was received from vendor. Vendor requested the company pay an additional $18,818. On or about October 4, 2010, vendor repudiated the agreement. On February 23, 2011 The Company engaged the services of legal counsel and made written demand for the return of the stock certificate and attempted to initiate settlement negotiations. Vendor did not acknowledge receipt of letter. Company has placed a “Stop” on the certificate with its Transfer Agent to prevent its consumption.

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

12.

RELATED PARTY NOTE PAYABLE

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

13.

RELATED PARTY TRANSACTIONS

During the years ended December 31, 2008 and 2007, the Company received funds from the issuance of a shareholder loan agreement to a shareholder. During the year ended December 31, 2007, the Company had received $30,000 under this agreement. During the year ended December 31, 2008, the Company received and additional $30,000 and repaid $4,800. The outstanding balance as of December 31, 2008 was $55,200. This debt was converted into 788,571 shares of Class A common stock in fiscal 2009 (See Note 8).

The Company entered into two unsecured promissory notes with its Chief Executive Officer and Chief Financial officer. The balance due under these loans was $175,825 as of December 31, 2009. As of December 31, 2009, the Company owed the same two officers $175,239 based on the terms of their employment contracts. On January 31, 2010, the officers/shareholders redeemed 521,439 shares (collectively) of their common stock in the Company, with a value of $0.35 to satisfy this outstanding debt obligation. Under Sarbanes Oxley, receivables from officers are prohibited, hence redemption of the loans in January 2010.

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

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

14.

CONFIDENTIAL OFFER

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

F-21

15.

SUBSEQUENT EVENTS

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

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

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

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

On February 21, 2013, the Company entered into an agreement to execute a convertible promissory note in the amount of $50,000 bearing interest at 8% per annum, with the note due and payable in November 25, 2013. The note is convertible into shares of Class A common stock at a variable conversion price based on 58% of the market value of the stock at the time of conversion. On February 26, 2013, the funding was received by the company.

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

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

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

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

Management evaluated all activity of the Company through March 31, 2013 (the issuance date of the Company’s financial statements) and concluded that no subsequent events have occurred that would require recognition in the financial statements.

F-22

EXHIBIT INDEX

Exhibit No. Description

31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

SIGNATURES

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

	Attune RTD, Inc.

	By:	/s/ Shawn Davis
		Shawn Davis
		Chairman and Chief Executive Officer

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

Signature	Title	Date

/s/ Thomas Bianco	Chief Financial Officer	January 27, 2014
	(Principal Financial Offer and Chief Accounting Officer) and Director

/s/ Shawn Davis	Chairman (Director) and Chief Executive Officer	January 27, 2014

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