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ATTUNE RTD - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

August 19, 2014

Our Business

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 then changed to our current name in March 2008.

We are a development stage company that 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.

Rising retail electricity prices, coupled with inelastic demand, create a significant and growing market opportunity for lower cost retail energy. Attune RTD designed and developed its patented BrioWave technology that reduces electrical consumption associated with residential pools and central HVAC systems. Additionally, the technology represents an effective demand response solution for utilities to leverage savings and works collaboratively with solar power systems.

Our Approach



We have developed an integrated approach that allows our customer's access to Solar Power Systems in a simple and cost-efficient manner. The key elements of our integrated approach are:

Sales. Develop a structured sales organization to efficiently engage prospective customers, from initial interest through customized proposals and, ultimately, signed contracts. Financing. To provide pricing options to our customers to help make renewable, distributed energy and BrioWave technology affordable. Engineering. We have developed hardware and software that potentially optimizes the energy production of each solar energy system. Installation. We obtain all necessary building permits and handle the installation of our solar energy systems. By managing these logistics, we make the installation process simple for our customers. Monitoring and Maintenance. We utilize our own software and other software from third party vendors to provide Attune RTD and our customers with a real-time view of their energy generation, consumption and carbon offset through an easy-to-read application available on any device with a web browser. Complementary Products and Services. Using our proprietary software, we analyze our customers' energy usage and identify opportunities for energy efficiency improvements. Our Strategy



Our goal is to become a competitive provider of efficient solutions, demand response technology and of clean distributed energy in the world. We plan to achieve this disruptive strategy by providing every home and business an alternative to their energy bill that is cleaner and less costly than their current energy provider coupled with our own proprietary BrioWave hardware and software. We intend to:

? Rapidly grow our customer base. We intend to invest significantly in sales,

marketing and operations personnel and leverage strategic relationships with

new and existing industry leaders to further expand our business and customer

base.

? To offer lower priced energy solutions. We plan on reducing costs by

continuing to leverage our proprietary hardware and software to further ensure

that our integrated team operates as efficiently as possible, and working with

fund investors to develop innovative financing solutions to lower our cost of

capital and offer lower-priced energy to our customers.

? Leverage our brand and long-term customer relationships to provide

complementary products. We plan to continue to invest in and develop

complementary energy products, software and services, such as our BrioWave and

BrioWEMS energy management technologies, to offer further cost-savings to our

customers.

? Expand into new locations. We intend to continue to expand into new locations,

initially targeting those markets where climate, government regulations and

incentives position solar energy as an economically compelling alternative to

utilities. 4



Results of Operations for the Six Months Ended June 30, 2014 Compared to the Six Months Ended June 30, 2013

Revenue. For the quarters ended June 30, 2014 and 2013, we had revenue of $0 and $0, respectively. We are in the development stage and have limited revenues, as we have been involved in the rollout and testing of our first products into the Texas market.

Gross Profit. Since we have yet to record and or achieve any significant revenues, we do not have any costs associated with sales, and therefore, there are no gross profits to report.

Operating Expenses. Total operating expense was $667,219 for the six months ended June 30, 2014, a decrease of $270,125 as compared to the same period in the prior year. The decrease for the six months ended June 30, 2014 was due to a decrease in common stock granted for service of $512,250. Payroll expenses for the six months ended June 30, 2014 also decreased by $17,439, while consulting expenses increased for the period by $92,500. The derivative valuation loss amounted to an increase of 209,695. Product development expense decreased by $43,581.

Provision for Income Taxes. Our income taxes for the six months ended June 30, 2014 and 2013 were $800 and $250 respectively. We did not incur any federal tax liability for the six months ended June 30, 2014 and 2013 because we incurred operating losses during the periods.

Net Loss. We generated a net loss of $702,290 for the six months ended June 30, 2014 a decrease of $253,781 as compared to a net loss of $956,071 reported for the same period in the prior year.

Liquidity and Capital Resources

At June 30, 2014, we had no cash or cash equivalents. We have historically met our cash needs through a combination of proceeds from private placements of our securities and from loans. Our cash requirements are generally for operating activities.

Our operating activities used cash in operations is $162,253 for the six months ended June 30, 2014, and we used cash in operations of $126,987 for the same comparable period in the prior year. The principal elements of cash flow from operations for the six months ended June 30, 2014 included a net loss of $702,290 decreased by change in fair value of derivative of $180,475, amortization expense of 19,825, Common Stock granted for services of $150,000 and accrued expenses and salaries of approximately $196,737.

Cash provided by financing activities was $162,253 for the six months ended June 30, 2014, compared to cash provided by financing activities of $192,499 during the same period in the prior year.

As of June 30, 2014, current liabilities exceeded current assets by $1,850,980, compared to December 31, 2013, where current liabilities exceeded current assets by $1,341,608. Current assets were $0 in both periods, while current liabilities increased $509,372 to $1,850,980 at June 30, 2014 from $1,341,608 at December 31, 2013. As a result, our working capital deficit increased from $1,341,608 at December 31, 2013 to $1,850,980 at June 30, 2014.

We do not have sufficient capital to meet our current cash needs. In the future, we will need to raise additional capital from external sources in order to continue the longer term efforts contemplated under our business plan. We expect to continue incurring losses for the foreseeable future and will need to raise additional capital to pursue our business plan and continue as a going concern. We cannot provide any assurances that we will be able to raise additional capital. Our management believes that we have access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means, if needed; however we have not secured a final commitment for such financing or financings at this time.

Off-Balance Sheet Arrangements

We currently have an off-balance sheet arrangement in place, in the form of an LOI with BGP for the acquisition of Majority-Voting Control of Attune that could have or is reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Going Concern Qualification



We have incurred significant losses from operations, and we expect to continue incurring such losses for the foreseeable future. Our auditors have included a "Going Concern Qualification" in their report for the year ended December 31, 2013. In addition, we have limited working capital. The foregoing raises substantial doubt about our ability to continue as a going concern.

Our management's plans include the Change of Majority-Voting Control of Attune, which will result in the injection of working capital contingent on the closing of the transaction, as well as seeking additional capital through possible public or private equity offerings, debt financings, corporate collaborations or other means.

5



There is no guarantee that additional capital or debt financing will be available when and to the extent required, or that if available, it will be on terms acceptable to us. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The "Going Concern Qualification" included in our auditor's report might make it substantially more difficult to raise capital, without the acquisition of Majority-Voting Control of Attune by BGP.


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Source: Edgar Glimpses


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