Dear Attune RTD Shareholder:
My name is Ken Miller and it is a privilege to be the new Chief Executive Officer of Attune RTD (OTCQB: AURT). My partner in Beacon Global Partners, LLC (BGP), Samuel Starr, and I have been involved with Attune RTD, Inc., and the BrioWave Technology; and are responsible for over $1.5 million worth of investment into Attune. We see the dream that the founder, Shawn Davis, conceived with his late father over a decade ago, and that dream has resulted in a global life-changing product. Many of you are familiar with that dream and have passionately invested in it. Thank you for the trust you have placed in Attune.
As CEO, my focus is to prioritize, develop a winning strategy, build a cohesive team, create buy-in and empowerment to accomplish the vision, and chart the roadmap of success for employees, customers, investors and communities. These are the laws of leadership that I have implemented in the past and will continue to follow, in leading Attune to previously unseen success in the field of Smart Energy Management and beyond.
In the announcement of Change Of Control of certain officers and the acquisition of Majority Voting Control of Attune by BGP, I said, "Sam and I have seen the results and cost savings provided to the consumer and we are committed to bringing this product to market, especially to Southeast Asia, where there is a dire need for energy management solutions, and is a region that is at the center of changes in the international reordering of energy supply and demand patterns."
It is time for Attune's BrioWave Technology to take hold and be put to use solving the biggest global challenge we face: reasonable and accessible energy for all. At Attune, our focus is boosting energy efficiency in the three major energy-consuming sectors: Industrial, Commercial and Residential, through the implementation of the BrioWave Technology. The BrioWave Technology substantially reduces overall energy demand, thus providing a very attractive business model, especially for the investment community. The founder's dream for Attune is on the precipice of breakthrough for many reasons. In order to understand why, let's take a look at the needs of the global energy market, or beginning on page three, you can find our: strategy, sales focus, and financial objectives.
Global Energy Outlook
Based on the International Energy Agency's (IEA) World Energy Outlook, the world's energy challenges are many. We are facing increases in demand and pricing, as well as consumption spikes, the scarcity of natural resources in some areas, CO2 emission reduction requirements, and other challenges that are specific to Emerging Economies, such as industrialization, urbanization, digitization, and development.
Emerging Economies, share of global energy demand will continue to rise from 55% in 2010 to close to 65% in 2035. Emerging Economies are responsible for 93% of the growth in energy demand.
Energy consumption among the ten Association of Southeast Asian Nations (ASEAN) is growing exponentially. ASEAN's primary energy demand is predicted to expand by 80% between now and 2035, nearly twice as fast as the global average. This supports a near tripling of the region's economy, and population that will expand by almost one-quarter. The ASEAN region is at the centre of the changes that will alter the global map of energy trade.
In economic terms, Emerging Economies will be the drivers of global growth for decades to come, lead by the ASEAN region. That is why I started developing relationships in Southeast Asia in 2011 -- with governments, energy executives, manufacturers, and others' long before the opportunity to take the helm at Attune was ever discussed. I did so in preparation of entering that market, something we will talk about later in this letter.
Demand in the Industrial Energy Management Sector for products and services are increasing substantially. Energy costs are of crucial importance to energy-intensive industries. Energy price variations affect industrial competitiveness, influencing investment decisions, and company strategies.
Based on a Pike Research Report, demand in this sector is growing at 21.6% per year and is projected to do so through 2020 and is currently a $13.7 billion market. The supply chain (consumers, shareholders, and other stakeholders) is also taking note of industries' initiatives with regard to sustainability. Companies are beginning to understand that brand image and revenue are at stake. The vendor landscape is very fragmented and there are high barriers to entry, as the manufacturing and industrial landscape requires a very specific knowledge base. This is a market in which Attune has been asked to begin field-testing at plants in Southeast Asia, and which it is currently considering.
In the Utility market, consumers are willing to act if the cost is low enough and the benefits are high enough. A Utility's access to information on changing patterns will help them increase hedging and forecasting performance (the BrioWave provides Real-Time data access). Access to immediate information on changing patterns in energy usage, that the BrioWave provides, can help utilities reduce penalties for supply imbalances and save on source costs. Furthermore, Energy Management can help utilities reduce infrastructure and maintenance costs. Franchises and Joint Ventures with Utility Companies will be crucial to helping them deliver growth and competitive advantages over the long term. Attune's successful field test with a major U.S. utility has resulted in Joint Venture talks to begin market rollout of the BrioWave in their market in the near future.
A renewed focus on energy efficiency is taking hold and is set to deliver benefits that extend well beyond improvements in competitiveness in the industrial and utility sectors. Efficiency measures will also mitigate the impact of energy prices on household budgets. The potential for energy efficiency is far from exhausted. Two-thirds of the economic potential of energy efficiency is set to remain untapped in the IEA's central energy scenario.
Action is needed to break down the various barriers to investment in energy efficiency. This includes phasing out fossil-fuel subsidies, which were estimated to have risen to $544 billion worldwide in 2012. The new geography of demand and supply means a re-ordering of global oil trade flows towards Asian markets, with implications for co-operative efforts to ensure oil security as the power sector adjusts to a new life with renewables such as wind and solar.
China currently dominates the picture within Asia, with India pushing to take over from 2020 on, as the principal engine of growth. Southeast Asia is also expanding as a demand centre. ASEAN -- along with China and India -- are shifting the centre of gravity of the global energy system towards Asia. Southeast Asia is an extremely diverse set of countries with vast differences in the scale and patterns of energy use and energy resources. Energy demand in Southeast Asia has expanded by 250% since 1990; a rate of growth that is among the fastest in the world. Economic and demographic trends point to further rampant growth; lifting the region's energy use per capita from just over half of the global average today. These changes represent a major realignment of energy trade from the Atlantic basin to the Asia-Pacific region.
Energy security promises to become a priority as reliance on oil imports rises across the region. So, too, does the need to ensure that energy supplies are affordable in order to support continued economic growth and development. Removing barriers to energy efficiency and cleaner sources of energy is imperative. Especially in the context of the region's fast-rising energy demand and its growing urban population. As a result of the region's fast-rising energy demand, Southeast Asia's energy-related CO2 emissions is projected to double, reaching 2.3Gt in 2035.
More than 130 million people in Southeast Asia (or over one-fifth of the population), and 626 million throughout Asia and 1.3 billion people globally, still lack access to electricity. Almost half of the ASEAN region's population still relies on traditional use of biomass for cooking, which poses a serious risk of premature deaths from indoor air pollution.
$330 billion in investment is needed to improve end-use efficiency and realize gains. The resulting fuel cost savings, which would total nearly $500 billion, would offset this expense. By 2035 regional GDP would be greatly boosted as a result, as reduced spending on energy increases disposable income and stimulates activity elsewhere in the economy.
Unlocking Southeast Asia's energy efficiency potential requires governmental action to address a wide spectrum of barriers. The exact policy paths and measures will vary by country and sector. Improving capacity and energy data collection are prerequisites to effective energy efficiency policies and implementation. The BrioWave addresses energy data collection prerequisites with access to Real-Time data. Southeast Asia also needs realistic and measurable efficiency targets, along with effective approaches to achieve them, including mechanisms to monitor progress and make adjustments as needed, which the BrioWave provides. The affordability of energy efficiency also needs to be improved by increasing the availability of financing and incentives, which Attune is prepared to offer. Together these steps will help bring energy efficiency into the mainstream in Southeast Asia.
The BrioWave Solution
The world's energy challenges are many: increases in demand and pricing, consumption spikes, as well as CO2 emission reduction requirements. Utilities need better information to avoid penalties for supply imbalances, and also to be more accurate on forecasting their needs. Energy efficiency is the key to energy expense reduction and competitiveness. Governments need solutions that deliver immediate results and low up-front costs. And as previously mentioned, 1.3 billion people globally have no access to electricity at all.
The BrioWave Technology is the Solution! It is a "Smart Energy Controller" unlike any product on the market today. It does not manage just a single function or element, but integrates the functions of all single and dual speed motors and networks them to "Load Balance" energy consumption, reducing overall consumption and preventing consumers from ever hitting peak "time-of-use" pricing.
In a two-year test of the BrioWave by one of the leading energy providers in the U.S. (during a time when that utility experienced the harshest summer and winter on record), the BrioWave saved consumers on average 40% on a single speed motor and as much as 72% on dual speed motors. Just imagine, 40% to 70% savings on your electricity costs.
The BrioWave Technology addresses global energy demands by:
a) Curtailing usage and excess energy consumption
b) Providing a lost cost / immediate benefit solution
c) Reducing spikes in consumption and overall demand
d) Eliminating inefficiencies
e) Reducing costs to consumers
f) Providing Utilities with immediate access to consumer patterns, thereby:
-Reducing penalties for supply imbalances
-Improving sourcing efficiency
-Decreasing energy sourcing costs
g) Affording benefits to Governments by:
-Offering a low up-front cost
-Delivering immediate savings of 2-3X cost
-Reducing CO2 emissions
h) Evening out the demand curve by increasing the minimum load base
Climate Control Systems (central HVAC systems) and swimming pools are the two largest energy consumption devices in the U.S. residential market. They use constant power, which means the consumer is at the mercy of "time-of-use" for power consumption, which can spike energy bills. By initially focusing on this market, Attune will see its best immediate return on investment.
Our plan is to:
a) Develop Top-Line Revenue by 3rd Quarter of 2014.
b) Focus on Attune's strengths - High-end U.S residential built-in swimming pool and central HVAC consumers.
c) Form a Sales/Distribution Network - Professional Pool Service Providers (PSP) as the driving sales force in key California and Arizona markets for primary revenue growth in the first 8 months; paying each PSP per sale/installation.
d) Develop a relationship/partnership to facilitate a financing plan for the sale of units.
Initial Sales focus:
a) Homes with central HVAC and built-in swimming pools:
b) Sell a minimum of 1,000 units in the U.S. in 2014, generating over $1 million in sales.
c) Expand by adding a Florida Division and Texas Division in the next 18 months.
d) Sell a minimum of 100,000 units in the U.S. alone in the next 4 years, generating over $129 million in sales.
Expanded Strategy - The Asian Market
Work with the Ministers of Energy in the ASEAN region to begin Asian field-testing within the first year of the Change of Control completion, investing $600k+ in Research & Development costs. Upon successful completion, the product will be rolled out in the respective ASEAN markets in 2016.
a) Expand investment in Research & Develop for future growth.
b) Evaluate synergistic acquisitions, joint ventures, and alliances.
Financial Objectives (within two years)
a) Generate sales of $1 million in 2014:
-Based on beginning production in the 2nd quarter
b) Increase sales to over $30 million in 2016.
c) Grow Standard Operating Income (SOI) Margin of 18% by 2016.
d) Grow working capital to more than $5 million by 2016.
In order to accomplish these financial objectives, Beacon Global Partners (BGP) needs to finalize three million dollars in funding. BGP is currently working with investment groups and investment banks, and we expect to have this funding in place within forty-five days. The funding will be used to complete the buyout of the co-founders (Shawn Davis and Thomas Bianco), immediately start production, and marketing, begin ramping up distribution channels, meeting operational costs, and satisfying some outstanding debt.
I am excited about the future of Attune. We have developed a global life-changing product that will substantially improve the quality of life for millions of people, not to mention the corporate bottom lines it will improve. These are exciting times for all who are connected with Attune.
Kenneth J. Miller, Jr.
Chief Executive Officer
Attune RTD, Inc.
International Energy Agency: World Energy Outlook 2011, 2012, and 2013
International Energy Agency: Southeast Asia Energy Outlook (Nov. 2013)
Pike Research: Energy Management Systems for Industrial Markets
The statements contained in this release contain certain forward-looking statements, including statements regarding the company's expectations, intentions, strategies, and beliefs regarding the future. All statements contained herein are based upon information available to the company's management as of the date hereof, and actual results may vary based upon future events, both within and without the control of the company's management.
Kenneth J. Miller, Jr.
Chief Executive Officer
Attune RTD, Inc.
SOURCE: Attune RTD