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AVRA INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.
[September 15, 2014]

AVRA INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.


(Edgar Glimpses Via Acquire Media NewsEdge) Forward-Looking Statements This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are "forward-looking statements" for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.



These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs and the risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements.

The following discusses our financial condition and results of operations based upon our unaudited financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.


Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States Dollars (US$) and all references to "common shares" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "we", "us", "our" and "our company" mean Avra Inc., unless otherwise indicated.

General Overview We were incorporated on December 1, 2010 under the laws of the State of Nevada.

Our principal executive offices are located at 3790 El Camino Real, Suite 291, Palo Alto, California, 94306. Our telephone number is 866-287-2462. Our fiscal year end is January 31.

We are only beginning our operations in the Cryptocurrency space. We plan to specialize in the marketing and selling of mining equipment for Bitcoin and other altcoins as well as marketing and selling ATM machines for the same Cryptocurrency vendors. We plan on continuing to try to access the Smart TV market by selling, marketing and distribution of Smart TV boxes to home consumers throughout the United States. Smart TV boxes are devices that allow consumers to combine all of the benefits of the Internet with the large size and high definition capabilities of TV screens in the comfort of consumers' living rooms.

Our CEO and director, Stephen Shepherd and our new Secretary and director do not have any significant training or experience in the sales and distributions of electronics or bringing such new products to market however, they both have a keen interest in Bitcoin, electronics and our Smart TV business.

We anticipate that our flagship product will be the marketing and selling of Bitcoin hardware such as mining equipment and bitcoin ATM machines. This new line of products will be marketed through www.avranews.com, which will be information portal for crypto currencies. We have also acquired the domains avraWorld.com for our corporate site, avraPay.com for our payment solutions, avraATM for our ATM operations and avraTourism.com for our tourism specific projects. We will continue to seek a market for the Smart TV box labeled AvraKaddabra. This product will be a fully functional Smart TV box using the Android Operating System. Our current expectations are that the box will use the Android 4.0 Ice Cream Sandwich, with upgrades to follow in the future. We anticipate that this product will be an interactive television box that has an entire host of features which are commonly seen on other Smart TV Boxes, such as Google TV and Apple TV. Some of the more common features of the AvraKaddabra will include accessing the web, special applications for YouTube, Facebook and Twitter, Skype integration, and the ability to use the box as a wireless router for one's home.

3 -------------------------------------------------------------------------------- Our company is also looking into the opportunities within the Bitcoin industry from different aspects within this new industry which will range from mining for Bitcoins, from establishing kiosks, a virtual wallet, to supplying mining equipment, and Bitcoin ATM machines. Our company at this time has not secured a deal and may not find a viable opportunity going forward but it would like to add this new line of business and technology to its existing line of SmartBox solutions. If we enter the Bitcoin space we will be seeking a reliable supply chain of bitcoin hardware manufacturers, chip makers, and manufacturers of bitcoin ATM machines.

The company is looking to provide a digital wallet solution under the Avra brand, and will likely come from a white labeled pre-existing wallet solution available. The company is currently looking at potential partners for this area of the business.

Potential opportunities in cryptocurrencies include involvement in the community for mining, development of supplying mining equipment, and the development of an online portal. With the market cap of bitcoin recently going over $10 billion, it makes sense to look at this growing industry.

In addition, if we are successful in entering the cryptocurrency business, we will also be looking at securing from manufacturers a line of high speed encryption processors for use in Bitcoin and altcoin mining, research, telecommunication and security applications.

Also, our company will conduct its due diligence on how to develop and produce Bitcoin miners, which are designed for mining of virtual currency. We will want to develop a hardware solution that will allow people to mine and that will be affordable and will be available to consumers with the shortest possible delivery times.

As part of our hardware solution, we will look at designing and then producing state-of-the-art cryptocurrency ASIC processors and systems. We will look at producing a superior design with advanced architectures, economies of scale and vertical integration that will enable us to deliver cryptocurrency mining solutions with the highest performance.

Products In the last few years, TV technology has advanced enough to create platforms that link to the Internet in very interactive and intuitive ways. In the mid 1990's the concept of WebTV was launched and soon after was deemed largely unsuccessful for its lack of intuitivism and weak user experience. However, in 2010, Google announced Google TV, which sparked a new wave of Smart TV devices.

In September 2010, Apple announced their second iteration of their Smart TV device dubbed "Apple TV". Apple TV as well as Google TV Smart TV boxes are both proprietary systems, using their own operating systems.

A Smart TV device is defined as either a television set itself or a set top box that connects to a TV that has integrated internet capabilities and offers more advanced computing abilities and connectivity than an ordinary television set or set top box. Smart TVs or Smart TV boxes can also be thought as an information appliance that allows the user to not only connect to the internet, but also to download and run advanced applications and plugins that allow users to customize their television watching experience to their liking. Smart TVs run competing operating systems, such as Google's Android OS, Apple's iOS and other Linux based operating systems.

Smart TVs in general have two basic functions. The first function is to deliver content from other computers and network-attached storage devices on the local or remote networks, such as photos, videos, music and other media. The second and more commonly known function is to provide access to Internet-based services including traditional TV broadcasts, Video On-Demand, interactive advertising, personalization, games, social networking and other multimedia applications.

Smart TV devices allow consumers to view all of the aforementioned advanced services via their flat-screen TV through a single device, as in integrated Smart TV or through a separate Smart TV box. In addition to providing access to content from TV stations, Smart TV platforms also enables users to access user-generated content, which can be watched via local storage on a hard drive or via a "Cloud Service". Such services include YouTube, Vimeo and Flickr. Smart TV set-top boxes are increasingly commonplace among pay TV operators, as they look to meet the changing media consumption trends for more video content, advanced interactivity and Internet applications, such as social networking.

Many Smart TVs and Smart TV boxes now come prepackaged with social networking platforms and some are very well integrated into every aspect of the operating system itself. This capability allows users to receive updates and post their own updates regarding content that is currently being watched, to their social networking platform of choice, such as Facebook, Flickr and Twitter. The addition of social networking synchronization to Smart TV and other platforms may provide more interaction with both on-screen content and other viewers than is currently available to most televisions, while simultaneously providing a much more cinematic experience of the content than is currently available with most computers.

4 -------------------------------------------------------------------------------- Our flagship product is a Smart TV box labeled AvraKaddabra. We expect that this product will be a fully functional Smart TV box using the Android operating system. Our current plans are to have to the box use Android 4.0 Ice Cream Sandwich with other versions to be upgraded in the future. We anticipate that this product will be an interactive television box with an entire host of features that are commonly seen on other Smart TV boxes, such as Google TV and Apple TV. Some of the more common planned features of the AvraKaddabra include accessing the web, special applications for YouTube, Facebook and Twitter, Skype integration, and the ability to use the box as a wireless router for one's home.

We also expect that the box will feature special web-widgets, which will be incorporated into the AvraKaddabra out of the box and will allow users to complete tasks very quickly without the need to open special applications. These widgets usually include a calculator, calendar, Smart box usage gauges, notes, dictionary, translator, device connection gauges and any other user preferences widgets. Widgets can also be downloaded from the android marketplace.

The intended features of the AvraKaddabra unit are outlined below. All of these features are planned for the AvraKaddabra, but these are forward looking statements and we cannot ensure that all desired features will be implemented in the product we are able to distribute.

AvraKaddabra Features Internet Accessing the Internet and the World Wide Web is the most common feature on all Smart TV boxes and will be featured on the AvraKaddabra. Users will be able to access information on any website, emails, including ones that use Adobe Flash and other proprietary web languages, such as JavaScript, etc. Flash games and video will be available to be played using the AvraKaddabra and this will be a feature not available on other smart boxes, such as Apple TV. Users will be able to configure their smart boxes according to the size of their TV screen. In order for text to render correctly, users will be able to resize text to their liking. Additionally, if text appears too small, then the web browser will feature a "Reader" option, which will automatically take the text and optimally size it to the screen, similar to the iPhone's "Reader" option in Safari.

Social Media Integration The AvraKaddabra is expected to integrate Facebook and Twitter directly into its operating system, and will be a crucial part of the user experience. Users will be able to directly post a score of their game, tell friends what there are doing, or just share their thoughts directly from a widget on the main screen.

Additionally, the "Like" button for Facebook will be included almost everywhere, so users can do things such as share their thoughts on a TV show they are currently watching, or even just comment on the TV show as they are watching it.

Users will be able to also download other applications, such as LinkedIn and social networking sites from other countries, such as China's QQ and Weibo, which are very popular. The device will allow for maximum user customization, and therefore, after these are downloaded, the operating system will have full integration with the websites, according to the application ("App") developers' requirements. For example, in the future, if LinkedIn is downloaded, it would be able to work together with Skype's video features to offer video conferencing capabilities for meetings and interviews, and the user will be able to integrate this into the LinkedIn App itself.

Android Marketplace and Apps A major planned feature of the AvraKaddabra will be the ability to access Android's marketplace. This will allow the user to download any of the marketplace's hundreds of thousands of applications that are available. Users will be able to play games, such as Angry Birds or Cut The Rope. Since the user's smartphone will be the remote control, everything can be controlled using it, including touch and swipe gestures for games. Additionally, since the AvraKaddabra will be connected through HDMI, users will be able to experience these games in crystal clear high definition 1080P.

YouTube Integration, Media Streaming and Flash Capabilities The AvraKaddabra is expected to have a YouTube application built into it out of the box. Anytime somebody clicks on a video that links to YouTube from any website, it will automatically open an integrated YouTube App. Additionally, users will have the option to open videos directly from the website that the user is on.

5 -------------------------------------------------------------------------------- [[Image Removed: Description: Description: http:::www.sec.gov:Archives:edgar:data:1552164:000129460612000316:x12091009271503.gif]] YouTube, as well as other video streaming applications, such as Vimeo use Adobe Flash are heavily restricted on some platforms, such as all Apple iOS devices.

This will not be a problem for AvraKaddabra users, as we plan for the box to have full Flash capabilities. The device will come packed with the latest version Adobe Flash out of the box. When new versions of Flash are available, a notification will be sent to the device and the user will have the option to download it directly to the device.

Skype Integration We anticipate that AvraKaddabra will ship with Skype integrated into the device out of the box. Skype integration will allow for teleconferencing capabilities and will also allow for video conferencing capabilities. A webcam with a microphone will need to be connected to the box though one of the device's USB ports in order to allow for video conferencing. Additionally, the user could attach a dedicated microphone to the device through USB, which would allow the user to speak throughout the entire room.

The user would be able to use their existing Skype account to sign in through the Skype App on the AvraKaddabra. If the account has a balance on it, the user would be able to see it on the App itself. If the user wants to call a landline phone using the Skype App, money from the balance would automatically be deducted, just as it would from one's computer or smartphone's Skype App.

Additionally, Skype will be integrated with Facebook and other social networking sites to be able to video conference, just as one would be able to from their computer. Videoconferencing to multiple people will also be available, and will be optimal for the user's large TV screen. This capability will be integrated into the App itself.

Device Mirroring Device mirroring allows the content from one's smartphone or tablet computer to be wirelessly transmitted to one's TV screen. This allows anybody to duplicate anything they are seeing on their smartphone or tablet to their TV set, with very little lag, in high definition. Users can see any content on their smart phones or tablets, such as videos, games, photos, website content and any other content wirelessly transmitted to their TV. Audio content will also be included, so music or audio from videos would be transmitted to their TV, and will play through the TV's integrated speakers or any stereo system that is connected to the TV.

Router Capabilities We expect that AvraKaddabra will be able to act as a wireless router, which will eliminate the need for the purchase of a wireless router. It will feature an 802.11 N/G/B wireless connection frequencies, and can be placed next to the user's cable modem or DSL connection though an Ethernet cable. The box will be able to transmit Wi-Fi frequencies throughout the user's household, which will allow the user to connect to Wi-Fi on their smartphone, computer, tablet, and any other device that has Wi-Fi capabilities. The user will have full customization options, including multiple connection preferences with multiple passwords.

Distribution and Marketing Our initial efforts will be centered in developing our brand image. In order for this to happen effectively, we expect to engage in an aggressive advertising and marketing campaign before the product's launch. From there we will try to expand our business through several methods. These methods include: 6 -------------------------------------------------------------------------------- º Trade Shows -A highly effective medium to help promote the brand of Avra Inc. as well as the AvraKaddabra Smart TV Box. It will be important for our company to effectively distinguish its system from every other Smart TV box and system that exists on the market. Our company will hire top marketers in the industry to run its trade show marketing campaigns. Our company will rent large booths at top trade shows in the U.S., such as the Consumer Electronics Show in Las Vegas.

º Electronics and Technology Blogs - It will be important for our company to get attention from top technology blogs and websites in the U.S. Such large blogs include Engadget.com, Gizmodo.com and Wired.com. The reviews and attention that these weblogs provide are key to the success of a lot of technology companies in the U.S. Casual readers as well as professionals in the community read these blogs on a daily basis to be informed on the latest news. This is an effective way of getting positive attention for our company. In addition, this is a free way of getting the message out.

º Word of Mouth - Since it is imperative for our company to build a brand image, it will rely on word of mouth to help sustain its business. This will be kick started by effective advertising in other areas, such as TV advertising and Internet advertising. Later on people will tell their friends how great the AvraKaddabra device is.

º Google Ads and Local Websites - We plan to advertise on the Internet on local websites, including Google Ads on popular local social and news websites. This is a highly effective method of obtaining younger and more internet-savvy customers.

º Traditional Advertising- Advertising, such as on billboards, magazines, newspapers, and local television stations are an effective method of gaining customers of all demographics.

º Search Engine Optimization Marketing - We plan on having a budget to market our brand and corporate identity on various search engines.

We plan to sell our AvraKaddabra Smart TV box through a number of distribution channels. These will include: º Large Electronics Retail Outlets - Stores such as Best Buy and Sears have proved to be the best way of selling items such as electronics and other related products. However, we hope to gradually depend less on these stores as time goes by and as Internet selling picks up steam. We do not currently have any arrangements to place our products in these retail outlets and there can be no assurance that we will be able to make such arrangements.

º Smaller Retail Outlets - Small and local stores in areas where larger retail outlets do not exist will prove to be an effective channel of distribution when the product launches. However, as Internet sales pick up, our company will gradually lessen our dependence on this method. We do not currently have any arrangements to place our products in these retail outlets and there can be no assurance that we will be able to make such arrangements.

º Internet Sales - We will depend largely on this method of sales heavily as this product will be mainly targeted to Internet and technology savvy consumers, who primarily buy items like the AvraKaddabra on the Internet.

Our company plans to sell via our own website www.avrakadabbra.com in addition to major electronics websites, such as Bestbuy.com, Amazon.com, and Ebay.com. Our website is live but the Company is looking at updating its website presence in the near future.

Competition The home electronics industry is highly competitive. We are a new start-up stage company and have a weak competitive position in the industry. We compete with junior and senior home electronics companies. Many of the home electronics companies with which we compete for financing and for the acquisition of customers have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on product development, marketing and distribution. This advantage could enable our competitors to acquire larger market share and develop more competitive products. Such competition could adversely impact our ability to attain the financing necessary for us to develop our business plan.

In the face of competition, we may not be successful in sufficient market share to make our business profitable. Despite this, we hope to compete successfully in the home electronics industry by: º keeping our costs low; º relying on the strength of our management's passion and knowledge of the market; and º using our size and experience to our advantage by adapting quickly to changing market conditions or responding swiftly to potential opportunities.

7 -------------------------------------------------------------------------------- Government Regulations There are no governmental regulations that are material to our operations.

Environmental Regulations We are not aware of any material violations of environmental permits, licenses or approvals that have been issued with respect to our operations. We expect to comply with all applicable laws, rules and regulations relating to our business, and at this time, we do not anticipate incurring any material capital expenditures to comply with any environmental regulations or other requirements.

While our intended projects and business activities do not currently violate any laws, any regulatory changes that impose additional restrictions or requirements on us or on our potential customers could adversely affect us by increasing our operating costs or decreasing demand for our products or services, which could have a material adverse effect on our results of operations.

Intellectual Property We have not filed for any protection of our trademark, and we do not have any other intellectual property. We have reserved the domain names www.avrakadabbra.com, www.avraworld.com, www.avraATM.com, www.avraPay.com, www.avraNews.com and www.avraTourism.com and begun the development of our new bitcoin website.

Employees We do not have any employees. Our CEO and director and officer are anticipated to devote approximately 60 hours per week to our affairs. We also engage a number of consultants.

Research and Development We have incurred $0.00 in research and development expenditures over the last two fiscal years. However, we plan on spending $10,000 in R&D of bitcoin hardware solutions.

Purchase of Significant Equipment We anticipate purchasing approximately $12,000 worth of inventory for testing over the twelve months.

Results of Operations The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended July 31, 2014, which are included herein.

Our operating results for the three and six months ended July 31, 2014 and 2013 are summarized as follows: Three Months Ended Six Months Ended July 31, July 31 2014 2013 2014 2013 Revenue $ Nil $ Nil $ Nil $ Nil Bank charges and interest $ 183 $ Nil $ 306 $ Nil General and administrative $ 513 $ Nil $ 513 $ Nil Marketing and advertising $ Nil $ Nil $ 1,900 $ Nil Transfer agent and filing fees $ 4,070 $ 3,810 $ 4,530 $ 4,735 Foreign exchange loss (gain) $ 14 $ (102) $ 38 $ (165) Professional fees $ 10,463 $ 3,876 $ 20,655 $ 14,239 Interest expense $ 1,046 $ Nil $ 1,843 $ Nil Net Loss $ (16,289) $ (7,584) $ (29,785) $ (18,809) We have not earned any revenues since our inception and we do not anticipate earning revenues in the upcoming quarter.

Our net loss for the three-month period ended July 31, 2014 increased primarily due to increases in professional fees and interest expenses. Our net loss for the six-month period ended July 31, 2014 increased primarily due to an increase in marketing, advertising professional fees and interest expenses. Our net loss from inception is $125,488.

8 -------------------------------------------------------------------------------- Liquidity and Capital Resources Working Capital At At July 31, 2014 January 31, 2014 Current Assets $ Nil $ 1,071 Current Liabilities $ 80,792 $ (52,078) Working Capital Deficit $ (80,792) $ (51,007) Our total current assets as of July 31, 2014 were $0 as compared to total current assets of $1,071 as of January 31, 2014. Our total current liabilities as of July 31, 2014 were $80,792 as compared to total current liabilities of $52,078 as of January 31, 2014. The increase in current liabilities was attributed to increases in accounts payable, accrued liabilities, short-term loans, and payable due to related party.

Cash Flows Six Months Ended July 31, 2014 2013Net Cash Used in Operating Activities $ (18,204) $ (4,881) Net Cash Provided by Financing Activities $ 17,133 $ 5,000 Increase (decrease) in Cash During the Period $ (1,071) $ 119 Operating Activities Cash used in operating activities during the six-month period ended July 31, 2014 was $18,204 due to the operating expenses incurred. Cash used in operating activities during the six-month period ended July 31, 2013 was $4,881 due to the operating expenses incurred.

Investing Activities We did not have any investing activities during the six months ended July 31, 2014 and 2013.

Financing Activities The increase in cash provided by financing activities during the six-month period ended July 31, 2014 compared to the same period in 2013 was due to proceeds from a short-term loan and from a related party.

Plan of Operation We are only beginning our operations. We anticipate that we will meet our ongoing cash requirements through equity or debt financing. We estimate that our expenses over the next 12 months (beginning October 2014) will be approximately $179,000 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.

Description Estimated Estimated Expenses ($) Completion Date Legal and accounting fees 12 months $32,000 Purchase of inventory for testing 12 months 12,000 Website and shopping cart 12 months 6,000 Management and operating costs 12 months 30,000 Salaries and consulting fees 12 months 24,000 Investor relations and capital raising 12 months 18,000 Fixed asset purchases 12 months 8,000 Social media and online sales marketing 12 months 9,000 General and administrative expenses 12 months 40,000 Total $179,000 9-------------------------------------------------------------------------------- We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements.

We decided to become a reporting company to be better equipped to raise capital by providing the transparency to the public of our operations and development.

We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.

If we are not able to raise the full $179,000 to implement our business plan as anticipated, we will scale our business development in line with available capital. Our primary priority will be to retain our reporting status with the SEC which means that we will first ensure that we have sufficient capital to cover our legal and accounting expenses. Once these costs are accounted for, in accordance with how much financing we are able to secure, we will focus on product acquisition, testing and servicing costs as well as marketing and advertising of our products. We will likely not expend funds on the remainder of our planned activities unless we have the required capital.

If we are able to raise the required funds to fully implement our business plan, we plan to implement the below business actions in the order provided below. If we are not able to raise all required funds, we will prioritize our corporate activities as chronologically laid out below because the activity which needs to be undertaken in the initial months is prerequisite for future operations. We anticipate that the implementation of our business will occur as follows: September 30, 2014 to December 2014: • Continual Testing of the Smart box units acquired from various suppliers by us as technology is changing very quickly.

• Complete and launch our bitcoin website.

• Continue evaluations of manufacturers of bitcoin mining equipment.

• Develop or acquire an e-Wallet.

• Continue development of ATM partners and payment solutions.

• Design marketing materials.

• Market products to large retailers and distributors.

• Complete certain asset purchases such as inventory for the various products we will acquire.

• Look at other Complementary technologies to add to the sales and marketing strategy.

January 2015 to August 2015: • If initial testing is successful, order additional units from Smart box suppliers and manufacturers.

• Review opportunities for establishment of retail locations.

• If initial testing is successful, order additional units from bitcoin suppliers and manufacturers.

• Roll out ATM software to partners to allow ATM bitcoin purchases.

• Roll out bitcoin payment solution to merchants.

• Attend trade shows.

• Hire personnel to market our products.

• Test and market new products that complement the existing line of Smart Boxes.

Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.

10 -------------------------------------------------------------------------------- Foreign Currency Translation The Company's planned operations will be in the United States, which results in exposure to market risks from changes in foreign currency exchange rates. The financial risk is the risk to the Company's operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk. The Company's functional currency for all operations worldwide is the U.S. dollar. Nonmonetary assets and liabilities are translated at historical rates and monetary assets and liabilities are translated at exchange rates in effect at the end of the year. Revenues and expenses are translated at average rates for the year. Gains and losses from translation of foreign currency financial statements into U.S. dollars are included in current results of operations.

Revenue Recognition Sales are recorded when products are shipped to customers. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

No provision for discounts or rebates to customers, estimated returns and allowances or other adjustments were recognized during the six months ended July 31, 2014. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company's final test procedures and the customer's acceptance. The Company has not made any sales as at July 31, 2014.

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