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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

August 12, 2014

AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS



This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

RESULTS OF OPERATIONS Working Capital Working capital June 30, 2014 December 31, 2013 Current assets $ 3,651 $ 5 Current liabilities 3,745,314 3,598,708 Working capital (deficit) $ (3,741,663)$ (3,598,703) Cash Flows Six months ended Six months ended June 30, 2014 June 30, 2013 Net cash provided by (used in) operating activities $ (167,840) $ (94,200) Net increase (decrease) in cash $ 3,646 $ (94,200)



Three months ended June 30, 2014 and 2013

Operating Revenues

The market for the Company's products is focused on international utility companies that are typified by lengthy evaluation periods and slow sales cycles. Following a slow-down in the construction and utility markets, we had received no orders since 2009. Starting from June 2012, we have resumed shipments to our former customer but on an irregular basis. One shipment of $472,754 was shipped and invoiced in the three month period ended June 30, 2013, but no shipments took place in the three month period ended June 30, 2014. There are no assurances when additional shipments will be made, if at all.

Operating Expenses and Net Loss

For the three months ended June 30, 2014 June 30, 2013 Change $ Change % Selling and marketing $ 4,342 $ 3,000 $ 1,342 44.7% General and administrative 40,640 87,699 (47,059) -53.7% Total operating expenses $ 44,982$ 90,699$ (45,717) -8.9% Selling and marketing



Selling and marketing expenses were higher in the three months ended June 30, 2014 than the corresponding period of 2013 due to additional travel related expenses.

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General and administrative

General and administrative expenses decreased approximately $47,000 for the three month period ended June 30, 2014 compared to the corresponding prior year period, due to reduced activities and billing by consultants and rationalization of supplier arrangements to reduce expense and minimize cash flow until we secure new sales orders. General and administrative expenses relate principally to payroll accrual and the costs of compliance with our SEC reporting responsibilities.

Interest expenses



Interest expense includes interest and amortization of discount on convertible notes issued by the Company since 2010 to generate cash and pay for operating expenses. Interest expense, including amortization of debt discount, decreased from $18,496 for the three months ended June 30, 2013 to $6,930 for the three months ended June 30, 2014.

Operating Expenses and Net Loss

For the six months ended June 30, 2014 June 30, 2013 Change $ Change % Selling and marketing $ 6,916 $ 9,062 $ 2,146 23.7% General and administrative 126,392 186,322 59,930 32.2% Total operating expenses $ 133,308$ 195,384$ 62,076 55.8% Selling and marketing



Selling and marketing expenses were lower in the six months ended June 30, 2014 than the corresponding period of 2013 due to the reduced travel expenses.

General and administrative

General and administrative expenses decreased approximately $60,000 for the six month period ended June 30, 2014 compared to the corresponding prior year period, due to reduced activities and billing by consultants and rationalization of supplier arrangements to reduce expense and minimize cash flow until we secure new sales orders. General and administrative expenses relate principally to payroll accrual and the costs of compliance with our SEC reporting responsibilities.

Interest expenses



Interest expense includes interest and amortization of discount on convertible notes issued by the Company since 2010 to generate cash and pay for operating expenses. Interest expense, including amortization of debt discount, decreased from $29,866 for the six months ended June 30, 2013 to $14,941 for the six months ended June 30, 2014 due to complete amortization of discount on convertible notes by the end of 2013.

Liquidity and Capital Resources

During the three months ended June 30, 2014, approximately $3,700 of net cash was generated by operating activities of which approximately $148,000 was due to losses from operations, offset by changes in working capital.

Going Concern

The Company requires additional funds to continue operations. As reflected in the accompanying financial statements, the Company has a net loss since inception of approximately $9.0 million, has experienced a number of quarters with no revenue, and has a cash balance of only $3,646. As of June 30, 2014, total liabilities exceeded total assets by over $3.7 million. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The ability to continue as a going concern is dependent on the Company's ability to raise additional capital and implement a business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Because the Company has net losses since inception and does not expect to be profitable until later in 2014, it will most likely be required to raise these additional funds through convertible debt, debt or equity financings or by selling its assets.

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Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. However, this additional financing may not be available on a timely basis or on terms acceptable to it, or at all. The Company's ability to obtain such financing may be impaired by the current economic conditions and the lack of liquidity in the credit markets. If the Company is unable to secure additional funding, it may have to discontinue operations; delay additional development or commercialization of its meters; license to third parties the rights to commercialize products or technologies that it would otherwise seek to commercialize; reduce marketing, customer support, or other resources devoted to its system: or any combination of these activities. Any of these results would materially harm the Company's business, financial condition, and results of operations, and there can be no assurance that any of these results will result in cash flows that will be sufficient to fund its current or future operating needs. The Company may also need to seek protection under the U.S. Bankruptcy Code or otherwise liquidate its assets, which may result in the failure of the Company's stockholders to receive value for their ownership of its stock.

Off-Balance Sheet Arrangements

We have no significant 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 are material to stockholders.

Future Financings



We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

ITEM 3.


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Source: Edgar Glimpses


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