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      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"&gt;1.&lt;/font&gt;&lt;font id="TAB2" style="LETTER-SPACING: 9pt; COLOR: black"&gt;&amp;#160;&lt;/font&gt;&lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"&gt;Description

      of Business and Basis of Presentation&lt;/font&gt;

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      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"&gt;Sutron

      Corporation (the &amp;#8220;Company&amp;#8221;) was incorporated on

      December 30, 1975, under the General Laws of the Commonwealth

      of Virginia.&amp;#160;&amp;#160;The Company operates from its

      headquarters located in Sterling, Virginia.&amp;#160;&amp;#160;The

      Company has several branch offices located throughout the

      United States, a branch office in India and a wholly owned

      subsidiary in India. The Company is a leading provider of

      real-time data collection and control products, systems

      software and professional services in the hydrological,

      meteorological, oceanic, air quality and aviation monitoring

      markets.&amp;#160;&amp;#160;The Company&amp;#8217;s principal products

      include data loggers, satellite transmitters/loggers, water

      level and meteorological sensors, tides systems, ambient air

      instrumentation and continuous emissions control monitoring

      and system and application software.&amp;#160;&amp;#160;Customers

      consist of a diversified base of Federal, state, local and

      foreign government agencies, commercial entities,

      universities, engineering firms and hydropower

      companies.&lt;/font&gt;

    &lt;/div&gt;&lt;br/&gt;&lt;div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"&gt;

      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"&gt;The

      financial statements included herein have been prepared,

      without audit, pursuant to the rules and regulations of the

      Securities and Exchange Commission (&amp;#8220;SEC&amp;#8221;).

      Certain information and disclosures included in financial

      statements prepared in accordance with accounting principles

      generally accepted in the United States of America

      (&amp;#8220;GAAP&amp;#8221;) have been omitted pursuant to such rules

      and regulations. The consolidated balance sheet as of

      December 31, 2012 was derived from the audited financial

      statements for the year then ended.&lt;/font&gt;

    &lt;/div&gt;&lt;br/&gt;&lt;div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"&gt;

      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"&gt;In

      the opinion of the Company, all adjustments necessary to

      present fairly the financial position of the Company and the

      results of its operations and its cash flows have been

      included in the accompanying financial statements. The

      results of operations for interim periods are not necessarily

      indicative of the expected results for the full year.&lt;/font&gt;

    &lt;/div&gt;&lt;br/&gt;&lt;div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"&gt;

      &lt;font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"&gt;We

      recommend that you read the unaudited consolidated financial

      statements included herein in conjunction with the audited

      consolidated financial statements and notes thereto included

      in our Annual Report on Form 10-K for the fiscal year ended

      December&amp;#160;31, 2012, filed with the SEC on March 29,

      2013.&lt;/font&gt;

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