text: **Inflation and Functional Currencies**
  
  In recent years, Hungary, Poland and the Czech Republic have experienced high levels of inflation. Consequently, these countries’ currencies have 
  continued to decline in value against the major currencies of the OECD over this time period. However, due to the significant reduction in the 
  inflation rate of these countries in recent years, none of these countries are considered to have a hyper- i n f l a t i o n a ry economy. Furt h e r, the majority 
  of all three subsidiaries’ revenues are denominated in the local curre n c y. Thus all three subsidiaries use their local currency as the functional 
  c u rre n c y. The Polish and Czech subsidiaries changed their functional currency to the respective local currency as of January 1, 1998 and January 
  1, 1999, re s p e c t i v e l y, and the Hungarian subsidiary changed as of July 1, 1999. 
  
  G e rm a n y, France and the United Kingdom have experienced relatively low and stable inflation rates in recent years. There f o re, the local curre n c y 
  in each of these markets is the functional curre n c y. Although Croatia, like Germany and France, has maintained relatively stable inflation and 
  exchange rates, the functional currency of the Croatian company is the U.S. dollar due to the significant level of U.S. dollar denominated re v e n u e s 
  and expenses. Due to the factors mentioned above, the Company does not believe that inflation will have a significant effect on results of operations 
  or financial condition. The Company continually reviews inflation and the functional currency in each of the countries that it operates in. 