Attached files
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EX-32 - CYBERDEFENDER CORP | v190188_ex32.htm |
EX-31.1 - CYBERDEFENDER CORP | v190188_ex31-1.htm |
EX-31.2 - CYBERDEFENDER CORP | v190188_ex31-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
AMENDMENT
NO. 2
x
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ANNUAL
REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended
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December 31,
2009
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¨
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TRANSITION
REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from
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Commission
file number
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000-53475
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CYBERDEFENDER
CORPORATION
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(Name
of registrant in its
charter)
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Delaware
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65-1205833
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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617 West 7th Street, Suite 1000, Los Angeles,
California
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90017
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|||
(Address
of principal executive offices)
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(Zip
Code)
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Issuer’s
telephone number (213)
689-8631
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act: Common Stock, no par
value
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. ¨ Yes x No
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. ¨ Yes x No
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the last 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes x No ¨
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company.
Large
accelerated filer ¨
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Accelerated
filer ¨
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Non-accelerated
filer ¨
(Do not check if a smaller reporting company) Smaller reporting company
x
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). ¨ Yes x No
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter. On June 30, 2009, the aggregate market value of the voting
and non-voting common equity held by non-affiliates was
$48,575,761.
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date. As of March 26, 2010 the number of
shares of the registrant’s classes of common stock outstanding was
25,829,675.
List
hereunder the following documents if incorporated by reference and the Part of
the Form 10-K (eg., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any
proxy or information statement; and (3) Any prospectus filed pursuant to Rule
424(b) or (c) under the Securities Act of 1933. The listed documents
should be clearly described for identification
purposes. None
EXPLANATORY
NOTE
On July
7, 2010 we received a comment letter from the Securities and Exchange Commission
relating to our Annual Report on Form 10-K for the fiscal year ended December
31, 2009 which we filed with the Securities and Exchange Commission on March 31,
2010 (the “Original Report”). The primary purpose of this amendment
to the Original Report (the “Amendment”) is to respond to the comment
letter.
In this
Amendment we have revised the disclosure at Item 13 to include information that
was inadvertently left out of the discussion.
This
Amendment includes information contained in the Original Report, and we have
made no attempt in the Amendment to modify or update the disclosures presented
in the Original Report, except as identified above. The disclosures
in this Amendment continue to speak as of the date of the Original Report, and
do not reflect events occurring after the filing of the Original
Report. Accordingly, this Amendment should be read in conjunction
with our other filings made with the Securities and Exchange Commission
subsequent to the filing of the Original Report, including any amendments to
those filings. The filing of this Amendment shall not be deemed to be
an admission that the Original Report, when made, included any untrue statement
of a material fact or omitted to state a material fact necessary to make a
statement not misleading.
Item
13. Certain Relationships and Related Transactions and Director
Independence
Using the
definition of “independent” as that term is defined under the rules of the
NASDAQ Capital Market, we determined that none of our directors qualified as an
independent director on April 30, 2010.
For the
period from January 1, 2008 through April 30, 2010, described below are certain
transactions or series of transactions between us and our executive officers,
directors and the beneficial owners of 5% or more of our common stock, on an as
converted basis, and certain persons affiliated with or related to these
persons, including family members, in which they had or will have a direct or
indirect material interest in an amount that exceeds the lesser of $120,000 or
1% of the average of our total assets as of year-end for the last two completed
fiscal years, other than compensation arrangements that are otherwise required
to be described under “Executive Compensation.”
Beginning
on October 30, 2006 and continuing thereafter, we entered into Indemnification
Agreements with all persons who have provided services to us as directors and
with certain of our officers, all of whom are sometimes collectively referred to
in this discussion as the “indemnified parties” or individually referred to as
an “indemnified party”. The agreements require us to provide indemnification for
the indemnified parties for expenses (including attorneys’ fees, expert fees,
other professional fees and court costs, and fees and expenses incurred in
connection with any appeals), judgments (including punitive and exemplary
damages), penalties, fines and amounts paid in settlement (if such settlement is
approved in advance by us, which approval shall not be unreasonably withheld)
actually and reasonably incurred by the indemnified parties in connection with
any threatened, pending or completed action or proceeding (including actions
brought on our behalf, such as shareholder derivative actions), whether civil,
criminal, administrative or investigative, to which he is or was a party, a
witness or other participant (or is threatened to be made a party, a witness or
other participant) by reason of the fact that he is or was a director, officer,
employee or agent of ours or of any of our subsidiaries. The indemnification
covers any action or inaction on the part of the indemnified party while he was
an officer or director or by reason of the fact that he is or was serving at our
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. We must advance the costs
of the fees and expenses within 20 days following the delivery of a written
request from an indemnified party. The indemnified parties have agreed to
promptly repay the advances only if, and to the extent that, it is ultimately
determined by the court (as to which all rights of appeal therefrom have been
exhausted or lapsed) that the indemnified party is not entitled to the
indemnity. The indemnified parties’ obligations to repay us for any such amounts
are unsecured and no interest will be charged thereon. We also agreed to
indemnify the indemnified parties to the fullest extent permitted by law,
notwithstanding that such indemnification is not specifically authorized by the
other provisions of the Indemnification Agreements, our articles of
incorporation, our bylaws or by statute. In the event of any change, after the
date of the Indemnification Agreements, in any applicable law, statute or rule
which expands the right of a California corporation to indemnify a member of its
board of directors or an officer, such changes shall be within the purview of
the indemnified parties’ rights and our obligations under the Indemnification
Agreements. In the event of any change in any applicable law, statute or rule
which narrows the right of a California corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to the Indemnification
Agreements will have no effect on the rights and obligations of the indemnified
parties and the company under them. The indemnification provided by the
Indemnification Agreements is not exclusive of any rights to which the
indemnified parties may be entitled under our articles of incorporation, bylaws,
any agreement, any vote of shareholders or disinterested directors or the
California Corporations Code. The indemnification provided under the
Indemnification Agreements continues for any action taken or not taken while an
indemnified party serves in an indemnified capacity, even though he may have
ceased to serve in such capacity at the time of any action or other covered
proceeding. If the indemnification provided for in the Indemnification Agreement
is unavailable to an indemnified party, in lieu of indemnifying the indemnified
party we will contribute to the amount incurred by him, whether for judgments,
fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or
for expenses, in connection with any claim relating to an indemnifiable event,
in such proportion as is deemed fair and reasonable by the court before which
the action was brought. We are not obligated to provide indemnification pursuant
to the terms of the Indemnification Agreements
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•
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for
any acts or omissions or transactions from which a director may not be
relieved of liability under the California General Corporation Law; or for
breach by an indemnified party of any duty to us or our shareholders as to
circumstances in which indemnity is expressly prohibited by Section 317 of
the California General Corporation Law;
or
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•
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with
respect to proceedings or claims initiated or brought voluntarily by an
indemnified party not by way of defense, (except with respect to
proceedings or claims brought to establish or enforce a right to
indemnification) although such indemnification may be provided if our
Board of Directors has approved the initiation or bringing of such
proceeding or claim; or
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•
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with
respect to any proceeding instituted by the indemnified party to enforce
or interpret the Indemnification Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
indemnified party in such proceeding was not made in good faith or was
frivolous; or
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•
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for
expenses or liabilities of any type whatsoever which have been paid
directly to an indemnified party by an insurance carrier under a policy of
directors’ and officers’ liability insurance maintained by us;
or
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•
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for
expenses and the payment of profits arising from the purchase and sale by
an indemnified party of securities in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or any similar successor
statute.
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The
Indemnification Agreements are effective as of the date they were signed and may
apply to acts or omissions of the indemnified parties which occurred prior to
such date if the indemnified party was an officer, director, employee or other
agent of our company, or was serving at our request as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, at the time such act or omission occurred. All of obligations
under the Indemnification Agreements will continue as long as an indemnified
party is subject to any actual or possible matter which is the subject of the
Indemnification Agreement, notwithstanding an indemnified party’s termination of
service as an officer or director.
On March
4, 2008 we entered into an Independent Contractor Agreement with Mr. Bing Liu, a
former director and employee, for his services as a software architect. The term
of the agreement was five months, but the agreement could be terminated by
either party upon 30 days notice, or immediately if Mr. Liu failed to discharge
his obligations under the agreement. We agreed to pay Mr. Liu the sum of $8,000
per month in exchange for his services and we agreed to reimburse Mr. Liu for
expenses incurred by him in rendering services under the agreement.
On August
1, 2008 we entered into another Independent Contractor Agreement with Mr. Liu.
The term of the agreement was five months, but the agreement could be terminated
by either party upon 30 days notice, or immediately if Mr. Liu failed to
discharge his obligations under the agreement. We agreed to pay Mr. Liu the sum
of $8,000 per month for the month of August and $9,000 per month for the
remaining term of the agreement in exchange for his services. We agreed to
reimburse Mr. Liu for expenses incurred by him in rendering services under the
agreement.
From
time-to-time, Unionway International, LLC, an entity controlled by Mr. Liu,
provides software development services to us. On January 1, 2009, we
entered into a three-month Consulting Agreement with Unionway International,
LLC. As part of the agreement, Mr. Liu was granted a 10-year option to purchase
18,000 shares of our Common Stock at an exercise price of $1.00 per share
vesting in equal monthly increments over the term of the agreement as
compensation for 2008 achievements. In addition, Mr. Liu was granted a 10-year
option to purchase 5,000 shares of our Common Stock at an exercise price of
$1.00 per share vesting 2,500 shares on January 1, 2009, 1,250 shares on
February 1, 2009 and 1,250 shares on March 1, 2009. On April 1, 2009, we entered
into a three-month consulting agreement with Unionway International, LLC, again
for consulting services. As part of the agreement, Mr. Liu was granted a 10-year
option to purchase 15,000 shares of Common Stock at an exercise price of $1.25
per share vesting over the term of the agreement. During the fiscal year ended
December 31, 2009, we paid a total of $49,500 to Unionway International, LLC for
the services provided to us. During the fiscal year ended December 31, 2008, we
paid Unionway International, LLC $92,000 for software development services.
Because Mr. Liu was a director during 2008, the negotiation of the compensation
for these services was not done “at arm’s length”. However, we believe that we
received fair value in the services provided to us by Unionway International,
LLC and that if we were to pay an independent provider for the services, we
would pay approximately the same amount per month. Mr. Liu resigned as a
director in June 2009.
On
February 4, 2008 our board of directors approved an independent contractor
agreement with Mr. Michael Barrett. The term of the agreement was six months.
Pursuant to the agreement, Mr. Barrett provided consulting services to us as our
Chief Financial Officer. We agreed to pay Mr. Barrett the sum of $6,000 per
month for the months of February and March 2008. Beginning on April 1, 2008, Mr.
Barrett’s cash compensation was reduced to $4,000 per month. We also issued to
Mr. Barrett an option to purchase 20,000 shares of our Common Stock at a price
of $1.00 per share. The right to purchase 10,000 shares vested on April 30,
2008. The right to purchase the remaining 10,000 shares of Common Stock vested
at the end of the term. On April 16, 2008, we granted to Mr. Barrett an option
to purchase 20,000 shares of Common Stock at a price of $1.00 per share. On
August 6, 2008 our board of directors approved a second independent contractor
agreement with Mr. Barrett. Pursuant to the agreement, Mr. Barrett continued to
provide services to us as our Chief Financial Officer through September 30,
2008. We agreed to pay Mr. Barrett at the rate of $6,000 per month for his
services. We also agreed to grant to Mr. Barrett options to purchase 10,000
shares of our Common Stock at a price of $1.30 per share. The right to purchase
the Common Stock vested in equal increments of 5,000 shares per month over the
term of the contract. In exchange for this compensation, Mr. Barrett provided
his services to us for 10 to 15 hours per week. On October 1, 2008, we extended
Mr. Barrett’s agreement through November 30, 2008 and we granted to Mr. Barrett
an option to purchase 10,000 shares of Common Stock at a price of $1.00 per
share. On December 1, 2008, we extended Mr. Barrett’s agreement through December
15, 2008 and granted to Michael Barrett an option to purchase 2,500 shares of
Common Stock at a price of $1.20 per share. On January 17, 2009, we entered into
a two-month consulting agreement with Michael Barrett for consulting services
relating to financial management and reporting. As part of the agreement, Mr.
Barrett was granted an option to purchase 2,500 shares of Common Stock at an
exercise price of $1.25 per share, per month for the term of the
agreement.
In March
2008, Mr. Guseinov pledged 750,000 shares of his Common Stock to Michael and
Casey DeBaecke in exchange for a loan of $160,000 made to us. The pledge was
non-recourse to Mr. Guseinov in the event the collateral was foreclosed upon due
to our failure to pay the loan. So long as there was no event of default in
connection with the loan, Mr. Guseinov could continue to vote the shares at any
annual or special meeting of the shareholders. The loan was due to be repaid on
the earlier of two months following execution of the loan document or two days
following our receipt of over $500,000 in new equity capital.
Additionally,
we issued warrants to purchase 40,000 shares of our Common Stock to the lenders.
The warrants may be exercised at a price of $1.25 per share for a period of 5
years. The loan plus accrued interest was paid in full on July 30,
2008.
During
the fiscal year ended December 31, 2009, we purchased promotional items with the
Company’s name and logo on them from VK Productions, an entity controlled by Mr.
Guseinov’s spouse. During the year ended December 31, 2009, VK Productions
invoiced us $36,453.
On
October 1, 2009, we granted to Igor Barash, Chief Product Officer, in accordance
with the terms of his employment agreement dated July 1, 2008, an option to
purchase 150,000 shares of Common Stock under the 2006 Plan at a price of $1.00
per share vesting over four years from the date of the employment agreement. In
addition, we granted to Mr. Barash an option to purchase 47,000 shares of Common
Stock under the 2006 Plan, at a price of $1.00 per share in accordance with the
terms of his prior employment agreement dated November 23,
2005.
On March
24, 2009 we entered into a Media and Marketing Services Agreement (the
“Agreement”) with GR Match, LLC (“GRM”), the beneficial owner of more than 5% of
our common stock. In conjunction with this transaction, we granted three
warrants to GRM (the “GRM Warrants”). Information regarding the Agreement and
the GRM Warrants is incorporated herein by reference to Item No. 1 of our Annual
Report on Form 10-K for the year ended December 31, 2008 which was filed with
the Securities and Exchange Commission on March 31, 2009.
On June
4, 2009 we and GRM signed the First Amendment to Media and Marketing Services
Agreement which extended the term from August 31, 2010 to June 1,
2011.
In order
to extend the benefits of the Agreement to the advertising, marketing and sale
of certain private label products, on October 26, 2009 GRM executed the Second
Amendment to Media and Marketing Services Agreement (the “Second Amendment”),
which we received on November 2, 2009. In conjunction with executing the Second
Amendment, we also agreed to modify the GRM Warrants. Information regarding the
Second Amendment and the modifications to the GRM Warrants is included in the
Current Report on Form 8-K filed with the Securities and Exchange Commission on
November 6, 2009, which we incorporate herein by reference.I
On June
4, 2009, pursuant to a Securities Purchase Agreement dated June 3, 2009 (the
“Securities Purchase Agreement”), we closed the sale and issuance to GRM of
1,142,860 shares of common stock for an aggregate purchase price of
$2,000,005. Information regarding this transaction is included in the
Current Report on Form 8-K filed with the Securities and Exchange Commission on
June 10, 2009, which we incorporate herein by reference.
On
November 2, 2009 we received from GRM an executed copy of the First Amendment to
the Securities Purchase Agreement, which was dated October 26, 2009. Information
regarding this transaction is included in the Current Report on Form 8-K filed
with the Securities and Exchange Commission on November 6, 2009, which we
incorporate herein by reference.
On March
31, 2010, pursuant to the terms of a Loan and Securities Purchase Agreement, we
sold and issued in a private placement to GRM a 9% Secured Convertible
Promissory Note in the aggregate principal amount of $5,300,000, due March 31,
2012. We received net proceeds of $5,000,000 after payment of an issuance fee of
$300,000 to GRM. During the period from the date of the loan to April 30, 2010,
the largest amount of principal outstanding was $5,300,000 and no principal or
interest payments had been made. The amount of principal and interest
outstanding on April 30, 2010 was $5,339,750. Information regarding this
transaction is included in the Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 6, 2010, which we incorporate herein
by reference.
On April
1, 2010, we and GRM entered into a License Agreement whereby we granted to GRM
an exclusive royalty-bearing license to market, sell and distribute, in the
United States through retail channels of distribution (such as retail stores,
online retail storefronts, kiosks, counters and other similar retail channels)
and television shopping channels (such as QVC and Home Shopping Network), and in
certain foreign countries through retail channels, television shopping channels,
direct response television and radio, and Internet websites associated with such
marketing channels (other than www.cyberdefender.com), our line of antivirus and
Internet security products or services. Information regarding this transaction
is included in the Current Report on Form 8-K filed with the Securities and
Exchange Commission on April 7, 2010, which we incorporate herein by
reference.
Pursuant
ot the terms of the Agreement we entered into on March 24, 2009 with GRM, GRM is
permitted to appoint one member to our board of directors. On July 21, 2009 GRM
appointed Mr. Bennet Van de Bunt to our board of directors. On January 1, 2010
Mr. Van de Bunt resigned from our board of directors, and GRM appointed Mr. Luc
Vanhal in his place. Mr. Vanhal resigned this position as of February 28, 2010
and on March 22, 2010, GRM reappointed Bennet Van De Bunt as a
director.
PART
IV
Item
15. Exhibits, Financial Statement Schedules
31.1
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Certification
Pursuant to Rule 13a-14(a) and 15d-14(a)
(4)*
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31.2
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Certification
Pursuant to Rule 13a-14(a) and 15d-14(a)
(4)*
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32
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Certification
Pursuant to Section 1350 of Title 18 of the United States
Code*
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*Filed
herewith.
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: July
8, 2010
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CYBERDEFENDER
CORPORATION
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By:
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/s/ Gary Guseinov
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Gary
Guseinov
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Chief
Executive Officer
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By:
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/s/ Kevin Harris
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Kevin
Harris
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Chief
Financial Officer
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