TITLE OF EACH | PROPOSED | PROPOSED | ||
CLASS OF | MAXIMUM | MAXIMUM | ||
SECURITIES | OFFERING | AGGREGATE | AMOUNT OF | |
TO BE | AMOUNT TO BE | PRICE PER | OFFERING | REGISTRATION |
REGISTERED | REGISTERED | SHARE (1) | PRICE (2) | FEE (2) |
Common Stock (3) | 1,000,000 shares | $1.00 | $1,000,000 | $90 |
Warrants (4) | 1,000 warrants | $0 | $0 | $0 |
Warrants (5) | 10,000 warrants | $0 | $0 | $0 |
Common Stock Underlying Warrants (6) | 1,000,000 shares | $2.00 | $2,000,000 | $162 |
Common Stock Underlying Warrants (7) | 1,000,000 shares | $1.00 | $1,000,000 | $81 |
Offering to new DNAshare subscribers and Strategic Partners: In addition, we will issue a different class of warrants where each warrant is to purchase 100 shares at $1 per share, exercisable for 12 months from the issuance of the warrant. These warrants will be given to each new DNAshare subscriber or strategic partner until either no warrants remain or the offering is terminated. The issuance of this class of warrants will be based upon a predetermined formula. Only new DNAshare subscribers that purchase an annual subscription will receive warrants. New DNAshare subscribers will receive 1 warrant for each annual subscription purchased. Strategic Partners will receive warrants based upon their efforts to assist us in marketing and selling our products. A Strategic Partner will receive 1 warrant for every annual subscription we receive as a result of their efforts to sell and market our products . This offering will commence promptly following the effectiveness of the registration statement. We will withhold the issuance of these warrants until such time when the minimum amount is received in the unit offering to the general public. All grants of these warrants will be declared null and no additional grants will be made in the event that the minimum amount of the unit offering to the general public is not reached. This offering does not have a minimum offering amount; however, this offering would terminate for failure to sell the minimum offering amount in the unit offering to the general public. A "subscriber" is any user who pays a monthly or annual amount to have access to our product. A "strategic partner" is any person or entity that assists us in marketing or selling our products. Our officers, directors, or employees will not be able to receive warrants as Strategic Partners. We have not identified any strategic partners at the present tim e. This offering will close whenever all warrants are issued, or nine months after the effective date of this prospectus, whichever is sooner. The warrants in this offering are not exercisable in fractions.
TABLE OF CONTENTS | |
PAGE | |
Summary | 3 |
Risk Factors | 7 |
Since we have generated only minimal revenues, it remains uncertain whether we can achieve commercially viable operations | 7 |
Because we have suffered recurring losses from operations and have a net capital deficiency, our independent accountants believe there is substantial doubt about the company's ability to continue as a going concern without raising additional capital | 7 |
If we are not able to succeed in marketing our product, making sales and maintaining a large enough customer base to support our business operations, we will not be able to achieve profitable operations | 7 |
A failure to raise substantial proceeds in this offering will inhibit our marketing ability which will likely result in our inability to be able to attract a large enough client base to achieve profitable operations | 8 |
Even if we are successful in selling this offering and thereby obtaining the funding necessary to operate for the next 12 months, we may need additional outside funding after that and if such funding is not available, the growth of our business and our ability to sustain operations may be impaired | 8 |
If we were unable to attract, train, or retain any of our key personnel or managers, our business could fail because our success is dependent in part upon the services of qualified personnel | 8 |
Because our officers and directors have various outside interests and currently provide their services on a part-time basis, they may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail | 9 |
Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment. | 9 |
If no market develops for our common stock, investors may be unable to sell their securities | 9 |
If we are unable to meet client expectations or deliver error-free services, our business will suffer losses and negative publicity | 9 |
There are some limitations inherent in DNAshare's measurement of media sentiment that may produce a lack of customer acceptance which would result in impaired sales of our product and an inability to achieve profitable operations. | 10 |
If our technology infringes on the intellectual property rights of others, we may find ourselves involved in costly litigation, which will negatively affect the financial results of our business operations | 10 |
If we are not granted full patent protection for our intellectual property, we may have difficulty safeguarding our proprietary technology potentially resulting in our competitors utilizing our technology and impairing our ability to achieve profitable operations. | 11 |
If any of our competitors infringe on our intellectual property rights, we may find ourselves involved in costly litigation, which will negatively affect the financial results of our business operations. | 11 |
Because we are dependent on third parties for critical services used in our business, we face potential losses if any of these services are interrupted or become more costly | 11 |
If we are unable to continually upgrade and expand our systems in order to keep up with the rapid technological change within our industry, we will not be able to compete within our industry and our business will fail | 12 |
We are in a highly competitive industry and some of our competitors may be more successful in attracting and retaining customers which could harm or limit our ability to attract and retain customers or expand our business. | 12 |
If there are events or circumstances effecting the continued use, performance, and reliability of the Internet, access to our product and/or the functionality of our product could be impaired causing a negative affect on the financial results of our business operations. | 13 |
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The continuing conflict in Iraq, future terrorist attacks and threats of or actual war may negatively impact all aspects of our operations, revenues, and costs. | 13 |
In the event that we attempt to take part in any business combinations, we face risks associated with any potential business combinations which may negatively impact all aspects of our operations. | 14 |
Forward-Looking Statements | 14 |
Use of Proceeds | 15 |
Determination of Offering Price | 16 |
Dilution | 17 |
Selling Shareholders | 19 |
Plan of Distribution | 19 |
Legal Proceedings | 22 |
Directors, Executive Officers, Promoters and Control Persons | 22 |
Principal Shareholders | 25 |
Description of Securities | 26 |
Interest of Named Experts and Counsel | 27 |
Disclosure of Commission Position of Indemnification for Securities Act Liabilities | 27 |
Organization Within Last Five Years | 27 |
Description of Business | 28 |
Management’s Discussion and Analysis or Plan of Operations | 37 |
Description of Property | 40 |
Certain Relationships and Related Transactions | 41 |
Market for Common Equity and Related Stockholder Matters | 43 |
Executive Compensation | 47 |
Financial Statements | 49 |
Changes in and Disagreements with Accountants | 50 |
Available Information | 50 |
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5 | ||
Fiscal year ended: December 31, 2003 | Fiscal year ended: December 31, 2002 | |
Balance Sheet Data | ||
Cash | $ 8,525 | $ 48,874 |
Total Assets | $ 310,586 | $ 353,760 |
Liabilities | $ 159,553 | $ 78,663 |
Total Stockholders' Equity | $ 151,033 | $ 275,097 |
Income Statement Data | ||
Net Income <Loss> | $ (134,064) | $ (115,085) |
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Assuming all units are sold | Assuming 50% of the unitsare sold | Assuming the minimum number of units are sold | |
Gross Proceeds | $1,000,00 | $500,000 | $250,000 |
Commissions | 100,000 | 50,000 | 25,000 |
Offering Expenses | 45,000 | 45,000 | 45,000 |
Net Proceeds | 855,000 | 405,000 | 180,000 |
General & Administrative Expenses | 225,000 | 125,000 | 75,000 |
Research & Development Expenses | 180,000 | 90,000 | 25,000 |
Marketing/Sales | 225,000 | 100,000 | 25,000 |
Discharge Debt / Management Salaries | 43,500 | 0 | 0 |
Working Capital | 181,500 | 90,000 | 30,000 |
Total Budget | $1,000,000 | $500,000 | $250,000 |
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An investment in this offering will undergo immediate dilution when compared with the net tangible assets of California News Tech. The following table illustrates the per share dilution in net tangible book value to new investors if 100% of the entire offering is sold, if 50% of the offering is sold and if the minimum offering is sold without taking into account the exercise of warrants in the Unit Offering to the General Public or Offering to new DNAshare subscribers and Strategic Partners. Calculations are based on 2,506,333 capital shares outstanding at December 31, 2003, and at the different levels of the offering sold as indicated after the deduction of offering expenses.
As the table reveals, as fewer than all shares offered are purchased, those who do invest in the offering will undergo even greater dilution of their investment dollar than if the offering were fully subscribed.
Percent of offering sold | 100% | 50% | Minimum |
Public offering price per Share | $1.00 | $1.00 | $1.00 |
Net tangible book value per share as of December 31, 2003 | ($0.06) | ($0.06) | ($0.06) |
Increase per share attributed to investors in this offering | $0.25 | $0.13 | $0.06 |
Net tangible book value per share as of December 31, 2003, after this Offering | $0.19 | $0.07 | $0.00 |
Net tangible book value dilution per share to new investors | $0.81 | $0.93 | $1.00 |
Net tangible book value dilution per share to new investors expressed as a percentage | 81% | 93% | 100% |
The following table illustrates the per share dilution in net tangible book value to new investors if 100% of the entire offering is sold, if 50% of the offering is sold and if the minimum offering is sold assuming all warrants included with the Unit are exercised and without taking into account the exercise of warrants in the Offering to new DNAshare subscribers and Strategic Partners. Calculations are based on 2,506,333 capital shares outstanding at December 31, 2003, and at the different levels of the offering sold as indicated after the deduction of offering expenses.
As the table reveals, as fewer than all shares offered are purchased, those who do invest in the offering will undergo even greater dilution of their investment dollar than if the offering were fully subscribed.
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DILUTION - EXERCISE OF WARRANTS |
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| 100%
| 50%
| Minimum
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Total shares post offering | 3,506,333 | 3,006,333 | 2,756,333 |
Warrants Exercisable | 1,000,000 | 500,000 | 250,000 |
Total shares incl. Warrants | 4,506,333 | 3,506,333 | 3,006,333 |
Warrants Proceeds | $2,000,000 | $1,000,000 | $500,000 |
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|
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Percent of warrants exercised | 100% | 100% | 100% |
Warrant exercise price per Share | $2.00 | $2.00 | $2.00 |
Net tangible book value per share as of December 31, 2003 plus increase per share attributed to investors in the public offering | $0.19 | $0.07 | $0.00 |
Increase per share attributed to investors in this offering | $0.44 | $0.29 | $0.17 |
Net tangible book value per share as of December 31, 2003, after this Offering plus exercise of warrants | $0.63 | $0.36 | $0.17 |
Net tangible book value dilution per share to investors exercising warrants | $1.37 | $1.64 | $1.83 |
Net tangible book value dilution per share to warrant purchasers expressed as a percentage | 68% | 82% | 92% |
The following table illustrates the per share dilution in net tangible book value to all holders of our common stock if 100% of the entire offering is sold, if 50% of the offering is sold and if the minimum offering is sold assuming all warrants issued in both offerings are exercised. Calculations are based on 2,506,333 capital shares outstanding at December 31, 2003, and at the different levels of the offering sold as indicated after the deduction of offering expenses.
As the table reveals, as fewer than all shares offered are purchased, those who do invest in the offering will undergo even greater dilution of their investment dollar than if the offering were fully subscribed.
DILUTION - | |||
| 100%
| 50%
| Minimum
|
Total shares post offering | 3,506,333 | 3,006,333 | 2,756,333 |
Warrants Exercisable by Strategic Partners and New DNAShare Subscribers | 1,000,000 | 1,000,000 | 1,000,000 |
Warrants Exercisable by Investors | 1,000,000 | 500,000 | 250,000 |
Total shares including Warrants exercised | 5,506,333 | 4,506,333 | 4,006,333 |
Total Warrants Proceeds | $3,000,000 | $2,000,000 | $1,500,000 |
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Warrant exercise price per Share- Strategic Partners and New DNAShare Subscribers | $1.00 | $1.00 | $1.00 |
Warrant exercise price per Share-Investors | $2.00 | $2.00 | $2.00 |
Percent of warrants exercised | 100% | 100% | 100% |
Average Warrant exercise price per Share-All | $1.50 | $1.33 | $1.20 |
Net tangible book value per share as of December 31, 2003 plus increase per share attributed to investors in the public offering | $0.19 | $0.07 | $0.00 |
Increase per share attributed to investors, Strategic Partners and New DNAShare Subscribers exercise of warrants in this offering | $0.54 | $0.44 | $0.37 |
Net tangible book value per share as of December 31, 2003, after this Offering plus exercise of warrants | $0.73 | $0.51 | $0.37 |
Net average tangible book value dilution per share due to exercising warrants | $0.77 | $0.82 | $0.83 |
Net average tangible book value dilution per share to all warrant purchasers expressed as a percentage | 51% | 61% | 69% |
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We are offering warrants on a discretionary basis to new DNAshare subscribers and strategic partners where each warrant is to purchase 100 shares at $1 per share, exercisable for 12 months from the issuance of the warrant. These warrants will be issued to each new DNAshare subscriber or strategic partner until either no warrants remain or the offering is terminated. Only new DNAshare subscribers that purchase an annual subscription will receive warrants. New DNAshare subscribers will receive 1 warrant for each annual subscription purchased. Strategic Partners will receive warrants based upon their efforts to assist us in marketing and selling our products. A Strategic Partner will receive 1 warrant for every annual subscription we receive as a result of their efforts to sell and market our products. Our officers, directors, or employees will not be able to receive warrants a s Strategic Partners. This offering will commence promptly following the effectiveness of the registration statement. We will withhold the issuance of these warrants until such time when the minimum amount is received in the unit offering to the general public. This offering will close whenever all warrants are issued, or nine months after the effective date of this prospectus, whichever is sooner. This offering relates to the unit offering to the general public in the respect that this offering would terminate in the event that the minimum offering amount in the unit offering to the general is not reached. In such case, any grants of these warrants will be declared null and no additional grants will be made. This offering does not have a minimum offering amount; however, this offering would terminate for failure to sell the minimum offering amount in the unit offering to the general public.
Securities and Exchange Commission registration fee | $ 333 |
Transfer Agent Fees | $ 500 |
Accounting fees and expenses | $10,000 |
Legal fees and expenses | $25,000 |
Blue Sky fees and expenses | $ 5,000 |
Miscellaneous | $ 4,167 |
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Total | $45,000 |
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NAME | AGE | POSITION(S) |
Marian Munz | 47 | Director, President and Chief Executive Officer |
Robert C. Jaspar | 63 | Director, Secretary, Chief Financial Officer |
Martin Barrs | 37 | Director, Chief Technology Officer |
John T. Arkoosh | 55 | Director |
David A. Hotchkiss | 49 | Director |
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David A. Hotchkiss, Ph.D.is one of our Directors. Currently Dr. Hotchkiss works as a Principal Program Manager for Kaiser Permanente in the Information Technology division where he provides portfolio and program management for all financial services, programs and projects. He started in this position in February 2003. From May of 2001 to October of 2002, Dr. Hotchkiss worked for A&G Electric & Communications as its Vice President of Operations where he led both divisions of this privately held company.He developed operating standards, the five-year business plan, negotiated contracts and oversaw all projects. From May of 2001 through the end of 2001, Dr. Hotchkiss also served as a director of A&G Electric & Communications, Inc. From December of 2000 to May of 2001, Dr. Hotchkiss worked for Agency.com as its Regional Vice President of Operations and Project Management for the San Francisco Region. From August of 1999 to July of 2000, Dr. Hotchkiss worked for iXL, Inc. as the Vice President of Project Management and Process, where he oversaw all regional projects, developed project managers skills, and developed standard processes for delivering projects. Dr. Hotchkiss worked for KPMG Peat Marwick LLP from October of 1997 to May of 1999 as a Senior Manager and worked in the capacity as Director of Project Management, where he
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Title of class | Name and address of beneficial owner | Amount of beneficial ownership | Percent of class 1 |
Common Stock | Howard F. Fine & Carol M. Fine, Trustees of the Fine Trust Two Embarcadero Center 24th Floor San Francisco, Ca 94111 | 300,000 shares | 11.96% |
Common Stock | Emmanuel D. Agorastos 2301 Broadway, #303 San Francisco, Ca 94115 | 137,500 shares | 5.49% |
Common Stock | Paul Lepus 329 1 Mai Blvd., Bl.18, #21 Bucharest, Sector 1 Romania | 133,333 shares | 5.32% |
Common Stock | Marian Munz 529 Buchanan Street San Francisco, Ca 94102 | 666,667 shares | 35.50% 2 |
Common Stock | John Arkoosh, Sr. 529 Buchanan Street San Francisco, Ca 94102 | 233,333 shares 3 | 10.90% 4 |
Common Stock | Robert Jaspar 529 Buchanan Street San Francisco, Ca 94102 | 54,267 shares | 7.10% 5 |
Common Stock | Gary Schell 21795 - 64th Avenue Langley, British Columbia, Canada, V2Y 2N7 | 500,000 shares | 19.95% |
Common Stock | Total of All Officers and Directors as a Group (six) | 954,267 shares | 60.70% 6 |
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We are not registering the warrants for resale and the warrants will not be separately tradable at any time. Only the common stock in either offering set forth in this prospectus is tradable. The warrants in either offering are not tradable, but when exercised into common stock, those common shares are tradable. In the unit offering to the general public, the unit must be divided to separate the warrants from the common stock prior to being able to trade the common stock.
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SUMMARY COMPENSATION TABLE | ||||||||
Long Term Compensation | ||||||||
Annual Compensation | Awards | Payouts | ||||||
Name and Principal Position | Year | Salary/Consulting Fees | Bonus | Other annualCompensation | Restricted StockAwarded | Options/SARs (#) | LTIPpayouts | All OtherCompensation |
Marian Munz President, CEO & Director | 2003 2002 2001 | $15,000 $0 $0 | $0 $0 $0 | $0 $0 $0 | 0 0 0 | 22,000 0 200,000 | 0 0 0 | 0 0 0 |
John T. Arkoosh Former VP Business Dev. & Director | 2003 2002 2001 | $0 $48,000 $0 | $0 $0 $0 | $0 $0 $0 | 0 0 0 | 22,000 17,500 50,000 | 0 0 0 | 0 0 0 |
Martin Barrs CTO & Director | 2003 2002 2001 | $11,200 $23,000 n/a | $0 $0 n/a | $0 $0 n/a | 0 0 n/a | 33,200 100,000 n/a | 0 0 n/a | 0 0 n/a |
Robert J. Jaspar Secretary, Controller & Director | 2003 2002 2001 | 36,000 $36,000 $0 | $0 $0 $0 | $0 $0 $0 | 0 0 0 | 58,000 41,000 25,000 | 0 0 0 | 0 0 0 |
Michael Nicholas Jones Former Director | 2003 2002 2001 | $0 $5,500 n/a | $0 $0 n/a | $0 $0 n/a | 0 0 n/a | 22,000 3,900 n/a | 0 0 n/a | 0 0 n/a |
David A. Hotchkiss Director | 2003 2002 2001 | $0 n/a n/a | $0 n/a n/a | $0 n/a n/a | 0 n/a n/a | 22,000 n/a n/a | 0 n/a n/a | 0 n/a n/a |
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Name | Number of Shares | Exercise Price | Year |
John T. Arkoosh Sr. | 22,000 17,500 50,000 | $1.00 $1.00 $0.20 | 2003 2002 2001 |
Martin Barrs | 33,000 100,000 | $1.00 $0.80 | 2003 2002 |
Robert J. Jaspar | 58,000 41,000 25,000 | $1.00 $1.00 $0.80 | 2003 2002 2001 |
Michael N. Jones | 22,000 3,900 | $1.00 $0.80 | 2003 2002 |
Marian Munz | 22,000 200,000 | $1.00 $0.80 | 2003 2001 |
David Hotchkiss | 22,000 | $1.00 | 2003 |
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![](https://capedge.com/proxy/SB-2A/0001255294-04-000146/scansig.jpg)
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- an agreement with the customer;
- delivery to and acceptance of the product by the customer has occurred;
- the amount of the fees to be paid by the customer are fixed or determinable; and
- collection of these fees is probable.
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Warrants accompanied the shares issued during 2002. The warrants gave the shareowner the right to purchase additional shares for $2.00 per share. A total of 117,500 warrants were granted with the sale of the shares. At December 31, 2003, there were no warrants outstanding as the 117,500 warrants expired May 31, 2003 and warrants granted in earlier years expired during the 2002 calendar year.
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Securities and Exchange Commission | |
registration fee | $ 333 |
Transfer Agent Fees | $ 500 |
Accounting fees and expenses | $10,000 |
Legal fees and expenses | $25,000 |
Blue Sky fees and expenses | $ 5,000 |
Miscellaneous | $ 4,167 |
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Total | $45,000 |
======== |
Name | Nature of Services Rendered | Value of Services Rendered |
Bob Jaspar | Accounting | $60.00 |
Marian Munz | Technology | $2,000.00 |
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Gary Schell | Corporate Organization | $1,500.00 |
Emmanuel D. Agorastos | Capitalization | $400.00 |
Paul Lepus | Human Resources | $400.00 |
Craig Doctor | Public Relations | $65.00 |
Hurst | Public Relations | $75.00 |
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3.1 | Articles of Incorporation (1) |
3.2 | Amended Articles of Incorporation (1) |
3.3 | By-Laws (1) |
4.1 | Share Certificate (1) |
5.1 | Opinion of Cane O’Neill Taylor, LLC, with consent to use (2) |
10.1 | Share Lock Up Agreement with Gary Schell (1) |
10.2 | Share Lock Up Agreement with Marian Munz (1) |
10.3 | Subscription Agreement (3) |
10.4 | Independent Contractor Agreement with Martin Barrs (2) |
10.5 | Independent Contractor Agreement Amendment with Martin Barrs (2) |
10.6 | Independent Contractor Agreement with Marian Munz (2) |
10.7 | Independent Contractor Agreement with John Arkoosh, Sr. (2) |
10.8 | Independent Contractor Agreement with Jaspar & Associates (2) |
10.9 | Independent Contractor Agreement with George Serban (2) |
10.10 | Independent Contractor Agreement with Iulian Sirbu (2) |
10.11 | Independent Contractor Agreement with Stelian Marin (2) |
10.12 | Agreement in Settlement of Consulting Services Debt with Marian Munz (5) |
10.13 | Agreement in Settlement of Consulting Services Debt with Robert C. Jaspar (5) |
10.14 | Agreement in Settlement of Consulting Services Debt with John Arkoosh (5) |
10.15 | Agreement in Settlement of Consulting Services Debt with Martin Barrs (5) |
23.1 | Consent of Jewell & Langsdale, Certified Public Accountants |
99.1 | Disclaimer, Terms, and Conditions for use of DNAshare (4) |
99.2 | Database Licensing Agreement with Stanford University, (4) Communications Department |
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