UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

 

FORM 10-Q

_______________

 

⌧     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31^st, 2018

 

OR

 

□      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______ to ______.

 

Commission File Number: 000-55489

___________________________________________________

 

TOKEN COMMUNITIES LTD.

(Exact name of registrant as specified in its charter)

___________________________________________________

EXTRACT PHARMACEUTICALS, INC.

(Former Name)

 

(310) 717-7745

(Registrant’s telephone number, including area code)

_____________________________________________________

 

 

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 preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ⌧  No  □

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T

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(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  ⌧  No  □

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company" in Rule 12b-2 of the Exchange Act:

 

 

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.

Yes □  No  ⌧

 

As of May 15^th, 2018, the registrant had 97,200,000 shares of its Common Stock, $0.0001 par value, outstanding.

 

 

 

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TOKEN COMMUNITIES LTD.

FORM 10-Q

March 31, 2018

INDEX

 

 

 

 

 

 

 

 

 

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PART I – FINANCIAL INFORMATION

 

Item 1.    Financial Statements

                   

 

TOKEN COMMUNITIES LTD
BALANCE SHEETS
ASSETS
	March 31, 2018	June 30, 2017
	(Unaudited)
Current Assets
Cash	$ -	$ -
Total Current Assets	-	-
Total Assets	$ -	$ -
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities
Accounts Payable	$ -	$ -
Total Current Liabilities	3,700	1,200
Long Term Liabilities		-
Notes Payable	53,407	5,375
Total Long Term Liabilities	53,407	5,375
Total Liabilities	57,107	6,575
Stockholders' (Deficit)
Preferred stock, $0.0001 par value, 20,000,000 shares
authorized; no shares issued or outstanding	-	-
Common stock, $0.0001 par value, 300,000,000 shares
authorized; 116,466,000 shares issued and outstanding	11,647	11,389
Additional paid-in capital	(2,437)	(2,179)
Accumulated deficit	66,317	15,785
Total stockholders' (deficit)	57,107	(6,575)
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)	$ -	$ -

See accompanying notes to consolidated financial statements.  

TOKEN COMMUNITIES LTD
STATEMENTS OF OPERATIONS
(UNAUDITED)
	For the	For the	For the	For the
	Three Months	Three Months	Nine Months	Nine Months
	Ended      March 31,	Ended    March 31,	Ended March 31,	Ended March 31,
	2018	2018	2018	2018
Revenue	$ -	$ -	$ -	$ -
Total Revenue	-	-	-	-
Expenses
General & Admin. Expenses	30,000	1,400	50,740	22,492
Other Operating Expenses	-	-	-	-
Total Expenses	30,000	1,400	50,740	22,492
Net (Loss)	$ (30,000)	$ (1,400)	$ (50,740)	$ (22,492)
Basic and Diluted Earnings
(Loss) per Share	$ -	$ -	$ -	$ -
Weighted average shares - basic
and diluted	115,015,336	113,886,000	115,015,336	113,886,000

See accompanying notes to consolidated financial statements.  

TOKEN COMMUNITIES LTD
STATEMENTS OF CASH FLOWS
(UNAUDITED)
	For the Nine Months Ended March 31,	For the Nine Months Ended March 31,
	2018	2017
Cash Flows from Operating Activities:
Net (Loss)	$ (50,740)	$ (22,492)
Adjustments to reconcile net loss to
cash
flows provided by operating
activities:
Common stock issued for services	258	-
Changes in operating assets and
liabilities
Accrued Liabilities	2,500	-
Net cash used in operating
activities	(47,982)	(22,492)
Cash Flows from Investing Activities
Purchase property plant and equipment	-	-
Cash Flows Used In Investing Activities	-	-
Cash Flows from Financing Activities
Proceeds of loan from officer	47,982	22,492
Cash Flows Provided  By Financing Activities	47,982	22,492
Net (Decrease) Increase in Cash and Cash Equivalents	-	-
Cash and Cash Equivalents at Beginning of Period	-	500
Cash and Cash Equivalents at End of Period	$ -	$ 500
Supplemental Cashflow Information:
Interest Paid	$ -	$ -
Taxes Paid	$ -	$ -

See accompanying notes to consolidated financial statements.

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 Token Communities Ltd

Notes to Financial statements

March 31, 2018 (unaudited)

Note 1– Nature of Business, Presentation and Going Concern

 

Organization

 

Token Communities Ltd. ("the Company" or "the Issuer") was organized under the laws of the State of Delaware on March 6, 2014, under the name Pacific Media Group Enterprises, Inc.

Token Communities Ltd. (“the Company”) is a US based development stage company that researches and creates white paper analysis for companies regarding block chain technology.

On February 26^th, 2018, the Company entered into an Acquisition and Share Exchange Agreement with Token Communities PLC., a Gibraltar company, as noted in the 8K filed with the SEC the same date.  Under the terms of the Agreement, the majority shareholder returned 19,266,000 common shares to treasury, and at closing 100% of the issued and outstanding shares of Token Communities PLC, comprised of 500,000,000 ordinary shares will be acquired by the Company, in exchange for 172,820,000 newly issued common shares equal to 64% of the Company’s outstanding common stock as of the closing date, thus making the shareholders of Token Communities PLC the majority shareholders of the company, as well as the Company’s wholly owned subsidiary. Per the Agreement between the parties closing shall be deemed to occur upon presentation of the fully audited financials of Token Communities PLC, which is expected before the end of May 2018.

Basis of Presentation

 

The accompanying unaudited financial statements were prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

 

These unaudited financial statements should be read in conjunction with our 2017 annual financial statements included in our Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on November 20^th, 2017.

 

Going Concern

 

The accompanying financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred a net loss of $30,000 for the three months ended March 31, 2018 and has incurred cumulative losses since inception of $66,317.

 

The ability of the Company to continue as a going concern is dependent upon its abilities to generate revenues, to continue to raise investment capital, and develop and implement its business plan. No assurance can be given that the Company will be successful in these efforts.

 

The unaudited financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 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. No assurance can be given that the Company will be successful in these efforts.

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Revenues

 

Revenue is recognized when all of the following criteria are met: there is persuasive evidence of an arrangement; the product has been delivered or services have been rendered; the fee is fixed and determinable; and collectability is probable.

 

Note 2 – Related Party Transactions

On June 1, 2014, the Company issued 1,520,000 shares of common stock in a private placement for services valued at par value of $0.0001 per share. Of these shares, 20,000 were issued to the former CEO and director of the Company and 1,500,000 were issued to the current CEO and director of the Company. At various dates between April 1, 2016 and March 30, 2017 the Company issued various Notes totaling $23,492 to a former officer. On April 5, 2017 all of these Notes were cancelled. On June 29, 2017 a Note for $5,375 was issued to a Shareholder. This Note is non-interest bearing and has no fixed term but is callable by the lender at any time. From June 2017 to March 2018 the company issued a further note $42,607 to the shareholder ( Trends Mergers and Acquisitions and Mergers LLC ) for continued operational expenses support

 

The Company utilizes an office space of approximately 100 square feet in the residence of the Company’s CEO, which is provided at no cost by the CEO. The value of the space is immaterial. The space is believed to be adequate for the Company’s needs at this time.

Note 3 –Stockholders’ Equity (Deficit)

 

Authorized Shares

 

As of March 31, 2018, the authorized share capital of the Company consists of 300,000,000 shares of common and 20,000,000 shares of preferred stock with $0.0001 par value. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.

Common Stock   

 

The Company's first issuance of common stock, totaling 580,000 shares, took place on March 6, 2014 pursuant to the Chapter 11 Plan of Reorganization confirmed by the U.S.  Bankruptcy Court in the matter of Pacific Shores Development, Inc. (“PSD”). The Court ordered the distribution of shares in the Company to all general unsecured creditors of PSD, with these creditors to receive their PRO RATA share (according to amount of debt held) of a pool of 80,000 shares in the Company.  The Court also ordered the distribution of shares in the Company to all administrative creditors of PSD, with these creditors to receive one share of common stock in the Company for each $0.10 of PSD's administrative debt which they held. A total of 500,000 shares were issued to PSD’s administrative creditors.

The Court also ordered the distribution of 2,500,000 warrants in the Company to all administrative creditors of PSD, with these creditors to receive five warrants in the Company for each $0.10 of PSD's administrative debt which they held. These creditors received 2,500,000 warrants  consisting of 500,000 "A  Warrants"  each  convertible  into one share of common stock at $4.00;  500,000 "B Warrants" each convertible into one share of common  stock at an exercise  price of $5.00;  500,000  "C  Warrants"  each convertible  into one  share of  common  stock at  $6.00; 500,000 "D  Warrants"  each  convertible  into one share of common stock at  $7.00;  and 500,000 "E Warrants" each  convertible  into one share  of  common  stock  at   $8.00.  All warrants are exercisable at any time prior to August 30, 2019. As of the date of this report, no warrants have been exercised.

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On June 1, 2014 the Company issued 1,520,000 common shares for services at par value, $0.0001 per share for $152. On April 1, 2016 the Company issued 9,000 common shares for services related to mobile app programming and development valued at $1.00 per share for $9,000.

As a result of these issuances there were 2,109,000 common shares issued and outstanding, and a total of 2,500,000 warrants to acquire common shares issued and outstanding, at March 31, 2018.

Stock Split – On April 5, 2017, the Company’ s Board of Directors declared a 54:1 forward stock split of all outstanding shares of common stock. The stock split was approved by FINRA on July 25, 2017. The effect of the stock split increased the number of shares of common stock outstanding from 2,109,000 to 113,886,000. All common share and per common share data in these financial statements and related notes hereto have been retroactively adjusted to account for the effect of the stock split for all periods presented prior to July 25, 2017. The total number of authorized common shares and the par value thereof was not changed by the split.

Note 4 – Commitments and Contingencies

 

None.

Note 5 – Subsequent Events

None. 

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS

 

We believe it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934, including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” ”will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions.  Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.

 

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017 and in our subsequent filings with the Securities and Exchange Commission.  The following discussion of our results of operations should be read together with our financial statements and related notes included elsewhere in this report.

 

Company Overview

 

Token Communities Ltd. ("the Company" or "the Issuer") was organized under the laws of the State of Delaware on March 6, 2014 under the name Pacific Media Group Enterprises, Inc.

Token Communities Ltd. (“the Company”) is a US-based development stage company that via the Acquisition and Share Exchange Agreement noted supra has entered into the blockchain technology sector and will researches and creates white paper analysis for companies regarding blockchain technology.

Plan of Operation

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended June 30, 2017.

FORWARD-LOOKING STATEMENTS

     

The discussion contained herein contains "forward-looking statements" that involve risk and uncertainties. These statements may be identified by the use of terminology such as "believes," "expects," "may," "should" or anticipates" or expressing this terminology negatively or similar expressions or by discussions of strategy. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. Our actual results could differ materially from those discussed in this report.

BUSINESS AND PLAN OF OPERATION

Token Communities Ltd. ("the Company" or "the Issuer") was organized under the laws of the State of Delaware on March 6, 2014 under the name Pacific Media Group Enterprises, Inc. The Company was established as part of the

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implementation of the Chapter 11 plan of reorganization of Pacific Shores Development, Inc. (“PSD”). PSD had been in the residential real estate development business and the predecessor of the issuer was a subsidiary of PSD operating as an in-house advertising agency to plan and create advertising and media planning and buying for its parent, PSD.  Under PSD's Plan of Reorganization the Company was incorporated to: (1) receive and own the interest which PSD had in the advertising business; and (2) issue shares  of  its  common  stock  to  PSD's  creditors “in order to enhance the Debtor’s distribution to its Creditors.” Management of PSD “agreed to use its best efforts to develop an active business within [the Company] and to have the shares publicly traded on the Over-The-Counter Bulletin Board market in order to provide an opportunity for liquidity to the Creditors.”

The Company’s plan of operation is to be a holding vehicle that is able to source and incubate as well as manage potential funding of companies with a particular focus on blockchain technologies while advising and assisting clients with the technical development of Token Generation Events (TGEs).  

At a very high level, the blockchain is a decentralized ledger, or list, of all transactions across a peer-to-peer network. This is the technology that is already revolutionizing a wide variety of business processes including the banking system. Additionally, the company plans on utilizing its technical expertise in the area of smart contracts. Smart contracts are pieces of self-executing code which can be programmed into particular blockchains known as a smart contract platform. In the same way that code can confirm an asset was transferred from A to B, it is also able to confirm that the asset will be transferred somewhere else once certain conditions are met. The platform however, will have a variety of accessible applications (decentralized applications or DApps).

Results of Operations

 

The Company has not yet realized any revenues or earnings from operations however, as noted above, it incurs ongoing expenses for its SEC registration and status as a reporting issuer. During the previous quarter, the Company’s efforts were devoted to developing a chewing gum product for the delivery of medicinal cannabis oils. While the Company has been in continuing discussions with a potential partner, no formal agreements have been executed to date.

 

Revenues

 

 We had no revenue for the three months ended March 31, 2018.

 

Operating Expenses

 

For the three months ended March 31, 2018, our total operating expenses were $30,000 compared to $1,400 for the three months ended March 31, 2017, resulting in an increase of $28,600. The decrease is attributable to decreases in general and administrative expenses. For the 9 months to March 31, 2018 were $50,740 and the 9 Months to 31, 2017 stood at $22,492, an increase of $28,248.

 

 

 

 

11

 Liquidity and Capital Resources

 

Overview

 

As of March 31, 2018, the Company had no cash. Without the continuing support of a shareholder we do not have sufficient resources to effectuate our business. We expect to incur a minimum of $50,000 in expenses during the next 12 months of operations. We estimate these expenses will be comprised primarily of general expenses including overhead, legal and accounting fees, research and development expenses.

 

Liquidity and Capital Resources during the Three Months Ended March 31, 2018 compared to the Three Months ended December 31, 2017

 

As of March 31, 2018, we had assets of $0 and we had accrued liabilities of $3,700 and an accumulated deficit of $66,317. Our only expenses in the three months and six months periods ended March 31, 2018 were for professional, general, and administrative expenses. For the three months ended March 31, 2018 these totaled $30,000. These expenses for 9 months to 31 March 2018 $50,740. We had no revenues during the period. We will, in all likelihood, sustain continued operating expenses without corresponding revenues, until at least the 2^nd quarter of 2018. Until then we will continue to depend upon loans to the Company to meet any costs that may occur. All such advances will be interest-free.

  

We will have to raise funds to pay for our expenses. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.

 

Going Concern

 

Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the audited financial statements as of and for the year ended December 31, 2017 regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

 

Our financial statements were prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

 

There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.

 

Off-Balance Sheet Arrangements

 

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

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Critical Accounting Policies

   

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

 

See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 2, “Summary of Significant Accounting Policies” in our audited consolidated financial statements for the year ended June 30, 2017, included in our Annual Report on Form10-K as filed on September 29^th, 2017, for a discussion of our critical accounting policies and estimates.

 

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

 

 

The disclosure required under this item is not required to be reported by smaller reporting companies; as such term is defined by Item 503(e) of

Regulation S-K.

 

Item 4.  Controls and Procedures.

 

 

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by the Company's management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of February 28, 2015. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

 

Based on that evaluation, the Company's management concluded, as of the end of the period covered by this report, that the Company's disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission's rules and forms, and that such information was accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.

 

 

There were no other changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

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PART II - OTHER INFORMATION

 

Item 1.  Legal Proceedings

 

 We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company, threatened against or affecting our company or our common stock in which an adverse decision could have a material adverse effect.

 

Item 1A.  Risk Factors

 

The disclosure required under this item is not required to be reported by smaller reporting companies; as such term is defined by Item 503(e) of Regulation S-K.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

 

None.

 

Item 3.  Defaults Upon Senior Securities.

 

None.

 

Item 4.  Mine Safety Disclosures

 

Not applicable.

 

Item 5.  Other Information, Subsequent Events.

None.  

 

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Item 6.  Exhibits

 

  

 

 

 

 

 

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.

 

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