References in this report (this "Quarterly Report") to "we," "us" or the
"Company" refer to Ventoux CCM Acquisition Corp. References to our "management"
or our "management team" refer to our officers and directors, and references to
the "co-sponsors" refer to Ventoux Acquisition Holdings LLC ("Ventoux
Acquisition") and Chardan International Investments, LLC ("Chardan
Investments"). The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
financial statements and the notes thereto contained elsewhere in this Quarterly
Report. Certain information contained in the discussion and analysis set forth
below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
that are not historical facts and involve risks and uncertainties that could
cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly
Report including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the completion of the Proposed Business Combination (as defined
below), the Company's financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements.
Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek"
and variations and similar words and expressions are intended to identify such
forward-looking statements. Such forward-looking statements relate to future
events or future performance, but reflect management's current beliefs, based on
information currently available. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and
results discussed in the forward-looking statements, including that the
conditions of the Proposed Business Combination are not satisfied. For
information identifying important factors that could cause actual results to
differ materially from those anticipated in the forward-looking statements,
please refer to the Risk Factors section of the Company's final prospectus for
its Initial Public Offering filed with the U.S. Securities and Exchange
Commission (the "SEC"). The Company's securities filings can be accessed on the
EDGAR section of the SEC's website at www.sec.gov. Except as expressly required
by applicable securities law, the Company disclaims any intention or obligation
to update or revise any forward-looking statements whether as a result of new
information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
July 10, 2019 for the purpose of entering into a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization or other similar
business transaction with one or more businesses or entities (a "Business
Combination". We intend to effectuate our Business Combination using cash from
the proceeds of the Initial Public Offering and the private placements of the
private warrants, our shares, rights, new debt, or a combination of these. We
expect to continue to incur significant costs in the pursuit of our acquisition
plans. We cannot assure you that our plans to complete a Business Combination
will be successful.
Recent Developments
Proposed Business Combination
On November 10, 2021, the Company entered into the Merger Agreement. Pursuant to
the Merger Agreement, the Company will acquire all of the outstanding equity
interests of Presto, and stockholders of Presto will receive $800,000,000 in
aggregate consideration (the "Aggregate Base Consideration") in the form of
newly issued common stock in New Presto, calculated based on a price of $10.00
per share.
In addition to the Aggregate Base Consideration, Presto stockholders may be
entitled to receive 15,000,000 additional shares of common stock of New Presto
(the "Presto Earnout Shares"), to be issued as follows: (A) 7,500,000 Presto
Earnout Shares, if, during the period from and after the Closing until the third
anniversary of the Closing, the Volume Weighted Average Price ("VWAP" as defined
in the Merger Agreement) of New Presto common stock is greater than or equal to
$12.50 for any 20 trading days within a period of 30 consecutive trading days,
and (B) an additional 7,500,000 Presto Earnout Shares, if, during the period
from and after the Closing until the fifth anniversary of the Closing, the VWAP
of New Presto common stock is greater than or equal to $15.00 for any 20 trading
days within a period of 30 consecutive trading days.
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On July 25, 2022, the Company entered into a second amendment ("Amendment No.
2") to the Merger Agreement, Amendment No. 2 amends the Merger Agreement to,
among other things:
? lower the equity valuation of Presto from $800 million to $525 million;
? provide for the treatment of outstanding restricted stock units of Presto at
the Effective Time;
? amend the dates of expiry in respect of the initial term of each class of
directors of the Acquiror Board post-Closing; and
? extend the termination date of the Merger Agreement from August 31, 2022 to
December 31, 2022.
Amendment to Sponsor Support Agreement
Concurrently with the execution of Amendment No. 2, Ventoux Acquisition Holdings
LLC and Chardan International Investments, LLC, respectively (the "Sponsors"),
entered into an amended and restated Sponsor Support Agreement (the "Amended and
Restated Sponsor Support Agreement"). The Amended and Restated Sponsor Support
Agreement amends the original Sponsor Support Agreement to:
? subject a total of 444,500 founder shares (the "Sponsors' Earnout Shares")
held by the Sponsors to vesting over a five-year period, such that four equal
portions of the Sponsors' Earnout Shares will vest when the volume weighted
average price (the "VWAP") of the Company's common stock (the "Common Stock")
post-business combination is over $12.00, $15.00, $20.00 and $25.00,
respectively, for any 40 trading days within any 60 trading day period within
five years after the closing of the business combination;
? subject any vested founder shares (initially an aggregate of 2,689,187 shares)
held by Sponsors to an 18-month lockup period; and
? waive any adjustment of the exercise price of the private placement warrants
held by the Sponsors pursuant to Section 4.4.2 of the Company's warrant
agreement, dated as of December 23, 2020 (the "Warrant Agreement").
Amendment to Support Agreement
Concurrently with the execution of Amendment No. 2, certain stockholders of
Presto ("Stockholders") entered into an amended and restated Support Agreement
(the "Amended and Restated Support Agreement") with Presto and Ventoux. The
Amended and Restated Support Agreement amends the original Support Agreement to
subject any shares of Common Stock held by the Stockholders as of and
immediately following the Closing Date to an 18-month lockup period.
Amended and Restated Subscription Agreements and Form of Indenture
Concurrently with the execution of Amendment No. 2, the Company entered into
certain new and amended and restated equity subscription agreements, each dated
as of July 25, 2022 (the "Equity Subscription Agreements"), with certain
accredited investors, pursuant to which, among other things, the Company agreed
to issue and sell, in private placements to close immediately prior to or
substantially concurrently with the closing of the Company's business
combination (the "Closing"), an aggregate of 7,667,437 shares of Common Stock
for an aggregate consideration of $60.0 million Of 14 Equity Subscription
Agreements, 11, representing a total investment of $6.9 million, were entered
into by current Presto investors and directors and officers. The remaining
Equity Subscription Agreements representing a total investment of $53.1 million
were entered into with investors that are unaffiliated with the Company, its
Sponsors, Presto or any of their affiliates, which includes a $50 million
investment from an entity affiliated with Cleveland Avenue, LLC ("Cleveland
Avenue") at an effective price per share of $7.14. The effective price per share
of Cleveland Avenue's investment takes into account (i) the subscription of
6,593,687 shares of Common Stock for an aggregate purchase price of $50 million
and (ii) the transfer of 406,313 Founder Shares by the Sponsors to Cleveland
Avenue for nominal consideration. As a result, the exercise price of Ventoux's
public warrants will be reduced from $11.50 per share to $8.21 per share
pursuant to the Warrant Agreement. Each of the previously outstanding
subscription agreements executed by the Company with certain accredited
investors on November 10, 2021 that were not amended and restated were
cancelled. The Equity Subscription Agreements provide that the Company (or its
successor) must file a registration statement with the SEC to register the
resale of the subscribed common stock no later than 30 days after the Closing
Date. In connection with the execution and delivery of the Equity Subscription
Agreements, the Sponsors agreed to transfer, or cause to be transferred,
1,088,813 Founder Shares to certain of the subscribers. The Company has agreed
that these Founder Shares will be included in the registration statement
referenced above.
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Concurrently with the execution of Amendment No. 2, the Company also entered
into an amended and restated convertible note subscription agreement (the
"Amended and Restated Convertible Note Subscription Agreement" and, together
with the Amended and Restated Equity Subscription Agreements, the "Amended and
Restated Subscription Agreements"), dated as of July 25, 2022, with an
institutional accredited investor (the "Note Investor"), pursuant to which the
Company and the Note Investor agreed to, among other things:
? decrease the aggregate principal amount of convertible notes (the "Notes")
from $55 million to $25 million;
? increase the warrants issuable to the Note Investor from 1,000,000 warrants to
1,500,000 warrants (the "Note Financing Warrants");
? amend the conversion terms of the Note such that the Notes are initially
convertible into Common Stock at a price equal to $11.50;
? in addition to the other closing conditions set forth therein, condition the
closing of the transactions contemplated by the Amended and Restated
Convertible Note Subscription Agreement to the Company having cash and cash
equivalents of $45 million;
? increase the interest payable under the Notes to 20.0% per annum, of which
15.0% will be payable in cash and 5.0% will be payable in kind; and
? increase the number of founder shares to be transferred from the Sponsors to
the Note Investor from 300,000 founder shares to 600,000 founder shares.
The Indenture governing the Notes will contain certain customary negative
covenants, including limitations on indebtedness, restricted payments, liens,
asset sales and transactions with affiliates. The Indenture will also require
that the Company maintain a minimum cash balance of $30 million and limit cash
expenditures on acquisitions and investments to $30 million, in each case, until
the Company achieves positive consolidated EBITDA (as calculated in the
Indenture) for two consecutive quarters, at which point such covenants will be
suspended.
Amended and Restated Warrant Agreement
At the Closing, the Company, the Sponsors and Continental Stock Transfer & Trust
Company, as warrant agent, will enter into an amended and restated warrant
agreement (the "Amended and Restated Warrant Agreement") to reflect the issuance
of the Note Financing Warrants. In addition, the Amended and Restated Warrant
Agreement also provides that 900,000 of the Sponsors' 6,675,000 private
placement warrants will be cancelled. Each Note Financing Warrant and each
private placement warrant is exercisable for one share of Common Stock at an
exercise price of $11.50 per share, and each public warrant is exercisable for
one share of Common Stock at an exercise price of $8.21 per share.
Amended and Restated Registration Rights Agreement
At the Closing, the Company, the Sponsors, the Note Investor, certain investors
and other holders of Presto capital stock, including Cleveland Avenue (the
"Presto Holders" and together with the Sponsors and the investors, the
"Holders") will enter into an amended and restated registration rights agreement
(the "Amended and Restated Registration Rights Agreement"). Pursuant to the
terms of the Amended and Restated Registration Rights Agreement, the Company
will be obligated to file a registration statement to register the resale of
certain securities of the Company held by the Holders. The Amended and Restated
Registration Rights Agreement also provides the Holders with certain "demand"
and "piggy-back" registration rights, subject to certain requirements and
customary conditions.
Governance Agreement
At the Closing, the Company, Rajat Suri, REMUS Capital, an affiliate of Presto,
Cleveland Avenue and certain other parties set forth therein, will enter into a
Governance Agreement (the "Governance Agreement") to provide for certain
governance rights and address certain governance matters relating to the
Company. The Governance Agreement will provide each of Mr. Suri, Cleveland
Avenue and REMUS Capital with the right to nominate one individual to the
Company's board of directors, subject to certain qualifications, requirements
and exceptions as set forth therein, including varying equity holding threshold
requirements.
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through June 30, 2022 were organizational activities, those
necessary to prepare for the Initial Public Offering, identifying a target
company for a Business Combination and activities in connection with the
proposed acquisition of Presto. We do not expect to generate any operating
revenues until after the completion of our Business Combination. We generate
non-operating income in the form of interest income on marketable securities
held in the Trust Account. We incur expenses as a result of being a public
company (for legal, financial reporting, accounting and auditing compliance), as
well as for due diligence expenses.
For the three months ended June 30, 2022, we had a net loss of $101,367, which
consists of general and administrative expenses of $1,066,140 and provision for
income taxes of $3,625, offset by change in fair value of warrant liabilities of
$801,000 and interest earned on marketable securities held in our Trust Account
of $167,398.
For the six months ended June 30, 2022, we had a net income of $853,873, which
consists of change in fair value of warrant liabilities of $2,469,750 and
interest earned on marketable securities held in our Trust Account of $185,717,
offset by general and administrative expenses of $1,797,969 and a provision for
income taxes of $3,625.
For the three months ended June 30, 2021, we had a net income of $1,443,756,
which consists of change in fair value of warrant liabilities of $1,668,750 and
interest earned on marketable securities held in our Trust Account of $8,731,
offset by general and administrative expenses of $233,725.
For the six months ended June 30, 2021, we had a net income of $4,904,863, which
consists of change in fair value of warrant liabilities of $5,487,000 and
interest earned on marketable securities held in our Trust Account of $34,906,
offset by general and administrative expenses of $450,701, loss on initial
issuance of private warrants of $162,000 and provision for income taxes of
$4,342.
Liquidity and Capital Resources
On December 30, 2020, we completed the Initial Public Offering of 15,000,000
Units at $10.00 per Unit, generating gross proceeds of $150,000,000.
Simultaneously with the closing of the Initial Public Offering, we completed the
sale of 6,000,000 Private Warrants at a price of $1.00 per Private Warrant in a
private placement to the co-sponsors, generating gross proceeds of $6,000,000.
On January 5, 2021, in connection with the underwriters' exercise of their
over-allotment option in full, we completed the sale of an additional 2,250,000
Units, at $10.00 per Unit, generating gross proceeds of $22,500,000.
Simultaneously with the closing of the over-allotment option, we completed a
sale of an additional 675,000 Private Warrants, at $1.00 per Private Warrant,
generating total proceeds of $675,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Units, a total of $174,225,000 was placed in
the Trust Account. We incurred $3,993,017 in Initial Public Offering related
costs, including $3,450,000 of underwriting fees and $543,017 of other costs.
The Company will have until September 30, 2022 to consummate a Business
Combination (the "Combination Period"). On March 29, 2022, the Company issued
unsecured promissory notes in the amount of $1,150,000 and $575,000, to Ventoux
Acquisition Holdings LLC and Chardan International Investments, LLC,
respectively. The proceeds of $1,725,000 ($0.10 per Public Share) from the
promissory notes were deposited into the Trust Account in order to extend the
period of time the Company has to complete its Business Combination from
March 30, 2022 to June 30, 2022. On June 16, 2022, the Company amended its
Investment Trust Agreement to (i) extend the date on which the Trustee must
liquidate the trust account established in connection with the Company's Initial
Public Offering if the Company has not completed its initial business
combination from June 30, 2022 to September 30, 2022, and (ii) allow the
Company, without another stockholder vote, to elect to extend such date by an
additional three months, from September 30, 2022 to December 30, 2022.
For the six months ended June 30, 2022, cash used in operating activities was
$303,035. Net income of $853,873 was affected by change in fair value of warrant
liabilities of $2,469,750 and interest earned on marketable securities held in
our Trust Account of $185,717. Changes in operating assets and liabilities
provided $1,498,559 of cash for operating activities.
For the six months ended June 30, 2021, cash used in operating activities was
$415,254. Net income of $4,904,863 was affected by interest earned on marketable
securities held in the Trust Account of $34,906, change in fair value of warrant
liabilities of $5,487,000 and loss on initial issuance of private warrants of
$162,000. Changes in operating assets and liabilities provided $39,789 of cash
for operating activities.
As of June 30, 2022, we had cash and marketable securities held in the Trust
Account of $12,831,895 (including approximately $31,000 of interest income)
invested in a money market account that invests in US Treasury Bills. Interest
income on the balance in the Trust Account may be used by us to pay taxes. In
connection with Special Meeting on June 16, 2022, the Company paid to redeeming
stockholders' approximately $10.20 or $163,148,416 in the aggregate from the
Trust Account. On June 21, 2022, the Company withdrew $196,212 of interest
income from the Trust Account to pay the Company's tax obligations.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
income taxes payable), to complete our Business Combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our Business Combination, the remaining proceeds held in the Trust
Account will be used as working capital to finance the operations of the target
business or businesses, make other acquisitions and pursue our growth
strategies.
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As of June 30, 2022, we had cash of $406,335. We intend to use the funds held
outside the Trust Account primarily to structure, negotiate and complete a
Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our initial stockholders, officers and
directors or their affiliates may, but are not obligated to, loan us funds as
may be required. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a Business Combination is not consummated, we
may use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $500,000 of such loans may be convertible into warrants at
a price of $1.00 per unit, at the option of the lender. The units would be
identical to the private warrants. Loans made by Chardan Capital Markets, LLC or
any of its related persons will not be convertible into private warrants, and
Chardan Capital Markets, LLC and its related persons will have no recourse with
respect to their ability to convert their loans into Private Warrants.
On March 29, 2022, the Company issued unsecured promissory notes of up to
$375,000 with $250,000 to Ventoux Acquisition Holdings LLC and $125,000 to
Chardan International Investments, LLC, respectively, in connection with
providing the Company with additional working capital. The promissory notes are
not convertible and bear no interest and are due and payable upon the date on
which the Company consummates its initial Business Combination. As of June 30,
2022, the Company had borrowed a total of $133,333 and $66,667 from Ventoux
Acquisition Holdings LLC and Chardan International Investments, LLC,
respectively.
On March 29, 2022, the Company issued unsecured promissory notes in the amount
of $1,150,000 and $575,000 to Ventoux Acquisition Holdings LLC and Chardan
International Investments, LLC, respectively. The proceeds from the promissory
notes were deposited into the Trust Account in order to extend the period of
time the Company has to complete its Business Combination from March 30, 2022 to
June 30, 2022. The promissory note bears no interest and is due and payable upon
the date on which the Company consummates its initial Business Combination.
If we are unable to raise additional capital, we may be required to take
additional measures to conserve liquidity, which could include, but not
necessarily be limited to, suspending the pursuit of a Business Combination. We
cannot provide any assurance that new financing will be available to it on
commercially acceptable terms, if at all.
As a result of the above, in connection with our assessment of going concern
considerations in accordance with Financial Accounting Standard Board's
Accounting Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about
an Entity's Ability to Continue as a Going Concern," we have determined that the
liquidity condition and date for mandatory liquidation and dissolution raise
substantial doubt about our ability to continue as a going concern through
September 30, 2022, the scheduled liquidation date of the Company if it does not
complete a Business Combination prior to such date. These financial statements
do not include any adjustments relating to the recovery of the recorded assets
or the classification of the liabilities that might be necessary should we be
unable to continue as a going concern.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of June 30, 2022 and December 31, 2021. We do
not participate in transactions that create relationships with unconsolidated
entities or financial partnerships, often referred to as variable interest
entities, which would have been established for the purpose of facilitating
off-balance sheet arrangements. We have not entered into any off-balance sheet
financing arrangements, established any special purpose entities, guaranteed any
debt or commitments of other entities, or purchased any non-financial assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay Chardan
Capital Markets, LLC a total of $10,000 per month for office space, utilities
and secretarial support. We began incurring these fees on December 23, 2020 and
will continue to incur these fees monthly until the earlier of the completion of
the Business Combination and our liquidation.
We have engaged Chardan Capital Markets, LLC as an advisor in connection with a
Business Combination to assist us in holding meetings with stockholders to
discuss the potential Business Combination and the target business's attributes,
introduce us to potential investors that are interested in purchasing our
securities in connection with the potential Business Combination, assist us in
obtaining stockholder approval for the Business Combination and assist us with
press releases and public filings in connection with the Business Combination.
We will pay Chardan Capital Markets, LLC a marketing fee for such services upon
the completion of a Business Combination in an amount equal to, in the
aggregate, 3.5% of the gross proceeds of the Initial Public Offering, including
proceeds from the exercise of the underwriters' over-allotment option. As a
result, Chardan Capital Markets, LLC will not be entitled to such fee unless the
Business Combination is consummated.
In addition to Chardan Capital Markets, LLC, we have engaged certain advisors to
assist in capital raising efforts in connection with the proposed Business
Combination. The fee arrangement with the advisors, including William Blair &
Company LLC, Truist Securities Inc. and others are only payable upon the
consummation of the Business Combination.
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Critical Accounting Policies
The preparation of unaudited condensed consolidated financial statements and
related disclosures in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and income and expenses during the periods reported. Actual results
could materially differ from those estimates. We have identified the following
critical accounting policies:
Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued warrants to purchase shares of common stock, to determine if such
instruments are derivatives or contain features that qualify as embedded
derivatives, pursuant to ASC 480 and ASC 815. We account for the Private
Warrants in accordance with the guidance contained in ASC 815-40 under which the
Private Warrants do not meet the criteria for equity treatment and must be
recorded as liabilities. Accordingly, we classify the Private Warrants as
liabilities at their fair value and adjust the Private Warrants to fair value at
each reporting period. This liability is subject to re-measurement at each
balance sheet date until exercised, and any change in fair value is recognized
in our statements of operations. The Private Warrants are valued using a
Modified Black Scholes model.
Common Stock Subject to Possible Redemption
The Company accounts for its common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480, "Distinguishing Liabilities from Equity." Shares of common stock subject to
mandatory redemption are classified as a liability instrument and are measured
at fair value. Conditionally redeemable common stock (including common stock
that features redemption rights that are either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely
within the Company's control) is classified as temporary equity. At all other
times, common stock is classified as stockholders' equity. Certain of the
Company's common stock features certain redemption rights that are considered to
be outside of the Company's control and subject to occurrence of uncertain
future events. Accordingly, at June 30, 2022 and December 31, 2021, common stock
subject to possible redemption is presented as temporary equity, outside of the
stockholders' deficit section of the Company's condensed consolidated balance
sheets.
Net (Loss) Income Per Share of Common Stock
Net (loss) income per common stock is computed by dividing net income by the
weighted average number of shares of common stock outstanding for the period.
Accretion associated with the redeemable shares of common stock is excluded from
earnings per share as the redemption value approximates fair value.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued ASU
2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and
Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)
("ASU 2020-06") to simplify accounting for certain financial instruments. ASU
2020-06 eliminates the current models that require separation of beneficial
conversion and cash conversion features from convertible instruments and
simplifies the derivative scope exception guidance pertaining to equity
classification of contracts in an entity's own equity. The new standard also
introduces additional disclosures for convertible debt and freestanding
instruments that are indexed to and settled in an entity's own equity. ASU
2020-06 amends the diluted earnings per share guidance, including the
requirement to use the if-converted method for all convertible instruments. ASU
2020-06 is effective January 1, 2022 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
We are currently assessing the impact, if any, that ASU 2020-06 would have on
its financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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