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HomeMy WebLinkAbout20180309Application.pdfAMERItrAN [lllllllililt trLEtr RECE'VED 20i8 HnR -9 At{ B, 59 . iQ.J+i: ;.UtsLIC; : jr.r I t_ll COM&,iISS|ON 20 February 2018 f 6t t 8'o1 Diane Hanian Commission Secretary Idaho Public Utilities Commission P.O. Box 83720 Boise,lD 83720-0074 Dear Ms Hanian: Included following is our application on behalf of: Fiber Broadband LLC, dba Tru Fiber for a Certificate of Public Convenience and Necessity to operate in the state of ldaho as a Competitive Local Exchange Carrier (CLEC). We are available to respond to any questions that the Commission or Commission Staff may have regarding our application. Please address all inquiries to: Michael Tague American CLEC ta suefaA m eri can C L EC. com 502-387-6800 Sincerely, www.AmericanCLEC.com P.O. Box 4189 . Louisville, Kentucky 402(N-0189 502-8'15-7171 . FAX 502-81$7001 h*1*! MichaelTague APPLICATION FOR CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY FOR TRU FIBER ASA COMPETITIVE LOCAL EXCHANGE CARRIER 20 FEBRUARY 2018 SUBMITED BY MICHAEL TAGUE 502-387-6800 TAGUE@AMERTCANCLEC.COM l. Proposed Services Tru Fiber, which is a dba name for Fiber Broadband LLC, plans to deploy a fiber network to support high-speed lnternet services throughout Southeast ldaho including Pocatello, BlacKoot, ldaho Falls, and Rexburg. We are seeking authorization to operate throughout the state so that we can readily expand our service areas and pursue business opportunities where they occur. We will be operating as a Facilities Based CLEC with initial plans for delivery of lnternet services at the 100 Mbps and 1 Gbps rates. The principals of Tru Fiber are largely the same as the earlier Optix Media, an ldaho PUC approved CLEC with CPCN, which operated since 2012and provided similar services but was recently sold. ll. Form of Business Company name and principal place of business: dba Tru Fiber Fiber Broadband LLC 620 Pheasant Ridge Dr. Chubbuck,lD 83202 The company is a Limited Liability Company organized in the State of ldaho, 25 July 2016. A copy of its ldaho Certificate of Organization in attached in Exhibit A. The registered agent is: Kenneth Pfannenstiel 620 Pheasant Ridge Dr. Chubbuck, lD 83202 Name and Address Ownership Percentaqe Votinq Percentaqe Kenneth Pfannenstiel 2390 Duskview Ct. Pocatello, lD 83201 15%15% Brad Barrott 5951 W Pocatello Creek Rd Pocatello, lD 83201 1SYo 1SYo Darren Miller 1355 Granite Dr. Pocatello, lD 83201 23113o/o 23113o/o Brad McSpadden 7964 Prospector Hollow Pocatello, lD 83201 23113o/o 23113o/o Shane Mouton 314 S. 10m Ave Pocatello, lD 83204 23113o/o 23113o/o The five owners of the company: The owners are all members of the LLC. The company has no subsidiaries. lll. Telecommunications Service Tru Fiber plans to begin building its network within 90 days of having relevant Commission approval. Tru Fiber will initially offer optically based lnternet services at the 100 Mbps and 1 Gbps speeds. lV. Service Territory lnitial service territories will be: Pocatello Blackfoot ldaho Falls Rexburg and surrounding areas. Fiber facilities will be deployed by Tru Fiber and services will be provided aoross these fiber facilities. The company's principal competitors in the area are Cable One and CenturyLink. V. Financial !nformation Tru Fiber is new and so we just have one full year financials which are for 2017. We have also included the financials of Optix Media for 2016 as a predecessor organization where 3 of 4 Optix Media owners now being owners of Fiber Broadband carrying forward expertise and financial resources. Financials are provided in Exhibit B. V!. "lllustrative" Tariff Filing We will not be submitting a tariff at this time as none of our currently planned services are regulated. At present we are not planning to offer local exchange services, only unregulated lnternet services. We spoke with Daniel Klein of the Commission staff who indicated that no tariff would be required in this circumstance. Vll. Customer Contacts Customer lnquiries and Complaints Contact: Tru Fiber 620 Pheasant Ridge Dr Chubbuck, !D 83202 Customer Service 208-9044888 888-313-1616 su ppo rt@ MyTru F i be r. com Commission Contact Kenny Pfannenstiel 208-244-1175 kenny@MvTruFiber.com Vlll. lnterconnection Agreements Tru Fiber does not plan initially to have an interconnection agreement with CenturyLink or another carrier. This may change at a later date, but no current plans require an intercon nection agreement. lX. Compliance with Commission Rules The applicant has reviewed all the Commission rules and agrees to comply with them. X. Escrow Account or Security Bond Tru Fiber does not require advance deposits of its customers 251 1 CERTIFICATE OF ORGAN IZATION LIMITED LIABILITY COMPANY Title 30, Chapters 21 and 25, ldaho Code Filing fee: $100 typed, $120 not typed Complete and submit the application in dupllcate. FILED EFFECTIVE m6JL25 fi$q2 'u8[mBI?fo?,$"The name of the limited liability company is: Fiber Broadband LLC (Remember to include the words "Limited Liability Company," "Limitad Company," or the abbreviations L.L.C., LLC, or LG) 2 The complete street and mailing addresses of the principal office is: 620 Pheasant Ridge Dr. Chubbuck lD 83202 (StreetAddress) (ttilailing Address, if <lifferent) 3. The name of the registered agent and the street address of the registered agent: Kenneth Pfannenstiel 620 Pheasant Ridge Dr. Chubbuck lD 83202 4 (Narne)(Address cannot be a post office box or postal mail box.) The name and address of at least one governor of the limited liability company: Brad McSpadden 620 Pheasant Ridge Dr. Chubbuck lD 83202 (Name)(Address) 620 Pheasant Ridge Dr. Chubbuck lD 83202Bradley Barrott (Name) Darren Miller (Address) 620 Pheasant Ridge Dr. Chubbuck lD 83202 (Namei Shane Molton (Address) 620 Pheasant Ridge Dr.Chubbuck lD 83202 5. (Name)(Address) Mailing address for future correspondence (annual report notices): 620 Pheasant Ridge Dr. Chubbuck aD 83202 (Address) Signature of organize(s). Signature: Printed N ame: $* rrrr.{L Signature: Seqetary of State use only IDATlo EBCRETARY OT STI,TE 07 12512015 o5: otl EE: 30,168 ET: 185281 EH: 1539019lG 100.00 = 100-00 0AGer LLC #z Printed Name: P$.rrr,^"' .l'al W/bq57b FIBER BROADBAND, LLC dba TRU FIBER Fi trer FruaxcnL SrererENTs- INcomE Tax Besm FonruEYeens Euneo Decgirgen Sl ,2817 AND 201 6 exo lxoepExoExr AccouNTANTs' ComprlAnox Reponr FIEER BROADBAND. L Table of Contents lndependent Accountants' Compilation Report. Financial Statements: Statements of Assets, Liabilities and Members' Deficit - lncome Tax Basis Statements of Revenues and Expenses - lncome Tax Basis Statements of Changes in Members' Deficit - lncome Tax Basis 1 .2 .4 .5 Cooper Norman CPAs & BUSINESS ADVISORS '144 Hosprrel Way Sure 555 Pocrreu-o, lmuo 83201 208.232.6006 | 208.232.6007 Fex www.coopernorman.com , To Management Fiber Broadband LLC dba Tru Fiber Chubbuck, lD Management is responsible for the accompanying financial statements of Fiber Broadband LLC dba Tru Fiber (a partnership), which comprise the statements of assets, liabilities, and members' deficit - income tax basis as of December 31,2017 and 2016, and the related statements of revenues and expenses - income tax basis and changes in members' deficit - income tax basis for the years then ended in accordance with the tax basis of accounting, and for determining that the income tax basis of accounting is an acceptable financial reporting framework. We have performed compilation engagements in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements. The financial statements are prepared in accordance with the income tax basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Management has elected to omit substantially all the disclosures ordinarily included in financial statements prepared in accordance with the tax basis of accounting. lf the omitted disclosures were included in the financial statements, they might influence the user's conclusions about the company's assets, liabilities, equity, revenue, and expenses. Accordingly, the financial statements are not designed for those who are not informed about such matters. {ry* fir4"*.0'4\ Pocatello, ldaho January 20,20'18 1ntegrl 1 Stexpenence STATEMENTS OF ASSETS, LIABILITIES, AND EQUITY. INCOME TAX BASIS DECEMBER 31, 2017 AND 2016 ASSETS 2017 2016 2 CURRENT ASSETS. Cash $ 71,243 $17,843 PROPERTY, PLANT, AND EQUIPMENT Machinery and equipment Transportation equipment Data and broadband equipment 1,050,320 143,226 298,496 491,058 143,226 86,636 1,492,032 720,920 Less accumulated depreciation (524,607)(335,441) 967,425 385,479 TOTAL $ 1,038,668 $ 403,322 Property, plant, and equipment - net LONG.TERM DEBT. Notes payable - net of unamortized debt issuance costs $ 1,946,923 $ 877,467 MEMBERS'DEFICIT (908,25s)(474,145',) TOTAL $ 1,038,668 $ 403,322 LIABILITIES AND MEMBERS' DEFICIT 2017 2016 See lndependent Accountants' Compilation Report. 3 STATEMENTS OF REVENUES AND EXPENSES. INCOME TAX BASIS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 2017 Percent of Revenue 2016 See lndependent Accountants' Compilation Report. 4 Percent of Revenue REVENUE $ 364,868 100.00% $ 29,M8 100.00% COST OF SALES Labor Depreciation Materials 668,970 189,166 50,272 183o/o 52o/o 14o/o 3,344 335,441 99,822 11.51o/o 1154.78o/o 343.650/o Total cost of sales 908,408 248.970/o 438,607 1509.94% GROSS LOSS OPERATING EXPENSES: Auto lnsurance Repairs and maintenance Bank charges Utilities Professional fees Advertising Amortization Telephone Meals and entertainment Postage 29,442 27,186 18,940 10,757 10,168 7,120 5,980 3,429 562,lg2 156 8.07o/o 7.45o/o 5.19o/o 2.95o/o 2.79o/o 1.95o/o 1.640/o 0.94o/o 0.15o/o 0.05% 0.04o/o 26,U4 4,057 2,516 6,686 1,015 293 9,402 1,429 5 22 120 92.41o/o 13.97o/o 8.66% 23.02o/o 3.49o/o 1.01o/o 32.370/o 4.92o/o 0.02o/o 0.08% 0.41o/o Total operating expenses 113,922 31.220/o 52,389 180.35% OTHER EXPENSE. lnterest expense (77,846) -21.34o/o (12,197) 41.99o/o Total other expense NET LOSS $ (735,308) -2Q1.53Yo $ (474,14s) -1632.28% -1409. 2,1 41 STATEi,IENTS OF CHANGES IN MEMBERS' DEFICIT . INCOME TAX BASIS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 See lndependent Accountants' Compilation Report. 5 BALANCE AT JANUARY 1, 2016 NET LOSS (474,145) BALANCE AT DECEMBER 31,2016 $ (474,14s) NET LOSS (73s,308) CONTRIBUTIONS 326,1 98 DISTRIBUTIONS (2s,000) BALANCE AT DEGEMBER 3I,2017 $ (e08,255) $0 OPTIX MEDIA GROUP COMBINED ComBNED FIMEHCNU SrerEmENT Fon ?HE Yenn Exoeo DecrmBER 31, 20to AND lxoepeNoeNT AecouNTANTs' ComprLATlox Reponr Table of Contents lndependent Accountants' Compilation Report Financial Statements: 1 Combined Balance Sheet Combined Statement of Operations ........ Combined Statement of Members' Equity Combined Statement of Cash Flows....... Notes to Financial Statements .... Supplementary lnformation: Schedule '1 - Combining Balance Sheets ......12 Schedule 2 - Combining Statements of Operations ........ 13 Schedule 3 - Combining Statements of Changes in Members' Equity..............14 2 3 4 5 7 CPAs & BUSINESS ADVISORS tl44 Hosprral Wav Sune 555 Pocrrello. loeHo 83201 208.232.6006 | 208.232.6007 Fnx Cooper Norman Cry^ /l$4't"*^ www.coopernorman.@m INDEPENDENT ACCOU To the Members of Optix Media Group Combined Pocatello, ldaho Management is responsible for the accompanying combined financial statements of Optix Media, LLC, Optix Holdings, LLC, and Network Construction, LLC (Optix Media Group Combined) which comprise the combined balance sheet as of December 31, 2016 and the related combined statement of operations, members' equity, and cash flows for the year then ended, and the related notes to the combined financial statements in accordance with accounting principles generally accepted in the United States of America. We have performed compilation engagements in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Commiftee of the AICPA. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these combined financial statements. The accompanying supplementary information contained in Schedules 1, 2, and 3 are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management. We have not audited or reviewed the supplementary information and do not express an opinion, a conclusion, nor provide any form of assurance on such supplementary information. Pocatello, ldaho May 1 '1,2017 lntegr1 1 texpenence GOMBINED BALANCE SHEET DECEMBER 31,2016 ASSETS LIABILITIES AND MEMBERS' EQUITY See lndependent Accountants' Compilation Report and Notes to the Financial Statements. 2 CURRENT ASSETS: Cash Accounts receivable lnventory Note receivable - related parly $162,779 1 19,584 55,299 252,000 Total current assets 589,662 PROPERTY AND EQUIPMENT: Land Buildings and improvements Network infrastructure Machinery, equipment and vehicles 121,172 607,566 549,795 1,958,683 3,237,216 Less accumulated depreciation (583,542) Property and equipment - net TOTAL 2,653,674 3 336 CURRENT LIABILITIES: Accounts payable Line of credit Current portion of notes payable Notes payable - related party $94,193 293 1 53,1 90 254,480 Total current liabilities LONG.TER]U DEBT. Notes payable Total long{erm debt MEMBERS'EQUITY TOTAL 502,156 734,334 734,334 2,006,846 $ 3,243,336 COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31 ,2016 See lndependent Accountants' Compilation Report and Notes to the Financial Statements. 3 Percent of Sales REVENUES: Support and maintenance Construction Hardware $ 4,185,775 37,378 5,426 98.99% 0.88% 0.13% Tota! revenues 4,228,579 100.00% COST OF SALES 1,285,785 30.410/o GROSS PROFIT 2,942,794 69.59% OPERATING EXPENSES 1,761,146 41.650/o INCOME FROM OPERATIONS 1,181,648 27.94o/o OTHER EXPENSE 91,556 2.170/o NET INCOME $ 1,090,092 25.78% COMBINED STATEMENT OF MEMBERS' EQUITY FOR THE YEAR ENDED DECEMBER 31 ,2016 See lndependent Accountants' Compilation Report and Notes to the Financial Statements. 4 BALANCE AT JANUARY 1,20,I6 $ 1,0s8,931 NET INCOME 1,090,092 DISTR!BUTIONS (142,177) BALANCE AT DECEMBER 3I,2016 846 COMBINED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2016 OPERATING ACTIVITIES: Cash received from customers $ 4,173,444 Cash paid to suppliers and employees lnterest paid (2,8s3,304) (e1,022) Net cash provided by operating activities 1,229,118 INVESTING ACTIVITIES. Purchase of property and equipment (961,483) Net cash used by investing activities (961.483) FINANCING ACTIVITIES: Net payments on lines of credit Proceeds from notes payable Payments on notes payable Proceeds from note receivable - related party Payments on notes payable - related party Distributions (82,719) 611,120 (423,518) 252,000 (447,618) (142,177) Net cash used by financing activities NET CHANGE IN CASH CASH AT BEGINNING OF YEAR CASH AT END OF YEAR e32,912\ 34,723 128,056 CASH FLOWS FROM OPERATING ACTIVITIES: Net income 1,090,092 Adjustments to reconcile net income to net cash used by operating activities: Depreciation 218,607 Change in assets and liabilities, net of effects from non-cash investing and financing activities: lncrease in assets - Accounts receivable Decrease in liabilities - Accounts payable (s5,135) (24,446) NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 5 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES 2016 Reclass construction in prooress to buildinos and improvements Buildings and improvements $ 293,537 Construction in progress $293,537 See lndependent Accountants' Compilation Report and Notes to the Financial Statements. 6 1, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations Optix Media Group (the Company) is the combined group of Optix Media, LLC (Optix), Optix Holdings, LLC (Holdings), and Network Gonstruction, LLC (Network Construction). Optix Media, LLC engineers, installs, and supports high performance wireless internet networks in demanding wireless areas such as apartment complexes, hotels, hospitals, schools, government buildings, and convention centers. Optix Media serves customers throughout ldaho and in a growing number of locations nationwide. Optix Holdings, LLC owns and Ieases realestate. Network Construction, LLC is a utility contractor specializing in underground fiber optic placement utilizing horizontal boring, trenching, and plowing. Basis of Combination The combined financial statements for the year ended December 31,2016, include the accounts of Optix Media, LLC; Optix Holdings, LLC; and Network Construction, LLC. Wtrere applicable, inter-company balances and transactions have been eliminated upon consolidation. Basis of Accounting The accompanying financialstatements have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. Revenue is recognized when earned and expenses are recognized as they are incurred. The entities use the cash method of accounting for income tax purposes. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 7 OPTIX MEDIA GROUP NOTES TO COMBINED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Cash The Company considers deposit accounts which are not subject to restrictions or penalties, and highly liquid debt instruments with a maturity of three months or less when purchased to be cash equivalents. At times, such investments may exceed the FDIC insurance limit. Accounts Receivable The Company considers accounts receivable to be fully collectible and no allowance for uncollectable accounts has been recorded. lnventorv lnventories consists of supplies and fiber networking components and is stated at the lower of cost or market (first-in, first out method). Propertv and Equipment Propefi and equipment are stated at historical cost. Depreciation is computed using the straight line method of depreciation for financial reporting purposes. Estimated useful lives and accumulated depreciation are as follows: Advertisino Advertising costs are charged to operations as they are incurred. Compensated Absences The Company Gnnot reasonably estimate the amount of compensation for future absences, and accordingly, no liability has been recorded in the accompanying financial statements. The Company's policy is to recognize the costs of compensated absences when actually paid to the employees. 8 Description Estimated Useful Lives Accumulated Depreciation Buildings and improvements Network i nfrastructu re Machinery, equipment and vehicles Total 15-39 30 5-15 22,535 30,923 530,084 $583 542 $ 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED lncome Taxes The Company consists of pass through entities (limited liability companies) for income tax purposes. As such, the income is distributed for income tax purposes to the owners and any income taxes due are paid by the respective owners. Accordingly, no provision for income taxes has been made in the accompanying financial statements, expect for annual minimum state taxes paid by the and respective LLC. Under ASC 740-10-50 this is considered an income tax position subject to evaluation regarding the possibility of the position being overturned upon examination by a taxing authority. Management believes this position will not be overturned. No interest or penalties related to income taxes have been recognized in the statement of operations orstatements of financialposition. The Group uses a calendar year end for income tax reporting purposes, and tax years back to and including the tax year ended December 31 , 2013 are subject to examination by major taxing jurisdictions. Subsequent Events The Company has evaluated all subsequent events through May 1 1,2017,the date the financial statements were available to be issued. 2. OPERATING LINE OF CREDIT Optix Media, LLC has a $250,000 revolving line-of-credit with Citizens Community Bank. lnterest rates on these lines of credit are variable. The interest rate as of December 31 , 2016 was 5.75o/o. The line of credit is secured by the business assets of Optix. The loan matures on July 1,2017. 9 3. LONG.TERM DEBT Long-term debt consists of the following notes payable: Optix Media: Citlzens Community Bank - Note payable in monthly installments of $481, including interest of 4.5o/o. The note matures June 20, 2019. A HyundaiAccent is pledged as collateral. E Optix Holdings: Citizens Community Bank: Note payable in monthly installments of $2,056 including interest of .So/o.The note matures July 22, 2023. Realestate is pledged as collateral. Note payable in monthly installments of $2,950 including interest of 4. lo/o.The note matures Aprll 21, 2031. Real estate is pledged as collateral. Network Construction: Citizens Community Bank: Note payable in monthly installments of $1,564 including interest of 4.8o/o.fhe note matures December 20,2018. Equipment is pledged as collateral. Note payable in monthly installments of $1,845 including interest of 5.0%.The note matures May 20, 2019. Equipment is pledged as collateral. Note payable in monthly installments of $2,829 including interest of 5.0%.The note matures October 20,2019. Equipment is pledged as collateral. Note payable in monthly installments of $3,952 including interest of 5.0%.The note matures February 20,2021. Equipment is pledged as collateral. Total Less current portion Long-term debt 98431 142,974 376,619 35,685 51,050 89,438 177 774 887,524 (153,190) 10 $ 7U,334 3. LONG.TERM DEBT, CONTINUED Principal maturities are as follows: Yearended December3l. 2017 $ 2018 2019 2020 2021 and thereafter 153,190 157,382 125,442 89,034 362,477 Total $ 887,524 4 RELATED PARTY TRANSACTIONS Note Receivable - Related Partv Fiber Broadband, LLC dba Tru Fiber is a related pafi through common ownership. During 2016, Optix Media, LLC paid expenses incurred by Tru Fiber for employee leasing costs. As a result, Optix holds a receivable due from Tru Fiber in the amount of $252,000 as of December 31, 2016. There are currently no stated terms for this receivable. The Company expects to collect this receivable within the next twelve months. Notes Pavable - Related Partv Optix Media, LLC has notes payable to the members of the Company. The notes are payable in total monthly installments of $44,876, including interest at 10%. The notes mature June 23, 2017. The notes are unsecured. Other Related Partv Transactions Data Solutions, Inc. is owned by the members of the Company. Data Solutions provides employee leasing to the Company. 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