Colleges Tax-Exempt Status Needs to Be Re-Evaluated

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As COVID-19 disrupts virtually all aspects of society, it forces us to reinvent our institutions that serve us. One of the biggest impacts COVID-19 had on our education system is to expose the flaws of the US college system, and the overwhelming negative consequences it has on our country and our citizens.

Most people do not know this, but most of our colleges and universities enjoy the benefits of a 501©3 organization, which makes them tax-exempt. The reasoning for the tax-exempt status of these institutions is based on the expectations that they benefit our society through the following:

  1. Educated citizenry essential to democracy
  2. Highly educated, skilled, and productive workforce – critical to a nation’s competitiveness
  3. New Innovations and technologies that improve our quality of life, strengthen our security, and fuel economic growth

The above might have been true a few decades ago, but it does not describe reality anymore.

  1. Our students are not educated anymore – they are indoctrinated. The average ratio of liberal to conservative faculty at most educational institutions is 17-1. There is no real diversity of thought, and if someone dares disagree with liberal logic, they risk being ostracized. Most students come out of colleges with tangible hatred for the United States and a noticeable misunderstanding of the capitalistic system that advanced our world, technologies and economies to where we are today. A quick search on Google will produce millions of results detailing the myriad of times conservative personalities were boycotted and banned from appearing at universities in schools. There is little to no freedom of thought: adhere to the liberal logic, or there will be consequences.
  2. Most colleges and universities teach a highly outdated curriculum, in a highly outdated way. Our students graduate highly educated in terms of classes and degrees, but with little relevant skills for our current economy and business environment. First, most colleges/universities must constantly update their curriculum to stay on top of the latest progress in the marketplace, which is virtually impossible under the current educational system. Second, most curriculums must take advantage of technology, and its speed and computational capacity. Most degrees should not take 4 years. They could easily be learned by students in 18 months with a laptop and Wi-Fi connection. As a society, we must seriously question whether colleges/universities create a productive workforce anymore.
  3. Our higher education system is supposed to contribute new innovations and technologies that improve our quality of life, strengthen our security and fuel economic growth. Again, this is no longer true.Instead of strengthening our security and fueling economic growth, the student debt colleges burden our students with acts like a cancer on our society, slowly paralyzing our young people and their drive for a better life. Instead of graduating college ready to take on the world and achieve their dreams, our students graduate, move in with their parents and feel lucky to get a job that allows them to pay back their student debt over one or two decades.

Because of these reasons, most universities and colleges should no longer enjoy the tax-exempt status of a 501©3 organization. They no longer meet the standards. Their net externalities to society have turned negative and no longer serve our nation’s best interests.

Instead of using their resources to reinvent the higher education system to serve our students and enable them to drive our nation to prosperity, colleges and universities are creating a generation of overly educated, debt-ridden hopeless citizens. They must be put under scrutiny and forced to explain why they should enjoy financial benefits at the expense of the taxpayer, when they no longer serve our country and citizens.

 

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Congress Must Pass the SAFE Banking Act

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We are now approaching an important and pivotal point in the future of the US cannabis industry and things must keep changing fast. The often discussed and rarely understood SAFE Banking Act is now moving closer to becoming by far the most important piece of federal legislation regarding the cannabis industry that has ever been approved by the US Congress.

THE SAFE BANKING ACT

It is officially named HR 1595 The SAFE Banking Act of 2019, and it allows banks and credit unions in the US banking system (almost all in the US) to conduct commercial banking with cannabis companies for the first time.

Presently most cannabis companies do their banking with actual paper currency. No checks or cards—they pay their employees, vendors, rent and taxes with bags of cash. It is dangerous and impractical. Most importantly, this lack of financial infrastructure is as a serious impediment to the cannabis industry. It makes it difficult to leverage loans, raise capital, deposit cannabis stocks with broker dealers and list on the major exchanges, among many others.

The SAFE Banking Act does not, in itself, end cannabis prohibition. That will require additional legislation or an official rescheduling of Cannabis, which seems likely in 2020. Also, it does not get rid of US Tax Code 280E, which prohibits claiming deductions or credit for any business involved in cannabis or hemp.

Nonetheless, the passing of the SAFE Banking Act will accomplish something very valuable: it is universally considered to be extremely positive for the US cannabis companies and industry generally and it will create enough momentum to effectively bring the end of prohibition with an immediate rescheduling and passage of the STATES Bill allowing states to decide on cannabis (just like alcohol after prohibition in 1937).

The stamp of authenticity and credibility of the US Congress will make it so that cannabis will not be perceived as an illicit industry under the risk of unpredictable federal intervention, but as a brand new industry with virtually limitless demand and uses in our society, from healthcare, pain management, to mental health, clothing, food, and many more.

THE CURRENT STATE OF THE CANNABIS MARKET

Despite the current laws and the recent 6-month downturn in the public markets, the cannabis and hemp industries are booming, and will continue to do so for a long time. The THC/CBD industry growth projections are continuing to increase and are now as high as $400 Billion.

New Frontier Data (the authority in on the global cannabis industry), released their Global Cannabis Report: 2019 Industry Outlook, and estimated that the current global total addressable cannabis market (regulated and illicit) is at $344 billion. This only takes into account the approximately 263 million people worldwide (3% of total population) currently using cannabis.

The same study estimates 1.2 billion people worldwide suffering from medical conditions for which cannabis has shown therapeutic value. It is evident then, that the adoption of medical cannabis treatment by even a small percentage of the 1.2 billion patients would contribute to create an even more massive cannabis market.

These same patients are the reason why there must be high urgency for the Senate to pass the SAFE Banking. There is ever-increasing research detailing the drastic health benefits cannabis can have upon severe illnesses such as cancer, Alzheimer’s disease, ALS disease, seizures, etc. The sooner the cannabis industry is allowed to develop the right financial infrastructure, the sooner this industry will grow in size and efficiency, and become a much-needed commodity, accessible and affordable for anyone needing cannabis treatment and pain relief.

THE SAFE BANKING ACT STATUS

The voters have spoken in state after state, and current legalization is working. The American Bankers Association (ABA), the American Bar Association, 38 state attorney generals, bipartisan governors from 30 states, and many more are now supporting the federal legalization efforts. The 85-year period of cannabis and hemp prohibition has been exposed as senseless, and not based on facts, and legalization is happening at a fast pace.

On September 25, 2019, the US House of Representatives passed the SAFE Banking Act with overwhelming, bipartisan support (321 to 103). The next step is for Senate Majority leader Mitch McConnell to bring it to the Senate floor for a vote.

THE SENATE MUST BRING THE SAFE BANKING ACT BILL TO A VOTE

Senator McConnell has a long-standing anti-cannabis stance, but he has been an ardent supporter of the Hemp Farming Act of 2018 and he recently met with Cannabis executives in Southern California to tour facilities and consult with some of the industry’s top leaders. His interest in this industry must transform into action on the SAFE Banking Act, to at least bring it on the Senate floor for a vote, regardless of whether he actually votes “yes.”

This bill has significant support on both sides of the isle, and it will most likely pass – if a vote is allowed. This bill needs a simple majority (51 votes). It is then up to President Trump who has 10 days to sign or veto or let it become law without a signature.

The Trump administration has not taken a clear stance on cannabis yet, but some members of his administrations, such as AG William Barr and Secretary of Treasury Steven Mnuchin have indicated on multiple occasions that they would not prosecute cannabis businesses in states where it is legal.

IMPLICATIONS FOR THE PRIVATE MARKET: ENTREPRENEURS AND INVESTORS

The result of passage of this bill will be a cascade of capital flooding into the industry. Literally billions of dollars of global investment capital have been on the sidelines waiting for some definitive signal from the US government that it will allow this industry to grow and flourish. The passage and signing of the SAFE Act will be that signal—and the response will far exceed what most investors are expecting.

And the publicly traded cannabis stocks – particularly the US operators – will likely trade at significantly higher valuations and with much higher trading volume, allowing them to access capital markets for the billions that will be required to build the estimated $50 billion in infrastructure needed.

Until this bill passes, although not so obvious, the limitations and legal impediments the cannabis companies are dealing with allows them the perfect opportunity to build solid foundations for their businesses. This federal prohibition of cannabis forces entrepreneurs to only move one state at a time, as they become legal. This creates discipline, that would likely not be required if cannabis was federally legal – there would be too many options, too much chaos and confusion.

During this time, entrepreneurs must work on their business blueprint and fundamentals, because once the SAFE Banking Act passes, there will be an ultimate green rush in capital, investors, and new business activities. Lots of opportunities and capital, lots of chaos and riding high. Only the most prepared entrepreneurs and investors will be able to ride the wave the farthest and build legacy companies in this new industry.

Informed investors that have been waiting for the right time to establish a position in this dynamic new industry may be wise to take advantage of the current decrease in cannabis stocks and establish a position for the long term bull market in cannabis that is likely to come with the passage of the SAFE Banking Act and the probability of the complete end of cannabis prohibition in 2020.

We urge Congress and the Trump administration to pass the SAFE Banking Act as soon as possible; in the meantime, the smart entrepreneurs and investors must make use of every moment until then and make the arrangements necessary to be in the best position for when the green wave comes.

SOURCES:

New Study Estimates the Global Cannabis Market at Over $340 Billion
SAFE Banking Act – House Final Vote Results
American Bankers Association – In Landmark Vote, House Passes ABA Backed SAFE Banking Act
Mitch McConnell Meets with Marijuana Executives and Tours Cannabis Facility in Hushed California Visit

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The U.S Must Win the 5G Race by Any Means Necessary

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WHAT IS 5G?

5G stands for fifth generation cellular wireless. 5G will introduce three new revolutionary features in our world: exponentially greater wireless Internet speed (up to 100x faster than the current 4G), lower latency (will be more responsive), and the ability to connect lots of devices at once (for sensors and smart devices). To give an example, with 4G it would take 6 minutes to download a 2-hour movie. With 5G, it will take all of 3.6 seconds.

The race to 5G is a race that will dictate the world leaders of the next decade. For example, when US won the race to 4G in 2010, US experienced tremendous economic and job growth. 4G technology allowed the US wireless industry to increase related jobs by 84% from 2011 to 2014, which added $125 billion in revenue to American companies, with $40 billion coming from app stores. The first 4G phones in the US appeared in 2010, which enabled 4G applications that changed our world, such as Snapchat, Uber, AirBnB, video calls, etc. If the US would’ve lost this race, these industries, advances in technologies and revenues would have gone to other countries.

As the world’s long-time leader, the US wireless technology industry employs almost five million professionals and contributes $475 billion per year to the American economy. Winning the 5G race could cause those numbers to explode in the near future. Studies show that 5G has is likely to create almost three million new jobs— and add $500 billion to US economic growth. It is a big deal.

5G IMPORTANCE ON ECONOMY/WORLD/COMPETITION

As our world turns digital, wireless technology becomes the most important competitive advantage between nations. The race to 5G is the most important thus far because our essential infrastructure in this country will be built using wireless technology. Our civic, commercial and military life depends on it.

100x faster wireless speed than 4G and reduced latency, will allow us to exponentially improve our connection with all devices. This will create new opportunities in manufacturing, transportation, health care, education, agriculture, and more. 5G will enable new services that will drive economic growth and job creation for years to come.

Historically, Europe won the 2G era, Japan won the 3G era, and of course, the US won the 4G era. But now, China poses a severe threat to winning the 5G era, which will have countless negative implications for the U.S. At a hearing before the Senate Committee on Commerce, Science, and Transportation in 2018, Mississippi Sen. Roger Wicker stated that “failing to win the race to 5G would not only materially delay the benefits of 5G for the American people, it would forever reduce the economic and societal gains that come from leading the world in technology.”

5G-CURRENT AFFAIRS-CHINA-TRUMP-HUAWEI:

Although US has a great reputation for its mobile technologies, Asia is dominantly leading the way regarding 5G. Four of the world’s five most 5G advanced nations are China, South Korea, Japan, and India.

However, no one can tell with certainty who will win the 5G race. A 2018 Cellular Telecommunications Industry Association (CTIA) report claimed that US was in third place in the 5G race, behind China and South Korea, while a 2019 CTIA report claimed that U.S. now shares the number one spot with China. Other reports put China as the clear winner, with functional 5G technology by 2020, while they claim that the U.S. is 5 years behind. AT&T Chief Executive Officer Randall Stephenson declared in March 2019 that China isn’t beating the United States on 5G – but then again, AT&T deceptively branded their new 5G E network pretending it uses 5G technology, when it used the regular 4G technology.

While these reports do not provide any clarity, these investments will. Starting in 2015, China has doubled down on investments in 5G technology, and has outspent the US by $24 billion to construct 350,000 new, 5G-compatible cell towers. During the same time, the US has built only 30,000 towers.

The reason China has prioritized development of 5G is because they understand that the race for 5G is a race for world-wide control. Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, explained that China’s goal is to become the global innovation leader, and will do everything in its power to achieve this goal, legally or illegally.

One of the most important weapons for China to win the 5G race is the Chinese company Huawei. Currently, Huawei is spending a tremendous amount of resources on R&D (almost 40% of their workforce), most of which is dedicated to 5G. This is more than Microsoft, Intel or Apple’s R&D efforts.

In addition to superior dedicated resources, Huawei has a long negative history of operating outside the international law and order. Huawei currently faces bans in Japan, Australia, New Zealand and the U.S. over fears that China’s government could use its systems to spy on their countries. The CIA, FBI and NSA publicly warned against Huawei. The Pentagon banned Huawei and its products. Huawei has long been accused of espionage, and for doing illegal business with Iran. Most recently, Canada helped the U.S. arrest Huawei’s CFO Meng Wanzhou, and President Trump signed an executive order banning any US company from doing business with Huawei.

It is extremely important that President Trump, the U.S. and its allies stop or slow down Huawei’s influence and operational capabilities throughout the world. As stated earlier, winning the 5G race will allow the development of exponential technology and booming economic growth for those who employ this technology first.

CONCLUSION:

If Huawei and China win the 5G race, they will undoubtedly use this technology to win over allies and dominate the world for a long time to come. They will offer this technology to other countries in exchange for trade deals, military partnerships, and economic prosperity. They could also choose to offer this technology to all US enemies, except for the U.S., leaving our country unable to compete. Thus, it is of the utmost importance that the United States wins the race to 5G.

President Trump must continue to put pressure of China and Huawei, in an intelligent way. There is no easy answer to do so, especially with the US and China locked in a tariffs war. All trade talks between the two countries will definitely include Huawei as a bargaining chip.

The Trump administration, US industry and government leaders, and allies must work in concert to win this race, by any means necessary, and make sure that all (or most) other countries will receive the 5G technology from the US, rather than from China.

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The Unprecedented Wealth Creation Opportunity of the Cannabis Industry is just getting started

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Cannabis prohibition is going to end much faster than most people anticipated, and this will allow for the biggest wealth creation opportunities in many lifetimes. When Prohibition ends, the dam holding back the Cannabis industry will have broken, and Cannabis will become ubiquitous in virtually every aspect of our society, worldwide.

Cannabis is extremely close being federally legal in the United States. 36 states have already decriminalized Cannabis, 11 of which have fully legalized it for medicinal and recreational purposes. In March of 2019, the House Financial Services Committee approved the SAFE Banking Act by 45-15. Earlier this month, 38 Attorney Generals from 38 U.S. states and territories signed a letter asking our Congress to pass legislation to increase Cannabis businesses’ access to banks, through the SAFE Banking Act.

Days earlier, the Treasurers of 17 states issued a separate call in support of the same bill. US Attorney General Barr stated he would not use federal resources to prosecute Cannabis businesses in states where it is legal. US Treasury Secretary Mnuchin urged Congress to pass the SAFE Banking Act. And finally, most Congressmen on both sides of the aisle are in favor of this Act passing through.

Cannabis products will disrupt multiple billion industries in the US, with the biggest changes taking place in medicine, pharmaceuticals, veterinary products, wellness and beauty, sleeping aids, packaging, banking, agriculture, advertising, food, alcohol, non-alcoholic beverages, tobacco, law, textiles and fashion/clothing, plastics, biodiesel and energy, paper, construction, sports products, tourism, and many more.

Most giants in each of these industries will inevitably become involved with Cannabis and adopt it within their existing offerings, as well as creating new Cannabis-based products and services. Food and soft-drink conglomerates like Nestle and Coca-Cola will create Cannabis-infused food, deserts and soft-drinks. Alcoholic beverage companies like Anheuser-Busch and Heineken will create Cannabis-infused alcoholic beverages. Textile companies like Admiral Sportswear, Nike, and Cone Mills Corporation will create hemp-derived shoes and clothing, and on and on. Thus, the companies that are currently establishing their footprint/territory and the technology of this industry will be prime acquisition targets for these giant corporations.

In addition to disrupting these existing industries, Cannabis will also create many new industries through new health and wellness products that combine CBD and THC substances. Cannabis and CBD are more commonly being used together in the creation a new worldwide health and wellness industry with a wide variety of plant-based consumer products.

Cannabis and hemp will become ubiquitous in our world. Almost everything in our lives as we know it will have a much improved, more durable, healthier version that is created with Hemp, Cannabis and its derivatives. There will be new infrastructure, new products, new healthcare (physical and psychological) treatment, new recreational activities, new foods, new productivity, new employment, new taxes and most important of all, a new life and culture.

Needless to say, the end of Cannabis prohibition will bring forth a political, economical, social and healthcare revolution in our world. We are entering an exciting new era, where Cannabis and hemp-based CBD are rapidly becoming an important part of an active healthier lifestyle. Patients will use medical Cannabis and receive much needed relief without the fear of going to prison for it. Adults can choose Cannabis for adult relaxation for a fraction of the cost and fewer of the negative effects of alcohol. Millions of people will sleep better and have less pain, children will be able to control their seizures and veterans will manage their PTSD.

This will create a new global health & wellness industry where hundreds of thousands are employed in an environmentally responsible new industry that produces a natural product, which is truly making the world a better and healthier place. New Frontier Data estimates that the legal Cannabis market in the United States will generate nearly 283,422 jobs by 2020. This will be more than the expected jobs created in all of manufacturing, utilities and government industries.

Such an unprecedented revolution to our world, will also bring unprecedented wealth creation opportunities. Just as most people underestimate the impact hemp and Cannabis will have on our real world, most investors underestimate the enormous investment opportunities this industry currently presents.

The most misunderstood element of this industry is the sheer scale of what the global Cannabis/CBD industry will be. What was projected to be a $25 billion global market is rapidly becoming $100 billion and could well go up to $1 Trillion over the next decade.

Grand View Research has published a study that shows Cannabis could become a $146 billion market (US and globally) by 2025. Based on a 20% profit margin and a 20x earnings valuation, the market cap of the global industry will be over $584 billion. In additional, there are approximately 180 Cannabis public companies in the US and Canada. If 100 of them become $1 billion dollar companies within the next decade, that could bring the total global Cannabis market cap to $1 trillion. From an investment prospective few new industries in history have offered the investment potential Cannabis offers in 2019.

Conclusion:

The Cannabis/CBD industry is entering a rapidly expansion cycle and the current market estimates are much too conservative. Cannabis prohibition will undoubtedly end, sooner rather than later. The myriad of recent positive developments in public policy suggests this will happen very shortly. Our politicians and Congressmen have the chance to create history, by bringing a long overdue end of Cannabis and hemp prohibition. They must vote to pass the SAFE Banking Act.

Investors realize the unprecedented opportunities for wealth creation in this industry, which is just getting started. This is an exceptional time to invest in the Cannabis market, as it seems to poised for a decade of remarkable domestic and international growth. Post prohibition, the Cannabis and hemp industry will go from today’s size of $10B, to the point where it will be absolutely ubiquitous throughout our society, products and markets – this exceptionally rapid development will create exceptionally large opportunities for Cannabis entrepreneurs and investors.

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The US Desperately Needs of a Department of Cyber Security

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As the world is turning digital, warfare is following suit in a very rapid and devastating way. Countless organizations in all sectors (Target, Equifax, DNC, IRS) are continuously reporting data hacks. According to the Government Accountability Office (GAO), federal civilian agencies reported 35,277 cybersecurity incidents, such as web-based attacks, phishing and loss or theft of computing equipment in 2017.

The public and private sectors in the US have not adapted to cyber threats. Instead of presenting a unified front for defending against these attacks, and have a plan to go on the offensive when necessary, most organizations are busy doing damage control by themselves, without any real long-term plan. This is done despite the fact that countless studies show year after year, that cybersecurity is the number one priority for all IT leaders.

A recent survey of government organizations, private sector and citizens in the U.S., China, Russia, and India found that more than 88% of participants believe that cyberspace threats are significant.

In the United States alone, state and local government IT leaders have maintained for years that cybersecurity needs to be the government’s priority. A 2018 Digital Cities Survey of city government IT leaders put cybersecurity as the top priority. The same survey of county government IT leaders placed cybersecurity at the top of the list for the past 5 years in a row. Lastly, the National Association of State Chief Information Officers (NASCIO) published their top 10 policy and technology priorities for 2019, and cybersecurity was named number 1.

The conventional literature throughout our country claims that cybersecurity is everyone’s problem, and that it needs to be dealt with on multiple levels within the government, private sector, as well as individual citizens. While it is true that cybersecurity needs to be fought for on multiple levels, this fight is extremely inefficient when everyone does their own thing, without a leading organization to set the policy and bear full ownership of outcomes.

The reality is that our nation’s current organization for dealing with cyber-attacks is doomed to fail. Responsibilities, skills and talent are spread across too many different parts of the government, which creates confusion, and most importantly, a lack of leadership and ownership.

For example, the Department of Defense, through its US Cyber Command arm, is responsible for national defense. The FBI is responsible for investigating and enforcement. The Department of Homeland Security oversees damage control and recovery for cyber-attacks. Lastly, every military branch has their own individual cyber units. Lack of communication and too much bureaucracy makes our cyber security efforts extremely inefficient, putting our nation at risk with each second that passes. Each one of these organizations have many other responsibilities and are stretched too thin to give cybersecurity the focus and resources it desperately needs.

President Trump is trying to rectify this situation by further centralizing the management and oversight of federal civilian cybersecurity through the National Cybersecurity Strategy of September 2018. This strategy will enable the Department of Homeland Security to secure all federal department and agency networks, with the exception of national security systems, the Department of Defense and the Intelligence Community. This is a step in the right direction, but it needs to be taken further.

There needs to be a department that is one hundred percent responsible for our nation’s cyber security, in the same way our military is responsible for our physical security. This department could be called the “Department of Cyber Security” (DCS) and it should set the policy, provide the proper organizational structure, and work with all other parties (government, private sector, and citizens) to gain control of our nation’s cyber security.

The new Department of Cyber Security’s top priorities should be to:

I. Request and maintain adequate funding – this is a top national security priority.

II. Mobilize our country’s best talent and resources to operate under a single umbrella and a single coherent policy.

III. Fill in the talent gap by promoting cybersecurity workforce, training, economic development. According to the “Presidential Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure,” there is an estimated 299,000 shortfall in cybersecurity professionals across all industry sectors.

IV. Incentivize research, contests, hackathons – it must adopt and encourage ways of unconventional warfare.

V. Collaborate with the private sector to share threat intelligence on an ongoing basis, as well as new advances in the digital world.

VI. Outline liabilities, reporting requirements, and course of action for the other organizations to follow.

The United States must treat the issue of Cybersecurity with the same seriousness it treats the military. It must be organized from top down, it must be prepared to defend our networks and to attack at a moment’s notice. Not prioritizing cybersecurity policy leaves federal, state and local agencies, U.S. critical infrastructure, businesses and citizens extremely vulnerable to attacks that could be absolutely devastating.

Creating a new Department of Cyber Security that is one hundred percent in charge and responsible for our nation’s Cybersecurity is the only solution that allows our country to gain control of the cyber space, successfully defend our networks and be ready to go on the offense when necessary.

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