$675$/'5($06&$3(0$1,38/$7,21

7KLVLVJRLQJWRWULJJHUDYRFLIHURXVUHVSRQVHIURPDOOWKHPLQGFRQWUROOHG
PXSSHWVRXWWKHUHEXWVREHLW7KHUHSWLOLDQPDQLSXODWLRQRIKXPDQVH[XDOLW\
QHHGVWREHDGGUHVVHG,
YHQRWLFHGKRZWKHIODPHUVVFUHDPHGDERXWHYHU\WKLQJ
H[FHSWWKHEDVLFWKHVLVRIWKHSDSHULH7KHUHSWLOLDQVURXWLQHO\PDQLSXODWHWKH
VH[XDOLW\RIKXPDQDEGXFWHHV

/LNH'DYLG,FNH,
YHEHHQFDOOHGDUDFLVWDSURSDJDQGLVWDGQDXVHXPIRU
H[SRVLQJWKHUHDOLW\RIWKLVUHLJQRIWHUURU

7KHUDSLQJUHSWLOLDQKRVW,PHQWLRQLQWKHDUWLFOHQRWE\QDPHKDVYLVLWHGD
IULHQGRIPLQHLQWKHGUHDPVFDSHUHFHQWO\DQGWKUHDWHQHGKHUZLWK6HYHUH
5HSULVDOV,KDYHDXGLRFDVVHWWHVVHFUHWHGLQGLIIHUHQWORFDWLRQVFRQWDLQLQJD
GHEULHILQJRIRQHRIWKHIHPDOHDEGXFWHHVWKLVUHSWLOLDQKRVWKDVSURSRVLWLRQHG
DQGDOVRWRUPHQWHGLQWKHGUHDPVFDSH,QWKRVHDXGLRWDSHVWKLVIHPDOH
DEGXFWHHPHQWLRQVWKLVUHSWLOLDQKRVW%<1$0(DVZHOODVWKHQDPHRIKLV
VLGHNLFNZKRKDGYLVLWHGKHUUHSHDWHGO\DWKHUKRPHLQWKHKLJKGHVHUWRI
6RXWKHUQ&DOLIRUQLDDQGWULHGWRHQOLVWKHULQYLGHRWDSHG6DGRPDVRFKLVP
VHVVLRQV,IDQ\RQHRIP\IHPDOHDEGXFWHHVIULHQGVDUHHYHUYLRODWHGE\WKLV
UHSWLOLDQKRVWDJDLQKHULVNVKDYLQJPHUHOHDVHWKDWDXGLRWDSHDVDQDXGLRILOH
RQWKHLQWHUQHW

7KDQNV
-DPHV%DUWOH\

:LWKWKHUHFHQWPDVVH[SRVXUHRISDHGRSKLOLDDURXQGWKHZRUOGLQWKHKLJK
SODFHVRIUHOLJLRQVJRYHUQPHQWVFRXUWVHWFDQGRQWKHYLGHRWHVWLPRQ\RI
$UL]RQD:LOGHUKRZFDQRQHGRXEWWKHUHDOLW\RIUHSWLOLDQPDQLSXODWLRQE\
KRVWLQJRURWKHUPHDQVWRVXEGXHDQGPROHVWFKLOGUHQZRPHQDQGPHQ"
0RQWDXNYLFWLPVZHUHDOVRFRQWUROOHGE\
GUHDPV
DQGWKHZKROHSURMHFWZDV
EDVHGRQHOHFWURQLFDOO\FRQWUROOLQJWKHDVWUDOILHOGDQGWKHRUJRQHHQHUJ\
EDVHGRQ:LOKHOP5HLFK
VUHVHDUFK2QWKHRWKHUKDQG$OHVWDLU&URZOH\
VXFFHHGHGLQWKLVZLWKRXWWKHPHDQVRI
HOHFWURQLFV
7KHZKROHVFHQDULRRI

KRVWLQJ
LVWKHEDVLVIRUZKDWWKHUHOLJLRQVFDOO
GHPRQSRVVHVVLRQ
$UH
GHPRQVUHSWLOLDQRUQRW"

ZZZGDYLGLFNHFRP
 $675$/'5($06&$3(
0$1,38/$7,21


%\-DPHV%DUWOH\‹

7KLVWUHDWLVHFRQFHUQVWKHUHSWLOLDQ
VPDQLSXODWLRQRIWKH+XPDQ$VWUDO
'UHDPVFDSHIRUWKHH[SUHVVSXUSRVHRISURPRWLQJSDUWLFXODUEHKDYLRUVZLWKLQ
WKHDEGXFWHH7KLVVXEMHFWGHDOVZLWKLVVXHVUHJDUGLQJVH[XDOLW\DJJUHVVLRQ
SK\VLFDOHPRWLRQDODQGSV\FKRORJLFDOVWUHVV7KLVWUHDWLVHZLOOSURYLGHWKH
PRVWDFFXUDWHLQIRUPDWLRQUHJDUGLQJUHSWLOLDQRSHUDWLRQDOPHWKRGVWKDWKDV
HYHUEHHQSUHVHQWHGLQKLVWRU\

$VWUDO'UHDPVFDSH0DQLSXODWLRQLVDYHU\SHUYDVLYHIRUPRIEHKDYLRU
PRGLILFDWLRQWKDWPRVWDEGXFWHHVH[SHULHQFHDWRQHWLPHRUDQRWKHU6DGO\
PRVWDEGXFWHHVDUHREOLYLRXVWRWKHIDFWWKDWWKLVLVDQDVSHFWRIEHKDYLRU
PRGLILFDWLRQWKDWLVURXWLQHO\SUDFWLFHGE\WKHUHSWLOLDQVXSRQFHUWDLQ
FDWHJRULHVRIDEGXFWHHV0RVWGLVWXUELQJWKLVW\SHRIPDQLSXODWLRQLVEHLQJ
SHUSHWUDWHGXSRQFKLOGUHQ'RXEWOHVVWKHLQIRUPDWLRQFRQWDLQHGLQWKLVWUHDWLVH
ZLOOJHQHUDWHDILUHVWRUPRIFRQWURYHUV\,FRXOGFDUHOHVV

$JDLQP\ZULWLQJVDUHPHDQWWREHUHDGE\DEGXFWHHVZLWKD+HLJKWHQHG
6HQVHRI$ZDUHQHVV7KHPDQLSXODWHGPXSSHWVFDQJRRIIDQGRVFLOODWHDWD
KLJKHUIUHTXHQF\IRUDOO,FDUH7KLVWUHDWLVHLVQ
WPHDQWIRUWKHP7KHLU
UHSWLOLDQIDPLOLDUVZRXOGQHYHUOHWWKHPUHDGWKLVDQGHYHQLIWKHLUIDPLOLDUV
OHWWKHPUHDGLWWKHLQWHUQHWJURXSOLVWPRGHUDWRUVDQGKRVWHGDEGXFWHHVXSSRUW
JURXSIDFLOLWDWRUVZRXOGQRWOHWWKHPUHDGLW6RPXFKIRUIUHHZLOODQGFKRLFH
-XVWVRPHPRUHKLYHFRQVFLRXVQHVVFOLFKpV

7KH'UDFRUHSWLOLDQKLYHFRQVFLRXVQHVVZLOOVLPSO\QRWDOORZWKHDEGXFWHHV
XQGHUWKHLUFRQWUROWRUHDGWKLVFDOLEHURILQIRUPDWLRQ7KLVLVXQIRUWXQDWHVLQFH
PDQ\ZLWKUHSWLOLDQ'1$DUHJRLQJWKURXJKFKDQJHVDWWKLVWLPH7KHLU
UHSWLOLDQIDPLOLDUVDUHDOZD\VRQKDQGWRHQVXUHWKDWWKHUHSWLOLDQK\EULGV
GHYHORSDORQJWKHOLQHVWKHUHSWLOLDQVZDQWWKHPWRR(YHQLIDUHSWLOLDQK\EULG
EDE\ZDVDGRSWHGDQGUDLVHGE\ZDUPORYLQJKXPDQSDUHQWVKLVRUKHU
UHSWLOLDQIDPLOLDUVZLOOVRRQHURUODWHUPDNHWKHLUSUHVHQFHIHOWDQGZLOOWU\WR
WXUQWKDWFKLOGLQWRDQREQR[LRXVREVFHQHKXPDQEHLQJ

2QHRIWKHSULQFLSDOPHWKRGVRIFRQGLWLRQLQJDQGEHKDYLRUPRGLILFDWLRQLV
WKURXJKDVWUDOGUHDPVFDSHPDQLSXODWLRQ7KH'UDFRUHSWLOLDQKLYH
FRQVFLRXVQHVVZLOOVWULYHDWDOOKD]DUGVWRNHHSWKHLUK\EULGVXQGHUWKHLU
FRQWURO

$V\VWHPWKDWGRHVQRWDOORZGLVVHQWDOVRLJQRUHVGLVVHQWLQJLQIRUPDWLRQ
$TXRWHE\*HQHUDO0DUNXV:ROIWKHIRUPHUGLUHFWRUIRU(DVW*HUPDQ
)RUHLJQ,QWHOOLJHQFH

+HPLJKWDVZHOOEHGHVFULELQJWKH'UDFRUHSWLOLDQFRQWURORYHUKXPDQVLQ
JHQHUDODQGUHSWLOLDQK\EULGVLQSDUWLFXODU7KHLURQLFWKLQJLVPDQ\RIWKHVH
K\EULGVWDUVHHGVDOZD\VEUDJDERXWKRZVSHFLDODQGVSLULWXDOO\HYROYHGWKH\
DUHQHYHUUHDOL]LQJWKDWWKH\QHYHUKDGDFKRLFHLQWKHPDWWHU7KHLU
RYHUZKHOPLQJFRQWHPSWDQGDUURJDQFHUHYHDOVWKHPIRUZKDWWKH\DUHQRWWR
PHQWLRQVRPHRIWKHSHUYHUWHGSUDFWLFHVLQWKHLUSULYDWHOLYHV

6RPHKDYHVOLSSHGWKURXJKWKHFUDFNVKRZHYHU6RPHRIP\FORVHVW
FROOHDJXHVDUHUHSWLOLDQK\EULGVWKDWGLGQ
WDOORZWKHPVHOYHVWREHFRUUXSWHG
IURPZLWKLQ,WMXVWVKRZVWKDWLWLVWKHTXDOLW\RIWKH628/WKDWFRXQWV1RW
WKHJHQHWLFV

,ZLOOGHVFULEHKRZUHSWLOLDQVDQGUHSWLOLDQKRVWFDQLQYDGHWKHGUHDPVFDSHDQG
VH[XDOO\DVVDXOWKXPDQV'RXEWOHVVWKHUHZLOOEHVRPHZKRVD\WKLVFDQQRWEH
GRQH7KHUHLVRQHUHSWLOLDQKRVWLQSDUWLFXODUWKDWKDVVDLGWKDWP\LGHDVDERXW
WKLVKDYHFRPHIURPDPRYLHVWDUULQJ'HQQLV4XDLGFDOOHG'UHDPVFDSH
7KLVQD\VD\HULVRQHRIWKHZRUVWRIIHQGHUVWKHUHLV+HKDVEHHQLGHQWLILHGE\
PRUHWKDQRQHKXPDQIHPDOHDVKDYLQJWKHDELOLW\WRDVWUDOSURMHFWKLPVHOILQWR
WKHDVWUDOGUHDPVFDSHRIDZRPDQWRHLWKHUUDSHWKHPRUWRVRZIHDUDQG
FRQIXVLRQLQWRWKHLUGUHDPVFDSH,NQRZDQRWKHUZRPDQZKRKDVDFWXDOO\VHHQ
KLP6KDSHVKLIWIRUDEULHILQVWDQW

+HLVZKDW,UHIHUWRDVD'LUW\5HSWLOLDQ%XPER\+HKDVSURSRVLWLRQHG
IHPDOHDEGXFWHHVDQGWULHGWRHQFRXUDJHWKHPWRWDNHSDUWLQYLGHRWDSHG
VDGRPDVRFKLVPVHVVLRQVLQYROYLQJKLPVHOIDQGDQRWKHUPDOH$QG\HWWRUHDG
KLVZULWLQJVKHFRPHVRIIDVDQDUWLFXODWHUHDVRQDEOHLQGLYLGXDOLQVWHDGRIWKH
UDSLQJGLUW\UHSWLOLDQEXPER\WKDWKHLV

7KLVUHVHDUFKHUKDVWROGDSHUVRQDOIULHQGRIPLQHZKRPKHWULHGWRHQOLVWLQ
WKHVHGHEDXFKHGDFWLYLWLHVWKDWWDNLQJSDUWLQVDGRPDVRFKLVPVHVVLRQVZLWK
PXOWLSOHSDUWQHUVRIERWKVH[HVDOORZVWKHSDUWLFLSDQWWRGHYHORSPRUHRID
SV\FKLFOLQNZLWKWKHUHSWLOLDQV

+HVDLGWKHUHSWLOLDQVZRXOGEHJLQWRDSSHDUWRWKHSDUWLFLSDQWPRUHRIWHQLI
WKH\WDNHSDUWLQWKHVHVDGRPDVRFKLVWLFJURXSVH[DFWLYLWLHV:KHQP\IULHQG
UHIXVHGWRSDUWLFLSDWHWKLVUHVHDUFKHUYLVLWHGKHUWKDWVDPHQLJKWLQKLVDVWUDO
IRUPDQGVDWRQWKHHGJHRIWKHEHGDQGVPLOHGDVDODUJHUHSWLOLDQEUXWDOO\
UDSHGDQGVRGRPL]HGP\IULHQG0\IULHQGKDVDYHU\SURQRXQFHGSVLDELOLW\
ZKLFKLVZK\VKHLVWKHVXEMHFWRIVRPXFKUHSWLOLDQDQGKXPDQPLOLWDU\
LQWHUHVW7KLV'LUW\5HSWLOLDQ%XPER\KDVXWLOL]HGQXPHURXVQRWLRQDO
LGHQWLWLHVRQWKHLQWHUQHWLQRUGHUWRVKRXWGRZQRUPDUJLQDOL]HWKHZULWLQJVRI
WKRVHZKRDUHYHU\IDPLOLDUZLWKWKHWUXHQDWXUHRIWKHUHSWLOLDQV

+HZLOODOWHUQDWHO\SRUWUD\KLPVHOIDVDQDGYRFDWHRIKXPDQIUHHGRPYLVDYLV
WKHUHSWLOLDQVDQGRQWKHRWKHUKDQGDVVRPHRQHZKREHFRPHVLQFHQVHG
ZKHQHYHUDQ\RQHPHQWLRQVQHJDWLYHUHSWLOLDQVDQGPDQLIHVWRQOLQHDVD
PDQ\KHDGHGYLSHUXQGHUDKDLORIQRWLRQDOHPDLOQDPHV+HZLOODOVRVHQG
RXWOLQNVUHODWHGWRHVRWHULFRURFFXOWHGVXEMHFWVLQRUGHUWRJHQHUDWH
FRQYHUVDWLRQRUXVXDOO\SURYLGHKLPVHOIDQRSSRUWXQLW\WRFRPPHQWDERXWWKH
VXEMHFWPDWWHUKLPVHOI

+HOXUNVRQDQXPEHURILQWHUQHWJURXSOLVWGHYRWHGWR8)2VXEMHFWVWRHQVXUH
WKDWQRPHDQLQJIXOGLVFXVVLRQDERXWUHSWLOLDQVLVHYHULQLWLDWHGDQGLIQHFHVVDU\
ZLOOJHQHUDWHDEOL]]DUGRIWKDWVSHFLDOEUDQGRIUHSWLOLDQGLVFRUGDQGFKDRVLQ
RUGHUWRVWRSWKRVHZKRDUHFRPPHQWLQJDERXWWKHUHSWLOLDQVIURPZULWLQJDQ\
IXUWKHU+LVUHSWLOLDQVSHFLDOW\LVWRUPHQWLQJIHPDOHVRQWKHYDULRXV8)2OLVW
ZKLOVWKLGLQJEHKLQGKLVYDULRXVLQWHUQHWSVHXGRQ\PV:KDWDJDOODQW
LQGLYLGXDO:LWKWKLV'LUW\5HSWLOLDQ%XPER\ZHKDYHDVQHDNSUHYLHZRI
ZKDWFHQVRUVKLSDQGPHGLDFRQWUROZLOOEHOLNHLQWKHIXWXUH1RGLVVHQWLQJ
RSLQLRQVZLOOEHDOORZHGXQGHUWKUHDWRIVODQGHUYHUEDODEXVHDQGSK\VLFDO
DQGVH[XDOSXQLVKPHQWDOOXQGHUWKHJXLVHRI(QOLJKWHQPHQWDQG6SLULWXDO
'HYHORSPHQW

+HZLOOHYHQDFFXVHKLVRQOLQHHQHPLHVRIKDYLQJUHSWLOLDQRU'UDFR'1$LI
WKH\PHQWLRQKDYLQJWKHDELOLW\WRVHHWKHKRVWLQJHQWLWLHVRYHUVKDGRZLQJ
SRVVHVVHGKXPDQEHLQJV+HLVWKHYHULWDEOHHPERGLPHQWRIUHSWLOLDQFKDRV
GLVFRUGDQGVH[XDOGHYLDQFHDQG\HWKHKDVHVWDEOLVKHGKLPVHOIDVDQH[SHUWRQ
DOOWKLQJVUHSWLOLDQ+HLVDQRFFXOWHGSUDFWLWLRQHUDORQJZLWKVRPHRIKLV
UHSWLOLDQEXPER\IHOORZUHVHDUFKHUVZKROLNHZLVHSRUWUD\WKHPVHOYHVDV
H[SHUWVLQWKH8)2ILHOG

.HHSDOOWKLVLQPLQG'HDU5HDGHUZKHQWKHH[SHUWVLQWKH8)2UHVHDUFK
ILHOGEHJLQWRDWWDFNP\ZULWLQJVDERXWWKHDVWUDOGUHDPVFDSHPDQLSXODWLRQRI
KXPDQVE\UHSWLOLDQVDQGWKHLUDOLHQYDVVDOV,IP\VHOIRUP\FROOHDJXHV
UHFHLYHDQ\PRUHFUDSIURPWKLVUHVHDUFKHU,ZLOOUHOHDVHKLVQDPHRQWKH
LQWHUQHWDQGSURYLGHLQWHUHVWLQJGHWDLOVRIKLVSULYDWHOLIH

7KHDELOLW\WRDVWUDOO\SURMHFWRQHVHOILQWRWKHDVWUDOGUHDPVFDSHRIRWKHUVIRU
PDOHYROHQWSXUSRVHVKDVEHHQSUDFWLFHGE\:DUORFNV$GHSWVDQG6RUFHUHVVHV
IRUFHQWXULHV7KHUHLVQRWKLQJQHZDERXWDQ\RIWKLV,WLVLQWHUHVWLQJWRQRWH
WKDWWKRVHZKROHQGWKHPRVWFUHGHQFHWRGUHDPYLVLRQVIURP,QGLDQ0HGLFLQH
0HQRU(DVWHUQ0\VWLFVDUHWKHVDPHRQHVZKRZLOOEHWKHPRVWFULWLFDODERXW
P\WKHVLVWKDWUHSWLOLDQVFDQPDQLSXODWHWKHKXPDQDVWUDOGUHDPVFDSH7KH\
ZLOODJUHHZLWKWKHQRWLRQWKDWKXPDQVFDQKDYHSURSKHWLFYLVLRQVEXWDQ\WKLQJ
WKDWVPDFNVRIQHJDWLYLW\LQWKHDVWUDOGUHDPVFDSHLVPHUHO\DSURGXFWRIP\
ZDUSHGLPDJLQDWLRQ

,FKDOOHQJHWKHUHDGHUVWREHKRQHVWZLWKWKHPVHOYHVZKHQUHDGLQJWKLV
PDWHULDODQGDVN\RXUVHOYHVLIDQ\RIWKLVPD\KDYHKDSSHQHGWR\RX<RXPD\
KDYHEUXVKHGRIIWKHPHPRULHVRIZKDW,
PDERXWWRGHVFULEHDVEDGGUHDPV
RUVWUDQJHHURWLFGUHDPVEXW,DVVXUH\RXWKH\DUHQRW$VWUDO'UHDPVFDSH
0DQLSXODWLRQLVLQWHQGHGWRSURPRWHFHUWDLQEHKDYLRUVDQGWHQGHQFLHVZLWKLQ
WKHWDUJHWHGKXPDQDEGXFWHHXQWLOWKHVHEHKDYLRUVEHFRPHDQLQJUDLQHGSDUWRI
WKHLUFKDUDFWHU,IOHIWXQFKHFNHGWKLVSURFHVVFDQOHDGWRUHSWLOLDQKRVWLQJ

5HPHPEHU7KRXJKWVOHDGWRZRUGVZRUGVOHDGWRDFWLRQVDFWLRQVOHDGWR
FKDUDFWHUDQGFKDUDFWHUOHDGVWR'(67,1<

7+(5(37,/,$16+2/'7+(7$&7,&$/+,*+*5281'

7KHUHSWLOLDQVKROGWKHWDFWLFDO+LJK*URXQGLQWKHDVWUDOGUHDPVFDSHE\GLQW
RIWKHIDFWWKDWPRVWKXPDQVDUHQRWOXFLGGUHDPHUVDQGWKHUHSWLOLDQVDUHDW
KRPHLQWKHDVWUDOGUHDPVFDSH%HVLGHVEHLQJSDUDSK\VLFDOHQWLWLHVDQG
PHVPHUL]HUVSDUH[FHOOHQFHUHSWLOLDQVFDQVKDSHDQGLQIOXHQFHDGUHDPVFDSH
H[SHULHQFHWRVXLWWKHLUGHYLRXVDQGVRUGLGHQGV0RUHRYHUWKHUHSWLOLDQVFDQ
IXUWKHUGLPLQLVKZKDWOLWWOHOXFLGLW\DQGDZDUHQHVVKXPDQVPD\KDYHLQWKH
GUHDPVFDSH7KHUHSWLOLDQVDUHLQWLPDWHO\IDPLOLDUZLWKWKHZD\WKH+XPDQ
0LQGZRUNVDQGLQSDUWLFXODUKRZWRFUHDWHFHUWDLQLPDJHU\RUVHWWKHPRRGRI
DGUHDP

:LWKWKHLUSV\FKLFWKLUGH\HYLVLRQWKH\TXLFNO\GRDQH[SHULHQFHVFDQLQ
\RXUPHPRU\EDQNVSULRUWRWKHDEGXFWLRQRUGUHDPVFDSHPDQLSXODWLRQ
$FWLQJXSRQWKLVSUHDEGXFWLRQLQWHOOLJHQFHWKHUHSWLOLDQPD\DSSHDUWRWKH
DEGXFWHHDVVRPHRQHKHRUVKHKDGDFUXVKRQEDFNLQKLJKVFKRRO$WWKH
VDPHWLPHKHUOLELGRLVUHYYHGXSDUWLILFLDOO\E\WKHUHSWLOLDQV

1RWRQO\DUHWKH\DEOHWRPDQLSXODWHDKXPDQ
VHURJHQRXV]RQHVEXWWKH\DUH
DGHSWDWPDQLSXODWLQJWKHKXPDQHQGRFULQHV\VWHP5HPHPEHU%UDLQ:DYH
IXQFWLRQLVUHJXODWHGDQGFRQWUROOHGE\FHUWDLQKRUPRQHVDQGDONDORLGV
UHOHDVHGLQWRWKHEUDLQDQGRWKHUSDUWVRIWKHERG\E\FHUWDLQJODQGV

+XPDQ6HFXULW\6HUYLFHVDUHDOUHDG\XVLQJVRQLFZDYHVWRVLPXODWHSDUWLFXODU
EUDLQZDYHSDWWHUQVZKLFKWULJJHUWKHUHOHDVHRIKRUPRQHVDQGDONDORLGVE\
SDUWLFXODUJODQGVQRWKLQJVLPSOHU+XPDQVFDQEHPDGHWRKDYHJUHDWHUSVL
DELOLWLHVPHUHO\E\PDQLSXODWLQJWKHLUEUDLQZDYHVDQGHQGRFULQHV\VWHP$QG
DOOWKHVH1HZ$JH/D'HH'DKVDQG0XSSHWVWKLQNWKH\KDYHGHYHORSHG
SV\FKLFDELOLWLHVEHFDXVHRIWKHLUFRQWDFWVZLWKWKHLUDOLHQEHQHIDFWRUV$V
%DUELH%DUWKROLFSRLQWVRXWWKHUHSWLOLDQVNQRZ(9(5<7+,1*DERXWXV

7KH\FDQPDQLIHVWDFUHGLEOHVLPXODWLRQRIDKRPHIURP\RXUFKLOGKRRGLQ
RUGHUWRVHWDFHUWDLQWRQHPRRGRUIHHOLQJRIIDPLOLDULW\)RUH[DPSOHWKHUH
FDQEHWZRRUPRUHKXPDQH[WUDVVWDQGLQJDURXQGLQ\RXUGUHDPVFDSH
FKLOGKRRGKRPH7KHVHKXPDQVDUHUHDOO\UHSWLOLDQVDVVXPLQJKXPDQ
GLVJXLVHVWKH\ZLVKHGWKH\ORRNHGKXPDQ7KH\ZLOOXVHIDPLOLDUSHRSOHLQ
\RXUGUHDPVFDSHWROXOO\RXLQWRDVHQVHRIVHFXULW\,PDJHVRIIULHQGVDQG
UHODWLYHVFDQEHSURMHFWHGRQWRRXUGUHDPVFDSHWKHVDPHZD\HOHFWURQLF
FRXQWHUPHDVXUHSRGVRQFHUWDLQDLUFUDIWFDQSURMHFWQRQH[LVWHQWERJLHVRQWR
WKHUDGDUVFUHHQVRIWKHHQHP\LQRUGHUWRFRQIXVHRUGLVWUDFWWKHPIURPZKDW
LVUHDOO\JRLQJRQ7KHDUHFHUWDLQFXHVWRZDWFKIRULQWKHDVWUDOGUHDPVFDSH

6RPHWLPHV\RXFDQWHOOWKHKXPDQVDUHUHSWLOLDQVEHFDXVHWKHUHPD\EHWZR
WKDWDUHDERXWWKHVDPHVL]HDQGZHDULQJWKHVDPHRUVLPLODUFORWKHVDV
FRPSDUHGWRDOHDGHUZKRPD\EHVOLJKWO\WDOOHUDQGDOZD\VVHHPVWREH
VWDQGLQJE\\RXUVLGHRULQIURQWRI\RX

2IWHQWLPHVWKH\XVHWKHFODVVLFLQWHUURJDWLRQWHFKQLTXHZKHUHWKH\ZLOOVLW
GLUHFWO\DFURVVDWDEOHIURPWKHDEGXFWHHDQGTXHVWLRQWKHPDERXWWKHLUEHOLHIV
DQGSURSDJDQGL]HWKHPZLWKWKH5HSWLOLDQ&UHGRRI(QOLJKWHQPHQWWKURXJK
3K\VLFDODQG6SLULWXDO'HJUDGDWLRQ7KH\FDQDSSHDUDVKXPDQVDVPLOLWDU\
SHUVRQQHOFORDNHGLQUREHVRUDVIXOORQUHSWLOLDQV7KHOHVVHUUDQNLQJ
UHSWLOLDQVXVXDOO\VWDQGEHKLQGWKHVHDWHGUHSWLOLDQ

,DORQJZLWKDFORVHIULHQGZKROLYHVLQWKHKLJKGHVHUWZDVLQWHUURJDWHGE\
WKUHHUHSWLOLDQVSRVLQJDVKLJKUDQNLQJKXPDQPLOLWDU\SHUVRQQHO7KH
RIILFHUVZHUHVHDWHGDORQJVLGHHDFKRWKHULQDKLJKGDLV7KH\ZHUH
IODQNHGRQRQHVLGHE\WKHIHGHUDOIODJZLWKWKH\HOORZDGPLUDOW\PDULWLPH
EUDLGDQGRQWKHRWKHUVLGHE\VRPHRWKHUIODJ7KH\NHSW\HOOLQJDWXV
WHOHSDWKLFDOO\DQGGLUHFWHGPRVWRIWKHLUDQJHUDWPH,UHPHPEHUDWRQHSRLQW
WXUQLQJWRP\IULHQGDQGWKLQNLQJWRKHU5HPHPEHUWKLV7KLVLVUHDOLW
V
QRWDGUHDP/DWHUZHFRPSDUHGQRWHVRQWKHWHOHSKRQH%DVHGRQVLPLODU
DFFRXQWV,KDYHKHDUGIURPRWKHUDEGXFWHHVDQGIURPZKDW,UHPHPEHUIURP
WKLVSDUWLFXODUH[SHULHQFHWKHHQWLWLHVZHUHJLYLQJWKHLPSUHVVLRQRIEHLQJ
VHDWHGEHKLQGDKLJKGDLVDVDPHDQVWRFRQFHDOWKHLUWUHPHQGRXVKHLJKW
ZKLFKLVDOZD\VDJLYHDZD\

7KHOHDGHUVDUHXVXDOO\FRQGXFWLQJPRVWRIWKHSV\FKLFPRQRORJXHWRWKH
DEGXFWHHZKHUHDVWKHRWKHUVMXVWJUXQWRUJURZOHYHU\QRZDQGWKHQXVXDOO\
ZLWKDVHYHUHJULPDFHRUVFRZORQWKHLUIDFHV,W
VVRGLIILFXOWIRUWKHPWR
FRQFHDOWKHLUXWWHUFRQWHPSWIRUKXPDQV

:HPXVWOHDUQWRUHFRJQL]HZKHQDGUHDPLVRXURZQDQGZKHQLWLVD6WDJH
PDQDJHGGUHDP7KHUHSWLOLDQVVWULYHWRLPPHUVHXVLQYDULRXVGUDPDVRU
VFHQDULRVZKLFKDUHPHDQWWRKROGWKHDWWHQWLRQRIWKHSHUFLSLHQWZKLOHDWWKH
VDPHWLPHZHDYHLQLPDJHU\DQGV\PEROLVPZKLFKLVPHDQWWRSURPRWH
FHUWDLQEHKDYLRUVDQGEHOLHIVRIZKLFK,ZLOOGLVFXVVLQPRUHGHWDLOODWHU

7KHUHLVDOVRDILOWKLQHVVIDFWRUDVVRFLDWHGZLWKWKHUHSWLOLDQVHYHQWKRXJK
\RXPD\QRWVHHWKHPLQWKHGUHDPVFDSH7KHDWPRVSKHUHVHHPVWREH
VDWXUDWHGZLWKWKHLUIRXOHQHUJ\:KDWDSSHDUVWREHIHFHVPD\EHVFDWWHUHGRQ
WKHIORRUV%DWKURRPRUORFNHUURRPVFHQHVDUHW\SLILHGE\WKHLUILOWKLQHVV
/DUJHFRFNURDFKHVDQGRWKHUEXJVPD\EHVHHQVFXUU\LQJDURXQGLQWKHDVWUDO
GUHDPVFDSH/DUJH5DWVDUHRIWHQVHHQLQDGUHDPVFDSHSROOXWHGE\WKH
UHSWLOLDQV7KHVHDUHMXVWDIHZRIWKHWKLQJVWKDWDUHGHVFULEHGDJDLQDQGDJDLQ
LQWKHDVWUDOGUHDPVFDSHZKLFKFUHDWHDQDWPRVSKHUHRIIRXOPDOHYROHQFH
ZKHQHYHUWKHUHSWLOLDQVDUHDWWHPSWLQJWRPDQLSXODWHWKHKXPDQ
VSHUFHSWLRQV
DQGHPRWLRQV,WLVDOWRJHWKHUDSWLI\RXDVNPH9HUPLQVXFKDVKXJH
FRFNURDFKHVDQGURGHQWVDUHV\PEROLFRIWKHSXWULGHVVHQFHRIWKHUHSWLOLDQV
VHZHUVFXPWKDWWKH\DUH,QGHHGWKH\LQWHQWLRQDOO\XVHWKHVHW\SHVRILOOXVLRQV
SUHFLVHO\EHFDXVHRIWKHQDWXUDOUHYXOVLRQDQGIHDULWHQJHQGHUVZLWKLQGHFHQW
KXPDQEHLQJV7LSWKHUH

+XPDQ$ZDUHQHVVLQWKHGUHDPVFDSHVXIIHUVIURPZKDWPLOLWDU\ILJKWHUSLORWV
UHIHUWRDV&RJQLWLYH6DWXUDWLRQ&RJQLWLYH6DWXUDWLRQRFFXUVZKHQDSLORWRI
DKLJKVSHHGMHWDLUFUDIWSHUFHLYHVWRRPXFKYLVXDOVWLPXOLDWRQHWLPHDQGLQ
VXFKDIDVKLRQDVWRQRWEHDEOHWRSURSHUO\FRQWUROKLVVSHHGLQJDLUFUDIWIRUD
IHZFULWLFDOVHFRQGV

7KHUHPD\KDYHEHHQWRRPDQ\SK\VLFDOIHDWXUHVWKDWKHSHUFHLYHGWKURXJKKLV
FRFNSLWDQG+HDGV8S'LVSOD\+8'DWRQHWLPH0RXQWDLQVFORXGV
VKLPPHULQJERGLHVRIZDWHURWKHUDLUFUDIWMHWH[KDXVWIORFNVRIELUGVDQ\RU
DOORIWKHDERYHFDQFRQWULEXWHWRPRPHQWDULO\IORRGLQJWKHYLVXDOVHQVHVRID
KXPDQSLORW$GGWRWKLVWKHVWUHVVRIIO\LQJDKLJKSHUIRUPDQFHDLUFUDIWLQ
UHDOLVWLF$LU&RPEDW0DQHXYHULQJ$&0WUDLQLQJRULQDFWXDODLUWRDLU
FRPEDWDQGWKHPDUJLQIRUHUURULVYHU\VOLPLQGHHG0DQ\SLORWVZLQGXS
G\LQJLQDLUFUDVKHVDVDUHVXOWRIH[SHULHQFLQJ&RJQLWLYH6DWXUDWLRQIRURQO\D
IHZVHFRQGV

7KH$PHULFDQSXEOLFIRUYDULRXVUHDVRQVLVJHQHUDOO\LJQRUDQWRIWKHIUHTXHQW
DLUFUDVKHVVXIIHUHGE\WKHPLOLWDU\6RPHRIWKHPLOLWDU\
VDLUFUDIWVKRXOGKDYH
EHHQUHWLUHG'(&$'(6DJR

7KHUHDGHUPXVWUHPHPEHUWKHLPSRUWDQFHRIUHWDLQLQJFRQVFLRXVDZDUHQHVV
GXULQJRXUGUHDPOLIH:HVSHQGIXOO\UGRIRXUOLIHDVOHHS

1RVHOIGLVJXVWLQJUHSWLOLDQRUPLQGFRQWUROOHUZRXOGDOORZVXFKDQ
RSSRUWXQLW\WRVOLSE\ZLWKRXWDWOHDVWDWWHPSWLQJWRPDQLSXODWH7KH0LQG
%RG\DQG6RXORIDVOHHSLQJKXPDQWKDWWKHUHSWLOLDQVDQGPLQGFRQWUROOHUV
ZDQWWRFRQWURO(DFKDEGXFWHHKDVDFHUWDLQGHJUHHRIXVHIXOQHVVWRWKH
UHSWLOLDQVVRPHPRUHWKDQRWKHUV

$VLVWKHFDVHZLWKSURIHVVLRQDODWKOHWHVLQVXFKKLJKVSHHGVSRUWLQJ
FRPSHWLWLRQVDV'RZQKLOO6NLLQJRU5DFHFDUGULYLQJ:(0867%($%/(
726/2:'2:17,0(:,7+285(<(6,(5(*8/$7(7+(
,1)/8;2)9,68$/67,08/,$1')2&86285'(37+3(5&(37,21
:,7+,17+(&21),1(62)7+($675$/'5($06&$3(

:H
YHDOOKHDUGDFFRXQWVRIJUHDWDWKOHWHVGHVFULELQJWKHVHQVDWLRQRI
HYHU\WKLQJDQGHYHU\RQHDURXQGWKHPEHLQJLQVORZPRWLRQZKLOHWKH\ZHUH
SHUIRUPLQJVRPHDFUREDWLFIHDWLQDIRRWEDOOJDPHRURWKHUDWKOHWLF
FRPSHWLWLRQ7KH\DUHDFFXUDWHO\GHVFULELQJWKHLUDELOLW\WRVFUHHQRXW
H[WUDQHRXVRUXQQHFHVVDU\YLVXDOVWLPXOLDQG)2&867+(,5:,//$1'
&216&,286$:$5(1(6683217+(,00(',$7(7$6.$7+$1'

0LOLWDU\-HWILJKWHUSODQHVKDYHDYHU\FURZGHG+HDGV8S'LVSOD\IXOORI
YDULRXVFRPSXWHUJUDSKLFVUXQQLQJVLPXOWDQHRXVO\RQWKHLUZLQGVKLHOG7KH\
FDQXQFRQVFLRXVO\EORFNRXWDOOWKHXQZDQWHGGDWDDSSHDULQJRQWKHLUVFUHHQ
DQGMXVWIRFXVWKHLU:,//DQGWKHLU&RQVFLRXV$ZDUHQHVVRQWKHGDWDWKH\
ZDQWDQGWKHERJH\WKH\DUHDIWHU

.HHSDOOWKLVLQPLQGEHFDXVHWKHUHSWLOLDQVDQGWKHLUPLQLRQVDUHPDVWHUVRI
FUHDWLQJLOOXVLRQVDVVXPLQJGLVJXLVHVDQGGLPPLQJWKHDZDUHQHVVRIKXPDQ
EHLQJVLQRURXWRIWKHDVWUDOGUHDPVFDSH,QWKHGUHDPVFDSHWKHUHSWLOLDQVFDQ
KHLJKWHQWKHDQ[LHW\OHYHORIWKHDEGXFWHHRUSURPRWHPHQWDOVOXJJLVKQHVVMXVW
DVHDVLO\DVLIWKH\ZHUHVSLQQLQJWKHGLDORQDQ)0UDGLR

5(37,/,$1,//86,216,17+($675$/'5($06&$3(

7KHUHSWLOLDQVXWLOL]HLOOXVLRQDQGGLVJXLVHVYHU\IUHTXHQWO\GXULQJSK\VLFDO
DEGXFWLRQVDQGLQWKHDVWUDOGUHDPVFDSH5HSWLOLDQVZLOORIWHQGLVJXLVH
WKHPVHOYHVDVROGER\IULHQGVIDPRXVPRYLHVWDUVPXVLFDODUWLVWHWFIRUWKH
H[SUHVVSXUSRVHRIUDSLQJKXPDQIHPDOHV7RSURYLGHDQLOOXVWUDWLRQRIWKH
HDVHLQZKLFKWKHUHSWLOLDQVXWLOL]HLOOXVLRQVOHWXVH[DPLQHLQFORVHGHWDLORQH
RIWKHLUIDYRULWHRSHUDWLRQDOVFKHPHV

5HSWLOLDQVRIWHQEULQJKXPDQIHPDOHVWRDSODFHWKDWKDVZDUPSRROVRIZDWHU
RUZKDWDSSHDUWREHKRWWXEVRU-DFX]]LV+XPDQZRPHQDUHPDVVUDSHGLQ
WKHVHZDGLQJSRROKRWWXEHQYLURQPHQWV$UWLILFLDOEHDFKVHWWLQJVKDYHEHHQ
GHVFULEHGE\IHPDOHDEGXFWHHV

7KHFULWLFDOUHDVRQLQJIDFXOW\RIWKHZRPHQKDVEHHQVZLWFKHGRII,WGRHVQ
W
RFFXUWRWKHPWRTXHVWLRQWKHSRVVLELOLW\RUOLNHOLKRRGWKDWWKH\DUHKDYLQJD
VH[XDOHQFRXQWHUZLWKDIDPRXVVLQJHURUDFWRU,W
VMXVWDQRSHUDWLRQDOLOOXVLRQ
WKDWWKHUHSWLOLDQLVXWLOL]LQJDWWKHPRPHQW8QOHVVWKHZRPDQZDNHVXSZLWK
YDJLQDORUDQDOVRUHQHVVLQYROXQWDU\GLVFKDUJHVEOHHGLQJRUDXULQDU\WUDFW
LQIHFWLRQWKHZRPDQPD\MXVWEUXVKRIIWKHPHPRU\DVDVWUDQJHHURWLFGUHDP
(YHQWKHQVKHPD\QRWDVVRFLDWHWKHV\PSWRPVZLWKWKHVWUDQJHGUHDPLI
LQGHHGVKHFDQHYHQUHPHPEHUWKHGUHDP

$JDLQZHFDQERUURZDWHUPIURPPLOLWDU\ILJKWHUSLORWV,QRXUH[DPSOH
DERYHWKHDEGXFWHHKDVORVW6LWXDWLRQDO$ZDUHQHVVLQWKHDVWUDOGUHDPVFDSH
EHFDXVHRIWKHYDULRXVDQGVXQGU\PHWKRGVRIGHFHSWLRQDQGPDQLSXODWLRQDQG
KDYHEHFRPHIDLUJDPHIRUWKHUHSWLOLDQV

,WPXVWEHXQGHUVWRRGE\WKHUHDGHUWKDWWKHUHLV3+<6,&$/,7<LQWKHDVWUDO
GUHDPVFDSH1RWLFHKRZDUHSWLOLDQFDQVHGXFHDZRPDQRUVRGRPL]HDPDQ
WKURXJKOD\HUVRIEHGVKHHWVFRPIRUWHUVDQGQLJKWFORWKHV7KH\GHQVLI\RQO\
WKRVHSDUWVRIWKHLUDQDWRP\ZKHUHDQGZKHQWKH\QHHGWR7KH\FDQEH
LQYLVLEOHLQWKHYLVLEOHVSHFWUXPDQG\HWFRQGXFWIRUFLEOHUDSHRUVRGRP\WKDW
LVDYHU\UHDOSK\VLFDOWUDXPDWLFHYHQWWRWKHKXPDQ7KHZRPDQPD\VHHRQO\
DQLOOXVLRQRIDIDPRXVHQWHUWDLQHURUPXVLFDODUWLVW7KHUHKDYHEHHQ
QXPHURXVFDVHVRIUDSLQJUHSWLOLDQVGLVJXLVLQJWKHPVHOYHVDV%UXFH
6SULQJVWHHQ6WLQJIURPWKHSROLFH7RP&UXLVHDQG7RPP\/HH-RQHV(YHQ
0LFKDHO-DFNVRQKDVEHHQUHSRUWHGE\FUHGLEOHIHPDOHREVHUYHUV2QWKHRWKHU
KDQGVRPHZRPDQPD\RQO\VHHDFORVHXSRIDKLGHRXVUHSWLOLDQIDFHDQGQRW
EHDEOHWRPRYHRUXWWHUDVRXQG

$QGDOOWKLVFDQJRRQZLWK7DU]DQO\LQJVRXQGDVOHHSRURWKHUZLVH
LPPRELOL]HGDQGFRPSOHWHO\LQFDSDEOHRIKHOSLQJKLVVLJQLILFDQWRWKHUWKDWLV
EHLQJVH[XDOO\DVVDXOWHGULJKWQH[WWRKLPLQWKHEHG,IKH
VEHHQSURSHUO\
SURJUDPPHGKHZLOOEHRIQRKHOSRUVXSSRUWWRKLV/DG\DQGLQGHHGFDQEH
TXLWHDEXVLYHLIWKDWLVZKDWWKHUHSWLOLDQVZDQW,QVKRUW7DU]DQLVDFRPSOHWH
12/2$'(PRWLRQDOO\XQDYDLODEOHDQGHYHQLUULWDEOHZKHQWKHVXEMHFWRI
WKHVHQLJKWPDUHVDQGH[SHULHQFHVDUHEURXJKWXS7DU]DQEHFRPHVSDUWRI
WKHSUREOHPLQVWHDGRIEHLQJDSDUWRIWKHVROXWLRQ

9$5,286385326(6)25'5($06&$3(0$1,38/$7,21

3URPRWLQJIHDULVRQHRIWKHPRVWFRPPRQDQGSHUYDVLYHIRUPVRIUHSWLOLDQ
GUHDPVFDSHPDQLSXODWLRQ7KLVLVLURQLFZKHQ\RXFRQVLGHUKRZRIWHQWKH
+LYH&RQVFLRXVQHVVWULHVWRFRPSHOKXPDQVWRJHWRYHUWKHLUIHDU

7KHDIRUHPHQWLRQHG'LUW\5HSWLOLDQ%XPER\VSHQGVDOOKLVRQOLQHWLPHWU\LQJ
WRELJVKRWKLVUHDGLQJDXGLHQFHLQWREHOLHYLQJKXPDQVDUHMXVWHYROYHG
UHSWLOHVDQGFLWHVWKHDEXQGDQFHRIDQFLHQWUHSWLOLDQDUFKLWHFWXUHDQG
P\WKRKLVWRULHVDVKLVSURRIWKDWUHSWLOLDQVDUHVSLULWXDOO\HYROYHGEHLQJV
ZKRDUHODUJHO\UHVSRQVLEOHIRUFLYLOL]LQJKXPDQVGHVSLWHWKHIDFWWKDW
UHSWLOLDQVVWULYHDWDOOKD]DUGVWRNHHSWKHLUYHU\H[LVWHQFHVHFUHW/HDYHLWWR
WKH8)25HVHDUFK&RPPXQLW\WRQRWVSRWWKLVDSSDUHQWFRQWUDGLFWLRQ

7KLVGLUW\UHSWLOLDQEXPER\OHDGVDGRXEOHOLIH2QWKHRQHKDQGKHLVDQ
DUWLFXODWHXUEDQH5HVHDUFKHUDQGRQWKHRWKHUKDQGKHOLYHVRXWDGHPRQLF
SV\FKLFH[LVWHQFHUHSOHWHZLWKRFFXOWLFULWXDOVVDGRPDVRFKLVPDVWUDOO\UDSLQJ
ZRPHQDQGFUHDWLQJ)($5DQG),/7+LQWKHDVWUDOGUHDPVFDSH

+HPHGLWDWHVXSRQWKHPHQWDOLPDJHRUDSKRWRJUDSKRIDZRPDQKHZDQWVWR
UDSHRUDPDQKHZDQWVWRVRGRPL]H+HLVDQRFFXOWLFSUDFWLWLRQHUDQG
SHUIRUPVPDQ\RIWKHVHULWXDOVGXULQJ3DJDQKROLGD\V,ZRXOGEHDPD]HGLI
HYHQWZRSHUFHQWRIWKHVRFDOOHG8)25HVHDUFK&RPPXQLW\LVDZDUHWKDW
UHSWLOLDQKRVWFDQGRWKHVHWKLQJV

7KHGLUW\UHSWLOLDQEXPER\WKHQDVWUDOO\SURMHFWVLQWRWKHGUHDPVFDSHRIWKH
KXPDQZRPDQDQGSURFHHGVWRSHUSHWUDWHKLVYLOHDFWVRIHYLODQGSHUYHUVLRQ
7KHGLUW\UHSWLOLDQEXPER\WKDW,
YHEHHQZULWLQJDERXWLVVHFUHWO\SURXGRIKLV
DELOLW\WRHQJDJHLQWKHVHNLQGVRIGLDEROLFDODFWLYLWLHV+HRIWHQGRHVKLV
GUHDPVFDSHUDSLQJLQWDQGHPZLWKKLVUHDOOLIHDOWHUHJRDQRWKHUGLUW\
UHSWLOLDQEXPER\ZKROLNHZLVHIDQFLHVKLPVHOID8)2(;3(57RUDVKH
SUHIHUVDQ,11(5($57+5(6($5&+(57KHODWWHULVPRUHDSWEHFDXVH
WKLVLQGLYLGXDOLVDQRWKHUUHSWLOLDQKRVWZKRDOVRSUDFWLFHVEODFNPDJLFN
([DFWO\WKHNLQGRILQGLYLGXDO\RX
GH[SHFWWRFRPHRXWRIWKHERZHOVRIWKH
(DUWKWRDVVDXOWKXPDQZRPHQ

)URPWKHVWDQGSRLQWRIZKDW,FDOO3V\FKLF6HFXULW\LWLVGDQJHURXVDQG
UHFNOHVVWRVHQGSKRWRJUDSKVE\PDLORULQWHUQHWWRSHRSOHZKRPD\EH
UHSWLOLDQKRVW7KHUHSWLOLDQKRVWFDQGHWHFWWKHUHVLGXDOHQHUJ\VLJQDWXUHLQWKH
SKRWRJUDSKDQGVXEVHTXHQWO\GHYHORSDSV\FKLFOLQNZLWKWKHSHUVRQLQWKH
SKRWR,QRFFXOWLFFLUFOHVWKLVLVNQRZQDVDQ2EMHFW/LQN

,IWKHDEGXFWHHLVLQHPDLORUWHOHSKRQLFFRPPXQLFDWLRQVZLWKWKLVKRVWWKH\
DUHDFWXDOO\PDNLQJLWHDVLHUIRUWKHUHSWLOLDQKRVWWRHQWHUWKHLUGUHDPVFDSH
DQGSHUSHWUDWHDOOPDQQHURIYLOHDQGSHUYHUWHGDFWLRQV

,RQFHKDGWKHHQHUJ\GUDLQHGRXWRIPHDIWHUOLVWHQLQJWRDWHQPLQXWHPHVVDJH
RQP\SKRQHPDFKLQHOHIWE\DQDQJU\DQGIUXVWUDWHGIHPDOHUHSWLOLDQKRVWWKDW
,KDGLGHQWLILHG\HDUVDJR)RUVRPHUHDVRQ,PDNHUHSWLOLDQKRVWYHU\DJLWDWHG
7KHWHOHSKRQHDQGWKHLQWHUQHWDUHPHUHO\HOHFWURPDJQHWLFFRQGXLWVDQGWKH
UHSWLOLDQVPDNHIXOOXVHRIWKLVZKHQWU\LQJWRPDQLSXODWHDQGFRQWUROKXPDQV
$FRPPRQSOR\LVWRKDYHPDQLSXODWHGPXSSHWDEGXFWHHVFDOOXSWKHKDUG
FRUHVSLULWXDOZDUULRUDEGXFWHHVRQWKHSKRQHVHYHUDOWLPHVDGD\WRZDVWHWKHLU
WLPHDQGGUDLQWKHPRIHQHUJ\

$VWUDO6H[LVSK\VLFDOVH[$OWKRXJKLWPD\VRXQGOLNHDSDUDGR[LWLVQ
WLI\RX
XQGHUVWDQGKRZIUHTXHQF\DQGUHVRQDQFHZRUNV0DQ\ZRPHQZDNHXSLQWKH
PRUQLQJDIWHUEHLQJUDSHGE\DUHSWLOLDQIHHOLQJVRUHQHVVLQWKHLUYDJLQDVDQG
VRPHWLPHVLQWKHLUUHFWXPVDVZHOO7KHHQWLUHVRUGLGH[SHULHQFHPD\VHHPWR
WKHIHPDOHDEGXFWHHDVPHUHO\DQXQXVXDOO\HURWLFGUHDPGHVSLWHWKH
SK\VLFDOGLVFRPIRUW,IWKDWLVQ
WPLQGFRQWURO,GRQ
WNQRZZKDWLV

7KLVGLUW\UHSWLOLDQEXPER\LQGXOJHVLQDVWUDOUDSHV7KDW
VILQH,
OOKDYHKLV
UHSWLOLDQVFDOSRQHRIWKHVHGD\V'HSHQGLQJRQWKHZRPHQLQYROYHGWKHVH
NLQGVRIXQZDQWHGQRFWXUQDOUDSHVFDQFUHDWHPXFKIHDUDQGWUHSLGDWLRQDQGEH
VHULRXVO\GLVUXSWLYHRIQRUPDOVOHHSSDWWHUQV2WKHUZRPHQGHYHORSHIIHFWLYH
FRXQWHUPHDVXUHVDQGKDYHHYHQEHHQNQRZQWRH[DFWVRPHPHDVXUHRI
UHYHQJHDJDLQVWWKHVHUHSWLOLDQKRVWV

)HDULVDOVRSURPRWHGWKURXJKDVHHPLQJO\HQGOHVVVWUHDPRIPLQGJDPHV
SHUSHWUDWHGWRFRQIXVHRULQWLPLGDWHWKHIHPDOHDEGXFWHHJRLQJWKURXJKWKHVH
DVWUDOUDSHV7KHUHSWLOLDQPD\FUHDWHGUHDPVFDSHVFHQDULRVZKHUHKHOXUNVLQ
WKHEDFNJURXQGDQGREVHUYHVDVWKHKXPDQJRHVWKURXJKRQHPDQLSXODWHG
GUDPDDIWHUDQRWKHU7KHUHSWLOLDQVOLNHWRVWDQGRIIWRWKHVLGHDQGODXJK
DPRQJVWWKHPVHOYHVDWWKHSV\FKRGUDPDVWKH\DUHSXWWLQJWKHDEGXFWHH
WKURXJK7KHUHSWLOLDQVOLWHUDOO\IHHGRIIRIRXUIHDUDQGDQ[LHW\ZKLFKLV
UHDVRQHQRXJKIRUWKHPWRFUHDWHWKHVHW\SHVRIGUHDPVFDSHVFHQDULRV

3URPLVFXLW\LVDOVRSURJUDPPHGLQWRDEGXFWHHVLQFOXGLQJSUHWHHQV7KH
UHSWLOLDQVFDQWXUQXSWKHVH[XDODURXVDOPHFKDQLVPLQKXPDQVZLWKOLWWOHRUQR
HIIRUW7KHVH[XDODURXVDOPHFKDQLVPLVDFWLYDWHGZLWKLQKXPDQVZKLOHDWWKH
VDPHWLPHWKHKXPDQILQGVKLPVHOIRUKHUVHOILQDQHURWLFGUHDP

7KURXJKWHOHSDWKLFVXJJHVWLRQDQGSHUFHSWXDOPDQLSXODWLRQWKHDEGXFWHHLVOHG
LQWRDVFHQDULRZKHUHWKH\DUHHQFRXUDJHGZKLOVWLQWKLVKLJKO\DURXVHGVWDWH
WRHQJDJHLQVH[XDODFWLYLW\7KHVH[XDODFWLYLW\WKHDEGXFWHHLVOHGLQWRPD\
LQYROYHUHSWLOLDQVJUD\VDOLHQKXPDQK\EULGVDQGLQVRPHFDVHVZLWKRWKHU
DEGXFWHHV7KHUHDUHQXPHURXVYDULDWLRQVRIWKLVW\SHRIVFHQDULR

7KHVHHURWLFGUHDPVFDSHPDQLSXODWLRQVFDQRFFXUIRUVHYHUDOQLJKWVUXQQLQJ
2UWKH\FDQRFFXULQWHUPLWWHQWO\RYHUDSURWUDFWHGSHULRGRIWLPHODVWLQJZHHNV
PRQWKVDQG\HDUV
1RWRQO\ZLOOWKHDEGXFWHHKDYHWKHVHNLQGVRIHURWLFGUHDPVDQGDFWXSRQ
WKHPLQWKHGUHDPVFDSHEXWDOVRKHRUVKHZLOOUHFHLYHHURWLFPHQWDOLPDJHU\
HYHQGXULQJWKHLUZDNLQJKRXUV7HOHSDWKLFVXJJHVWLRQVZLOOEHXWLOL]HGWR
HQFRXUDJHWKHDEGXFWHHWRHQJDJHLQVH[XDOLQWHUFRXUVH7KLVSDUWLFXODUIRUP
RIFRQGLWLRQLQJLVSDUWLFXODUO\HIIHFWLYHRQZRPHQ

$KXPDQIHPDOHWKDWKDVEHHQFRQGLWLRQHGLQWKLVIDVKLRQFDQEHFRPH
H[WUHPHO\SURPLVFXRXVIRUDQH[WHQGHGSHULRGRIWLPH1HHGOHVVWRVD\WKLV
FUHDWHVDVLWXDWLRQZKHUHWKHZRPDQFDQEHVHWXSLQDVHULHVRIVHOI
GHVWUXFWLYHQHJDWLYHUHODWLRQVKLSVIXOORIKLJKGUDPDDQGFRQIOLFW1RWRQO\
ZLOOWKHUHSWLOLDQVIHHGRIIWKHDQ[LHW\DQGVWUHVVHQJHQGHUHGZLWKLQWKHZRPDQ
EXWWKH\ZLOODOVRIHHGRIIWKHVH[XDOHQHUJ\JHQHUDWHGGXULQJWKHZRPDQ
V
PDQ\VH[XDOH[SHULHQFHVZLWKGLIIHUHQWSDUWQHUV

,NQRZRIFDVHVZKHUH\RXQJSUHDGROHVFHQWJLUOVKDYHXQGHUJRQHWKLVNLQGRI
DVWUDOGUHDPVFDSHPDQLSXODWLRQ1LJKWDIWHUQLJKWWKH\DUHKDYLQJGUHDPV
LQYROYLQJVH[XDODFWLYLW\WRWKHSRLQWZKHUHWKH\EHFRPHSUHRFFXSLHGZLWK
WKRXJKWVRIVH[DWDOOWLPHVRIWKHGD\7KH\PD\EHJLQWRPDVWXUEDWHWRVXFK
DQH[WHQWWKDWWKHLUSDUHQWVQRWLFHWKLVFKDQJHLQWKHLUEHKDYLRU7KH\PD\HYHQ
DVNWKHLUSDUHQWVTXHVWLRQVLQYROYLQJVH[XDOLW\

7KHUHKDYHEHHQLQVWDQFHVZKHQ\RXQJJLUOVXQGHUJRLQJWKLVNLQGRI
PDQLSXODWLRQKDYHEHHQNQRZQWRKLGHEHQHDWKWKHEHGRIWKHLUSDUHQWVKRSLQJ
WKDWWKHODWWHUZLOOHQJDJHLQVH[XDOLQWHUFRXUVH7KH\RXQJJLUOPD\EHFRPH
DQH[KLELWLRQLVWZDONLQJDURXQGWKHKRXVHQXGHLQIURQWRIKHUVLEOLQJV

:HDUHWDONLQJVLPSOHFDXVHDQGHIIHFWKHUH6LQFHWKHUHSWLOLDQVKDYHWKH
DELOLW\WRVWLPXODWHWKHHURJHQRXV]RQHVRIHYHQSUHDGROHVFHQWJLUOVDQG
ERPEDUGWKHPLQGZLWKHURWLFLPDJHU\WKH\RXQJJLUOLQRXUH[DPSOHLV
LQFDSDEOHRIGRLQJDQ\WKLQJH[FHSWDFWRXWDOOWKHIHHOLQJVDQGLPSODQWHG
VXJJHVWLRQVVKHLVJLYHQE\KHUUHSWLOLDQKDQGOHUV,QDVLWXDWLRQVXFKDV,KDYH
MXVWGHVFULEHGLWLVLQFXPEHQWXSRQWKHPRWKHUWREHDVRXUFHRIJXLGDQFHDQG
VXSSRUWWRWKHFKLOGZKRLVXQGHUJRLQJWKHVHHYLOPDQLSXODWLRQVE\WKH
UHSWLOLDQV


9,2/(1&(352027(':,7+,17+('5($06&$3(


9LROHQWDQGVRFLRSDWKLFEHKDYLRUVFDQDOVREHSURPRWHGWKURXJKDVWUDO
GUHDPVFDSHPDQLSXODWLRQ&KLOGUHQWHHQDJHUVDQGDGXOWVFDQEHVKRZQ
LPDJHVRIEORRGDQGJRUHLQWKHDVWUDOGUHDPVFDSHDQGFDQHYHQEHFRPSHOOHG
WRSDUWLFLSDWHLQYLROHQWVFHQDULRVLQZKLFKWKHDEGXFWHHLVPDGHWRHLWKHU
ZDWFKRUWDNHSDUWLQKRUULILFDFWVRIYLROHQFH

7KHUHSWLOLDQVFDQXVHWKHLPDJHRIDFKLOG
VSDUHQWVZKLOVWWKH\SHUSHWUDWHDFWV
RISK\VLFDODQGVH[XDODEXVHXSRQWKHFKLOG,QFDVHWKHUHDGHULVZRQGHULQJ
WKHGHVFULSWLRQVRISV\FKRVH[XDODEXVHJLYHQE\WKHFKLOGUHQKDVEHHQ
REWDLQHGE\SDUHQWVZLWKDKHLJKWHQHGVHQVHRIDZDUHQHVVDERXWWKHDEGXFWLRQ
V\QGURPH7KHUHSWLOLDQVW\SLFDOO\PHWHRXWWKHLUUHSULVDOVXSRQWKHFKLOGUHQRI
DEGXFWHHVZKRDUHDFWLYHO\UHVLVWLQJWKHP/DWHU,ZLOOGLVFXVVLQPRUHGHWDLO
KRZVH[XDOLW\FDQEHPDQLSXODWHGWRWKHH[WHQWRIDOWHULQJWKHVH[XDO
RULHQWDWLRQRIFHUWDLQKXPDQV

5HJDUGLQJYLROHQFHDVDFRQGLWLRQHGUHVSRQVH,NQRZSHUVRQDOO\DQDGXOW
PDOHZKRZDVPDGHWRNLOOKLVZLIHDQGFKLOGUHQDJDLQDQGDJDLQLQWKHDVWUDO
GUHDPVFDSH7KHNLOOLQJVZRXOGDOZD\VEHGRQHLQDJRU\YLFLRXVIDVKLRQ+LV
ZDNLQJKRXUVZHUHQRUHOLHIHLWKHUDVYRLFHVLQKLVKHDGXUJHGKLPWRDFWRQ
WKHIDQWDVLHVKH
GEHHQKDYLQJDQGPXUGHUKLVHQWLUHIDPLO\+HWROGPHWKDW
KHFRXOGXQGHUVWDQGKRZVRPHRQHFRXOGEHPDGHWRNLOODIWHUWKH\KDGEHHQ
VXEMHFWHGWRWKLVW\SHRIWUHDWPHQWIRUDZKLOH

9LROHQWWHQGHQFLHVZLWKLQPDOHVFDQEHIRVWHUHGE\WKLVW\SHRIPDQLSXODWLRQ
,WLVHVSHFLDOO\XVHIXOLIWKHPDOHLVWKHSDUWQHURIDIHPDOHDEGXFWHHWKDWWKH
UHSWLOLDQVZDQWWRNHHSLQDVWDWHRISK\VLFDODQGVH[XDOGHJUDGDWLRQ7KH
UHSWLOLDQVZLOOXVH7DU]DQDVWKHLUSUR[\KDQGOHU2IWHQWLPHVLI7DU]DQLV
KRVWHGKLPVHOIRULIKHLVEHLQJSOLHGZLWKGHYLDQWHURWLFPHQWDOLPDJHU\KH
ZLOOEHJLQWRPDQLIHVWGHYLDQWVH[XDOGHVLUHVLQFOXGLQJDFWLQJRXWIDQWDVLHVRI
ERQGDJHDQGGLVFLSOLQHXSRQKLVKDSOHVVJLUOIULHQGRUZLIH9XOJDULW\VH[XDO
SHUYHUVLRQDQGWKHQHHGWRFRQWURORWKHUVDUHKDOOPDUNVRIWKHUHSWLOLDQ
LQIOXHQFHXSRQKXPDQEHLQJV

9LROHQWWHQGHQFLHVFDQDOVREHSURPRWHGZLWKLQPDOHDEGXFWHHVXQGHUJRLQJ
WKH$OLHQ/RYH%LWH%DUEDUD%DUWKROLFDQG(YH/RUJHQKDYHPDGHLQGHSWK
VWXGLHVRIWKLVIRUPRIDOLHQPDQLSXODWLRQ

'XULQJWKHODWWHUVWDJHVRIWKH/RYH%LWHPDQLSXODWLRQDPDOHDEGXFWHHFDQ
EHFRPHHQUDJHGDWWKHIHPDOHKHKDVEHFRPHREVHVVHGZLWK7KHDOLHQVZLOO
VHQGLPDJHVLQWRWKHPLQGRIWKHPDOHDEGXFWHHRIKLVWDUJHWHGORYHELWH
SDUWQHUKDYLQJVH[XDOLQWHUFRXUVHZLWKDQRWKHUPDQ,WLVDVLIDYLGHRWDSHLV
SOD\LQJLQWKHPLQGRIWKHPDOHDEGXFWHHZKLFKLVGHVLJQHGWRGULYHKLPFUD]\
ZLWKUDJH

$EGXFWHHVFDQEHPDGHWRHDWZKDWDSSHDUVWREHUDZPHDWEORRG\SDQFDNHV
RUHYHQKXPDQERG\SDUWVVXFKDVKDQGVLQWKHDVWUDOGUHDPVFDSH$EGXFWHHV
KDYHEHHQNQRZQWRVXIIHUH[WUHPHQDXVHDODVWLQJIRUZHHNVRUPRQWKVDIWHU
EHLQJVXEMHFWHGWRWKLVNLQGRIPDQLSXODWLRQ,FDQQRWVWUHVVHQRXJKWKH
LPSRUWDQFHRIQHYHUHDWLQJRUGULQNLQJDQ\WKLQJLQWKHDVWUDOGUHDPVFDSH

6(;8$/&21',7,21,1*2)$%'8&7((6

7KHILQDOSDUWRIWKLVWUHDWLVHGHDOVZLWKWKHPRVWFRQWURYHUVLDODVSHFWRIWKH
UHSWLOLDQDVWUDOGUHDPVFDSHPDQLSXODWLRQRIKXPDQV7KLVLVWKHFRQGLWLRQLQJ
RIDFHUWDLQSHUFHQWDJHRIKXPDQVWRZDUGVDGRSWLQJKRPRVH[XDOLW\DVZHOODV
6DGRPDVRFKLVPDQGLWVUHODWHGEHKDYLRUVDVDQDOWHUQDWLYHOLIHVW\OH
3HGRSKLOLVPFDQHYHQEHSURJUDPPHGLQWRWKHDEGXFWHHYLDWKLVGUHDPVFDSH
PDQLSXODWLRQ

+HUHFRPHVWKHGLVFODLPHUDQG,
GOLNHWKHUHDGHUWRUHDGWKLVSDUWWZLFHVR
WKHUHLVQRPLVXQGHUVWDQGLQJ

,$01276$<,1*7+$7$//+2026(;8$/6%,6(;8$/6
6$'20$62&+,6725%21'$*($1'',6&,3/,1($)),&,$1$'26
:(5(&21',7,21('72,1'8/*(,17+(6($&7,9,7,(6%(&$86(
2)7+(5(37,/,$16,$00(5(/<6$<,1*7+$7$&(57$,1
3(5&(17$*(2)+80$16$5(68%-(&7('%<7+(5(37,/,$16
72$)2502)$675$/'5($06&$3($1'6(;8$/
0$1,38/$7,21:+,&++$6)267(5('$1,1&/,1$7,21
72:$5'6$'237,1*7+(6($/7(51$7,9(/,)(67</(6
/,.(:,6(&(57$,1$%'8&7((6&$1%(0$1,38/$7(',172
'(9(/23,1*$3523(16,7<72:$5'63('23+,/,60%<12
0($16$5(7+(6(7$&7,&6())(&7,9($*$,167$//
$%'8&7((6

,ZLOOQRZGHVFULEHKRZWKLVLVGRQH,PHQWLRQHGHDUOLHUKRZWKHUHSWLOLDQVDUH
DEOHWRWXUQXSWKHVH[XDODURXVDOPHFKDQLVPLQKXPDQV7KLVLVDQ
DEVROXWHO\FULWLFDOSRLQWWRXQGHUVWDQG$QRWKHULVWKHIDFWWKDWWKHUHSWLOLDQV
DQGWKHLUDOLHQYDVVDOVFDQHQVXUHWKDWDQDEGXFWHHUHPDLQVLQJOHDQGFHOLEDWH
IRUH[WHQGHGSHULRGVRIWLPH7KHUHSWLOLDQVKDYHEHHQNQRZQWRDOWHUWKH
ROIDFWRU\VHQVHVRIIHPDOHDEGXFWHHVWRVXFKDQH[WHQWWKDWWKH\ZLOOUHDFW
QHJDWLYHO\DQGEHLPPHGLDWHO\UHSXOVHGE\WKHVFHQWRIKXPDQPDOH
SKHURPRQHV

%\WKHVDPHWRNHQDPDOHDEGXFWHHWKDWKDVKDGKLVHQGRFULQHV\VWHPDOWHUHG
FDQHPLWSKHURPRQHVWKDWZLOOOLWHUDOO\UHSHOZRPHQ7KLVLVQRWFRQMHFWXUHRU
VSHFXODWLRQ7KXVZHKDYHPDOHDEGXFWHHVZKRFDQKDYHWKHLUOLELGR
PDQLSXODWHGDWZLOOE\WKHUHSWLOLDQVDQG\HWEHXQZLWWLQJO\IRUFHGLQWR
H[WHQGHGSHULRGVRIFHOLEDF\7KLVVHWVWKHVWDJHIRUWKHDVWUDOGUHDPVFDSH
PDQLSXODWLRQVZKLFKPD\OHDGWRWKLVSHUVRQ
VFRQVFLRXVRUXQFRQVFLRXV
DGRSWLRQRI$1DOWHUQDWLYHOLIHVW\OH

$PDOHDEGXFWHHZLOOILQGKLPVHOILQDQDVWUDOGUHDPVFDSHHQYLURQPHQWWKDWLV
KLJKO\FKDUJHGZLWKVH[XDOHQHUJ\+HKLPVHOIEHFRPHVDURXVHGDVWKH
UHSWLOLDQVPDQLSXODWHKLVOLELGR7KHPDOHDEGXFWHHZLOOILQGKLPVHOILQD
EHGURRPVHWWLQJ2IWHQWLPHVWKHEHGZLOOEHODUJHDQGFLUFXODU7KHUHPD\EH
RQHRUWZREHDXWLIXOZRPHQO\LQJRQWKHHQG

$VKHDSSURDFKHVWKHZRPHQWKH\EHJLQWRDVVXPHYHU\VHGXFWLYHSRVWXUHV
DQGSRVLWLRQVRQWKHEHG7KHPDOHZLOOILQGKLPVHOIH[WUHPHO\DURXVHG+H
PD\EHJLQWRKHDUWHOHSDWKLFVXJJHVWLRQVHQFRXUDJLQJKLPWRHQJDJHLQ
LQWHUFRXUVHZLWKRQHRIWKHZRPHQ

+HZLOOSRVLWLRQKLPVHOIVRDVWRSHQHWUDWHWKHZRPDQ$7(;$&7/<7+(
6$0(,167$17+(3(1(75$7(67+(:20$1+()((/6$1
,17(16(3$,1,1+,6$186$6$5(37,/,$1%(,1*62'20,=(6
+,0$WWKLVSRLQWWKHPDOHDEGXFWHHRIWHQWLPHVZDNHVXSIURPWKHSDLQKH
IHHOV+HIHHOVDQLFN\WLQJOLQJHQHUJ\LQWKHEHGURRPDQGIHHOVWKLVHQHUJ\
WKURXJKRXWKLVZKROHERG\DVLILWKDGWULHGWRSHQHWUDWHKLVYHU\EHLQJEXWLV
QRZH[LWLQJKLVERG\7KHLFN\WLQJO\HQHUJ\VHHPVWRKRYHUGLUHFWO\RYHUKLP
EXWJUDGXDOO\EHJLQVWRGLVVLSDWHDQGILQDOO\JRHVDZD\

+HPD\SRQGHUDQGUHIOHFWRQZKDWMXVWRFFXUUHG+LVSDLQDQGGLVFRPIRUWLV
UHDOHQRXJKEXWKHPD\QRWEHDEOHWRUHODWHKLVGLVFRPIRUWWRWKHXQXVXDO
HURWLFGUHDPKHMXVWKDG6RRQDIWHUWKHPDOHDEGXFWHHKDVDQRWKHUGUHDP
7KLVWLPHKHPD\EHZDONLQJDURXQGLQDODUJHVSDUVHO\IXUQLVKHGKRXVHZLWKD
QXPEHURIURRPV+HPD\ZDQGHULQWRDOLYLQJURRPDUHDDQGVHHDYHU\
DWWUDFWLYHZRPDQZHDULQJOLQJHULHVLWWLQJRQDOD]\ER\ORXQJHFKDLU7KHUH
PD\EHRWKHUSHRSOHZDQGHULQJDURXQGWKHKRXVHWRR7KHPDOHEHJLQVWRIHHO
DURXVHGDQGWKHVFDQWLO\FODGZRPDQEHFNRQVKLPWRHQJDJHLQVH[XDO
LQWHUFRXUVHEXWVLQFHWKHUHDUHRWKHUVZDONLQJDURXQGWKHKRXVHWKHPDOHLV
UHOXFWDQWWRHQJDJHLQLQWHUFRXUVH

)LQDOO\KHVXEPLWVWRWKHHQWUHDWLHVRIWKHVH[\ZRPDQDQGEHJLQVWRNLVVDQG
FDUHVVKHU6KHDGRSWVDVH[XDOO\SURYRFDWLYHSRVHRQWKHIORRURURQWKHOD]\
ER\+HSRVLWLRQVKLPVHOIWRKDYHVH[ZLWKWKHZRPDQDVZHVKDOOVHHODWHU
RIWHQWLPHVWKHVHZRPHQDUHQRWUHDOO\ZRPHQDWDOODQGRQFHDJDLQWKH
PRPHQWKHSHQHWUDWHVKHUYDJLQDKHIHHOVLQWHQVHSDLQLQKLVDQXVDVKH
KLPVHOILVSHQHWUDWHGE\DUHSWLOLDQ7KHVRGRPL]LQJUHSWLOLDQLVRIWHQWLPHV
LQYLVLEOHGXULQJWKHVHDFWLYLWLHV

2QFHDJDLQWKHPDOHDEGXFWHHLPPHGLDWHO\ZDNHVXS$JDLQWKHURRPDQGKLV
ERG\DUHVDWXUDWHGZLWKWKLVLFN\WLQJO\HQHUJ\ZKLFKVHHPVWRRR]HRXWRIKLV
RZQSRUHV7KLVWLPHKHLVFRQFHUQHGEHFDXVHWKLVLVWKHVHFRQGWLPHWKLVKDV
KDSSHQHGWRKLP+HNQRZVWKDWVRPHWKLQJLVJRLQJRQEXWFDQ
WILJXUHRXW
H[DFWO\ZKDWLWLV+HLVFRQFHUQHGEXWKHDOVREHJLQVWRH[SHULHQFHFHUWDLQ
IHHOLQJVDQGHPRWLRQVGXULQJKLVZDNLQJKRXUV

+HPD\EHJLQWRZRQGHUZKDWLWIHHOVOLNHWRHQJDJHLQKRPRVH[XDODFWLYLW\
EXWTXLFNO\GLVPLVVHVWKHWKRXJKWIURPKLVPLQG+HPD\KDYHUDQGRP
WKRXJKWVHQWHULQWRKLVPLQGDERXWWKHQDWXUHRISDLQDQGKRZLWPLJKWEH
WUDQVIRUPHGLQWRSOHDVXUHLIDPHWKRGLVGHYHORSHGRULQWURGXFHGWKDWZLOO
EULGJHWKHJDSEHWZHHQWKHWZR2IFRXUVHWKHVHDUHQRW+,6LGHDV+LV
UHSWLOLDQ)DPLOLDUVDUHWHOHSDWKLFDOO\VXJJHVWLQJWKLVWRKLP,QD
V\QFKURQLVWLFIDVKLRQKHPD\EHH[SRVHGWRFHUWDLQW\SHVRIOLWHUDWXUHRUILOP
ZKLFKHQGRUVHVRUVHHPLQJO\OHJLWLPL]HVLQKLVPLQGWKLVNLQGRIOLIHVW\OH

6RRQWKHPDOHDEGXFWHHILQGVKLPVHOILQDQRWKHUGUHDP+HRQFHDJDLQILQGV
KLPVHOILQDQHURWLFGUHDPVFDSHZLWKRQHRUPRUHZLOOLQJSDUWQHUV7KHZRPHQ
RQFHDJDLQDGRSWFHUWDLQSRVLWLRQVWRIDFLOLWDWHVH[XDOLQWHUFRXUVH%\QRZWKH
DEGXFWHHEHFDXVHRIKLVSUHYLRXVH[SHULHQFHVLQWKHDVWUDOGUHDPVFDSHZKLFK
KHFDQQRZUHPHPEHUKDVFRQVFLRXVO\RUXQFRQVFLRXVO\DVVRFLDWHG
+HWHURVH[XDO,QWHUFRXUVH:,7+3$,1EHFDXVHRIZKDWWKHUHSWLOLDQVKDYH
GRQHWRKLPLQWKHSDVWHDFKWLPHKHDWWHPSWHGKHWHURVH[XDOLQWHUFRXUVH+H
PD\EHUHOXFWDQWWRHQJDJHLQVH[XDOLQWHUFRXUVHIRUIHDURIWKHSRVVLEOH
FRQVHTXHQFHVDQGUHVXOWDQWSDLQWKDWKHWHURVH[XDOLQWHUFRXUVHHQJHQGHUV7KLV
LVDQDEVROXWHO\HVVHQWLDOSRLQWWRXQGHUVWDQGDERXWDOOWKLV7KHFRQFHSWRI
+HWHURVH[XDO,QWHUFRXUVHKDVEHFRPHDVVRFLDWHGZLWK3$,1LQWKHPLQGRIWKH
PDOHDEGXFWHHEHLQJWKXVPDQLSXODWHG

1RZWKHPDOHDEGXFWHHLVUHOXFWDQWWRHQJDJHLQKHWHURVH[XDOLQWHUFRXUVH
+RZHYHUKHLVVWLOOLQDYHU\DURXVHGVWDWHRIEHLQJ7KHZRPHQDUHWKHUHDQG
KHLVEHLQJWHOHSDWKLFDOO\HQFRXUDJHGWRHQJDJHLQVH[XDODFWLYLW\ZLWKWKHP
6RWKHPDOHDEGXFWHHDUULYHVDWDFRPSURPLVH,QVWHDGRIHQJDJLQJLQFRLWXV
ZLWKWKHZRPHQKHGHFLGHVWRSHQHWUDWHWKHLURULILFHVZLWKKLVILQJHUV

6RKHSHQHWUDWHVWKHYDJLQDRIRQHRIWKHZRPHQZLWKKLVILQJHUVDQGDJDLQKH
IHHOVVLPXOWDQHRXVSDLQLQKLVDQXV+HTXLFNO\ZLWKGUDZVKLVILQJHUVDQG
UHDOL]HVWKDWWKHHQWLW\SURELQJKLPIURPEHKLQGKDVVLPXOWDQHRXVO\ZLWKGUDZQ
LWVPHPEHUIURPKLVDQXV+HVRRQUHDOL]HVWKDWKHFDQUHJXODWHWKHUDWHRI
SHQHWUDWLRQDQGWKHGHSWKRISHQHWUDWLRQLQWRKLVRZQDQXVPHUHO\E\LQVHUWLQJ
KLVILQJHUVLQWKHYDJLQDRIWKHZRPDQ+LVDFWLRQVZLWKWKHZRPDQVHHPWR
V\QFKURQL]HZLWKWKHDQDOSURELQJWKDWKHLVH[SHULHQFLQJ0HDQZKLOHKHLV
UHFHLYLQJWHOHSDWKLFVXJJHVWLRQVHQFRXUDJLQJKLPWRJRDORQJZLWKLW*R
DKHDG\RXNQRZ\RXUHDOO\ZDQWWRGRLWRULWVMXVWDGUHDPJRDKHDG
QRWKLQJZLOOKDSSHQWR\RXRULWGRHVQ
WKXUWWKDWEDGNHHSGRLQJLWLWJHWV
EHWWHU

+HPD\FRQWLQXHLQWKLVIDVKLRQIRUDVKRUWZKLOHEXWWKHQKHVWRSVHLWKHURXW
RIUHYXOVLRQRUEHFDXVHKHKDVUHDFKHGDFHUWDLQSDLQWKUHVKROG

7KHQH[WWLPHKHILQGVKLPVHOILQWKHGUHDPVFDSHKHPD\ILQGKLPVHOIZLWK
ZRPHQDJDLQEXWGXULQJWKHDFWLYLW\RQHRUDOORIWKHZRPHQVKDSHVKLIWLQWR
DKHUPDSKURGLWHW\SHEHLQJLHRQHZLWKERWKPDOHDQGIHPDOHVH[XDORUJDQV

7KLVVKDSHVKLIWRFFXUVZKLOVWKHLVLQDKLJKO\DURXVHGVWDWHRIEHLQJ7KLV
PHWDPRUSKRVLVPD\RFFXUDVKHLVLQVHUWLQJKLVILQJHUVLQWRWKHYDJLQDRUDQXV
RIWKHZRPDQ6RPHWLPHVWKHPDOHDEGXFWHHPD\EHPRPHQWDULO\WDNHQ
DEDFNE\WKLVVXGGHQWUDQVIRUPDWLRQEXWGXHWRWKHFRQGLWLRQLQJERWKLQWKH
GUHDPVFDSHDQGWKHWHOHSDWKLFVXJJHVWLRQVDQGHURWLFKRPRVH[XDOLPDJHU\LQ
KLVPLQG
VH\HGXULQJQRUPDOZDNLQJFRQVFLRXVQHVVKHPD\GHFLGHWR
FRQWLQXHHQJDJLQJLQVH[XDODFWLYLW\+LVUHSWLOLDQIDPLOLDUVZLOOVWLOOEH
HQFRXUDJLQJKLPWRFRQWLQXHWKLVDFWLYLW\DQGZLOOHYHQHQFRXUDJHKLPWRWU\
WKLVWKDWRUWKHRWKHUVH[XDODFWLYLW\ZLWKWKHKHUPDSKURGLWH

6RRQZKHWKHULW
VWKLVGUHDPVFDSHH[SHULHQFHRUWKHQH[WWKHKHUPDSKURGLWHV
PD\FRPSOHWHO\VKDSHVKLIWLQWRPDOHV7KHUHSWLOLDQVRGRPL]LQJWKHPDOH
DEGXFWHHPD\DOVRPDWHULDOL]HLQWKHYLVXDOVSHFWUXPEXWDVDPDQLQVWHDGRID
UHSWLOLDQ7KDWZLOOFRPHODWHULIWKH\VRFKRRVH

$OORIWKLVKDVWDNHQSODFHRYHUDSHULRGRIZHHNVPRQWKVDQG\HDUV%\QRZ
WKHPDOHKDVORVWDQ\LQWHUHVWLQKHWHURVH[XDOLQWHUFRXUVH,IWKHUHSWLOLDQV
LQWHQGWRWXUQWKLVLQGLYLGXDOLQWRDSUDFWLFLQJVDGRPDVRFKLVWERQGDJHDQG
GLVFLSOLQHSUDFWLWLRQHUWKH\ZLOOEHJLQWRHPSKDVL]HWKHVHNLQGVRIDFWLYLWLHV
ZLWKLQWKHDVWUDOGUHDPVFDSHDQGLQWKHPHQWDOLPDJHU\KHUHFHLYHVGXULQJKLV
FRQVFLRXVZDNLQJKRXUV7KHPDOHDEGXFWHHPD\EHVRGRPL]HGTXLWHYLROHQWO\
RUKHPD\ZLWQHVVRWKHUPDOHDEGXFWHHVYLROHQWO\VRGRPL]HG5HSWLOLDQVKDYH
OLWHUDOO\EHHQGHVFULEHGZHDULQJVWXGGHGOHDWKHUMDFNHWVLQVRPHRIWKHVH
GUHDPVFDSHVFHQDULRV

,WPXVWEHXQGHUVWRRGE\WKHUHDGHUWKDWUHSWLOLDQVGHVSLWHDOOWKHSURSDJDQGD
HVSRXVHGE\WKHLUKLYHFRQVFLRXVQHVVPXSSHWVDUHYHU\PXFKPLUHGLQWKH
ORZHUFKDNUDVRIH[LVWHQFH7KHVHDUHEHLQJVWKDWDUHDEVROXWHO\GULYHQWR
VH[XDOO\FRQWUROKXPDQVDQGPDQLSXODWHHYHU\DVSHFWRIWKHLUH[LVWHQFHLIWKH\
KDYHWKHRSSRUWXQLW\7KHDVWUDOGUHDPVFDSHPDQLSXODWLRQRIKXPDQEHLQJVLV
MXVWRQHDVSHFWRIWKHLUPHWKRGRORJ\

:HKDYHQ
WHYHQGLVFXVVHGWKHUHODWLRQVKLSWKDWFU\VWDOPHWKHGULQHDQGFUDQN
KDYHZLWKWKHUHSWLOLDQV&U\VWDOPHWKHGULQHDQGFUDQNKDYHD6\PSDWKHWLF
5HVRQDQFHZLWKWKHUHSWLOLDQV+DYH\RXHYHUZRQGHUHGZK\PDQ\FUDQNVWHUV
DQGVSHHGIUHDNVEHFRPHLQYROYHGLQDFWVRIPD\KHPDQGVH[XDOYLROHQFH",WV
EHFDXVHSURORQJHGXVHRIWKHVHNLQGVRIDPSKHWDPLQHVOHDGVWRWKHXVHU
EHFRPLQJD+RVWIRUDUHSWLOLDQHQWLW\

7KHHQWLW\XWLOL]HVWKHKRVWDVDYHKLFOHWRZUHDNDOONLQGVRIPD\KHPDQG
VH[XDOYLROHQFHDQGGHYLDQFHXSRQVRFLHW\,QGHHGFU\VWDOPHWKDQGFUDQNXVH
LVWKH)$6775$&.72%(&20,1*+267('%<$5(37,/,$1
(17,7<)RUJHWDERXWRFFXOWLFULWXDOVDQGJURXSPHGLWDWLRQVDWYRUWH[DUHDV
7KLVLVWKHEHVWRUZRUVWZD\WREHFRPHDIXOORQUHSWLOLDQKRVW,KDYH
VSRNHQWRDPHQWDOKHDOWKSURIHVVLRQDOZKRWROGPHWKDWPDQ\SHRSOHLQWKH
VWDWHKRVSLWDOZKHUHWKLVSHUVRQZRUNHGZHUHVSHHGIUHDNVZKRFRQILGHQWLDOO\
VSRNHRIWKHVSLULWVWKDWWROGWKHPWRFRPPLWWKHLUFULPHV0DQ\SHRSOHZKR
XVHFUDQNKDYHFRQIHVVHGWKDWWKHLUVH[XDOGHVLUHVEHFDPHPRUHDQGPRUH
GHYLDQWDVWLPHZHQWRQ7KH\EHJDQWRYLVLWWKHFKLOGSRUQRJUDSK\VLWHVRQWKH
LQWHUQHWRUEHJDQWRPHQWDOO\VH[XDOL]HZRPHQLQDVDGRPDVRFKLVWLFDQG
ERQGDJHDQGGLVFLSOLQHIDVKLRQ,ZLOOGLVFXVVLQPRUHGHWDLOEHORZKRZVRPH
DEGXFWHHVFDQEHWXUQHGLQWRSHGRSKLOHVE\WKHUHSWLOLDQVEXWWKLVLVDJRRG
RSSRUWXQLW\WRGLVFXVVKRZWKHUHSWLOLDQVDQGWKHLUDOLHQYDVVDOVNHHSSHRSOH
DGGLFWHGWRFHUWDLQIRUPVRIVXEVWDQFHDEXVH

'58*6,17+('5($06&$3(

,QP\SUHYLRXVZULWLQJV,DOOXGHGWRWKHSURPRWLRQRIVXEVWDQFHDEXVH
DPRQJVWDEGXFWHHVE\WKHUHSWLOLDQV6RUFHU\E\DQ\RWKHUQDPHLVVWLOOVRUFHU\
,QWKHVWULFWHVWVHQVH6RUFHU\UHIHUVWRWKHXVHRIQDWXUDORUDUWLILFLDO
VXEVWDQFHVE\KXPDQVLQRUGHUWRDWWDLQDFHUWDLQOHYHORIFRQVFLRXVQHVVDVD
PHDQVRIHVWDEOLVKLQJDQGPDLQWDLQLQJFRQWDFWZLWKQRQKXPDQLQWHOOLJHQFHV,
ZLOOQRZSRLQWRXWKRZDVWUDOGUHDPVFDSHPDQLSXODWLRQFDQDQGZLOOEHXVHG
WRNHHSDEGXFWHHVRIERWKVH[HVKRRNHGRQYDULRXVGUXJVLQFOXGLQJEXWQRW
OLPLWHGWRDOFRKROFU\VWDOPHWKHGULQHFUDQNFRFDLQHDQGPDULMXDQD

,IDQDEGXFWHHKDVJLYHQXSDOFRKROIRUDZKLOHKHPD\KDYHGUHDPVZKHUHKH
LVGULQNLQJERR]H1RWMXVWGULQNLQJEHHUVEXWJX]]OLQJZKLVNH\RXWRIDERWWOH
7KHGUHDPVFDSHHQYLURQPHQWPLJKWEHVLPXODWHGWRORRNOLNHDIDYRULWHSXERU
KDQJRXW'XULQJWKLVGUHDPVFDSHH[SHULHQFHWKHDEGXFWHHPD\EHGULQNLQJ
ZLWKZKDWDSSHDUWREHROGGULQNLQJEXGGLHVKHKDVQ
WVHHQLQ\HDUV+HPD\
ZDNHXSLQWKHPRUQLQJZLWKDKDQJRYHURUDWUHPHQGRXVKHDGDFKH

7KHULWXDOLVWLFDVSHFWRIPDULMXDQDXVDJHLVH[SORLWHGELJWLPHE\WKHUHSWLOLDQV
LQWKHDVWUDOGUHDPVFDSH$QDEGXFWHHZLOOILQGKLPVHOILQDGUHDPZKHUHKHLV
EDFNLQDSDUW\KRXVHKHXVHGWRKDQJRXWDWDVDWHHQDJHUIRUH[DPSOH
$JDLQWKHUHSWLOLDQVKDYHVFDQQHGKLVPHPRULHVDQGNQRZH[DFWO\KRZWR
FUHDWHDUHDVRQDEOHIDFVLPLOHRIWKLVSDUW\KRXVH(YHU\WKLQJLQFOXGLQJWKH/HG
=HSSHOLQSRVWHUVRQWKHZDOOZLOOEHVLPXODWHG

7KHDEGXFWHH
VSDUW\EXGGLHVDVWKH\DSSHDUHG\HDUVDJRZLOOEHSUHVHQW+HUH
LVZKHUHWKHULWXDOLVWLFDVSHFWRISRWXVHFRPHVLQWRSOD\7KHDEGXFWHHZLOO
ILQGDEDJRISRWLQKLVSRFNHW+HZLOOSXOOLWRXWDQGEHJLQWKHULWXDORI
UHPRYLQJWKHVHHGVDQGWKHVWHPVRUGHSHQGLQJRQWKHTXDOLW\RIWKH
GUHDPVFDSHSRWSXOORXWOLWWOHVFLVVRUVDQGEHJLQFXWWLQJXSWKHEXGV(YHU\
QXDQFHRIWKHMRLQWUROOLQJRUSLSHVWXIILQJULWXDOLVUHHQDFWHGLQPLQXWHGHWDLO
)LQDOO\WKHJURXSJDWKHUVDURXQGLQDFLUFOHDQGEHJLQVWKHULWXDORIVPRNLQJ
WKHSRWDQGSDVVLQJLWDURXQG7KHGXUDWLRQRIWKHVHH[SHULHQFHVDUHWKHVDPH
DVLILWZHUHEHLQJGRQHLQUHDOOLIHZLWKHDFKVPRNHUH[SHFWDQWO\ZDLWLQJIRU
WKHLUQH[WKLWRISRW

:KHQWKHDEGXFWHHZDNHVXSVKRUWO\WKHUHDIWHUWKLVLVXVXDOO\GRQHLQWKHODWH
PRUQLQJVRWKHPHPRU\LVVWLOOIUHVKKHPD\DFWXDOO\IHHODVLIKH
VKLJKRQ
SRWIRUIHZPLQXWHV7KHUHDVRQKHPD\IHHOKLJKDOEHLWPRPHQWDULO\LV
EHFDXVHWKHUHSWLOLDQVFDQPDQLSXODWHEUDLQFKHPLVWU\LQRUGHUWRVLPXODWHWKH
IHHOLQJRIEHLQJXQGHUWKHLQIOXHQFHRIDQ\GUXJWKH\FKRRVH7KH\ZLOOHYHQ
LQMHFWRURWKHUZLVHLQWURGXFHWKHGUXJLQWRWKHVOHHSLQJDEGXFWHH

%DUEDUD%DUWKROLFDFWXDOO\KDVFDVHVZKHUHWKHDEGXFWHHZRNHXSZLWKSRZGHU
XQGHUWKHLUQRVHVRUUHPHPEHUHGVHHLQJJUD\VLQMHFWLQJWKHPDQGWHOOLQJWKHP
WKH\ZHUHEHLQJLQMHFWHGZLWK&UDQN

)RUWKLVDQGPDQ\RWKHUUHDVRQVFU\VWDOPHWKHGULQHDQGFUDQNDUHVRPHRIWKH
PRVWGLIILFXOWGUXJVWRTXLW:KHQDQLQGLYLGXDOLVRQVSHHGWKH\UHVRQDWHDWD
GLIIHUHQWIUHTXHQF\WKDQWKH\RUGLQDULO\ZRXOG([FHVVQHUYRXVIUHQHWLFHQHUJ\
RR]HVRXWRIWKHFUDQNXVHUZKLFKLVDVVLPLODWHGJUHHGLO\E\DQ\DQGDOO
UHSWLOLDQVWKDWDUHSUHVHQWLQRURXWRIWKHYLVLEOHVSHFWUXP6SHHGPDNHV
SHRSOHSDUDQRLGDQGHDVLHUWRPDQLSXODWH6RPHFUDQNXVHUVEHJLQWRGHYHORS
GHYLDQWVH[XDOWKRXJKWVDQGGHVLUHVDQGPD\EHJLQDFWLQJRQWKHP,QVRPH
FDVHVFUDQNXVHUVKDYHIRXQGLWZHOOQLJKLPSRVVLEOHWRVWD\RIIRIWKHFKLOG
SRUQRVLWHVRQWKHLQWHUQHW

&UDQNXVHUVDUHPDQLSXODWHGLQWREHFRPLQJYLROHQWDQGXQSUHGLFWDEOHWKXV
FUHDWLQJDQHQYLURQPHQWRIKLJKGUDPDDQGWHQVLRQIRUWKHRWKHUIDPLO\
PHPEHUVLQWKHKRXVHKROG7KHZLYHVRUJLUOIULHQGVRIFUDQNXVHUVZKRKDYH
EHFRPHKRVWHGKDYHGHVFULEHGKRZWKH\VXGGHQO\UHDOL]HGWKDWWKHLQGLYLGXDO
WKH\ZHUHOLYLQJZLWKZDVQRWWKHVDPHPDQ,PDUULHG7KLVFRPHVXSVR
RIWHQWKDWLWFDQQRWEHDVFULEHGPHUHO\WRVRPHNLQGRIKXQGUHGWKPRQNH\
HIIHFW0RUHOLNHDKXQGUHGWKUHSWLOLDQKRVWHIIHFW7KHZRPDQZLOOQRWLFHWKDW
KHUFUDQNVWHUER\IULHQGRUKXVEDQGKDVGHYHORSHGH[WUHPHO\GHYLDQWVH[XDO
GHVLUHVZKLFKKHZDQWVWRWU\RQKLVPDWH+H
VQRWWKHVDPHPDQ,
PDUULHG1RGRXEW

:KHQWKHVSHHGXVHUGHFLGHVWRTXLWXVLQJWKHGUXJWKDW
VZKHQWKHDVWUDO
GUHDPVFDSHPDQLSXODWLRQNLFNVLQWKDWLVWDLORUPDGHWRNHHSKLPRQFUDQNRU
FU\VWDOPHWK7KHUHUHDOO\LVQRQHHGWRHODERUDWHRQLWVXIILFHWRVD\WKDWWKH\
HQVXUHWKDWWKHXVHULQWKHGUHDPVFDSHLVDOZD\VLQDVLWXDWLRQZKHUHWKHGUXJ
LVEHLQJXVHGE\KLPVHOIDQGRWKHUVRUKHLVDOZD\VLQSRVVHVVLRQRIWKHGUXJ
:KHWKHUKH
VVLWWLQJLQDGUHDPVFDSHSDUNLQJORWWKHDWHUSDUNRUFODVVURRP
WKHIRUPHUXVHUZLOODOZD\VILQGWKDWKHKDVKLVGUXJRIFKRLFHLQKLV
SRVVHVVLRQ3UHWW\VRRQWKHFUDQNXVHUEHJLQVXVLQJDJDLQLQWKHUHDOZRUOG
DQGWKHZKROHPLVHUDEOHF\FOHEHJLQVDQHZ

3('23+,/,60,17+($675$/'5($06&$3(

3HGRSKLOLVPLVSURPRWHGPXFKWKHVDPHZD\DVPHQWLRQHGDERYH$PDQPD\
ILQGKLPVHOILQDQHURWLFGUHDPVFDSHVFHQDULRZLWKDZRPDQ+HEHJLQVWR
FDUHVVDQGIRQGOHWKHZRPDQ+HLVLQDKLJKO\DURXVHGVWDWHRIEHLQJ7KH
ZRPDQKHLVZLWKFRQWULYHVWRPDNHWKHPDQOLHRQKLVEDFNDQGVKHPRXQWV
KLPZKLOHKHLVLQDIXOO\DURXVHGVWDWH+RZHYHUWKHPRPHQWWKHZRPDQ
PRXQWVKLPDQGKHSHQHWUDWHVKHUYDJLQDWKHZRPDQVKDSHVKLIWLQWRD\RXQJ
FKLOG6RPHWLPHVWKHZRPDQZLOOVKDSHVKLIWLQWRWKHPDQ
VRZQGDXJKWHU

2WKHUWLPHVWKHPDQPD\EHNLVVLQJDQGFDUHVVLQJDZRPDQDQGWKHQWKH
ZRPDQZLOOVKDSHVKLIWLQWRD\RXQJWHHQDJHER\7KHPDQZLOOEHWDNHQDEDFN
E\WKLVVXGGHQFKDQJHRIHYHQWVDQGSXOOEDFN0HDQZKLOHDYRLFHLQKLVPLQG
ZLOOEHHQFRXUDJLQJKLPWRFRQWLQXHFDUHVVLQJWKLV\RXQJER\7KHYRLFHZLOO
WHOOKLPWKLQJVOLNH*RDKHDG,WVMXVWDGUHDP*RDKHDGQRRQHZLOONQRZ
7KHPDOH
VHURJHQRXV]RQHLVEHLQJPDQLSXODWHGE\WKHUHSWLOLDQVDOOWKHZKLOH
LQRUGHUWRNHHSKLPLQWKLVKLJKO\DURXVHGVWDWH

,QWKHFDVHRIDIHPDOHDEGXFWHHVKHPD\EHKDYLQJDQHURWLFGUHDPZLWKKHU
LGHDOPDQRUVRPHRQHVKHKDVDFUXVKRQLQUHDOOLIH2QHWKLQJOHDGVWR
DQRWKHUDQGULJKWEHIRUHVKHEHJLQVSHUIRUPLQJIHOODWLRRQWKHGUHDPJX\KH
VKDSHVKLIWLQWRD\RXQJER\RULQVRPHFDVHVLQWRKHURZQVRQ

7KHUHDUHQXPHURXVYDULDWLRQVRIWKLVIRUPRIDVWUDOGUHDPVFDSHPDQLSXODWLRQ
6XIILFHLWWRVD\WKDWLWLVDOOPHDQWWRHQFRXUDJHWKDWLQGLYLGXDOWREHJLQ
LQGXOJLQJKLPVHOIRUKHUVHOILQSHGRSKLOLVP

+(,*+7(1('$:$5(1(6635(9(176,7)520:25.,1*

,IRXQGWKLVIDVFLQDWLQJLQVLJKWLQWKHFODVVLFERRN7KH$UWRI:DU
E\6XQ7]XZKLFKZDVLQWHUSUHWHGDQGWUDQVODWHGE\*HQHUDO6DPXHO%
*ULIILWK860&5HWLUHG

$OOZDUIDUHLVEDVHGRQGHFHSWLRQ$VNLOOHGJHQHUDOPXVWEHPDVWHURIWKH
FRPSOLPHQWDU\DUWVRIVLPXODWLRQDQGGLVVLPXODWLRQZKLOHFUHDWLQJVKDSHVWR
FRQIXVHDQGGHOXGHWKHHQHP\KHFRQFHDOVKLVWUXHGLVSRVLWLRQVDQGXOWLPDWH
LQWHQW:KHQFDSDEOHKHIHLJQVLQFDSDFLW\ZKHQQHDUKHPDNHVLWDSSHDUWKDW
KHLVIDUDZD\ZKHQIDUDZD\WKDWKHLVQHDU0RYLQJDVLQWDQJLEO\DVDJKRVW
LQWKHVWDUOLJKWKHLVREVFXUHLQDXGLEOH+LVSULPDU\WDUJHWLVWKHPLQGRIWKH
RSSRVLQJFRPPDQGHUWKHYLFWRULRXVVLWXDWLRQDSURGXFWRIKLVFUHDWLYH
LPDJLQDWLRQ6XQ7]XUHDOL]HGWKDWDQLQGLVSHQVDEOHSUHOLPLQDU\WREDWWOHZDV
WRDWWDFNWKHPLQGRIWKHHQHP\

*HQHUDO*ULIILWKPLJKWDVZHOOKDYHEHHQZULWLQJDERXW$VWUDO'UHDPVFDSH
0DQLSXODWLRQE\WKH5HSWLOLDQV$OORIWKHPHWKRGV,
YHPHQWLRQHGDERYHKDYH
EHHQXVHGDJDLQDQGDJDLQE\WKHUHSWLOLDQVDQGWKHLUDOLHQYDVVDOV7KRVH
DEGXFWHHVZKRKDYHQ
WGHYHORSHGQDXVHDRUVXIIHUHGDPLJUDLQHDQGKDYH
DFWXDOO\ILQLVKHGWKLVWUHDWLVHQRZKDYHWKHLQIRUPDWLRQWKH\QHHGWRSURWHFW
WKHPVHOYHVIURPWKLVIRUPRIPDQLSXODWLRQDQGEHKDYLRUFRQGLWLRQLQJ

,QWHOOLJHQFHHVSHFLDOO\RSHUDWLRQDOLQWHOOLJHQFHLVZRUWKOHVVLILWGRHVQ
WJHWWR
WKHSHRSOHZKRKDYHWKHPRVWQHHGIRULW+LVWRU\KDVSURYHQWKLVWLPHDQG
DJDLQ7KHUHSWLOLDQVFRPHRXWDWQLJKWWRDVVDXOWXVDQGPDQLSXODWHXVLQWKH
DVWUDOGUHDPVFDSH7RSDUDSKUDVH0DR

:KHQKXPDQVVOHHSWKHUHSWLOLDQVDWWDFN:KHQZHDUHDZDNHWKHUHSWLOLDQV
UHWUHDW


7KHWLGHKDVWXUQHG0RUHDQGPRUHVSLULWXDOZDUULRUVDUHDZDNHQLQJWRWKH
UHDOLW\RIWKHUHSWLOLDQRYHUORUGVKLS2XUDELOLW\WRILJKWWKHUHSWLOLDQVRQ
VRPHWKLQJDSSURDFKLQJHTXDOWHUPVLQWKHDVWUDOGUHDPVFDSHLVEHFRPLQJPRUH
 HYLGHQWHYHU\QLJKW0\VHOIDQGWKHWHDP,DPDSDUWRIZLOOFRQWLQXHWR
SURYLGHRSHUDWLRQDOLQWHOOLJHQFHWRWKHDEGXFWHHVZLWKDKHLJKWHQHGVHQVHRI
DZDUHQHVV,FDQDVVXUHWKHUHDGHUWKDWWKH\ZLOOQRWILQGWKLVNLQGRI
LQIRUPDWLRQDWD8)2FRQIHUHQFHXQOHVVP\FROOHDJXHVRUP\VHOILVSUHVHQW
7KH8)25HVHDUFK&RPPXQLW\LVDUHSWLOLDQVWURQJKROGSROOXWHGZLWKKLYH
FRQVFLRXVQHVVPXSSHWVVSHZLQJRXWKLYHFOLFKpVZLWKERULQJUHJXODULW\

2XUWHDPKDVGHFLGHGWRE\SDVVWKHPDLQVWUHDP8)2FRPPXQLW\DQGWDNHWKLV
LQIRUPDWLRQVWUDLJKWWRWKHSHRSOH6REHZDUHDOORI\RXGLUW\UHSWLOLDQ
EXPER\VLQWKH8)2UHVHDUFKFRPPXQLW\DQGLQWKHDVWUDOGUHDPVFDSH:H
DUHJRLQJWRH[SRVH\RXIRUZKDW\RXDUH7KH7587+WRDUHSWLOLDQUHSWLOLDQ
KLYHFRQVFLRXVQHVVPXSSHWLVOLNHVXQOLJKWWRDYDPSLUHRUNU\SWRQLWHWR
6XSHUPDQ7KH7UXWKLVDQDWKHPDWRWKHUHSWLOLDQV1RWLFHKRZWKH+LYH
&RQVFLRXVQHVVWRRNRYHU'DYLG,FNH
VEXOOHWLQERDUGXQWLOLWEHFDPHD
SURSDJDQGDRUJDQIRUWKHUHSWLOLDQUHSWLOLDQKLYHFRQVFLRXVQHVV,WJRWVREDG
WKDW,FNHKDGWRZULWHDSODLQWLYHOHWWHUSRLQWLQJRXWWKDWKHZDVRQO\H[SRVLQJ
WKHDJHQGDRIWKHEDGUHSWLOLDQV