The following constitutes the Schedule 13D filed by the undersigned (the “Schedule 13D”).
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Item 1.
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Security and Issuer.
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This statement relates to the common stock, par value $0.001 per share (the “Shares”), of
Superior Drilling Products, Inc., a Utah corporation (the “Issuer”). The address of the principal executive offices of the Issuer is 1583 South 1700 East, Vernal, Utah 84078.
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Item 2.
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Identity and Background.
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(a) This statement is filed by:
(i) Lone Star Value Investors, LP, a Delaware limited partnership (“Lone Star Value Investors”);
(ii) Lone Star Value Co-Invest I, LP, a Delaware limited partnership (“Lone Star Value Co-Invest I”);
(iii) Lone Star Value Investors GP, LLC, a Delaware limited liability company (“Lone Star Value GP”), which serves as the general partner of Lone Star Value Investors and Lone Star Value Co-Invest I;
(iv) Lone Star Value Management, LLC, a Connecticut limited liability company (“Lone Star Value Management”), which serves as the investment manager of Lone Star Value Investors, Lone Star Value Co-Invest I and a certain managed account (the “Separately Managed Account”); and
(v) Jeffrey E. Eberwein, who serves as the manager of Lone Star Value GP and sole member of Lone Star Value Management.
Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing Agreement, as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.
(b) The address of the principal office of each of Lone Star Value Investors, Lone Star Value Co-Invest I,
Lone
Star Value GP, Lone Star Value Management and Mr. Eberwein is 53 Forest Avenue, 1
st
Floor, Old Greenwich, Connecticut 06870.
(c) The principal business of Lone Star Value Investors and Lone Star Value Co-Invest I is investing in
securities
. The principal business of Lone Star Value GP is serving as the general partner of Lone Star Value Investors and Lone Star Value Co-Invest I. The principal business of Lone Star Value Management is serving as the investment manager of Lone Star Value Investors,
Lone
Star Value Co-Invest I and the Separately Managed Account. The principal occupation of Mr. Eberwein is serving as the manager of Lone Star Value GP and the sole member of Lone Star Value Management.
(d) No Reporting Person, has, during the last five years, been convicted in a criminal proceeding (excluding
traffic
violations or similar misdemeanors).
(e) No Reporting Person, has during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
(f) Mr. Eberwein is a citizen of the United States of America.
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Item 3.
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Source and Amount of Funds or Other Consideration
.
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The Shares purchased by Lone Star Value Investors, Lone Star Value Co-Invest I, LP and held in the Separately Managed Account were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule A, which is incorporated by reference herein. The aggregate purchase price of the 2,212,739 Shares beneficially owned by Lone Star Value Investors is $2,436,226, including brokerage commissions. The aggregate purchase price of the 200,000 Shares beneficially owned by Lone Star Value Co-Invest I is approximately $202,000, including brokerage commissions. The aggregate purchase price of the 266,740 Shares held in the Separately Managed Account is approximately $541,480, including brokerage commissions.
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Item 4.
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Purpose of Transaction.
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The Reporting Persons purchased the Shares based on the Reporting Persons’ belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.
The Reporting Persons have engaged, and intend to continue to engage, in general discussions with the Issuer’s Board of Directors (the “Board”) and management team, including with respect to the composition of the Board. In the course of such discussions, the Reporting Persons have informally suggested a director candidate that the Reporting Persons believe would be a valuable addition to the Board.
No Reporting Person has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein. The Reporting Persons intend to review their investment in the Issuer on a continuing basis. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, engaging in additional communications with management and the Board of the Issuer, engaging in discussions with stockholders of the Issuer and others about the Issuer and the Reporting Persons’ investment, making proposals to the Issuer concerning changes to the capitalization, ownership structure, board structure (including Board composition) or operations of the Issuer, purchasing additional Shares, selling some or all of their Shares, engaging in short selling of or any hedging or similar transaction with respect to the Shares, or changing their intention with respect to any and all matters referred to in Item 4.
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Item 5.
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Interest in Securities of the Issuer.
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The aggregate percentage of Shares reported owned by each person named herein is based upon 24,095,695 Shares outstanding as of November 15, 2016, which is the total number of Shares reported outstanding in the Issuer’s Prospectus filed with the Securities and Exchange Commission on November 22, 2016.
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A.
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Lone Star Value Investors
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(a)
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As of the close of business on February 3, 2017, Lone Star Value Investors beneficially owned 2,212,739 Shares.
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Percentage: 9.2%
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(b)
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1. Sole power to vote or direct vote: 2,212,739
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2. Shared power to vote or direct vote: 0
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3. Sole power to dispose or direct the disposition: 2,212,739
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4. Shared power to dispose or direct the disposition: 0
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(c)
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The transactions in the Shares by Lone Star Value Investors during the past 60 days are set forth in Schedule A and are incorporated herein by reference.
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B.
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Lone Star Value Co-Invest I
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(a)
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As of the close of business on February 3, 2017, Lone Star Value Co-Invest I beneficially owned 200,000 Shares.
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Percentage: Less than 1%
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(b)
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1. Sole power to vote or direct vote: 200,000
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2. Shared power to vote or direct vote: 0
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3. Sole power to dispose or direct the disposition: 200,000
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4. Shared power to dispose or direct the disposition: 0
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(c)
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The transactions in the Shares by Lone Star Value Co-Invest I during the past 60 days are set forth in Schedule A and are incorporated herein by reference.
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(a)
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Lone Star Value GP, as the general partner of Lone Star Value Investors and Lone Star Value Co-Invest I, may be deemed the beneficial owner of the (i) 2,212,739 Shares owned by Lone Star Value Investors and (ii) 200,000 Shares owned by Lone Star Value Co-Invest I.
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Percentage: Approximately 10.0%
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(b)
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1. Sole power to vote or direct vote: 2,412,739
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2. Shared power to vote or direct vote: 0
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3. Sole power to dispose or direct the disposition: 2,412,739
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4. Shared power to dispose or direct the disposition: 0
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(c)
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Lone Star Value GP has not entered into any transactions in the Shares during the last 60 days. The transactions in the Shares on behalf of Lone Star Value Investors and Lone Star Value Co-Invest I during the last 60 days are set forth in Schedule A and are incorporated herein by reference.
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D.
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Lone Star Value Management
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(a)
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As of the close of business on February 3, 2017, 266,740 Shares were held in the Separately Managed Account. Lone Star Value Management, as the investment manager of Lone Star Value Investors, Lone Star Value Co-Invest I and the Separately Managed Account, may be deemed the beneficial owner of the (i) 2,212,739 Shares owned by Lone Star Value Investors, (ii) 200,000 Shares owned by Lone Star Value Co-Invest I and (iii) 266,740 Shares held in the Separately Managed Account.
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Percentage: Approximately 11.1%
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(b)
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1. Sole power to vote or direct vote: 2,679,479
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2. Shared power to vote or direct vote: 0
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3. Sole power to dispose or direct the disposition: 2,679,479
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4. Shared power to dispose or direct the disposition: 0
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(c)
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The transactions in the Shares by Lone Star Value Management through the Separately Managed Account and on behalf of Lone Star Value Investors and Lone Star Value Co-Invest I during the past 60 days are set forth in Schedule A and are incorporated herein by reference.
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(a)
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Mr. Eberwein, as the manager of Lone Star Value GP and sole member of Lone Star Value Management, may be deemed the beneficial owner of the (i) 2,212,739 Shares owned by Lone Star Value Investors, (ii) 200,000 Shares owned by Lone Star Value Co-Invest I and (iii) 266,740 Shares held in the Separately Managed Account.
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Percentage: Approximately 11.1%
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(b)
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1. Sole power to vote or direct vote: 2,679,479
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2. Shared power to vote or direct vote: 0
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3. Sole power to dispose or direct the disposition: 2,679,479
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4. Shared power to dispose or direct the disposition: 0
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(c)
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Mr. Eberwein has not entered into any transactions in the Shares during the past 60 days. The transactions in the Shares on behalf of Lone Star Value Investors, Lone Star Value Co-Invest I and the Separately Managed Account during the past 60 days are set forth in Schedule A and are incorporated herein by reference.
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(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.
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Item 6.
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Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer
.
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On February 2, 2017, the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to securities of the Issuer, to the extent required by applicable law. A copy of this agreement is attached as exhibit 99.1 hereto and is incorporated herein by reference.
Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.
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Item 7.
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Material to be Filed as Exhibits
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99.1 Joint Filing Agreement, dated February 2, 2017.
SIGNATURES
After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
Dated: February 3, 2017
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Lone Star Value Investors, LP
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By:
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Lone Star Value Investors GP, LLC
General Partner
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By:
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/s/ Jeffrey E. Eberwein
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Name:
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Jeffrey E. Eberwein
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Title:
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Manager
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Lone Star Value Co-Invest I, LP
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By:
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Lone Star Value Investors GP, LLC
General Partner
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By:
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/s/ Jeffrey E. Eberwein
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Name:
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Jeffrey E. Eberwein
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Title:
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Manager
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Lone Star Value Investors GP, LLC
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By:
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/s/ Jeffrey E. Eberwein
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Name:
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Jeffrey E. Eberwein
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Title:
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Manager
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Lone Star Value Management, LLC
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By:
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/s/ Jeffrey E. Eberwein
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Name:
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Jeffrey E. Eberwein
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Title:
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Sole Member
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/s/ Jeffrey E. Eberwein
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Jeffrey E. Eberwein
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SCHEDULE A
Transactions in the Securities of the Issuer during the Past 60 Days
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Shares of Common Stock
Purchased/(Sold)
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Price Per
Share ($)
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Date of
Purchase / Sale
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LONE STAR VALUE INVESTORS, LP
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50,000
*
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1.1200
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01/03/2017
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(52,420)
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1.1855
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01/03/2017
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(28,968)
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1.1485
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01/04/2017
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50,000*
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1.1300
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01/05/2017
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(9,965)
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1.1308
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01/05/2017
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50,000*
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1.1300
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01/06/2017
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(8,648)
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1.1146
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01/06/2017
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(38,070)
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1.0869
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01/09/2017
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50,000*
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1.0300
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01/11/2017
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30,000*
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1.0500
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01/11/2017
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(28,829)
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1.0400
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01/11/2017
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(61,929)
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1.0400
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01/11/2017
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(500)
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1.0900
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01/12/2017
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50,000*
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1.0600
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01/17/2017
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(8,625)
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1.0366
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01/17/2017
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(20,400)
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1.0606
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01/18/2017
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(10,000)
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1.0800
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01/19/2017
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50,000*
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1.0800
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01/20/2017
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(3,912)
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1.0800
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01/20/2017
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(7,534)
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1.0800
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01/24/2017
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(10,200)
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1.0877
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01/24/2017
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(20,000)
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1.1536
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01/25/2017
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(20,000)
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1.1704
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01/25/2017
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(27,810)#
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1.1113
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01/26/2017
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(1,530)#
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1.1400
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01/27/2017
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2,242,079*
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1.1000
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01/27/2017
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LONE STAR VALUE CO-INVEST I, LP
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(1,150)
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1.2965
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12/06/2016
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(11,805)
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1.2943
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12/07/2016
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(11,820)
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1.3307
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12/08/2016
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(28,124)
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1.3162
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12/12/2016
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(1,246)
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1.1972
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12/19/2016
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(1,150)
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1.2030
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12/20/2016
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(5,010)
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1.1901
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12/21/2016
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(17,401)
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1.1425
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12/22/2016
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(193)
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1.1429
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12/23/2016
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LONE STAR VALUE MANAGEMENT, LLC
(Through the Separately Managed Account)
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(1,150)
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1.2965
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12/06/2016
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(11,805)
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1.2943
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12/07/2016
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(11,820)
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1.3307
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12/08/2016
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(28,124)
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1.3162
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12/12/2016
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(1,247)
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1.1972
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12/19/2016
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(1,150)
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1.2030
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12/20/2016
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(5,009)
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1.1901
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12/21/2016
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(17,402)
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1.1425
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12/22/2016
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(192)
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1.1429
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12/23/2016
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(5,856)
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1.1900
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12/27/2016
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(5,200)
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1.2900
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12/29/2016
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(10,484)
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1.1855
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01/03/2017
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(5,793)
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1.1485
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01/04/2017
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(1,992)
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1.1308
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01/05/2017
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(1,730)
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1.1146
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01/06/2017
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(9,518)
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1.0869
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01/09/2017
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(18,200)
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1.0400
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01/11/2017
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(1,000)
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1.0900
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01/12/2017
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(456)
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1.0900
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01/17/2017
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(600)
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1.0867
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01/18/2017
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(5,100)
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1.0800
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01/19/2017
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(4,328)
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1.0800
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01/20/2017
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(200)
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1.0800
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01/23/2017
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(4,743)
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1.0800
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01/24/2017
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(9,800)
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1.0877
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01/24/2017
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(10,000)
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1.1536
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01/25/2017
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(10,000)
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1.1704
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01/25/2017
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(3,090)
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1.1113
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01/26/2017
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(170)
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1.1400
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01/27/2017
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