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      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;&lt;b&gt;7.&amp;#160;Income

      Taxes&lt;/b&gt;&lt;/font&gt;

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      &lt;font style="FONT-FAMILY: Times New Roman, Times, serif; FONT-SIZE: 10pt"&gt;The

      Company evaluates its deferred tax assets on a regular basis

      to determine if valuation allowances are required. In its

      evaluation, the Company considers taxable loss carryback

      availability, expectations of sufficient future taxable

      income, trends in earnings, existence of taxable income in

      recent years, the future reversal of temporary differences

      and available tax planning strategies that could be

      implemented, if required.&amp;#160;&amp;#160;Valuation allowances are

      established based on the consideration of all available

      evidence using a more likely than not

      standard.&amp;#160;&amp;#160;Based on the Company&amp;#8217;s evaluation,

      a valuation allowance of $2.5 million was established against

      its net deferred tax assets for the six months ended June 30,

      2013. This amount was in addition to the $16.8 million

      valuation allowance that was recorded as of December 31,

      2012.&lt;/font&gt;

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