Hubert Enterprises, Inc. and Subsidiaries, et al. - Page 26

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               E.  2000 Computer Equipment                                            
               On April 30, 2000, CRG purchased computer equipment (2000              
          computer equipment) from RFC for $765,326.  Pursuant to                     
          promissory notes dated April 30, 2000, CRG agreed to pay RFC                
          $56,850 and $672,101.  On the same day, CRG leased the 2000                 
          computer equipment back to RFC.                                             
               Also on April 30, 2000, LCL purchased the 2000 computer                
          equipment (subject to the lease) from CRG for $765,326, and LCL             
          executed promissory notes to CRG in the amounts of $56,850 and              
          $667,766.  No individual member of LCL signed or directly                   
          guaranteed the notes, the latter of which stated it was recourse            
          to the extent of $340,000 and that payments of principal would be           
          applied first to the recourse portion.  For each of its taxable             
          years ended in 2000 and 2001, LCL reported as to the 2000                   
          computer equipment the following amounts of lease income,                   
          interest expense, depreciation, “G&A” expense and interest                  
          income, and loss:                                                           
          2000          2001                                                          
               Lease income                 -0-        $100,341                       
               Interest expense          ($17,065)      (48,816)                      
               Depreciation              (153,065)     (244,904)                      
               Net G&A expense                                                        
               and interest income          -0-             639                       
               Loss                       170,130       192,740                       
          The portions of these losses allocated to HBW’s 99-percent                  
          ownership interest were $168,429 and $190,813, respectively.                







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