PK Ventures, Inc. and Subsidiaries, et al. - Page 2

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                       MEMORANDUM FINDINGS OF FACT AND OPINION                        

                                  Table of Contents                                   

          FINDINGS OF FACT  ..........................................    7           
               Background  ...........................................    7           
                    A. Rose  .......................................    7             
                    B.   Printon Kane and Co. and the Printon Kane                    
                         Group, Inc.  ................................    8           
                    C. PK Ventures  ................................    9             
                    D. PKVI LP  ....................................   11             
               PK Ventures’ Purchase of the Stock of SLPC, TBPC, TPC,                 
               and TPTC  .............................................   15           
               Rose’s Initial Receipt of an Equity Interest in                        
               PK Ventures  ..........................................   25           
               The Purchase of Zephyr  ...............................   26           
               Transfers From PK Ventures, TBPC, and TPTC to Zephyr                   
               and Zephyr’s Bankruptcy  ..............................   29           
                    A.   As Described in the Business’s Financial                     
                         Statements and Income Tax Returns  ..........   30           
                         1. 1987  ..................................   30             
                         2. 1988  ..................................   31             
                         3. 1989  ..................................   32             
                         4. 1990  ..................................   33             
                    B.   Internal Revenue Service (IRS)                               
                         Determinations  .............................   34           
               Rose’s Acquisition of Control of PK Ventures and                       
               PKVI LP  ..............................................   35           
               Transfers From PK Ventures to the Zephyr Purchasers  ..   42           
                    A.   As Described in the Financial Statements                     
                         and Income Tax Returns for PK Ventures and                   
                         PKV&S  ......................................   43           
                    B.   As Described in the Roses’ Income Tax                        
                         Returns  ....................................   46           
                    C. IRS Determinations  .........................   47             
               Transfers to PKVI LP  .................................   47           
                    A.   Transfers From Unrelated Parties to                          
                         PKVI LP  ....................................   47           





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