- 4 -
domestic operating companies including Adult Fun Center, Inc.
(Adult Fun), a domestic corporation. Prior to the years in
issue, Adult Fun was an adult novelty store with its principal
place of business in Phoenix, Arizona.
Petitioner operated a live entertainment night club in
Toledo, Ohio. Petitioner also provided operational, management,
and consulting services to adult entertainment clubs doing
business as "Deja Vu". Donald Krontz (Mr. Krontz), who served as
petitioner's president during the subject years, made all of
petitioner's executive decisions in consultation with Mr. Mohney.
In 1990, Adult Fun relocated to a store adjoining petitioner
in Toledo, Ohio, to sell adult lingerie. Adult Fun solicited
funds from petitioner to remodel its new location and to start-up
its business there. Beginning on February 9, 1990, petitioner
made unsecured cash advances to Adult Fun that were evidenced by
the following promissory notes (Notes):
Date Amount Interest Rate Repayment Schedule
Apr. 13, 1990 $6,117 10% $150/month
May 5, 1990 2,000 10% 500/month
June 6, 1990 17,468 10% 250/month
Aug. 8, 1990 3,000 10% 200/month
Oct. 18, 1990 1,000 10% previously agreed
Total 29,585
The advances were not, in all instances, contemporaneous with the
execution of a note. For example, petitioner paid $5,000 to a
construction firm on February 9, 1990, and it paid an additional
amount to the same firm on April 13, 1990. These funds, which
were paid to remodel Adult Fun’s new location, were reflected in
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Next
Last modified: May 25, 2011