Paul G. Gubbini - Page 5

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               On November 23, 1988, Color Trick reassigned the patent to             
          Leland Prentice and his wife in exchange for 200 shares of its              
          stock, which were to be canceled.  On that date, two other                  
          investors in Color Trick were each issued 100 shares of Color               
          Trick.  As a condition for advancing more money to Color Trick,             
          on November 30, 1988, Leland Prentice granted petitioner and                
          other investors a lien on the patent, and a financing statement             
          concerning the lien was filed with the Florida secretary of                 
          state.  The lien on the patent was the only security petitioner             
          obtained for all of his loans and advances to Color Trick.                  
          Petitioner also considered any damages that might be awarded in             
          connection with the lawsuit against A.B. Dick as a possible                 
          source for the repayment of his loans and advances to Color                 
          Trick.                                                                      
               During 1988 and 1989, as petitioner continued to advance               
          funds to Color Trick, he acquired additional stock in Color Trick           
          and, by the end of 1989, he had acquired 60 percent of the stock            
          of Color Trick.  During 1989, in order to induce petitioner to              
          continue to advance funds to Color Trick, Leland Prentice and his           
          wife returned the remainder of their stock in Color Trick to the            
          corporation.  The stock was reissued to petitioner and other                
          investors.  The transfer of the shares allowed more of Color                
          Trick’s losses to be passed through to petitioner and the other             
          investors.  Leland Prentice continued to work in Color Trick’s              
          business after he had given up all of his stock in the                      




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