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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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Last modified: May 25, 2011