Estate of Robert G. Kluener, Deceased, Donald E. Hathaway, Co-executor and Charlotte J. Kluener - Page 24

                  We note that, at a January 16, 1990, board meeting, Mr.                                 
            Kluener estimated that between $1,500,000 and $2,500,000 would be                             
            required to bring APECO's new product lines to market.  He also                               
            stated that there did not appear to be any place the corporation                              
            could obtain such a quantity of capital, and he solicited                                     
            suggestions for sources of capital from the board.  Mr. Kluener                               
            made the foregoing statements even though he was aware that the                               
            proceeds of the horse sales were being paid to APECO Equine.  Mr.                             
            Hathaway admitted at trial that, in making those statements, Mr.                              
            Kluener was engaging in a "charade".  Although petitioners claim                              
            that Mr. Kluener did so in order to maintain the fiscal                                       
            discipline of APECO's personnel, Mr. Kluener's misrepresentation                              
            to the board indicates to us that the proceeds of the horse sales                             
            were not intended for use by APECO.                                                           
                  Petitioners contend that Mr. Kluener intended the secrecy to                            
            keep APECO's personnel focused on the development of the                                      
            Planatronic because they would have attempted to use the money                                
            for other projects had they known of it.  Mr. Kluener, however,                               
            was an experienced businessman, the sole shareholder of APECO,                                
            its chief executive officer, and a director.  According to Mr.                                
            Stock, Mr. Kluener attended meetings of APECO personnel and                                   
            designated the products to be developed.  Moreover, APECO's                                   
            personnel were working on a variety of projects, with Mr.                                     
            Kluener's apparent approval, during the time that the Planatronic                             
            was being developed, and the minutes of meetings of APECO's board                             
            during 1989 and 1990 do not indicate that the corporation's                                   

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