John Franklin Foust - Page 8

                                        - 8 -                                         

          Cheyenne’s Bankruptcy Proceedings                                           
               On February 28, 1989, petitioner filed a voluntary                     
          chapter 12 petition in bankruptcy for Cheyenne.  Cheyenne                   
          failed to fulfill its duties as a debtor-in-possession and to               
          file complete and adequate schedules with the bankruptcy court.             
          Cheyenne also failed to cooperate with the trustee in bankruptcy            
          and to provide the trustee with financial information.  As a                
          result, Cheyenne’s petition was dismissed on May 15, 1989.                  
               On June 20, 1989, petitioner filed a second voluntary                  
          chapter 12 petition in bankruptcy for Cheyenne.  This petition              
          was also filed without the required statements and schedules.  On           
          July 18, 1989, this petition was dismissed.                                 
               In 1989, the Agricultural Stabilization and Conservation               
          Service (ASCS) owed a 1988 corn and soybean disaster payment to             
          Cheyenne in the amount of $37,723.  ASCS distributed the disaster           
          payment to the Commodity Credit Corporation (CCC) and the SBA,              
          creditors of Cheyenne, in the amounts of $34,171 and $3,552,                
          respectively.  Cheyenne did not report the $37,723 disaster                 
          payment on its 1989 Form 1120S.                                             
               In 1989, Cheyenne was also entitled to receive a Federal               
          Crop Insurance (FCI) payment in the amount of $43,496 from                  
          Thurston Fire & Casualty Insurance Co.  In 1989, the $43,496 FCI            
          payment was made to AG Services of America, a creditor of                   
          Cheyenne that had financed its farming operations in earlier                

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