- 26 -
1988. The most recent interim financial statements available were
for the 6 months ended January 31, 1989. (In addition to the
annual audited financial statements, KPMG also prepared unaudited
financial statements on a quarterly basis.)
Except for motivational sales goals announced at semiannual
distributors meetings as of April 21, 1989, JPMS did not project
future revenues, expenses, costs of maintaining the Paul Mitchell
brand name, or income. Between December 1989 and January 1990
KPMG prepared projections of JPMS' revenues and expenses for fiscal
years 1990-94.
M. Post-Death Events
1. Mr. Fujieki's Request for JPMS Documents
On June 29, 1989, Patrick Fujieki, trustee of the Trust, and
Michaeline Re11 were elected to the JPMS Board. (The Board was thus
comprised of Mr. DeJoria, Ms. Braa, Mr. Fujieki, and Ms. Re.) At
this time, the Trust was the shareholder of record of 49.04 percent
of the outstanding common shares of JPMS, of which 1 percent was to
be transferred to Mr. DeJoria in accordance with the terms of Mr.
Mitchell's Will and Trust.
Mr. Fujieki (in his capacities as director of JPMS, trustee
for the Trust, and executor of Paul Mitchell's estate) asked to
11 Ms. Re, an attorney, joined JPMS on Jan. 1, 1989, as
vice president and general counsel, to oversee the correction of
certain operational problems. On Mar. 1, 1989, she became JPMS'
chief operating officer.
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