William Whelpley, Jr. - Page 8

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             from Avant-Garde to WAI.  CPI never issued any stock, and                 
             it never filed a Federal income tax return.                               
                  Mr. Whelpley undertook the work relating to the CPI                  
             project through WAI rather than CPI.  WAI received the                    
             funds advanced by Weeden for the project, and WAI deducted                
             expenses relating to the project on its income tax return.                
             Weeden advanced a total of $103,093 to WAI for the CPI                    
             project in 1987.  A memorandum written by Mr. Whelpley                    
             states that "bills [were] written to CPI by WAI" for this                 
             work.  WAI included the funds advanced by Weeden in the                   
             gross income reported on its 1987 income tax return.                      
                  In addition to the advances for the CPI project,                     
             Weeden transferred funds to WAI as compensation for                       
             Mr. Whelpley's consulting services in connection with                     
             unrelated matters.  WAI included these other funds in gross               
             income, and they are not at issue.                                        
                  At the end of 1987, Weeden's general ledger trial                    
             balance included an account labeled "RECEIVABLE FROM CPI"                 
             which had a debit balance of $103,092.89.  The trial                      
             balance also included an account labeled "PROFESSIONAL                    
             FEES - CONSULTANTS."  Based upon the entries in these                     
             two accounts, it appears that during 1987, payments to                    
             "Whelpley Associates" were initially booked to PROFESSIONAL               
             FEES-CONSULTANTS and were reclassified at the end of the                  
             year to RECEIVABLES FROM CPI.                                             




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