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consider his opinion about MSSTA's tax liability to constitute
his opinion as to whether the $300,000 purchase price, as set
forth in the Bosworth letter, would be sustained if MSSTA's
return were audited by the Service.
As requested in the Bosworth letter, Mr. Hrynik also pre-
pared a letter (solvency letter), dated September 13, 1989, which
he sent to the board of directors and stockholders of MSSTA. The
solvency letter stated:
We have been requested to provide our opinion relative
to the solvency of the Company [MSSTA] subsequent to
the Company's sale of assets to American Securities
Transfer, Inc. and the redemption of James R. Carter's
common stock.
Section 7-6-102 of the Colorado Corporation Code pro-
vides that no redemption or purchase of redeemable
stock shall be made by a corporation when it is insol-
vent or when such redemption or purchase would render
it insolvent and further provides that a corporation
may redeem its stock only out of surplus. Section 7-1-
102 of the Code defines insolvency as the inability of
a corporation to pay its debts as they become due in
the usual course of its business.
In our opinion, based on the Company's unaudited bal-
ance sheet at August 31, 1989, there will be, immedi-
ately after the asset sale, adequate unreserved and
unrestricted surplus to purchase Mr. Carter's stock.
Further, subsequent to the stock redemption and based
on management's statement that the Company [MSSTA] will
continue to operate in a limited capacity and generate
approximately $10,000 per month in gross revenue, the
Company will have the ability to pay its debts as they
become due in the usual course of business.
At the request of Mr. LaPlante, the only transactions that were
part of the MSSTA transaction which Mr. Hrynik considered in
opining on the solvency of MSSTA are those described in the first
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