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Morales served as chief executive officer of Telim, Amos as
vice president of operations, petitioner as vice president, and
Mrs. Nix as the secretary and chief financial officer. The Telim
stock was to be treated as section 1244 stock. Upon
incorporation, petitioners were issued 3,000 shares of stock in
Telim, and Morales and Amos were issued 3,000 shares of stock
each.
Telim arranged to have single line telephones manufactured
in Taiwan and imported to and sold in the United States. The
telephones received from Taiwan were defective, and Telim was
required to rebuild the telephones before sale to customers. Due
to delays and limited sales, Telim realized no profits.
Prior to incorporation of Telim in April of 1987,
petitioners spent $39,651 of their funds in startup expenses
relating to Telim.
From April to the end of September 1987, petitioners spent
an additional $25,046 of their funds to pay expenses of Telim,
and on September 29, 1987, an additional 25,000 shares of Telim
stock were issued to petitioners.
In October and November of 1987, petitioners spent an
additional $30,000 of their funds to pay expenses of Telim, and
on November 4, 1987, an additional 16,000 shares of Telim stock
were issued to petitioners.
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