Cascade Designs, Inc. - Page 15




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          cost.                                                                       
               Second, in November 1982, Cascade hired a new controller,              
          Lee Fromson (Fromson), who implemented certain changes in                   
          Cascade's financial operations that improved its cash-flow during           
          1983.  For instance, Fromson introduced the corporation to                  
          computers, which Cascade used to automate its system of                     
          accounting for sales and receipts.  To quickly improve the                  
          corporation's cash-flow, Fromson hired a full-time credit manager           
          who expeditiously collected the accounts receivable and a                   
          purchasing manager who negotiated more favorable prices and                 
          payment terms with the corporation's vendors.                               
               Most importantly, to fund Cascade's growth, Fromson                    
          negotiated with the bank for an increased line of credit at a               
          lower rate of interest, and he convinced the corporate officers             
          to use it.  The credit limit was increased to $125,000 in April             
          and to $150,000 in June 1983, and the initial interest rate was             
          fixed at 11.5 percent.  For the years 1983 through 1986, the                
          credit limit was increased to $300,000, and in 1987 it was                  
          increased to $500,000.  These lines of credit were secured by,              
          and limited to the value of, Cascade's accounts receivable and              
          its finished goods inventory.                                               
               The improved cash-flow allowed Cascade to pay its officers             
          and to become current on its patent payment obligations under the           
          1982 agreement at the same time it improved its manufacturing               






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