Dynadeck Rotary Systems, LTD. - Page 3




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          they used the Corporation’s funds to pay a majority of the                  
          Partnership’s expenses.                                                     
               Also in late 1990, the Laurel Assets Group (LAG), an                   
          unrelated investment group, expressed interest in investing in              
          the Corporation.  Mr. Lettunich met with representatives of LAG             
          to discuss its interest, and LAG advanced $150,000 to the                   
          Corporation on December 19, 1990.  LAG and the Corporation agreed           
          that the Corporation would repay LAG the $150,000, with interest,           
          by December 31, 1991, if they did not reach an investment                   
          agreement by January 31, 1991.  As of December 19, 1990, LAG and            
          the Corporation believed they would agree to an investment of up            
          to $350,000 by January 31, 1991, at which time they would                   
          consider the $150,000 part of that investment.                              
               Mr. Schadeck applied to patent his idea on February 8, 1991.           
          He transferred his rights in that application to the Partnership            
          approximately 1 year later, and the Partnership immediately                 
          assigned those rights to Magnitude Technologies Incorporated                
          (Magnitude), a corporation whose shareholders were the                      
          individuals.                                                                
               LAG advanced another $200,000 to the Corporation in the                
          first half of 1991, making LAG’s total advance $350,000.  The               
          Corporation asked LAG to take an interest in the Partnership in             
          consideration for the $350,000.  LAG asked that the $350,000 be             
          converted into a royalty arrangement.                                       





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