Cerand & Company, Inc. - Page 5




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                                   Cumulative     Interest                            
          Sister Corp.    Year      Advances      Reported   Percent                  
          First World     1984     $10,260        $1,160    11.3                      
          First World    1985      111,129        7,194     6.5                       
          First World    1986      271,094        13,965     5.2                      
          First World    1987      496,153        31,288     6.3                      
          First World    1988      654,077        51,349     7.8                      
          First World    1989      808,333        65,206     8.1                      
          Airport Ser.   1987      48,866         2,416     4.9                       
          Airport Ser.   1988      65,650         3,084     4.7                       
               Throughout the 8-year period the amount of outstanding                 
          advances was increasing, the amount of repayment was decreasing,            
          and no amount of interest was paid by the sister corporations.              
          Instead of being paid, any interest accrued by petitioner was               
          merely rolled over annually into a note receivable.  As the                 
          sister corporations’ revenues decreased, advances from petitioner           
          generally increased, reflecting a lack of concern about the                 
          possibility of repayment.  Petitioner continued to advance funds            
          to its three sister corporations even though conditions worsened,           
          and the likelihood of repayment diminished.  The three sister               
          corporations did not seek financing from outside sources.                   
               The three sister corporations made a total of $414,220 in              
          repayments, which petitioner applied to the outstanding open                
          “account receivable”.  The repayment amounts were sporadic, and             
          they were not uniform in amount.  For example, during 1986                  
          petitioner advanced $151,000 to First World Corp. and $5,000 was            
          repaid.  In the next year (1987), $184,600 was advanced, and                
          nothing was repaid.  During the following year (1988) $163,025              






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