Michael T. Caracci and Cindy W. Caracci, et al. - Page 10




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          entities generated gradually increasing revenue, but also                   
          commensurate losses, in the 3 years preceding October 1, 1995.              
               The Sta-Home tax-exempt entities’ accounting firm prepared             
          unaudited combined financial statements.  The results from                  
          operations reported by the combined Sta-Home tax-exempt entities            
          on their returns for fiscal years ended September 30, 1991                  
          through 1995, were:                                                         


          Year     Revenue      Expenses    Net Income (Loss)                         
          1991   $11,736,061  $11,799,721      ($63,660)                              
          1992    18,442,072   18,414,315        27,757                               
          1993    25,162,701   25,208,255       (45,554)                              
          1994    36,882,957   37,141,686      (258,729)                              
          1995    44,101,849   44,535,239      (433,390)                              
          According to those combined financial statements, the total                 
          assets and liabilities of the Sta-Home tax-exempt entities for              
          those years were:                                                           
          Year       Assets    Liabilities      Deficit                               
               1991    $3,203,759   $3,787,285     ($583,526)                         
               1992     5,404,925    5,960,696      (555,771)                         
               1993     6,910,710    7,639,855      (729,145)                         
               1994     7,515,492    8,417,027      (901,535)                         
               1995    10,736,407   12,144,655    (1,408,248)                         
               To ease their financial statuses, the Sta-Home entities                
          required their employees–-including the Caracci family members              
          themselves--to forgo payment for the first 6 weeks of employment.           
          After that initial period, the employees were entitled to collect           








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