Waterfall Farms, Inc. - Page 8

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          E.   Compensation and Payment of Food, Lodging, and Medical                 
               Expenses                                                               
               Mr. Huber was the sole employee of Waterfall Farms.  He kept           
          the corporate books and paid its bills.  For his services, Mr.              
          Huber received $1,000 in 1995, $600 in 1996, and $1,000 in 1997.            
          In addition, Waterfall Farms paid all of the Hubers’ medical care           
          expenses.                                                                   
               In 1997, Waterfall Farms leased the homestead from Ms. Rose;           
          the rent was $7,500 per annum.  The original term of the lease              
          was 1 year beginning January 1, 1997, and ending December 31,               
          1997; the agreement continued in effect year to year until                  
          otherwise canceled.  The Hubers (and one of their daughters)                
          continued to use the homestead as their residence   after                   
          Waterfall Farms leased the homestead from Ms. Rose.  In addition            
          to the rent for the homestead, Waterfall Farms paid for                     
          the food consumed by the Hubers and their daughter.                         
               Waterfall Farms did not pay dividends for fiscal years ended           
          November 30, 1995, 1996, and 1997.                                          

















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