Opinion ID: 1248085
Heading Depth: 1
Heading Rank: 7

Heading: statements in the prospectus

Text: In addition to the foregoing statements contained in the Stock Purchase Agreement of August 18, 1974, Plaintiffs also rely upon the following statements contained in the dealer prospectus prepared by Glen Covey Associates: Under the Section entitled PROFIT  EXPENSES  GROSSES  SALES RECAP . I do not have the information to complete this section as yet. Dealer reports that the deal has been making $70,000.00 profits before tax regularly plus paying him salary and bonus of $75,000.00  $100,000.00 annually. Under the Section entitled SALE INFORMATION; ASSETS TO BE SOLD: Corporate stock ($47,000.00 cash in bank through May, 1974 with virtually no trade creditors). SALE PRICE: $200,000.00 (Approximately $25,000 over net worth) OTHER INFORMATION: This is the cleanest looking corporate purchase that I have seen. An accounting procedure on some corporate lease vehicles could have the net worth of the corporation understated. This appears to be the only area where a close look see would be required, assuming the normal corporate purchase indemnifications hold harmless clauses, guarantees, etc. are obtained in the purchase (which appears to be no problem in this deal). I find that the prospectus was prepared and forwarded to Plaintiffs by Glen Covey Associates, Inc. in the course of Covey's engagement by Defendants as a broker to sell the stock of Paul's Pontiac-Buick Co., Inc. and that the prospectus contained the statements quoted above. However, the testimony is in conflict as to whether Paul Hullander had actual notice of the contents of the prospectus and as to whether he specifically informed Plaintiffs of the incorrectness of the statements regarding earnings of the corporation and salary of the owner.