In a message dated 5/4/2004 9:11:36 PM Central Standard Time, CIRCLECCDC writes:

May 4, 2004

Dear Ms. Sun:

I am in receipt of your latest request for information. However, I have no information about any of the subjects you are referring to. I do know that as of December, 2003, both liens on our building had been paid. Perhaps Mickey Giles could point you in the right direction in your search for information.

Sincerely,

Kerri L. Baker
Director

******************************************************************************

Dear Ms. Baker,

Thank you for your response to my letter/e-mail dated April 30, 2004.

As you are the Director of the Circle C Child Development Center, it is your responsibility to provide me the information and documents as I requested. However, I am willing to assist you by letting you know from whom you can obtain the information and the related documents.


COST BASIS OF LAND & BUILDING

Steve Bartlett was the President of Phoenix Holdings, a company belongs to the Developer, Gary Bradley, for more than ten years. I was told by the personnel of the Sales & Marketing Department of Newmark Homes that they were being told many years ago by Mr. Bartlett that the cost of the CDC facility was 1.7 million dollars. This amount had been mentioned in an article on the Web site.

From the financial statements of the CDC, I can tell that large amount of money was funneled into Phoenix Holdings annually for all these years as a long term liability payments, and therefore, I am more than convinced that Steve Barlett can provide you an explanation about the discrepancy of $397,825 and the related documents.



$1,000 PER HOME ESCROW FUND

I have copies of three years?’ annual contracts signed by Terri Giles and Steve Bartlett. From the description of her job responsibility, I am convinced that Terri Giles handles the collection and deposit of the $1,000 per home Escrow Fund, and therefore, you can obtain all the information and bank statements regarding to this escrow fund from Terri.

I expect to receive the information and documents which I had requested in my letter/e-mail dated April 30, 2004 no later than the 10th of May, 2004. Thank you.


Sincerely,


Lisa Sun

Cc. Steve Bartlett
Cc. Terri Giles

CDC's Land, Bldg. & Escrow Fund


Lisa L Sun
6709 Edwardson Cove
Austin, TX 78749
April 30, 2004


Circle C Child Development Center
Attn: Kerri Baker, Director
5917 LaCrosse
Austin, TX 78739

RE: Enquiry about the Cost Basis of CDC?’s Land & Building and $1,000 per home Escrow Fund

Dear Ms. Baker,

After examining the tax returns and financial documents of the last three years 2001-2003, I have the following questions:


COST BASIS OF LAND & BUILDING

Based on the Travis County Appraisal District?’s record, the Market Value of the building was $608,160 in the Year of 1994, and the Market Value of the land (3.521 acres) was $35,210.

Based on the Federal Depreciation Report Form 4562, the Cost Basis of the building in 1994 was $1,005,985. I was informed by the CPA, Mickey Giles, that the amount of $1,005,985 was the cost of the building only.

Please explain to me about the discrepancy of $397,825 ($1,005,985 ?– $608,160). Also, I want to request a copy of all the documents related to this discrepancy.


$1,000/PER HOME ESCROW FUND

(1) How many homes had contributed $1,000 to this Escrow Fund from 1988 through December 31, 2003?
(2) What was the total amount received by Circle C Child Development Center by December 31, 2003?
(3) What was the balance in this Escrow Fund at December 31, 2003?


Please provide me a copy of all the bank statements of this Escrow Fund from 1988 through December 2003 to support the answers of the above questions.

I expect to receive the above information and documents within ten days from the date of this letter/e-mail. Thank you.

Sincerely

Lisa L. Sun
Cc. Mickey Giles, CPA