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According to the offering circular, Utah I was to be "formed
to undertake a comprehensive research and development program on
the plant Simmondsia Chinensis (Jojoba)," and, ultimately obtain
production from the plantation property allocated to Utah I.
The offering identified U.S. Agri as the contractor selected to
carry out the research and development program under an R&D
agreement.
b. U.S. Agri
U.S. Agri was a Nevada corporation established by Pace on
November 7, 1979. Prior to 1979, Pace was not familiar with
jojoba. Pace was the sole shareholder of U.S. Agri and also
served as the chief executive officer. Pace delayed activating
U.S. Agri until the summer of 1981 so he could learn more about
the jojoba business before committing to participation in the
business. For 4 or 5 months in 1981, Kellen served as an officer
and director of U.S. Agri.
U.S. Agri leased, with an option to buy, 1,306 acres of land
in Desert Center and Blythe, California. U.S. Agri allocated 400
of those acres located in Desert Center to research and
development partnerships. The other 906 acres were utilized for
U.S. Agri's commercial jojoba farming operations. The 400 acres
that U.S. Agri allocated to research and development partnerships
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