Bernice M. and Stanley M. Ulanoff - Page 18




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                    In my opinion, the marketing strategy worked out                  
               by FMEC, licensee to [partnership name], is ingenious                  
               and bound to succeed.  [Partnership name]'s license                    
               with FMEC requires additional royalty payments over and                
               above the minimum annual royalty, to be computed as a                  
               share of profits on the sale (or fair market value if                  
               used by sublicensees) of the resin pellets resulting                   
               from further processing the recycled material produced                 
               by the Recycler.                                                       
               Petitioner made similar observations in his marketing report           
          regarding the Sentinel EPS recycler, concluding that investment             
          in transactions involving the Sentinel EPS recycler would be                
          profitable.  At the time that this report was written, petitioner           
          was aware of difficulties faced by PI in placing the EPE                    
          recyclers with end-users and that only a few such recyclers were            
          operational at that time.                                                   
               Finally, in both marketing opinion reports, petitioner                 
          relied heavily on the assumption that the price of oil would rise           
          dramatically in the future and that, as a result, the price of              
          oil resin would also rise.                                                  
               Petitioner visited the PI plant in Hyannis, Massachusetts,             
          on two occasions and spent several hours meeting with PI's                  
          personnel.  At the plant, petitioner observed many types of                 
          machines and consumer energy-saving products manufactured by PI.            
          Petitioner also visited a plastic manufacturing plant that used a           
          Sentinel recycler to see it in operation.  He observed a Sentinel           
          recycler compress a truck load of plastic scrap into a 4-foot               
          square cube.  He conducted limited research regarding plastics              
          recycling by visiting the local library for an hour.  Petitioner            



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