I-Tech R&D Limited Partnership - Page 4




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          approximately 26 years.  Prior to his retirement from the IDF in            
          1974, Mr. Yaakov served as chief of research and development.               
               Mr. Yaakov met with Mr. Slavitt, an investment banker, in              
          June 1984.  Mr. Yaakov and Mr. Slavitt decided to form I-Tech as            
          a limited partnership to fund research projects of four startup             
          Israeli companies that were previously funded by Advanced                   
          Technology Associates, L.P. (ATA), as well as a fifth Israeli               
          company.                                                                    
               Pursuant to a Confidential Private Placement Memorandum                
          (PPM) dated August 6, 1984, 68 units in the limited partnership             
          were offered for sale to investors.  The limited partnership                
          interests were offered in units of $100,000 each.8                          
               In Mr. Slavitt’s promotional letter to prospective                     
          investors, he stated, in part:                                              
               I-Tech R&D Limited Partnership will provide the funding                
               for research and development of five separate R&D                      
               projects which will be included in our limited                         
               partnership.                                                           
                    *    *    *    *    *    *    *                                   
               The Limited Partners’s cash investment will be spread                  
               over four calendar years and will produce the following                
               approximate tax losses per $100,000 unit:                              

                                   Cash Invested            Tax Loss                  
               1984                $28,200                  $64,860                   
               1985                39,726                   80,103                    
               1986                26,180                   53,695                    
               1987                     5,894               11,906                    



               8Petitioner purchased a one-half share for $50,000.                    




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