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mention I-Tech’s expected or anticipated involvement in the
marketing or production of any discoveries.
In Mr. Slavitt’s promotional letter to potential investors,
he stated that the limited partnership will provide the funding
for research and development of five separate R&D projects. He
further stated that when the research and development activities
were completed and marketing commenced, I-Tech would receive
royalties based upon gross sales and that options existed
allowing the royalties to be converted into equity in the R&D
companies at a later date. Mr. Slavitt’s letter does not mention
or even suggest that I-Tech intended to exploit any successfully
developed technology on its own.
Mr. Slavitt’s promotional letter, read in conjunction with
the PPM, leads us to the conclusion that the plan from the
beginning was for the R&D companies to exercise their buy-out
options and for I-Tech to exercise its equity options in the R&D
companies or their affiliates. Indeed, the buy-out options
essentially guaranteed that I-Tech did not have a realistic
prospect of exploiting any discoveries in its own trade or
business. Since the R&D companies could exercise the buy-out
options after a minimal waiting period, they would surely
exercise the options if their projects were profitable enough to
justify incurring the cost of manufacturing and marketing. As a
result, I-Tech stood to receive production and marketing rights
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