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Thursday, Mar 28, 2024

TechnoConcepts Investors File Suit Over Technology Transfer

Technology that allows communication between mobile devices is at the center of a lawsuit filed by a group of investors against a Van Nuys company. The two individual investors and five investment firms are seeking a court order invalidating the move by the now-defunct TechnoConcepts, Inc. of transferring the analog-to-digital equipment technology to a company with the same name operating in Van Nuys. The allegations against TechnoConcepts, both the defunct company that had been headquartered in Thousand Oaks and the currently operating company in Van Nuys and four of its employees were made in an amended complaint filed in California Superior Court on April 11. The lawsuit alleges fraud, intentional fraudulent transfer, a breach of fiduciary duties, breach of shareholder agreement, and breach of written promissory note. In addition, some of the same creditors filed involuntary bankruptcy proceedings against the defunct TechnoConcepts on April 13 seeking to recoup their $1 million investment and to have control of the software radio technology or its monetary equivalent, said Stephen Fox, the attorney representing the creditors. While Fox did not have a dollar amount of the technology the creditors are seeking to gain, the fact that they and other investors ponied up millions of dollars shows what they believe the assets to be worth. TechnoConcepts, Inc. Co-Founder and Chief Technology Officer Ronald M. Hickling, Chairman and Chief Executive Officer Antonio Turgeon and employee Lap Wai Chow were named among the defendants in the lawsuit. In a prepared statement, Turgeon said the claim has no merit and will not have an effect on the financial position of the company. “Since consummating the transaction TechnoConcepts has invested significant financial resources to develop and protect new intellectual property that is the basis of its business initiatives,” Turgeon said. In December, TechnoConcepts Inc. announced it raised $3 million from three institutional investors, two of which had previously invested in the company. The lawsuit stems from the involvement of Paul S. Kosacz, Clarence Farrell, the E-Cap Venture Fund and two off-shore investment firms beginning in 2000. “The pitch was here’s this valuable technology that allows us to change analog to digital,” Fox said. “That conversion process was very valuable.” E-Cap Venture Fund invested $558,000, while Paul Kosacz put in $10,000 of his own money to cover costs for issuance of patents for TechnoConcepts. E-Vestment Capital Ltd. put in $250,000 for the company, according to the lawsuit. Then in 2003, Techno California had its intellectual property assets acquired by another company named TechnoConcepts that was incorporated in Nevada. The TechnoConcepts incorporated in Nevada was then merged with a company named TechnoConcepts incorporated in Colorado, and which is the publicly-traded company still operating in Van Nuys. The lawsuit alleges that the transfer of the intellectual property now being used by the Van Nuys TechnoConcepts was fraudulent and done without the knowledge or approval of the investors. In March, TechnoConcepts announced that it had been given preliminary approval to form a subsidiary in Shanghai to design and manufacture television equipment using its digital equipment. Fox explained that the move to form the subsidiary could be the company’s attempts to keep the technology out of the hands of the creditors. “Once you transfer technology to a Chinese company, it’s hard to get it back,” Fox said. As the bankruptcy proceeding moves through court, the biggest challenge with long-term implication will be the scope of discovery, or the documentation that must be shared between the two parties, Fox said. The creditor will want to make it as broad as possible to get as many documents to show why it should be considered bankrupt while TechnoConcepts will want to limit the documents that are released, Fox said.

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