Full opinion text
OPINION LECHNER, District Judge. This is an action brought by the plaintiff, EP Medsystems, Inc. (“EPM”), against the defendant, EchoCath, Inc., (“EchoCath”). In its amended complaint (the “Amended Complaint”), EPM alleges EchoCath made material misrepresentations to induce EPM to purchase 280,000 shares of preferred stock of EchoCath (the “Securities”). In count I of the Amended Complaint, EPM seeks damages for violations of Section 10(b) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. § 78j (“Section 10(b)”), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5 (“Rule 10b-5”). See Amended Complaint at ¶¶ 28-35. In count II of the Amended Complaint, EPM seeks damages for common law fraud. See Amended Complaint at ¶¶ 36-40. Jurisdiction is asserted pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1367. Currently pending is a motion to dismiss (the “Motion to Dismiss”) the Amended Complaint filed by EchoCath pursuant to Rules 9(b) (“Rule 9(b)”) and 12(b)(6) (“Rule 12(b)(6)”) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1367 (“Section 1367”). The documents relevant to the purchase of the Securities set out warning signals in plain language. These warning signals demonstrate that EPM cannot establish a reasonable investor would find the alleged misrepresentations and omissions material to the decision to invest in EchoCath. Accordingly, for the reasons set forth below, the Motion to Dismiss is granted. Background A. Procedural History On 7 October 1997, EPM commenced this action by filing a complaint (the “Complaint”). See Complaint. By letter, dated 13 November 1997, (the “13 November 1997 Letter”) EchoCath advised EPM that it intended to move tó dismiss the Complaint pursuant to Rule 9(b) and Rule 12(b)(6). See Exhibit A to DeBernardis Aff. at 1. Echo-Cath sent the 13 November 1997 Letter to put EPM on notice concerning deficiencies EchoCath found in the Complaint. This notification gave EPM an opportunity to amend the Complaint to correct the deficiencies and perhaps moot the Motion to Dismiss before it was filed. On 26 November 1997, EchoCath filed an answer to the Complaint (the “Answer to the Complaint”) and a counterclaim (the “Counterclaim”) against EPM. See Answer to the Complaint. On 9 December 1997, EPM filed an answer to the Counterclaim (the “Answer to the Counterclaim”). See Answer to the Counterclaim. On 3 December 1997, in response to the 13 November 1997 letter, EPM filed the Amended Complaint. See Amended Complaint. On 10 December 1997, EchoCath filed an answer to the Amended Complaint (the “Answer to the Amended Complaint”) and a counterclaim against EPM. See Answer to the Amended Complaint. EchoCath thereafter filed the Motion to Dismiss. B. Facts EPM is involved in the development, marketing and sale of cardiac electrophysiology products used to diagnose, monitor and treat certain disorders. .See Amended Complaint at ¶ 5. In August 1996, the President and Chief Executive Officer of EPM, David Jenkins (“Jenkins”), together with the EPM Chief Financial Officer, James Caruso, (“Caruso”) and Anthony Varricchio (“Varricchio”), a member of the EPM board of directors, traveled to the EchoCath plant to meet with the senior management of EchoCath (the “August 1996 Meeting”). See Amended Complaint at ¶ 9. The purpose of the August 1996 Meeting was to provide EPM management with a tour of the EchoCath facility and to give EPM management an opportunity to evaluate the technology under development by EchoCath. See id. From the August 1996 Meeting, EchoCath hoped EPM would be willing to invest in it. While at the EchoCath plant, Jenkins, Caruso and Varricchio met with Frank DeBer-nardis (“DeBernardis”), the EchoCath President and Chief Executive Officer, and David Vilkomerson (“Vilkomerson”), the EchoCath Executive Vice President and Director of Research. See id. During the August 1996 Meeting, DeBernardis made a presentation in which he detailed the ongoing commitment of EchoCath to develop and market a line of health products for women. See id. at ¶ 10. According to DeBernardis, these products included a SSG catheter and a breast biopsy needle. See id. The Amended Complaint refers to these products generally as “women’s health products.” See id. at ¶¶ 10, 11, 12, 14, 16, 17, 19, 21. It appears the Echo-Cath sales projections specifically refer to the SSG catheter and the biopsy needle as “EehoMark” and “ColorMark,” respectively. See id. at ¶ 14; see also Moving Brief at 16 n. 8. In the course of the August 1996 Meeting, DeBernardis identified several contracts which EchoCath intended to enter into with third parties for the marketing and development of its health products for women. See Amended Complaint at ¶ 15. DeBernardis represented: EchoCath had engaged in lengthy negotiations with and was on the verge of signing contracts with a number of companies including UroHealth [ (“UroHealth”) ], Johnson & Johnson [ (“J & J”) ], Medtronic [ (“Medtronic”) ] and C.R. Bard, Inc. [ (“Bard”) ] to develop and market these women’s health products. See id. at ¶ 10. It appears none of these contracts were consummated. See id. at ¶¶ 17-19. EPM asserts the oral representations made by DeBernardis at the August 1996 meeting were “similar to” the written representations EchoCath had made in the 17 January 1996 prospectus (the “17 January 1996 Prospectus”). See Amended Complaint at ¶ 11. The 17 January 1996 Prospectus, issued by EchoCath in connection with its initial public offering of stock, contained an abundance of warnings and cautionary language which bore directly on the risky, perhaps even speculative, nature of the investment EPM made in EchoCath. It contained, inter alia, the following statements: [EchoCath] has developed a product (the “ColorMark Clip”) utilizing the ColorMark technology ... [and] [EchoCath] has developed a catheter utilizing the EchoMark technology____ 17 January 1996 Prospectus at 3. [EchoCath] intends to use a portion of the proceeds of the Offering to market th[e] [catheter utilizing EchoMark technology]. Id. at 3-4; see Amended Complaint at ¶ 11. Although [EchoCath] will allocate a portion of the proceeds of the Offering for the continued development of these products, the commercialization of any products incorporating these technologies, as well as any other proposed products utilizing [EchoCath’s] technologies, will depend upon [EchoCath’s] ability to obtain additional financing through joint ventures, licensing agreements or other collaborative arrangements or otherwise. 17 January 1996 Prospectus at 3-4. [EchoCath] is a development stage company which has limited sales and which has incurred substantial losses since inception. An investment in the securities offered hereby is speculative in nature and involves a high degree of risk. Prior to making any investment decision, prospective investors should read and carefully review the ‘Risk Factors’ section of this Prospectus. Id. at 5 (emphasis added). Among the factors cited by the auditors as raising substantial doubt as to [Echo-Cath’s] ability to continue as a going concern is that [EchoCath] has incurred losses since inception and is expected to continue to incur losses and is in need of substantial funds. There can be no assurance that [EchoCath] will ever achieve significant revenues or profitable operations. Id. at 7 (citing Report of Independent Certified Public Accountants) (emphasis added). [EchoCath] believes that the net proceeds from the Offering, together with funds expected to be generated from operations, will be sufficient to meet its cash requirements for approximately 12 to 18 months following consummation of the Offering; however, there can be no assurance that [EchoCath] will not require additional financing prior to that time or that, if required, additional financing will be available on acceptable terms or at all. In any event, [EchoCath] will require substantial additional financing in the future to fully implement its proposed business plan. Id. at 7 (emphasis added); see id. at 23 (repeating representations). [EchoCath] has no binding commitments from any third parties to provide funds to [EchoCath] and there can be no assurance that additional financing will be available on terms favorable or acceptable to [EchoCath], if at all. Failure to obtain such additional financing would have a material adverse effect on [EehoCath’s] business and prospects and could require [EchoCath] to seriously limit or cease its operations____ Former sources of capital are not obligated and are not expected to contribute, loan or provide any additional financing to [EchoCath]. Id. at 7 (emphasis added); see id. at 23 (repeating representations). The commercial success of [EchoCath’s] ColorMark Clip [and] the EehoMark EP Catheter, ... as well as [EehoCath’s] other products and proposed products, will depend upon acceptance of such products by the medical community as safe, useful, and cost-effective____ The future success of [EchoCath] will depend, in part, on the degree of clinical acceptance of ultrasound imaging as opposed to competing technologies as well as on acceptance of [Echo-Cath’s] products for ultrasound imaging applications. Id. at 7-8. [EchoCath] intends to pursue licensing, joint development and other collaborative arrangements with other strategic partners. There can be no assurance, however, that [EchoCath] will be able to successfully reach agreements with any strategic partners, or that other strategic partners will ever devote sufficient resources to [EchoCath’s] technologies. Id. at 8 (emphasis added); see id. at 24 (repeating representations). [EchoCath] has limited manufacturing and assembly experience and to date has not yet manufactured any of its products in significant quantity. No assurance can be given that [EchoCath] will ever be able to establish commercial scale manufacturing operations. Id. at 8 (emphasis added); see id. at 31 (“[EchoCath] currently does not have written agreements with any of its suppliers for manufacturing or assembly.”) (emphasis added). [EchoCath’s] future success will depend in part upon its ability to attract and retain highly qualified personnel. [EchoCath] faces competition for such personnel from ■ other companies, academic institutions, government entities, and other organizations, many of which have significantly greater resources than [EchoCath.] There can be no assurance that [EchoCath] will be able to attract and retain the necessary personnel on acceptable terms or at all. See id. at 8; see also id. at 31. [EchoCath] has not yet developed a sales organization to market and sell any of its products and there can be no assurance that [EchoCath] will be successful in establishing a sales organization or as to the effectiveness of such sales organization____There can be no assurance that [EchoCath] will be successful in entering into any such arrangements or be able to effectively manage and maintain its relationships with others, or that any marketing and sales efforts undertaken by or on behalf of [Echo-Cath] by others will be successful. See id. at 9 (emphasis added); see also id. at 31 (repeating representations). [EchoCath] considers patent protection of its technologies to be critical to its business prospects. There can be no assurance that [EchoCath’s] pending patent applications will issue as patents, that any issued patents will provide [Echo-Cath] with significant competitive advantages or that challenges will not be instituted against the validity or enforceability of any patent owned by [EchoCath.] ... [T]here can be no assurance that others will not independently develop similar or more advanced technologies or design around aspects of [Echo-Cath’s] technologies which may be patent- , ed or duplicate [EehoCath’s] trade secrets. See id. at 9 (emphasis added). There can be no assurance that reimbursement [by various third-party payors such as Medicare, Medicaid, other government programs, and private insurance plans] for procedures utilizing [EchoCath’s] products will be sufficient to cover the additional cost of [EchoCath’s] products, or that future reimbursement policies of payors will not adversely affect [EehoCath’s] ability to sell its products on a profitable basis. See id. at 10. A purchaser in the Offering will experience immediate and substantial dilution of approximately $4.24 per share or 85% from the initial public offering price per share of $5.00. See id. at 11 (emphasis added). The market price for securities of emerging and development stage bio-technology companies have historically been highly volatile. Future announcements concerning [EchoCath] or its competitors, including the results of testing, technological innovations or new commercial products, government regulations, developments concerning proprietary rights, litigation or public concern as to safety of [EchoCath’s] proposed products may have a significant impact on the market price of [EchoCath’s] securities. See id. at 12. [EchoCath] estimates that the net proceeds from the sale of the 1,400,000 Units offered in the Offering will be approximately $5,485,000 ($6,435,250 if the Over-Allotment Option is exercised in full) after deducting underwriting discounts and commissions and expenses of approximately $1,515,000 ($1,614,750 if the Over-Allotment Option is exercised in full). See id. at 15. [EchoCath] is a development stage company and has not conducted any significant operations to date or received any significant operating revenues and has limited assets. See id. at 21 (emphasis added). [EchoCath’s] research and development and general and administrative expenses will increase following this Offering when [EchoCath] incurs substantial research and manufacturing expenses, expenses for the payment of salaries to officers and employees, and consulting fees which have recently increased and are expected to continue to increase. [EchoCath] anticipates that revenues will be insufficient to meet all operating expenses for the foreseeable future even if there is market acceptance of its products, and accordingly, it expects to incur substantially increased operating losses for the foreseeable future. There can be no assurance that [EchoCath] will ever achieve profitable operations. See id. at 21 (emphasis added); see also id. at 29 (“Expenditures for research and development will be ongoing.”). Since its inception, [EchoCath’s] efforts have been principally devoted to research and development and raising capital, and [EchoCath] has sustained cumulative losses of approximately $(8,883,000) through November 30, 1995____As of November 30, 1995, [EchoCath] had a working capital deficit of approximately $(2,079,000), an accumulated deficit of approximately $(5,680,000) and a stockholders’ deficit of approximately $(2,398,000), which deficiencies are expected to increase. See id. at 22. [EchoCath’s] operations have not generated significant revenues to date. [EchoCath] has incurred operating losses in each of its fiscal years, and expects that operating losses will continue in the foreseeable future. No assurance can be given that [EchoCath] will successfully commercialize any of its products or successfully develop any of its proposed products. See id. at 24 (emphasis added). EPM contends EchoCath continued to make specific statements to EPM about its products and business through early 1997 in an ongoing effort to persuade EPM to invest in EchoCath. See Amended Complaint at ¶ 18. For example, in December 1996, Deli ernardis assured Caruso during a telephone conversation that EchoCath was actively moving forward with the health products for women which had been described during the August 1996 Meeting. See id. at ¶ 12. On 20 December 1996, DeBernardis delivered to Caruso a series of documents including a marketing plan and financial projections of EchoCath for fiscal years 1997 and 1998 (collectively, the “EchoCath Marketing Plan”). See id. at ¶ 13; EchoCath Marketing Plan. Attached to the EchoCath Marketing Plan was a document entitled, “EchoCath Operating Model,” dated 20 December 1996, (the “EchoCath Operating Model”), for the period November 1996 to October 1998. See Amended Complaint at ¶ 14. The first page of the EchoCath Operating Model stated: “This Model is a simplified form of accounting, but does reflect accurately cash and income flows.” See EchoCath Operating Model at 2. Regarding the sales of the health products for women, the Echo-Cath Operating Model also stated: As shown, ColorMark sales are projected to be $736,000 in the coming year and $2.5 million in the second year. The EchoMark . SSG catheter sales are projected at $116,-000 and $768,000 in the 1st and 2nd year, respectively. We believe these sales projections are conservative. Amended Complaint at ¶ 14 (quoting Echo-Cath Operating Model at 2) (emphasis supplied in Amended Complaint). On 23 December 1996, Daniel Mulvena, the EchoCath Co-Chairman of the Board, (“Mulvena”) told EPM representatives that anticipated investments in EchoCath would allow it to actively develop and market the products it had identified to EPM. Investments by EPM and other outside investors would provide EchoCath with sufficient operating funds for a period of at least eighteen to twenty-four months. See Amended Complaint at ¶ 26. Similar statements concerning the sufficiency of such operating funds were previously made in the Prospectus, dated 17 January 1996. See 17 January 1996 Prospectus at 7, 23. As indicated, the 17 January 1996 Prospectus stated, in relevant part: [EchoCath] believes that the net proceeds from the Offering, together with funds expected to be generated from operations, will be sufficient to meet its cash requirements for approximately 12 to 18 months following consummation of the Offering; however, there can be no assurance that [EchoCath] will not require additional financing prior to that time or that, if required, additional financing will be available on acceptable terms or at all. In any event, [EchoCath] will require substantial additional financing in the future to fully implement its proposed business plan. See id. at 7 (emphasis added); see also id. at 23 (repeating representations). EPM contends the efforts by EchoCath to secure an investment from EPM continued in early 1997. For instance, on 30 January 1997, DeBernardis assured Jenkins Echo-Cath was actively moving forward with its health products for women and that the contracts with UroHealth, J & J, Medtronic and Bard were imminent. See Amended Complaint at ¶ 15. EchoCath made several other statements to EPM in an effort to solicit an investment from EPM. For example, in the EchoCath Operating Model, EchoCath stated: Other income over the coming two-year period is in the form of license fees and Milestone payments coming from Medtronic, $450,000, — [and] $500,000 from a company that wishes to use EchoMark technology for guiding prostate treatments. See EchoCath Operating Model at 2; see also Amended Complaint at ¶¶ 22, 24. The Echo-Cath Operating Model further stated “negotiations for these contracts are in process.” See EchoCath Operating Model at 2. In February 1997, EPM entered into a license agreement with EchoCath pursuant to which EPM received an exclusive license with respect to certain proprietary technology developed by EchoCath relating to ultrasound guidance and imaging. See Amended Complaint at ¶.6. The license included the proprietary catheter positioning system of EchoCath, needle stylet positioning system and proprietary technology for viewing tissues and organs in three-dimensional real-time. See id. On 27 February 1997, EPM and EchoCath also entered into two purchase agreements (the “Purchase Agreements”) whereby EPM purchased certain ultrasound piezoelectric sensors from EchoCath for use on catheters. See Amended Complaint at ¶ 7. Also on 27 February 1997, EPM and Echo-Cath entered into a subscription agreement (the “Subscription Agreement”) pursuant to which EPM purchased 280,000 shares of preferred stock of EchoCath for $1,400,000. See Amended Complaint at ¶ 8. In the Amended Complaint, EPM contends it relied on all the oral and written statements of EchoCath in deciding whether to make this investment. See Amended Complaint at ¶¶ 11, 16, 32. EPM does not mention whether it investigated the representations made by EchoCath or conducted due diligence prior to entering into the Subscription Agreement. See Amended Complaint. In this regard, the Subscription Agreement states, in relevant part: IV. Representations and Warranties. The undersigned [EPM] hereby acknowledges, represents, warrants to and agrees with [EchoCath] as follows: (a) None of the Shares are registered un- der the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws____ (b) The undersigned has access to the same kind of information which would be available in registration statements filed by [EchoCath] under the Securities Act; (d) The undersigned acknowledges that prior to the date hereof it has received and reviewed a copy of [EchoCath’s] annual report on Form 10-KSB____ (e) The undersigned acknowledges that all documents records, and books pertaining to the investment in the Shares have been made available for inspection by it, its attorney, accountant, purchaser representative or tax advisor (collectively, the “Ad-visors”); (f) The undersigned and the Advisors have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of [EchoCath] concerning the offering of the Shares and all such questions have been answered to the full satisfaction of the undersigned and its Advisors; (g) In evaluating the suitability of an investment in [EchoCath], the undersigned has not relied upon any representation or other information (oral or written) other than as contained in documents or answers to questions so furnished to the undersigned or its Advisors by [EchoCath]____ (h) The undersigned is unaware of, and in no way relying on, any form of general solicitation or general advertising in connection with the offer and sale of the Shares; (i) The undersigned has such knowledge and experience in financial, tax, and business matters so as to enable it to utilize the information made available to it in connection with the offering of the Shares to evaluate the merits and risks of an investment in the Shares and to make an informed investment decision with respect thereto; (j) The undersigned is not relying on [EchoCath] respecting the tax and other economic considerations of an investment in the Shares, and the undersigned has relied on the advice of, or has consulted with, only its own Advisors; (l) The undersigned must bear the economic risk of the investment indefinitely because none of the Shares may be sold, hypothecated or otherwise disposed of unless subsequently registered under the Act and applicable state securities laws or an exemption from registration is available. ... (n) The undersigned is aware that an investment in the Shares involves a number of very significant risks and is able to bear the loss of its entire investment. Subscription Agreement at 2 (emphasis added). EPM alleges every representation, assurance and projection made to it by EchoCath turned out to be incorrect. See Amended Complaint at ¶ 25. For example, it contends EchoCath never signed a contract with Uro-Health, J & J, Medtronic, Bard or any other entity for its health products for women, contrary to the assertions by DeBernardis that EchoCath was “on the verge” of signing such contracts. See Amended Complaint at ¶¶ 10, 17-19. In addition, EPM asserts that, despite the sales projections of EchoCath for these products, EchoCath has yet to receive any income from the sale of these products. See Amended Complaint at ¶ 19. Similarly, EPM contends that, with the exception of one payment from Medtronic, EchoCath never received the $450,000 in Milestone payments it expected or the $500,000 from a company that was to use its technology to guide prostate treatments. See Amended Complaint at ¶¶ 22-25. Finally, EPM asserts that despite the previous representation by Mulvena regarding the sufficiency of operating funds, EchoCath informed EPM in September 1997 that EchoCath would run out of operating funds in ninety days if a new investment in the company was not-forthcoming. See Amended Complaint at ¶ 27. EPM alleges EchoCath knew each of its representations, assurances and projections was “false and misleading” and/or “highly unlikely.” See Amended Complaint at ¶¶ 17-19, 21-24, 26, 29-30. In addition, EPM contends it did not know or have reason to know of the falsity of these representations. See Amended Complaint at ¶32. Furthermore, EPM alleges that, if EchoCath had disclosed to EPM the truth about its products and business, EPM would not have purchased the Securities. See Amended Complaint at ¶¶ 32-33. The statements contained in the 17 January 1996 Prospectus and in other documents clash with the alleged oral misrepresentations of EchoCath. As early as 17 January 1996, EPM was placed on notice of the financial risks inherent in dealing with a development stage company which had not secured any binding commitments from third parties. See, e.g., 17 January 1996 Prospectus at 7, 23 (“[EchoCath] has no binding commitments from any third parties to provide funds to [EchoCath] and there can be no assurance that additional financing will be available on terms favorable or acceptable to [EchoCath], if at all.”); id. at 21 (“[EchoCath] is a development stage company and has not conducted any significant operations to date or received any significant operating revenues and has limited assets.”); id. at 21 (“[EchoCath] anticipates that revenues will be insufficient to meet all operating expenses for the foreseeable future____”). The statements contained in the sales projections of EchoCath are also at odds with the alleged oral misrepresentations. The Annual Report of EchoCath on Form 10-KSB, dated 12 December 1996, (the “1996 10-K of EchoCath”) stated: [EchoCath’s] operations have not generated significant revenues to date. [EchoCath] has incurred operating losses in each of its fiscal years, and expects that operating losses will continue in the foreseeable future____No assurance can be given that [EchoCath] will successfully commercialize any of its products or achieve profitable operations. See 1996 10-K of EchoCath at 3 (emphasis added). [EchoCath] anticipates that revenues will be insufficient to meet all operating expenses for the foreseeable future even if there is market acceptance of its products, and accordingly, it expects to incur substantially increased operating losses for the foreseeable future. There can be no assurance that [EchoCath] will ever achieve profitable operations. See id. at 19 (emphasis added). [EchoCath] had no significant sales revenue for the fiscal years ended August 31, 1996 and 1995. See id. There can be no assurance that [Echo-Cath] will be able to complete the ... license agreements and strategic alliances on acceptable terms---- [EchoCath] has no binding commitments from any third parties to provide funds to [EchoCath]. There can be no assurance that [Echo-Cath] will be able to obtain financing from any other source on acceptable terms. See id. at 20 (emphasis added). Statements identical to those set out above were contained in the Form 10-Q , of Echo-Cath, the quarterly report, filed 21 January 1997, (the “1997 10-Q of EehoCath”). The potentially misleading effect of any announcements issued by EehoCath prior to 21 January 1997 was neutralized by disclosures contained in the 1997 10-Q of EehoCath. The 1997 10-Q of EehoCath additionally stated: Research and Development expenses increased 118% during the three months ending November 30, 1996____The quarter ending November 30, 1995 was the last quarter before the Initial Public Offering and [EehoCath] did not have the resources to match the current level of expenditure. See 1997 10-Q of EehoCath at 8. Nevertheless, EPM contends it has sustained substantial financial losses as a direct result of the alleged misrepresentations of EehoCath. See Amended Complaint at ¶ 34. The Amended Complaint does not indicate the nature or amount of the losses allegedly sustained by EPM. See Amended Complaint. Due to these disclaimers, warnings and other statements contained in the 17 January Prospectus, the 1996 10-K of EehoCath, the EehoCath Marketing Plan, the EehoCath Operating Model, the 1997 10-Q of EehoCath and the Subscription Agreement, no reasonable investor could accept, understand or believe that an investment in EehoCath was anything but a risky, speculative investment which could well result in the loss of the entire amount invested. Discussion A. Standard For Dismissal Under Rule 12(b)(6) A court may dismiss a complaint pursuant to Rule 12(b)(6) for failure to state a claim where it appears beyond doubt that no relief could be granted under any set of facts which could be proved consistent with the allegations. See Hartford Fire Ins. Co. v. California, 509 U.S. 764, 811, 113 S.Ct. 2891, 125 L.Ed.2d 612 (1993); Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Weiner v. Quaker Oats Co., 129 F.3d 310, 315 (3d Cir.1997); Unger v. National Residents Matching Program, 928 F.2d 1392, 1395 (3d Cir.1991); Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir.1990); Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir.1988). Because granting a motion under Rule 12(b)(6) can result in a dismissal at an early stage of a case, all allegations of a plaintiff must be taken as true and all reasonable factual inferences drawn in his or her favor. See Gomez v. Toledo, 446 U.S. 635, 636, 100 S.Ct. 1920, 64 L.Ed.2d 572 (1980); Weiner, 129 F.3d at 315; In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir.1997); Piecknick v. Pennsylvania, 36 F.3d 1250, 1255 (3d Cir.1994); Jordan v. Fox, Rothschild, O’Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir.1994); Shapiro v. UJB Fin. Corp., 964 F.2d 272, 279-80 (3d Cir.), cert. denied, 506 U.S. 934, 113 S.Ct. 365, 121 L.Ed.2d 278 (1992); Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir.1991); Unger, 928 F.2d at 1395; Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir.1990); Melikian v. Corradetti, 791 F.2d 274, 277 (3d Cir.1986). A complaint should not be dismissed unless it appears beyond doubt that “the facts alleged in the complaint, even if true, fail to support the claim.” Ransom, 848 F.2d at 401; Shapiro, 964 F.2d at 279-80. Legal conclusions made in the guise of factual allegations, however, are given no presumption of truthfulness. See Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986); Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.1997) (“[A] court need not credit a complaint’s ‘bald assertions’ or ‘legal conclusions’ when deciding a motion to dismiss”); Haase v. Webster, 807 F.2d 208, 215 (D.C.Cir.1986), vacated on other grounds, 835 F.2d 902 (D.C.Cir.1987); Briscoe v. La-Hue, 663 F.2d 713, 723 (7th Cir.1981), aff'd, 460 U.S. 325, 103 S.Ct. 1108, 75 L.Ed.2d 96 (1983); Western Mining Council v. Watt, 643 F.2d 618, 626 (9th Cir.), cert. denied, 454 U.S. 1031, 102 S.Ct. 567, 70 L.Ed.2d 474 (1981); Bermingham v. Sony Corp. of Am., 820 F.Supp. 834, 846 (D.N.J.1992), aff'd, 37 F.3d 1485 (3d Cir.1994). A district court' reviewing the sufficiency of a complaint has a limited role. “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support his [or her] claims.” Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1420; Bermingham, 820 F.Supp. at 846. Generally, when conducting such an inquiry, material beyond the pleadings should not be considered. See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1426; Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir.1993), cert. denied, 510 U.S. 1042, 114 S.Ct. 687, 126 L.Ed.2d 655 (1994); Wallace v. Systems & Computer Tech. Corp., No. 95-6303, 1997 WL 602808, at *5 (E.D.Pa. Sept.23, 1997); Gannon v. Continental Ins. Co., 920 F.Supp. 566, 574 (D.N.J.1996). Documents expressly relied upon or integral to the complaint and matters of public record, if the claims of the plaintiff are based upon such documents, may be considered. See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1426; In Re Westinghouse Sec. Litig., 90 F.3d 696, 707 (3d Cir. 1996); In re Donald Trump Sec. Litig., 7 F.3d 357, 368 n. 9 (3d Cir.1993), cert. denied, 510 U.S. 1178, 114 S.Ct. 1219, 127 L.Ed.2d 565 (1994); Pension Benefit Guar. Corp., 998 F.2d at 1196; Wallace, 1997 WL 602808, at *5; Weiner, 928 F.Supp. at 1380; Gannon, 920 F.Supp. at 574. Such documents must be explicitly relied upon or integral to the complaint. See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1426 (quoting Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1220 (1st Cir.1996)). The failure of a plaintiff to attach or cite documents in the complaint does not preclude a court from reviewing the texts of extrinsic documents. See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1426. The reason for this rule is to prevent [t]he situation in which a plaintiff is able to maintain a claim of fraud by extracting an isolated statement from a document and placing it in the complaint, even though if the statement were examined in the full context of the document, it would be clear that the statement was not fraudulent. Id. Under these circumstances, reference to documents outside of the complaint does not convert a motion to dismiss into a motion for summary judgment. See id.; Pension Benefit Guar. Corp., 998 F.2d at 1196-97. In support of the Motion to Dismiss, Eeho-Cath submitted, among other things, the Subscription Agreement, the 17 January 1996 Prospectus, the 1996 10-K of EchoCath and the 1997 10-Q of EchoCath. EPM argues these documents should not be considered in connection with the Motion to Dismiss. See Opposition Brief at 3 n. 1, 13-16. These documents, however, are referred to in the Amended Complaint and form the basis for the allegations of EPM. See Amended Complaint at ¶¶ 11, 20. The Amended Complaint states the misrepresentations that EchoCath made to EPM about the contracts for the development and marketing of health products for women also were set forth in the 17 January 1996 Prospectus. See Amended Complaint at ¶ 11. Specifically, the Amended Complaint states: The representations made by Mr. DeBer-nardis during the August, 1996 meeting at EchoCath were similar to the representations set forth in the Prospectus dated January 17, 1996 in connection with Echo-Cath’s initial public offering of common stock through D.H. Blair Investment Banking Corp. EchoCath stated in its Prospectus that it had already developed a line of women’s health products and that it intended to use the proceeds form the initial public offering to assist it in selling, marketing and manufacturing these products for sale in the United States and in parts of Europe. EP MedSystems was aware of and relied upon both the statements made at the August, 1996 meeting and in the EchoCath Prospectus in making its substantial investment in EchoCath in February, 1997. Id. In light of the foregoing, the allegations by EPM are related to and based upon the 17 January 1996 Prospectus. The 17 January 1996 Prospectus will be considered in connection with the Motion to Dismiss. See In re Donald Trump Sec. Litig., 7 F.3d at 368 n. 9 (finding district court properly considered prospectus that was not attached to complaint because complaint challenged prospectus). The Amended Complaint also states that at no time prior to the purchase of the Securities by EPM did EchoCath file a 10-K (annual report) or 10-Q (quarterly report) report which revealed that it had decided not to proceed with its line of health products for women. See Amended Complaint at ¶ 20. Specifically, the Amended Complaint states: Furthermore, at no time relevant hereto and prior to the February, 1997 closing did EchoCath ever file a 10-K or 10-Q report with the SEC revealing that it had changed its plan for further operation of the business including the failure to proceed with its line of women’s health products. Id. By this assertion, EPM appears to be alleging that EchoCath failed to correct its alleged prior misrepresentations. As well, EPM by this allegation states, albeit indirectly, that it reviewed and relied on the 10-K and 10-Q reports when it decided to purchase the Securities. The 1996 10-K of EchoCath and the 1997 10-Q of EchoCath are part of the Amended Complaint; they are relevant to the alleged misrepresentations by EchoCath. The 1996 10-K of Echo-Cath and the 1997 10-Q of EchoCath will be considered in connection with the Motion to Dismiss. Finally, the basis for the claims by EPM is that the misrepresentations by Echo-Cath induced it to enter into the Subscription Agreement. See Amended Complaint at ¶ 32 (“[EPM] reasonably relied upon the ... misrepresentations and omissions by EchoCath in making its decision to purchase the securities of EchoCath.”). The Subscription Agreement is therefore relevant to the claims by EPM even though EPM does not allege that the Subscription Agreement itself contains misrepresentations and did not attach it to the Amended Complaint. In addition, the contents of the Subscription Agreement are relevant to ascertain whether the facts alleged in the Amended Complaint will support the claims of EPM. See Ransom, 848 F.2d at 401. As such, the contents of the Subscription Agreement will be considered in connection with the Motion to Dismiss. See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1426. 1. The Claim of EPM for Securities Fraud EPM asserts claims for violations by EchoCath of Section 10(b) and Rule 10b-5. In order to establish such a claim, a plaintiff must prove EchoCath (1) made misstatements or omissions of material fact (2) with scienter (3) in connection with the purchase or sale of securities (4) upon which the plaintiff relied and (5) that the reliance of the plaintiff was the proximate cause of its injury. See Weiner, 129 F.3d at 315 (quoting Kline v. First W. Gov’t Sec., Inc., 24 F.3d 480, 487 (3d Cir.), cert. denied, 513 U.S. 1032, 115 S.Ct. 613, 130 L.Ed.2d 522 (1994)); In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1417; Shapiro, 964 F.2d at 280. If a plaintiff fails to allege any of these elements, the complaint must be dismissed. See In re Donald Trump Sec. Litig., 7 F.3d at 368 n. 10 (citing Herman & MacLean v. Huddleston, 459 U.S. 375, 380-86, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983)); In re Westinghouse Sec. Litig., 90 F.3d at 710; Lewis v. Chrysler Corp., 949 F.2d 644, 649 (3d Cir.1991); Wallace, 1997 WL 602808, at *8. Because a Rule 10b-5 claim is a “fraud” claim, EPM must satisfy the pleading requirements of Rule 9(b). See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1417; In Re Westinghouse Sec. Litig., 90 F.3d at 710; Wallace, 1997 WL 602808, at *8. Rule 9(b) requires that “[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Fed.R.Civ.P. 9(b). The heightened pleading gives defendants “notice of the claims against them, provides an increased measure of protection for then-reputations, and reduces the number of frivolous suits brought solely to extract settlements.” In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1418. In order to satisfy Rule 9(b) in connection with a Rule 10b-5 claim, EPM must plead with particularity (1) a specific misrepresentation of material fact, (2) the knowledge by EchoCath of its falsity, (3) ignorance of its falsity, (4) the intention of EchoCath that it should be acted upon and (5) that EPM acted upon it to the detriment of EPM. See In Re Westinghouse Sec. Litig., 90 F.3d at 710; Shapiro, 964 F.2d at 284. Consequently, Rule 9(b) demands increased specificity in the pleadings to establish violations of Section 10(b) and Rule 10b-5. Pursuant to Rule 9(b), allegations concerning misrepresentations of material fact must be pleaded in greater detail. See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1417-18 (Rule 9(b) requires “where plaintiffs allege that defendants distorted certain data disclosed to the public by using unreasonable accounting practices, ... plaintiffs [must] state what the unreasonable practices were and how they distorted the disclosed data”); Shapiro, 964 F.2d at 285 (citing Craftmatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 646 (3d Cir.1989)) (Rule 9(b) requires plaintiffs to “accompany the allegations with a statement of fact upon which their allegation is based”). A viable claim under Section 10(b) and Rule lOb-5 also requires a plaintiff to plead scienter. Rule 9(b), however, states “[m]al-ice, intent, knowledge, and other condition of mind of a person may be averred generally.” See F.R.Civ.P. 9(b). This Circuit has interpreted this provision to mean that [w]hile state of mind may be averred generally, plaintiffs must still allege facts that show the court their basis for inferring that the defendants acted with “scienter.” Otherwise, strike suits based on no more than plaintiffs’ detection of a few negligently made errors in company documents or statements (errors detected in the aftermath of a stock price drop) could survive the pleading threshold and subject public companies to unneeded litigation expenditures. See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1418; see also In re Westinghouse Sec. Litig., 90 F.3d at 711. The particularity requirement of Rule 9(b) is “relaxed somewhat where the factual information is peculiarly within the defendant’s knowledge or control.” See In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1418; Shapiro, 964 F.2d at 285; Craftmatic Sec. Litig., 890 F.2d at 645. This is so because application of the particularity requirement “may permit sophisticated defrauders to successfully conceal the details of their fraud.” In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1418; see Craftmatic, 890 F.2d at 645; Christidis v. First Pa. Mort. Trust, 717 F.2d 96, 100 (3d Cir.1983). Even under a relaxed application of Rule 9(b), “boilerplate and conclusory allegations will not suffice.” In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1418; see Shapiro, 964 F.2d at 285. In accordance with Rule 9(b), a plaintiff must still plead with particularity his or her ignorance of the falsity of the misrepresentation. In this connection, a complaint alleging violations of Section 10(b) and Rule 10b-5 must contain more than mere conclusory allegations that the necessary information lies within the exclusive control of the defendants. See Shapiro, 964 F.2d at 285. Instead, a complaint must set forth “at least the nature and scope of plaintiffs’ effort to obtain, before filing the complaint, the information needed to plead with particularity.” Id.; see In re Burlington Coat Factory Sec. Litig., 114 F.3d at 1418 (“Plaintiffs must accompany their legal theory with factual allegations that make their theoretically viable claim plausible.”); Craftmatic, 890 F.2d at 645. This pleading requirement promotes due diligence by requiring a plaintiff to thoroughly investigate all possible sources of information, including but not limited to all publicly available relevant information, before filing a complaint. Shapiro, 964 F.2d at 285. In the Opposition Brief, EPM contends the particularity requirement of Rule 9(b) should be relaxed in this case because the precise information known by the managers of EchoCath when they made the alleged misrepresentations to EPM is exclusively within the control of EchoCath. See Opposition Brief at 14-15. EPM asserts that it can obtain this information only through discovery and therefore the Motion to Dismiss should be denied. See id. No such allegation was set forth in the Amended Complaint. See Amended Complaint. Before EPM filed the Amended Complaint, EPM was required to delineate, at the very least, the nature and scope of its effort to obtain the information needed to plead with particularity. See Shapiro, 964 F.2d at 285; see Weiner, 129 F.3d at 319. Neither the Amended Complaint nor the Opposition Brief sets forth the nature and scope of the efforts by EPM to obtain the information it contends it needed to plead its allegations with particularity. See Amended Complaint; Opposition Brief. It is unclear what efforts, if any, EPM undertook before filing the Complaint and the Amended Complaint. The Motion to Dismiss can not be denied simply because EPM alleges in conelusory fashion in the Opposition Brief that it did not have sufficient information with which to plead its allegations with specificity. See Shapiro, 964 F.2d at 285; see also 15 U.S.C. § 78u-4(b)(1)(B). As discussed below, the Amended Complaint contains boilerplate and conelusory allegations of securities “fraud by hindsight.” The Amended Complaint does not contain sufficient particularity with which to satisfy the heightened pleading standards of Rule 9(b) or the Reform Act. Even under a relaxed application of Rule 9(b), the Amended Complaint must be dismissed. In addition, as explained below, the Amended Complaint must be dismissed pursuant to Rule 12(b)(6) because EPM has not satisfied the requirements for sustaining a Rule 10b-5 claim. a. Misrepresentations or Omissions of Material Fact “A statement is false or misleading if it is factually inaccurate, or additional information is required to clarify it.” Wallace, 1997 WL 602808, at *9; see In re Bell Atlantic Corp. Sec. Lit, No. 91-0514, 1997 WL 205709, at *23 (E.D.Pa. Apr.17, 1997); Pache v. Wallace, No. 93-5164, 1995 WL 118457, at *3 (E.D.Pa. Mar.20, 1995), aff'd, 72 F.3d 123 (3d Cir.1995). Misleading statements of intentions or forward looking statements, such as projections, estimates, and forecasts may be actionable if “[they] are issued without reasonable genuine belief [in their accuracy or truth] or if [they] ha[ve] no basis.” Kline, 24 F.3d at 486; see also In re Donald Trump Sec. Litig., 7 F.3d at 368; In re Bell Atlantic Corp. Sec. Lit., 1997 WL 205709, at *23. In order to determine whether a forward looking statement can be deemed false or misleading, “the court must examine whether the speaker, at the time it is made, (1) actually believed the statement to be accurate, or whether (2) there is a factual or historical basis for that belief.” In re Bell Atlantic Corp. Sec. Lit., 1997 WL 205709, at *23; see Kline, 24 F.3d at 486. It is not enough, however, that a statement is false or misleading; if the misrepresented fact is not material, then the misrepresented fact is not actionable. See Basic, Inc. v. Levinson, 485 U.S. 224, 238, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988); Weiner, 928 F.Supp. at 1384. A misleading statement is material if there is a substantial likelihood that the reasonable investor would have viewed the statement or omission “as having significantly altered the ‘total mix’ of information made available.” Basic, 485 U.S. at 231, 108 S.Ct. 978; see Weiner, 129 F.3d at 317; Shapiro, 964 F.2d at 281 n. 11; Wallace, 1997 WL 602808, at *9. “The Supreme Court has been ‘careful not to set too low a standard of materiality’ in order to avoid ‘an overabundance of information’ especially concerning corporate developments of ‘dubious significance.’ ” Weiner, 928 F.Supp. at 1384 (quoting Lewis v. Chrysler Corp., 949 F.2d 644, 649 (3d Cir.1991)); see Basic, 485 U.S. at 231, 108 S.Ct. 978. The reason for this is that the Supreme Court was concerned that a minimal standard might bring an overabundance of information within its reach, and lead management ‘simply to bury the shareholders in an avalanche of trivial information — a result that is hardly conducive to informed deci-sionmaking.’ Basic, 485 U.S. at 231, 108 S.Ct. 978 (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 448-49, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976)). The issue of materiality is a mixed question of law and fact which ordinarily is decided by the trier of fact. See Weiner, 129 F.3d at 317; In re Donald Trump Sec. Litig., 7 F.3d at 369 n. 13; Shapiro, 964 F.2d at 281 n. 11. However, if the alleged misrepresentations and omissions are so obviously unimportant to an investor that reasonable minds cannot differ on the question of materiality, the allegations are not actionable as a matter of law. See Weiner, 129 F.3d at 317; In re Westinghouse Sec. Litig., 90 F.3d at 707 n. 8; In re Donald Trump Sec. Litig., 7 F.3d at 369 n. 13; Sha piro, 964 F.2d at 281 n. 11. When assessing materiality, not only the statement or omission itself but, as well, the context in which it occurs must be considered. See In re Donald Trump Sec. Litig., 7 F.3d at 364 (“[A] statement or omission must be considered in context.”); Wallace, 1997 WL 602808, at *9. In the Opposition Brief, EPM contends the following material misrepresentations were made by EehoCath to induce it to purchase the Securities. First, in August 1996 and again in late January 1997, EehoCath orally stated to EPM that it was “on the verge of signing contracts” with third parties for its health products for women even though EehoCath knew it had no reasonable prospects of entering into any contract relating to these products. (Hereinafter referred to as the “Possible Contracts Allegation”). See Opposition Brief at 19 (quoting Amended Complaint at ¶¶ 10,15,17-19). Second, on 20 December 1996, EehoCath delivered to EPM sales projections for its health products for women showing rapid sales growth in 1997 and 1998 when in fact EehoCath “did not genuinely believe and had no reasonable basis to support the projections.” (Hereinafter referred to as the “Sales Projections Allegation”). See id. (quoting Amended Complaint at ¶¶ 13-14, 18). Third, in the EehoCath Operating Model, dated 20 December 1996, EehoCath represented to EPM that it would receive income in the form of license fees and Milestone payments from Medtronic in the amount of $450,000 even though “EehoCath had no reasonable basis to support this projection and knew ... it was false and misleading.” (Hereinafter referred to as the “Medtronic Allegation”). See id. (quoting Amended Complaint at ¶¶ 21-23). Fourth, also in the EehoCath Operating Model, dated 20 December 1996, EehoCath advised EPM that it “anticipated receiving” income in the amount of $500,000 from a company that would use EehoMark technology for guiding prostate treatments when EehoCath “had no reasonable basis to support this statement and knew that it was highly questionable, if not entirely unlikely, this contract would ever be consummated.” (Hereinafter referred to as the “Prostate Contract Allegation”). See id. at 20 (quoting Amended Complaint at ¶ 24). Fifth, on or about 23 December 1996, EehoCath orally informed EPM that the anticipated investment by EPM together with other outside investments “would provide sufficient operating funds to allow EehoCath to actively develop and market the products ... for a period of at least 18 to 24 months” when in fact EehoCath “knew or had every reason to know this representation was false.” (Hereinafter referred to as the “Cash Balance Allegation”). See id. (quoting Amended Complaint at ¶¶ 26-27). EehoCath - contends EPM has failed to demonstrate how the Possible Contracts Allegation, the Sales Projections Allegation, the Medtronic Allegation, the Prostate Contract Allegation and the Cash Balance Allegation, (collectively, the “Alleged Misrepresentations”) constitute material misrepresentations. See Moving Brief at 23-31. The 17 January 1996 Prospectus, the 1996 10-K of EehoCath, the 1997 10-Q of EehoCath and the Subscription Agreement all include general warnings that an investment in Echo-Cath was risky, indeed speculative. These documents include specific language detailing a variety of risk factors that pointed out the uncertain nature of the EehoCath operation and the fact that the success and profitability of EehoCath were uncertain at best. Within these broad, yet detailed warnings, the Alleged Misrepresentations at issue were, at worst, harmless. See In re Donald Trump Sec. Litig., 7 F.3d at 371. Each of these allegations is addressed. (1) Possible Contracts Allegation and Sales Projections Allegation The Possible Contracts Allegation is based upon representations made by DeBer-nardis on two occasions between August 1996 and late January 1997. Specifically, EPM alleges DeBernardis falsely stated EehoCath was “on the verge” of signing contracts for its women’s health products with UroHealth, Johnson & Johnson, Medtronic and Bard. See Amended Complaint at ¶¶ 10, 15. According to the Amended Complaint, Echo-Cath assured EPM that such contracts with outside companies were “imminent.” See id, at ¶ 15. EPM contends EchoCath “had no reasonable prospects of entering into the contracts.” See id. at ¶ 18. As indicated, in assessing materiality, the context in which the alleged misrepresentation was made must be examined. See In re Donald Trump Sec. Litig., 7 F.3d at 364. Statements contained in offering documents are relevant to this issue. See id. at 371. This Circuit has followed the lead of several Courts of Appeals which dismissed securities fraud claims under Rule 12(b)(6) because “cautionary language in the offering document negated materiality of an alleged misrepresentation or omission.” See id. Notably, EPM expressly acknowledges the Possible Contracts Allegation contains representations “similar to the representations set forth in the Prospectus, dated January 17, 1996____ EchoCath ■ stated in its Prospectus that it had already developed a line of women’s health care products.” Amended Complaint at ¶ 11. However, the written statements contained in the 17 January 1996 Prospectus, which predated the Possible Contracts Allegations of August 1996 and January 1997, contradict these later oral representations of DeBernardis, rendering them immaterial. See In re Donald Trump Sec. Litig., 7 F.3d at 364. The 17 January 1996 Prospectus refrained from stating EchoCath had already reached agreements with outside parties or had received funds pursuant to such agreements to market or develop any of its products, including its women’s healthcare products. Instead, the 17 January 1996 Prospectus stated: [EchoCath] has no binding commitments from any third parties to provide funds to [EchoCath] and there can be no assurance that additional financing will be available on terms favorable or acceptable to [Echo-Cath], if at all. 17 January 1996 Prospectus at 7; see id. at 23. [EchoCath] intends to pursue licensing, joint development and other collaborative arrangements with other strategic partners. There can be no assurance, however, that [EchoCath] will be able to successfully reach agreements with any strategic partners, or that other strategic partners will ever devote sufficient resources to [EchoCath’s] technologies. 17 January 1996 Prospectus at 8; see id. at 24. [EchoCath] has not yet developed a sales organization to market and sell any of its products and there can be no assurance that [EchoCath] will be successful in establishing a sales organization or as to the effectiveness of such sales organization. [EchoCath] also intends to rely upon a network of distributors or enter into joint venture, licensing, or other collaborative arrangements to market and sell its products .... There can be no assurance that [EchoCath] will be successful in entering into any such arrangements or be able to effectively manage and maintain its relationships with others, or that any marketing and sales efforts undertaken by or on behalf of [EchoCath] will be successful. 17 January 1996 Prospectus at 9. [EchoCath] currently does not have written agreements with any of its suppliers for manufacture or assembly. 17 January 1996 Prospectus at 31. With specific reference to the women’s health care products “EehoMark” and “Col-orMark,” the 17 January 1996 Prospectus stated: Such products ... are expected to require additional financing to commercialize. There can be no assurance as to [Echo-Cath’s] ability to ... secure any financing. Id. at 25; see id. at 26. Similarly, the 1997 10-Q of EchoCath, filed on 21 January 1997, just prior to the 30 January 1997 statement by DeBernardis, reiterated “[t]here can be no assurances that [EchoCath] will be able to complete the ... license agreements and strategic alliances on acceptable terms.... [EchoCath] has no binding commitments from any third parties to provide funds to [EchoCath].” See 1997 10-Q of EchoCath at 8. Significantly, there is a common theme which is first memorialized in the 17 January 1996 Prospectus and is carried forward in the 1997 10-Q of Echo-Cath, filed on 21 January 1997. Each of these documents stresses the highly speculative nature of the investment and the fact that EchoCath was merely a start-up company hoping for success. Absent a statement by EchoCath that the contracts would be consummated, such statements, taken in context, are not false and misleading. See Weiner, 129 F.3d at 317. The contradictory language contained in the 17 January 1996 Prospectus put EPM on notice of the possibility such contracts would not be consummated, thereby diminishing the importance of the oral statements. See Associates in Adolescent Psych. v. S.C. Home Life Ins. Co., 941 F.2d 561, 571 (7th Cir.1991) (“Documents that unambiguously cover a point control over remembered (or misremembered, or invented) oral statements.”). EPM, a sophisticated investor, can not argue that such oral statements significantly altered the “total mix” of information made available to EPM. See In re Donald Trump Sec. Litig., 7 F.3d at 370 (alleged misrepresentation deemed immaterial where prospectus contains abundance of warnings and the alleged misrepresentation was buried amidst cautionary language) The Sales Projections Allegation is based upon sales projections for the women’s health products contained in the EchoCath Marketing Plan. Delivered to EPM on 20 December 1996 with the EchoCath Operating Model, the EchoCath Marketing Plan stated: ‘ColorMark sales are projected to be $736,-000 in [1997] and $2.5 million in [1998]. The EchoMark SSG catheter sales are projected at $116,000 and $786,000, in the 1st and 2nd year, respectively. We believe these sales projections are conservative.’ See Amended Complaint at ¶ 14 (quoting the EchoCath Marketing Plan). EPM alleges EchoCath “did not genuinely believe and had no reasonable basis to support the projections set forth in the [EchoCath Marketing Plan].” See Amended Complaint at ¶ 18. The statements contained in the EchoCath Marketing Plan, the 17 January 1996 Prospectus, the 1996 10-K of EchoCath, dated 12 December 1996, the 1997 10-Q of Echo-Cath, filed 21 January 1997, and the Subscription Agreement reveal that the data upon which the Sales Projections Allegation is based are neither misleading nor material. The EchoCath Marketing Plan stated “[t]his plan will outline the sales and marketing goals for the next two years (February 1996 — January 1998). It is intended as a beginning guide, and it is expected that it will be revised.” See EchoCath Marketing Plan at 1 (emphasis added). As discussed in further detail in connection with the reasonable reliance requirement of Rule 10b-5, the 17 January 1996 Prospectus emphasized: [EchoCath] is a development stage company which has limited sales and which has incurred substantial losses since inception. An investment in the securities offered hereby is speculative in nature an