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Message: Greeting from La Costa Apr 07
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Greeting from La Costa – April 2007<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:of... />
Prologue
It was with great pleasure that I met several of our esteemed brethren from Agoracom namely, - <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:sm... />Huntington from NY, Wolfpackvolt, SDcraigo, Bankerson, Bigplay777, Marc, and He who cannot be named (wink)….before the meeting began. At this time, I spoke with Helmut Falk, Jr. & Jim Turley. Jim hoped a few things will break open for PTSC in the next few months. When I pushed him hard regarding near term IGNITE development activity, Jim indicated there are NO software tools development planned in the short run. Disappointing. IGNITE is dead in the water for now, even when I inquired about possible AMD support. I said it can’t be due to the lack of funds, we have the money. He agreed. He says he fly’s around giving presentations occasionally, but said his day-to-day work activity is sporadic similar to a sine wave, like Gloria Felcyn’s CPA work.
Helmut said BOD members reads AGORA often. Helmut, like Pohl said he is perplexed why the share price is down despite earnings. IMO, the Street does not as yet believe in the Business Model, which is rather unusual to say the least. It is very difficult to predict future earnings, given current court challenges & USPTO overhang. Each negotiation is unique, each outcome independent of the next negotiation. We need more data points IMO.
Introduction
10:20 a.m. Atmosphere seemed a little more subdued. People entered the room concerned, apprehensive, skeptical, and disappointed about the current share price. Attendance was about 75% of last time, unlike the SRO crowd last time. Fewer outside suits, but more inside suits e.g. Holocom people, PTSC PR people. Is that an oxymoron?? Unlike last SHM, I did not see/meet any print reporters. Hawk/Hoffman were there, too. More on them later.
David Pohl gave the opening remarks. Accompanying David on the dais were Gloria Felcyn, Charles Johnson, Helmut Falk, and Jim Turley. Later on, Charles presented David with a very nice inscribed plaque by the BOD commemorating his several years of service and very hard work in resurrecting PTSC from the ash heap to a its current position. Very nice touch. Many times investors thanked David for all his efforts with handclapping. David said he was retiring June 5th, , when he turns 70, from his CEO position only, but will remain as a transitionary figure, helping the new CEO get up to speed. Dave will assume Chairman of the Board status only. More than once, David said it was time to get new, young blood to lead PTSC forward. Curiously, neither Gloria, Helmut, nor Jim Turley spoke today. Otto Sorenson – Corp General Counsel & Mike Vidule – Auditor were introduced, too. Interesting Mark Gaspar, former PTSC CTO of long ago was introduced. Mark apparently was instrumental in the GPR Ground Penetrating Radar PTSC developed and whose name is on the patent. Pohl said, we are revisiting potential applications of this technology, but just in the discussion stage. Pohl introduced Eric Swartz, John Burns – Holocom Networks, Dan & Matt Leckrone, and Brian, our shareholder representative.
Agenda Activity
Pohl called the SHM to attention and to conduct company business. He introduced Sweeney – PTSC CFO, who briefed the crowd on the 2006 financials. It was then announced 325M out of 379M proxies were received or 86%. By a show of hands, both measures on the agenda – Ratify selection of new PTSC Auditors and re-election of BOD directors were voted on and approved by a show of hands. Unbelievable!!!!!.....No mention was made of the individual share vote of each of the current BOD members. Hopefully, this will be provided later.
Pohl Remarks
10:35 a.m. Finally, Pohl acknowledged receipt of Ron’s letter and mentioned the 56M amount included in the letter and waved it in front of everyone. He said many of the questions in the letter would be answered by the presentations to follow. Pohl then said those questions unanswered from the letter at the SHM will be answered in the form of a letter to shareholders in a week or two following the SHM.
Pohl expressed 2 words “common goal”, and said he is very concerned with the share price – Jan 06 $.09 to Dec $.60, which he was very proud of and wanted to reassure everybody the BOD does not manipulate the share price. He reaffirmed his firm desire to get out of BB land. Pohl had discussions within the last 6 months with representatives of the AMEX, and said the current AMEX requirement is $3.00 for 30 days. He did not mention the other exchange, presumably NASDAQ.
M & A Activity – Concerted effort currently underway looking at JV, acquisition, or mergers.
Timetable
1) 3-6 months screening
2) DD takes several more months
3) Final Legal review
Pohl is very interested in M&A activity (Understandable given his expertise in guiding the BofA - Security Pacific Bank merger in the past. He sees this as a shortcut to a major exchange (Dave’s words). He mentioned they almost completed one in Oct-Nov 06 with a company with over 200 patents, but talks broke down over which company is more valuable. Curiously, the same company called up PTSC recently and asked to restart negotiations. Interesting. Pohl stressed the tireless work put in by Gloria and the financial team associated with restating, a re-audit of the 2006 financials to conform with Sarbanes- Oaxley requirements and the ongoing work it takes to conform to the new rules. Personally, some of these rules entail creation of a Risk Register and more auditing from my own experience. Pohl indicated he wanted the books, “squeaky clean” , to help M&A accounting activity.
Pohl said the compensation of the BOD was related to Sarbanes-Oaxley accountability, accelerated filing status, and new internal controls. “We have active Directors”. Five people are now on the BOD and more people are expected to be added in the coming year. No mention of when or who. Curiously, he said an investment banker was not a prospective candidate due to conflicting responsibilities. The Board has conducted an active search over the last 2 months for a new CEO, and will hire the “Brightest and the Best”. The position is expected to be filled before Dave retires June 5th. Pohl said 23K proxies were received, which are positions only not necessarily shareholders, an increase from 16K last year, which is encouraging. Pohl emphatically said “I’m not going away”. The Board is close to making a decision right now.
Pohl said the Remote Wireless Charging Device is NOT practical to go forward. It would take 31 years to charge 2 AA batteries. The patent is viable, but not worth going forward. The JV activity in China is Dead. The other side disappeared. Then Dave mentioned Marc Gaspar – Former PTSC CTO 93-94, and said the GPR combined with the IGNITE might lead to something in the future.
11:00 a.m. Pohl ends remarks concluding with the statement” CEO position will be filled with someone with experience in M&A activity and investment banking.
11:05 a.m. Eric Swartz speaks. We’ve been financing PTSC for 10 years. PTSC has turned the corner, and used the dollars to build a company into a bigger firm. Swartz never shorted or arbitraged a single share or warrant {His words}, and is the largest shareholder. I believe in the Board and the company, and says Pohl and the Board has done a great job to get to the place where they are now. Cleaned up the books. Expressed that the company has the wherewithal to be successful no matter what the outcome of the Markman. Eric continued and said Dan Leckrone is relentless. Eric said he believes in PTSC but reserved the right to sell at some time in the future. IMO, Eric plays his cards close to the vest and acknowledged the roller coaster share price.
Pohl came back on and said he made several trips to NYC in 06, laying the foundation for future interest by the Street. He indicated because of the current share price, NYC firms are precluded from investing in PTSC.
Next, John Burns – Holocom Networks CEO Attorney, with Engineering background introduced. Presents PowerPoint presentation Scripps Secured Data dba Holocom Networks title. Founded 1996 as a furniture company evolved into a PDS company (Protected Distribution System). Firm has a rich IP. For Sale in Sep 06, Failed in Jan 07. Approved by NSA (National Security Agency) & all branches of the military. Company had $2.7M in assets but was losing $300k/mo. Now (See below)
Income Statement (Monthly)
(In Thousands) 2006 Feb Mar Apr (Prelim)
Revenue 350 71 167 224
Expense 300 113 60 9
Asset Sale 100
Net Income 300? (113) 40
Burns downsized the firm from 50 to 15employees. Reduced offices from 7 to 2. Eliminated costly leases (SW, HW, etc). All remaining employees are given options and a bonus pool of 20% of net operating income. Burns indicated the firm is profitable at $250k-$300k/mo and expects to be more profitable later.
Strategy Forward
1) Grow the DoD
2) Grow other Govt sales
3) Strategic partnership
4) Open the commercial market
5) Expand IP
6) Share gain with employees
Nice presentation.
11:35 a.m. Pohl mentions TPL is now a subject of a Harvard Case Study and introduces Dan Leckrone (The Elder), who seems in a good mood today. Presents a PowerPoint presentation.
TPL – Global Intellectual Property Development & Management Company made up of TPL, Alliacense, and Intellasys
Home to 32K sq.ft office and 200 employees. New home in a very nice location in Northern California. Intellasys has 8 Design Centers & 3 Sales offices overseas – Paris, Switzerland, Taiwan, I think.
Alliacense executes TPL licensing programs, currently 30 employees and growing rapidly.
Intellasys has 150 people – 40 PhDs, 80 Masters. All support Alliacense. Core competency is semi-conductor devices covering microprocessor arrays, memory management & control – Flash, and HDTV networking and security. An incomparable array of technical expertise – MMP related; also supports Alliacense MMP program on demand
TPL – 30 people, 40 outside lawyers. Corporate support. Core competency – IPA development and litigation management.
New task – Portfolio protection. Dan indicates present patent system is under attack by a well organized, heavily funded firms. The “Intels” are emboldened, and a string of pending cases are pending. Real threat to us. TPL response: “Amicus” program underway aka “Friend of the Court”, and Legislative information program being launched.
Litigation - Markman
3 May
High expectation
Very confident
Dan in response to a question regarding PUPAT sponsorship implied PUPAT was funded by Big Money, Free Software folks
11:50 a.m. Dan introduces Matt Leckrone to talk about Alliacense & the MMP portfolio. Dan talked about the organization, Operations & Licensing divisions. Big focus in 2007 is the AUTO industry. TPL has already met with several car firms. He talked about tearing apart Cars, Cameras, toys (Tickle me Elmo illustration without the fur was quite funny), ATM machines, Point-of-Sale machines. They do 200 Tear Downs a month. Taking items apart and see how they work.
Alliacense Claim charts activity jumped from 2Q06 of 934 to 4500 thru 2Q 07.
Alliacense has had 265 customers meetings from 2006 thru 2007
485 companies have been put on notice. Of which, 318 have >$1B in revenue. 222 responded. Met with 81 firms and Licensed 16 to date. Alliacense is operating in 11 Consumer sectors and coincidentally 11 Industry sectors. GREAT PRESENTATION!!!
Q & A
Q: Payout of dividend. Why?
A: Pohl indicated some investors like the dividend and said Board would “consider” future dividends are dependent on future conditions.
Q: Patents expire in 2015. What then?
A: Engineering team???, to seek & development patents. Acquire new technology patents e.g. Holocom. Leckrone says we also have a 6-year look back in 2015.
Q: 5 employs spent $6M on Selling & G&A expense. Why?
A: People cost money – Resolve old accounting problems, lawyers, auditing, etc.
Q: As license price goes up are prospective licensees waiting it out?
A: That’s the reality (tip toe answer). Price/Demand is an Art. Leckrone says it’s a fine line. Price affects demand. As value goes up, the price goes up.
Q: Servers / Computers bleed over like Apple could fall into several categories. Which one??
A: Rule of reason – Look where the biggest part of relevant revenue comes from.
Q: Getting listed on major exchange?
A: Reverse split is always possible to, but Board feels it is very unlikely now. Much more likely thru an acquisition.
Q: Price of a License mentioned in PR’s, now it is now mentioned. Why?
A: Earlier done because of an obligation and characterized as a “Special event”. Now its common, no need, and also secret for competitive reasons. Note: A big settlement in Texas would qualify as a “Special Event” and actual dollars paid would be listed.
Q: Has BOD sold stock in the last 6 months?
A: No
Q: How much stock & warrants does Swartz currently hold?
A: See 10-K & Proxy
Q: My Favorite – Hoffman Agency is asked why no PR? I ask has Hoffman, Hawk, et al been muzzled intentionally?
A: John Radenwagen – Hoffman, replies he is feeding info to investment bankers, the WSJ. But is told PTSC is not interesting enough to write about yet. LOL.. I asked him if he had sent anything to the Los Angeles Times. He said NO!!!! He says we are “Getting there”, need more events, “It’s a Process”!!!!
Q: Is share repurchase program continuing?
A: It is still in place.
Q: Rep from UBS Securities. We need more exposure.
A: New CEO needs to contact more Hedge Funds, etc.
Q: From Brian – Downstream Royalty Process??
A: Leckrone says we are experiencing it. We earn royalties in the Box not the Chip. Revenue attributable to end user system, preserving downstream potential.
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Apr 27, 2007 08:53PM
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