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Message: Letter to Shareholders from Jim Turley, CEO of Patriot Scientific
Letter to Shareholders from Jim Turley, CEO of Patriot Scientific
We had terrific year-end results – the best in Patriot’s 20-year history. Our top-line “sales” for fiscal 2007 nearly doubled to $49 million. (Technically, our sales include only our microprocessor chips and the products from Holocom. Most of our income is actually recognized through our equity stake in the joint venture through which we license our patents. It’s just one of those funny accounting rules. Thank you, Mr. Sarbanes and Mr. Oxley.) Our net profit was $23.7 million, or $0.06 per fully diluted share. Obviously, Patriot Scientific is enormously profitable and we’re growing rapidly. Our cash position has also improved hugely over the previous fiscal year, growing by a factor of nearly 5x. We now have over $21 million in the bank, compared to just under $4 million this time last year. That puts us in a much stronger position to acquire other companies, technologies, rights, or equipment. Regarding our cash, I met recently with the board of directors and we decided not to pay out a dividend this period. We’ll revisit this issue regularly but for now I think we can put that cash to much better use in growing the company, as I hope to show you later this year. With our patent licensing activity running at the rate of about one new licensee every month, and with more than 300 potential licensees officially notified, we’ve got every reason for optimism. We’ve got many years of licensing deals and revenue ahead of us. So why isn’t the share price doing better? I get a lot of letters from shareholders asking, “Why didn’t you raise the share price this morning?” If only it were that easy. You know, I sometimes wonder if these people understand how free markets work. To borrow a phrase from the 19th century scientist Charles Babbage, “I am not rightly able to apprehend the kind of confusion of ideas that could provoke such a question.” Share prices are controlled by supply and demand, not some big red button in my office. Nick Tredennick has joined our board of directors. As I hinted in our last letter, I’m thrilled that Nick has found the time to join us. I’ve known Nick for a number of years and I admire his balance of technological know-how and business sense. He also has an eye for spotting trends, which brought him together with George Gilder many years ago to write Dynamic Silicon and the Gilder Technology Report and to participate in the Telecosm tech-investor conferences. Nick’s going to review the acquisition candidates we’re evaluating and recommend some ideas of his own. His industry knowledge, corporate experience, and nose for good (and bad) investments will really work in our favor. I’m now writing a regular monthly column for Electronic Business that starts this month. This is a widely distributed electronic newsletter published by Reed Elsevier alongside big industry magazines like Electronic News and EDN (Electronic Design News). In addition to spreading the word about Patriot Scientific I’ll be writing about the intellectual property business, industry climate, business models, and related topics of the day. You may be getting a tax refund. As you know, we paid two dividends during calendar year 2006, and you will have received a Form 1099 that declared those dividends as taxable income. They actually weren’t taxable, and we sent out corrected 1099s, but some of you didn’t receive them. We’ve sent out the corrected form yet again, but just in case you still don’t receive it we’ve posted more information here. Mark your calendars for our next shareholders’ meeting on Tuesday, the 23rd of October. As before, we’ll hold the meeting at the La Costa Resort & Spa here in Carlsbad. Everyone’s welcome and you can find information on travel and hotels on our Web site.
To All Friends of Patriot Scientific Corporation,
August was a good month for Patriot, but more than that, it was a record-breaking year! We released fantastic annual results, appointed a new board member, and opened a new publicity channel.
With best regards for a good and profitable summer;
—Jim Turley
President/CEO
Patriot Scientific Corporation
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