REAL Outlook IMO

Bear Case

· The Company has completed its initial installation at one of the most advanced Data Fusion Centers in the country. Ultimate success of this and all Fusion Centers is dependent upon reaching agreements with other governmental agencies to gain access to specific data sets. No assurance can be given that these agreements will, in fact, be consummated or, if they are, when that might be.

· Revenues from IP licensees are not consistent. It is difficult to accurately forecast IP licensing revenues.

· The Company’s IP patents are being challenged with litigation proceedings. There can be no assurance the proceedings will be favorable to PTSC. Previous litigation has resulted in IP licensing for PTSC.

· The healthcare vertical market for data sharing may take more time to develop than is assumed in our forecasts.

· Competing software designs may offer similar functionality to CDX at a lower cost. Competition today does not meet the combination of robust design characteristics and ease of use of CDX.

· Adoption of new Medicare reimbursement and audit policies may be slow due to a new federal administration. We expect any change to Medicare is likely to have more performance based reimbursement.