With PTSC in full cardiac arrest and Doctors at the ready to apply the paddles, the patient is on life support in desperate need of an adrenaline shot directly into the heart, our partner, TPL, accidentally shot himself in the foot, and is bleeding profusely, and is on the way to the ER in an ambulance. The extent of the injury is unknown but the patient has lost a lot of blood (credibility) and needs emergency care, too.

Though some investors may be wistfully dreaming of Schadenfreude on TPL at this point based on emotion, I would urge a little caution. From the outside looking in, TPL looks foolish based on results. While some members of TPL may be guilty of hubris and arrogance and dropped the ball sotospeak in most eyes, the next few days will be crucial for investor confidence, which while at a low ebb, has not completely been abandoned. Expect a newsletter by Friday at the latest to the effect “ lost a major battle but will win the war”. Additionally, I would expect PTSC to comment on Crossflow’s initial contacts and that the previously forecast of $6M a year in sales may be too low…”And we see great prospects in terms of sales by the end of CY 09”. “Avot looks very promising, too.”

Comments were made earlier today, cynically indicating TPL is loaded and will continue to feed off of PTSC with legal fees run amok in the Appeals process. IMO, TPL took a HUGE hit and their Business model is in tatters. I would expect their employment Rec’s to be cancelled immediately. A lot of their “Tear-down specialists” will now sit idle. Their whole business model is in serious jeopardy.

Approximately $240M have been garnered to date in total licensing fees. Roughly half of that ($120M), goes to TPL. Applying a 40% tax rate (Fed & State), whittles the $120M down to $72M. Subtract out start-up costs of $10-20M (Nice Corp HQ and other offices worldwide), Salaries (100 people at average salary of $100k – high end tech types and lawyers or $10M/year, Overhead ($2-5M) – educated guess, and TPL may have around $40-50M capital or less. Additionally, I believe they were also bankrolled to the tune of approximately $30M by Sequoia Capital Partners or another Silicon Valley investment firm in the past. They may be subject to a Note with interest fees.

Given the economic times, and the PTO disaster, I would expect considerable heat being placed on TPL’s heads right now. Expect a visit from the Capital firm at the very least, the wolves are barking! All the more incentive for TPL to turn this around.

While PTSC has/is attempting to diversify into other markets, TPL IMO is even more dependant on licensing fees to expand, even considering the Seaforth and Flash with likely miniscule royalties to date, IMO. That market is in its infancy and IMO will never be the main driver of revenue for TPL.

Once TPL/ Moore / Lawyers huddle up, I would expect great pressure on TPL’s European offices to net some big fish. Sadly, these are tough economic times and TPL will get much less revenue I’m afraid…

Virt