As you read this please keep in mind the following:

· I am NOT advocating a reverse split

· I am NOT advocating paying dividends

About a month ago I purchased shares in a company at a cost of about $19.50/shr. On Friday, 7/31 it closed around $23.00+/shr. A rather nice return so far bit I bought the stock for its dividend which at the purchase price has an annual yield of 15.6%. Try getting that from a bank CD.

One thing I noted was that the daily trading volume for this stock is about 54,000 shares. The outstanding share amount is 54 million. Contrast that with the outstanding share amount of 400 million for PTSC. The history of PTSC and how the outstanding share account grew has been discussed before on this forum. It should also be noted that PTSC is an OTC Bulletin Board stock whereas the other stock is on the NYSE.

I have always felt that the company needed to reduce the outstanding shares drastically otherwise it would linger in the penny range. At Friday’s closing price of $.118 buying back 100M shares would cost $11.8 million. However there are SEC rules in place governing how companies may buy back their own stock. These rules are to prevent manipulation of the share price, which penny stocks are notoriously known for. The following link is to an article on the rules:

http://www.thefreelibrary.com/Stock+buybacks%3a+the+rules-a054636937

The central question is what is the best use of company capital? Buying back shares or expanding/growing the company. That is the difficult call Mr. Goerner is facing. Clearly he has chosen to grow the company.

I have posted in the past that with the uncertain nature of the revenue from the MMP that the company needed to create an alternative source of revenue. My opinion is that pursuing the mergers/acquitsitons of Crossflow, et al in a very promising and growing business sector RG is doing the correct thing. The recent recertification of the 584 patent and, hopefully soon, of the 336 and 148 patents should result in a significant increase in licensing revenue (Mr. ObviousMan at work here). However, I believe there is a question of just how valuable these patents really are. The disappointing settlement of the J3 case and the rather small fees from some of the subsequent licenses seem to suggest that the original estimate of licensing revenue was too high.

With a predictable revenue stream from our affiliate companies and increasing earnings from Q to Q PTSC would become an attractive investment. In other words, there will be demand for PTSC shares. Increasing demand will drive up the price. But how high the share price can go will be influenced by the outstanding shares. With such a large supply of shares (400+ million) share price growth may not be significant at all.

So I have raised the issue. I am not smart enough to go beyond this. I leave it to the rest of you to discuss this if you wish. Looking forward to the discussion if one takes place. What is the best use of company capital?