PATRIOT SCIENTIFIC – EXTRACT FROM A YAHOO ‘BLOG’ NOV 29 2011

By http://messages.finance.yahoo.com/profile?bn=49226&mid=18614 “whatptscwontputinapr”

69 years old, Henderson, Nevada

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_P/threadview?m=tm&bn=49226&tid=18614&mid=18614&tof=6&frt=1

EXTRACT IS VERBATIM EXCEPT FOR SPELLING CORRECTIONS

Gluttonous Part 1 et cetera

The filings show that Carl, Gloria and Cliff were paid $707,000 in cash for fiscal year ending 2010, while PTSC recorded Total Revenues for the entire year of only $567,934; Operating Losses of <$12,764,015>, and Losses before Income Taxes of <$10,608,178.>.

It's brazen, I think highly irresponsible, and screams to this reader of "entitlement" thinking and a Shareholder's be damned attitude!

Carl, Gloria and Cliff have presided over millions and millions and millions of dollars in losses, yet got paid hundreds and hundreds and hundreds of thousands of PTSC's dollars.

We had Operating losses in 2007 <$14,763,834>, 2008 <$5.6 Million>, 2009 <$7 Million>, 2010 <$12.7 Million> and 2011 <$6.4 Million>. We had corporate cowardice masquerading as "cost savings (less than $20K) and greater participation" such that a BOD resolution was passed so they could never again need to face company owners in person generally, and likely their very large So California shareholder base specifically, even just once a year; and held a "virtual" SHM in Jan 2011 (they could have easily simultaneously Streamed the physical meeting live, it's just as simple and costless as Goerner's Conference Calls were). Besides, an Annual Meeting once a year is the only time Shareholders get to gather and look the BOD in the eye, and hold them accountable for the performance of the company .... seems to me that is exactly what the BOD didn't want to happen. Unbelievably, in what Shareholders protested as an earlier strategic effort to exclude as many participants as possible, the previous SHM was held all the way in Chicago ("cost savings" ?, "to better accommodate Shareholder access..." ?), in the dead of winter, and was the only SHM held outside of Southern California that I'm aware of since we became Patriot Scientific in 1992. To top it off, these three don't even have enough confidence in their own abilities or sympatico towards their investors plight to purchase one lousy share of PTSC stock during the past 3 years; NOT ONE SHARE OF COMPANY STOCK ... Do you know how much total cash compensation (just cash) these three received in those same 3 Fiscal years ? One million seven hundred seventy three thousand three hundred one dollars; $1,773,301. What was the average price for one share of PTSC stock over that same 3 fiscal year period? 14 cents.

In my opinion, these folks are the poster children for selfish, entrenched, and contemptible corporate actors.

Most leaders who repeatedly failed to perform for their investors would have resigned or been fired, or at the very least cut their cash compensation levels down to more modest or performance tied amounts; they might have even taken the bulk of their compensation in Stock rather than cash as a much needed demonstration to the Markets (Investors and Infringers) of their confidence in our business strategy, their own Leadership abilities, and their expectancy of success ... but oh no, not these "care(ing)" __________ (Fill in the blank), who "hurt for all of you" (as Gloria stated in her remarkable Jan 2010 "120 days" letter to Debbie). While Investors get 5 and 6 cents per share, these three folks continue to take from $8,000 up to $25,000 monthly cash pay, month after month, year after year; not including Cash Bonuses and Options. Gloria says they feel our pain as PTSC investors, yet, all the while they continue to keep their uninterrupted oversized personal paychecks flowing, even as the stock hits (4 cents) near it's all-time lows seen in 2003; they rack up millions of dollars in annual Operating losses, and even while they enact governance policies which directly translate into investment avoidance by potential Shareholders and result in antagonistic and even hostile shareholder relations.

Perhaps if Carl (10yrs) and Gloria (9yrs), after all those years on the BOD (and associated with the company even longer), owned substantially more than the tiny .003 of PTSC's Outstanding Shares, investors might think they cared more if the company succeeded as a stock investment; but their modest 1.3M total shares when compared to their cash compensation perhaps gives a better indication of the level of their "care". Are you aware that Carl and Gloria (both on the Compensation Committee) have paid themselves a combined $1.2M in cash alone since early 2006? In just those 5-6 years, that's over 12 times today's value of the PTSC holdings they've acquired over their long years on the BOD, and by my calculations off the Form 4 filings going back to 2003, approx 6 times the actual cost of their purchased stock combined. http://www.secform4.com/insider-trading/... .


It's a slap in the face to Shareholders and disregard for the seriousness of company's crisis under their leadership (read the financials and warnings in our SEC disclosures) that Carl and Gloria continue to take this type of undeserving and performance detached compensation; and gave that unfathomable, outrageous and what appears to be non-prorated $148,000 cash bonus to Cliff for FY 2010; and a separate additional $62,500 bonus paid him in July 2010 as well. If that $62,500 July bonus was for FY 2009, that would be in addition to yet another $50,000 cash bonus he received for FY 2009. Their self benefit and pay levels are an outrage, especially when most every M&A decision has been a colossal financial failure, they have run up massive losses, we were in survival litigation with our JV partner, they demonstrate little confidence besides occasional lip service, and equally important, haven't personally spent one penny of their PTSC cash pay on company Stock or Options in years; including during the periods in which we promoted or announced : PRs about Patent strength and USPTO validation after multiple Reexams, PDSG clients and opportunities, more MMP licensing, a PDSG pie chart indicating revenue percentages dwarfing the MMP's (pie chart just removed in the last few weeks), a "profitable" Crossflow forecast, announcements of acquisitions to enhance and expand PDSG, the German Federal Patent Court upholding our MMP, "leveraging our capital resources", "the market timing for Crossflo’s technology could not be better", multiple MMP licenses, PTSC does Investor presentations, "at this time, we do not anticipate the necessity to further fund Phoenix Digital Solutions, or PDS", retention of Imperial Capital, Crossflow's GSA Contract Award, the NIEM Presentation, retaining the Greg Baroni Co (and their glowing remarks about Crossflow's technology), retaining Eclat Consulting, "reaffirming our core focus", declaring "excellent results of the recent CDX technology evaluation which included the reassessment of CDX as a core driver for maximizing shareholder value", the Chief Executive search for someone with "appropriate industry expertise" to accelerate PDSG growth, the next generation of Crossflow's new CDX Exchange Builder, more MMP Licenses, PDSG signs a Reseller Agreement with SRA, success with PDSG's "Go-To market Strategy", more MMP licenses, divestiture of cash draining activities, more MMP ReExam Validations, substantial increase in capital for MMP licensing and prosecution efforts, "recognition in the strength growing confidence in the MMP", PTSC gets more MMP oversight, the Open CDX Community, more market adoption of our CDX, more MMP licenses, engaging Strategic Equity Group to seek a transactional opportunity where the value of PDSG may be realized ..... Through all of these positively presented and positively spun corporate developments in the past 3 years ... NOT ONE SINGLE STOCK or OPTION PURCHASE.

You say perhaps they couldn't buy because of a Blackout Period? For 3 straight years? They'd have to prove it to me. The SEC requires the Issuer to notify Directors or Executive officer when imposing a Blackout period, so there should be a well documented and specified written record. Besides, the company itself within that same timeframe has repurchased stock in their Buyback program, and we don't have a 10b5-1 plan on file that I am aware of, so it sure looks to me like Carl, Gloria and Cliff could have bought stock too ... IF they wanted to.

Carl and Gloria are actually minor company investors considering the length of time they have been among its core decision makers and leaders. When you look at the company's Financial Statements and see the results their failed leadership and costly business debacles have brought us, that record of performance is likely telling us the clearest and most obvious reason why they don't buy company stock with those big PTSC paychecks; even with a share price of only 5 cents. Look at this stock chart of their leadership capability, business judgment, and their performance results on the share price over the past 10 years. In the main, we traded under 15 cents for 4 straight years, and as low as 3.5 cents; all while diluting the company through Death Spiral Convertible financing by approx 800%; then we had one very short very sharp blow off spike straight up, and it's been 6 years of grinding downhill back to 5 cents ever since.http://bigcharts.marketwatch.com/quickch...

As for Clifford, our CEO for 2 years and CFO for 4 years, he's never owned one PTSC share according to the SEC form 4 filings; and that after raking in $1.3M in cash compensation in only the last four years. Cliff has now also been on the BOD for 10 months, and he still isn't a Shareholder! But as a PTSC Board Member Cliff's not alone, we had 2 other BOD members on the previous Board; one served for 1 year as Chairman of the Technology Committee, and one for almost 3 years as Chairman of the M&A Committee; they also took generous cash payouts and were not Shareholders in our company either. Frankly, to me, especially with a stock price costing less than a pack of gum, it's insulting, arrogant and offensive.

What a sad and extremely revealing commentary on the Executive Committee and the BOD's lack of corporate policy or appreciation regarding the importance and necessity of generously paid corporate leaders demonstrating confidence (instead of indifference) to their Investors, and actually being Shareholders in the very company they're being highly paid to make succeed. As it stands, the past 5 years have been an Employment and Paycheck boon to BOD Members and Executives, while at the same time Stockholders have suffered their Leadership failures, and seen any value in their Shares erode away; again becoming just 5 cents away from worthless.

Is it just coincidence that with little to nothing of their own net capital at risk in PTSC, they've failed to make this a successful stock investment? I doubt it.

How convenient for them that most all of their compensation has been comprised of cash payouts rather than Stock or Options

I believe it is a detriment and embarrassment to this company that Carl and Gloria are still its core leadership. With their history here of horrific stock performance, highly questionable business judgment, CEO rotation, blunders from their Merger and Acquisition efforts, terrible shareholder relations (and selective communications), minimal confidence by Shareholders, and with the lack of greater commitment (or ANY in the CEO's case) to company stock ownership at the same time as they take large cash payouts, it's no wonder why this stock is at 4, 5 or 6 cents; and why the company gets no respect and has zero to insignificant Institutional investors.

I am not alone in my views and opinions. The continued leadership of PTSC by these 3 folks has in all reality been rejected by the Shareholder base. If you look at the 2011 Proxy results, the election voting confirms it. All three had more than twice as many votes affirmatively and specifically "Withheld" against them than voted for them. The practical interpretation of a "Withheld" vote is that these would typically be considered as votes "Against" the election of those Board Members, if "Against" was an option on the Proxy. As it stands, they are only still in power because the Corporation uses the Board friendly Plurality Vote counting method as oppose to the Shareholder friendlier Majority Voting method (with the Plurality voting system, a nominee could be elected as a director with one affirmative vote and several million "Withheld" votes).

Shareholders will not be silenced ... against their formal Vote Recommendation and even Proxy Solicitation efforts of the BOD, Stockholders also voted by another landslide 4:1 in favor of changing our corporation's use of that Shareholder UNfriendly method of voting that has keep Carl and Gloria in power. THESE VOTE RESULTS ARE A LOUD and CLEAR REPUDIATION BY SHAREHOLDERS OF THESE THREE INDIVIDUALS, AND THEIR CONTINUED EFFORTS TO REMAIN IN BOD LEADERSHIP. Unfortunately, I suspect this BOD has already instructed their lawyers to challenge, delay, and narrow the impact of the new Majority voting method change in such a way as to extend their rein, to keep their personal paychecks flowing, and to keep any "outsider" BOD member from getting legal authority and forcible access to nonpublic information behind the decision making which precipitated PTSC becoming such a train wreck.

My fear for Shareholders is that Carl and Gloria might attempt to stay in power at all costs, even if that might mean the Privatizing, Voluntary Reorganization, or the Issuance of Preferred Stock with "Super Voting (10:1 or 20:1 or more) Rights" .... one of these choices could be the road we are heading down the path towards.

MY SUGGESTION, with all the complaints of... PTSC's M&A initiative failures, poor money management, Insider relationships, issues of contracting to a private company the direction and control over our revenue producing assets and corporate speech over those assets, the potential for corporate blackmail, public statements by PTSC's former CEO, questions about our PIPE financier and the dates of his share sales, lingering Convertible financing questions, trading behavior and news releases, dividend timings and curiosities, abdications by a public company to a private one, cash payments to Board Members, the effectiveness of our "Chinese Walls", questionable severance payouts to "relieved" Executives, bonus allocations and disbursements, sufficiency of PDS auditing protections and company assurances, BOD accountability, Options Grants questions, the remarkable content and implications (and timing) of Gloria's letter, questions about the PDS Independent Manager position, long obsolete company website "Investor" information, concerns about Reg FD compliance, status of our JV Partner/subsidiaries and employees as Insiders for Stock Ownership/Trading, dismissal of serious formal claims of Fraud/Fiduciary Breaches/Unjust Enrichment against our asset manager and JV partner in exchange for ?, the fictitious dividend news release, timeline for when PTSC knew or should have known of TPL's questionable simultaneous licensing of non MMP patents to MMP infringers, secrecy surrounding licensees and license fees, keeping the post "fraud" litigation ComAg with TPL private, the proxy revolt by Shareholders, and likely more that is yet to be explored .......

I think it would go a long way for the company to retain a completely independent and highly respected Shareholder's Rights Litigation Firm from California, and for PTSC to open up all their Corporate records, Transfer Agent records, BOD minutes, Company correspondence and files, and even make available for interview past CEOs, for the purpose of commissioning a comprehensive independent investigation resulting in the issuance of a detailed public Legal Opinion Letter that would assuage, remove any doubts, and reassure PTSC investors that in addition to the questions and concerns mentioned above, Shareholder's Rights are not and have not been violated, that our BODs and Executives have not breached any fiduciary or loyalty duties, that any of our agents or negotiators or attorney's haven't committed malpractice, and that the terms of PTSC's private agreements with TPL were/are legal, appropriate and genuinely the best alternative in the best interests of Investors and PTSC as a continuing public entity. IF THEY ARE UNWILLING TO DO SOMETHING LIKE THIS, SHAREHOLDERS MUST CONSIDER THE QUESTION, "WHY NOT?" As a result of their decisions and performance, the cloud attached to this public company has to be purged before PTSC will again be considered more than just a penny stock trading vehicle with Paycheck Players as its leadership.

Were Carl, Gloria and Cliff's advice and guidance for PTSC investors worth them taking $707,000 of Shareholder's cash for FY 2010, while at the same time our entire revenues were only $567,934? For every $1 of Revenue PTSC took in, these three were paid $1.24. For every $1 PTSC recorded in Operating Losses, these three were paid $18.05.

As a result of the above observations and their disproportionate personal gains while providing retail investors disastrous leadership and stock performance over the past several years, I do not trust Carl, Gloria or Cliff to lead this company, and it's clear to me that neither do the thousands of other Shareholders who control the tens of millions of shares which voted 2:1 to "Withhold" their vote against electing them, and also voted 4:1 to remove the Shareholder UNfriendly system that allows them to remain.