Letter to Shareholders from Patriot Scientific Board of Directors
To Shareholders of Patriot Scientific Corporation . . . .
As we start a new year, we want to share with you our optimistic outlook for what lies ahead for Patriot and our shareholders. Calendar year 2007 ended with a flurry of welcome activity on the licensing and litigation fronts, and 2008 started off on a positive note as TPL signed another MMP patent portfolio licensee in the very first week of the new year.
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For the past 2+ years, Patriot has enjoyed profitability due primarily to the licensing revenue produced by the successful efforts of our licensing partner, The TPL Group. As a result, we are in a very good position financially. During this time period, Patriot has paid three cash dividends to our shareholders, we have substantial cash in the bank, we have no significant debt, all major litigation has been resolved, and our books and records are SOX-compliant. In other words, our shareholders can take pride in the fact that Patriot is clean as a whistle.
In 2007, TPL brought in 20 new licensees, bringing the total licenses to Patriot through our licensing joint venture to 34. Humax of Korea and Psion of the UK became our first licensees in 2008, following a busy 2007 year end that brought in four licenses in 10 days. Through the continuing efforts of our aggressive licensing partner, we expect to welcome more companies into the prestigious group of MMP licensees .
2008 finds us in a better position to build a dynamic and exciting future for Patriot and it is our intent to do that. Our M&A search activity is being expanded by our having initiated efforts to engage an investment banking firm to help introduce us to candidate companies. We have already looked at a number of companies and are cautiously evaluating financial information. The range of companies we have looked at and will continue to focus on includes some in various areas of technology, early-stage investment, companies with established business operations, and interesting business units that offer opportunity for growth and profitability.
In July, 2007, we advised you of pending federal legislation regarding the 2007 Patent Reform bill, which we believe if passed would negatively impact the future success of our licensing program. TPL has devoted an enormous amount of time to this issue and has prepared very valuable information, which is posted on their website. We encourage everyone to view and consider the information on TPL's website at http://www.tplgroup.net/legislation. You can help by writing to your Senators and Congressional Representatives sooner rather than later, as time is of the essence. We are attaching a copy of TPL's suggested letter for your reference if you wish to write a letter about this important legislation.
We have once again considered the matter of dividends according to the dividend policy announced last year by our Board of Directors, and we have currently decided that now is not the right time to pay out a dividend. It is the Board's opinion that Patriot's cash and the interests of our shareholders are better served by finding the right M&A acquisition and growing the company. As licenses continue to grow in number, we expect to continue to revisit the matter of dividend payouts. It will always be the intent and policy of this management and Board to utilize Patriot's funds responsibly with the best interests of our shareholders in mind. When we believe it to be a prudent use of corporate funds to pay a dividend to reward our shareholders, we will definitely do so.
The Company is currently unable to repurchase Patriot shares in the market at this time due to the same blackout period that currently prevents insiders from stock transactions, but we previously engaged in a share buy-back program until the last quarter of 2007. Both the buy-back and dividends were significant because, to our knowledge, no other bulletin board companies have ever taken such actions.
We certainly share the frustration expressed by many of our shareholders regarding the share price of our common stock. Management and the Board of Patriot feel that Patriot stock is currently undervalued, and we hope that our activities in the near future will lead to increased investor confidence that will be reflected in a higher share price.
Shareholders will soon be receiving 2007 Form 1099-DIV for the dividends paid by Patriot in 2007. This form will be sent to you either from your brokerage firm or directly from our transfer agent, Interwest Transfer Co. The forms have been reviewed carefully at Patriot and reflect accurately the taxable character of the reporting for 2007.
In closing, we would like to add a note of reassurance to those shareholders who noted that no press release was issued for the 10Q recently filed. Although no press release was issued during the flurry of other activity that was going on at the time, we want to assure you that in the future we will make sure that Patriot issues a press release on all of our SEC 10K and 10Q filings.
We appreciate your continued support,
The Executive Committee, Board of Directors
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