Do I have this right: the $86,000 per month should have stopped at the end of March, so we should see one more $86,000 payment made to TPL on the 10K? Also, is it just me or does it seem like PTSC had an opportunity to perhaps make a $200,000 capital contribution on behalf of TPL, thereby gaining a greater than 50% ownership. Instead, TPL submits expenses that may or may not have been verified by our BoD and Carlton Johnson gives the ok for TPL to forfeit its rights to $200K of expense money (oh yeah...special litigation support payments) for an in kind capital contribution. Raises a lot of questions don’t you think? Why is there not a third member of the PDS management committee?

The two appointees are required to select a mutually acceptable third member of the management committee. p.14

Since there is currently not a third member of the management committee, working capital contributions made to PDS require the approval of both management committee members. On December 14, 2011 we contributed $200,000 and TPL forfeited rights to $200,000 of special litigation support payments due it pursuant to the October 6, 2011 settlement agreement for an in-kind capital contribution of $200,000 in order to fund a portion of a retainer due to newly engaged counsel (see Note 1, Liquidity and Management’s Plans). On March 23, 2012 and April 13, 2012 we and TPL each contributed $150,000 and $150,000 to PDS to fund a portion of a retainer due to such counsel. Distributable cash and allocation of profits and losses will be allocated to the members in the priority defined in the LLC Agreement. PDS has committed to pay a quarterly amount ranging between $500,000 and $1,000,000 (based upon a percentage of the working capital fund balance of PDS) for supporting efforts to secure licensing agreements by TPL on behalf of PDS. During the nine months ended February 29, 2012 and February 28, 2011, PDS expensed $1,500,000 and $2,000,000, respectively, pursuant to this commitment. This expense is recorded in the accompanying statements of operations presented below.

On April 22, 2010, we filed an action against TPL in the Superior Court of Santa Clara County. We and TPL had been in negotiations to restructure our relationship. On October 6, 2011, we announced that we had settled this action. Pursuant to this executed settlement agreement with TPL, PDS agreed to pay TPL $172,000 for June 2011, and $86,000 per month thereafter until 60 days after the Markman hearing relating to TPL’s special work and effort regarding internal costs related to litigation support. Accordingly, PDS has recognized $860,000 through February 29, 2012 pursuant to the executed settlement agreement and this expense is recorded in the accompanying PDS statements of operations presented below. P.15

In the event we, and not TPL, provide working capital funding to PDS we would consolidate PDS’ financial statements with our own as our ownership in PDS would be greater than 50%. P.16

http://www.sec.gov/Archives/edgar/data/836564/000101968712001380/patriot_10q-022912.htm