whereby TPL and Alliacense will beneift from expenses? Have you actually read through the 10K, particularly F-17 and F-18. How much in licensing revenues must there be in order for PTSC to ever receive a distribution? What the bleep is going on. Who is monitoring these expenses and why isn't there a third member of the management committe of PDS? Something smells fishy.

Pursuant to the Commercialization Agreement, PDS had 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 fiscal years ended May 31, 2012 and 2011, PDS expensed $2,000,000 and $2,500,000, respectively, pursuant to this commitment.

PDS reimburses TPL for payment of all legal and third-party expert fees and other related third-party costs and expenses, and certain internally generated costs as approved on August 17, 2009 and more fully described below. During the fiscal years ended May 31, 2012 and 2011, PDS expensed $5,563,594 and $6,833,992, respectively, to TPL pursuant to the agreement. This expense is recorded in the accompanying statements of operations presented below.

During the fiscal year ended May 31, 2012 PDS reversed approximately $491,000 of legal fees previously expensed and recorded as accounts payable to TPL as the statute of limitations had expired.

We received no cash distributions from PDS during the fiscal year ended May 31, 2012

During the fiscal year ended May 31, 2012 we accounted for an advance of $227,268 for legal services, which are reimbursable by PDS as equity in loss of PDS, under the equity method of accounting given that this amount remains unreimbursed at May 31, 2012. During the fiscal year ended May 31, 2012 we advanced PDS $10,000 for legal services and received $100,000 in payment on previous advances.

During the years ended May 31, 2012 and 2011, TPL entered into licensing agreements with third parties, pursuant to which PDS recorded license revenues of approximately $4,029,000 and $11,090,000, respectively.

At May 31, 2012, PDS had accounts payable and accrued expense balances of approximately $1,948,000 and $137,000 to TPL and PTSC

At August 15, 2012, PDS’ cash and cash equivalents balance was $40,912.

F-17 &18 http://www.sec.gov/Archives/edgar/data/836564/000101968712003037/ptsc_10k-053112.htm

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