PRESS RELEASE
An Open Letter from Chairman & CEO David Pohl to the Shareholders of Patriot
Scientific Corporation
Thursday August 4, 11:00 am ET
SAN DIEGO--(BUSINESS WIRE)--Aug. 4, 2005--I am delighted to take this
opportunity to share my enthusiasm with you as I assume my new responsibilities
as Chairman and Chief Executive Officer and discuss the basis for the pride we
can all share with our newly revitalized company. This first shareholders'
letter from me is intended to begin a new era of shareholder communications for
Patriot Scientific Corporation Source: Patriot Scientific Corporation Corporate
Viability. Since assuming leadership, we have conducted an intensive internal
review of our company's systems, procedures and internal controls as Patriot
Scientific Corporation embarks upon this significant new phase of its existence.
During the next 30 days we will be devoting considerable focus toward working
with our independent auditors as they complete the annual audit for our fiscal
year that ended May 31st. We will also be completing the preparation and filing
of SEC Form 10-K for that fiscal year, which is due by the end of August,
followed shortly thereafter by the filing of Form 10-Q for the first quarter of
the current fiscal year.
We are excited because, unlike any other time in its history, Patriot Scientific
Corporation is now in a positive growth mode. It's an enviable situation,
somewhat like a startup technology company that already has financial liquidity
and valuable assets to exploit.
o Financial information to be publicly filed or released during the next
few months will show the company to be in a great financial position as
of June 30, 2005, with current and liquid assets exceeding $7 million,
no debt other than current payables, and millions of dollars of tax
loss carry forwards to apply against future earnings as permitted by
applicable laws.
o As a small company, the outsourcing of licensing activities for our
patent portfolio provides us with the basis to plan for a revenue
stream without the need to devote further resources to create and
sustain an in-house licensing and support team. We intend to shape our
business plan to keep expenses relatively low and allow current or
future employees to focus on their areas of expertise so that we may
focus on future growth..
New CFO. We welcome the addition of Thomas J. Sweeney, CPA, who has been working
with us in conducting our internal review for several weeks. Tom has now joined
our management team in the position of Chief Financial Officer and brings over
25 years of valuable professional experience to Patriot, including positions as
a CFO for hi-tech and other industry clients. His experience with publicly-held
companies will be most beneficial as he works with our independent auditors and
supervises our SEC filings in addition to handling the responsibilities usually
associated with his CFO position.
Advisory Board. We will be reactivating Patriot's Advisory Board within the next
30 days with a renewed focus and some new faces. In order to have the benefit of
input from the perspective of our shareholders, we are initiating a new policy
of having a shareholder representative occupy one of the seats on the Advisory
Board.
It is a pleasure to announce that Brian Boyajian, Esq., has agreed to serve
during the initial term as our first shareholder representative. Mr. Boyajian is
a California attorney and active PTSC investor whose communications have
demonstrated a definite care and concern for the best interests of PTSC
shareholders. He has shown a willingness to express his opinions in an objective
and articulate fashion even when his views may differ from those of management
or the Board of Directors, and we look forward to benefiting from his
participation. To help achieve a synergistic diversity of input that will work
to the benefit of the company, other members of the advisory board will also be
selected to serve on the basis of their technical, business or financial
industry expertise.
In addition to reactivating the Advisory Board, we will be considering the
addition of one or two new members to the Board of Directors. Candidates with
strong credentials and experience in either the microprocessor industry or
investment banking, among others, will have qualifications that will be high on
our list.
Litigation. The burden of the litigation that has consumed considerable time and
resources of the company over the past 3 years has been substantially alleviated
by the recent developments associated with the agreement with TPL Group and the
licensing of Intel Corporation to the patent portfolio. The Patriot lawsuits
with the TPL Group and Intel have been settled and dismissed, and TPL has
assumed responsibility for management of lawsuits originally initiated by
Patriot against 5 major Japanese electronics companies.
The New York law firm that originally represented Patriot as lead counsel in
several of those lawsuits was disqualified as a result of a court ruling in
concurrent litigation in a California federal court. They have recently sought
to appeal that ruling. That law firm, whose services were subsequently
terminated by the Company, has recently sued Patriot for contingency fees they
claim Patriot owes them. We have referred the matter to experienced and
well-qualified attorneys for appropriate representation of our interests.
P-Newco Formation. As part of our Master Agreement with The TPL Group, Patriot
has formed a new entity named P-Newco that is jointly owned by Patriot and TPL
Group in equal shares. Both TPL Group and Patriot have licensed certain of their
intellectual property rights in the Patent Portfolio, consisting of 7 US
patents, to P-Newco. That company has engaged TPL Group to commercialize the
Patent Portfolio by convincing companies using our technology to pay for
licenses for such usage. I am Patriot's representative on the three-member Board
of Directors of P-Newco. That Board held its first organizational meeting last
month and will meet at least monthly to review mandated reports from TPL Group
regarding progress and results of their licensing activities that are already
ongoing and have involved considerable travel.
Intel and Other Licenses. The licenses from Patriot to Intel Corporation and AMD
each involved a one-time fee to Patriot. Intel or AMD microprocessors that may
be used in various products by other electronics companies, such as the five
Japanese manufacturers originally sued by Patriot as mentioned above, will now
be covered by either the Intel license or the AMD license, as the case may be.
However, it is important to point out that products or systems containing Intel
chips, for example, will typically contain several other microprocessors that
are using our technology and are not currently covered by a license, such as in
sound cards and graphics controllers as just a couple of examples. Such products
are very likely infringing by using technology covered by the patents included
in the Patriot/TPL patent portfolio without appropriate licenses.
The significance of the licenses to Intel, for example, should also be viewed
from the perspective of the fact that the 7 fundamental patents in our Patent
Portfolio cover techniques widely used in designing microprocessors, Digital
Signal Processors (DSPs), embedded processors and system-on-chip solutions. From
this broad perspective, even though it is a respected giant in its industry
segment, Intel's products reportedly represent a small percentage of the broad
array of product designs used in electronics products worldwide. A significant
number of infringing products are produced by companies yet to be approached
regarding opportunities to become properly licensed.
In 2004 over 150 companies were sent letters from Patriot putting them on notice
of possible infringement. Many of their products that are in use in households
and commercial establishments around the world involve microprocessors that use
our patented design architecture and are not shielded from infringement
discussions by the Intel licenses from Patriot and TPL. We are pleased with the
credibility and validation that the Intel and AMD licenses bring to our
technology, and we look forward to fruitful results from licensing discussions
that TPL Group's Alliacense affiliate is conducting with other companies.
Business Plan. The Board of Directors is currently evaluating alternatives
suggested by my vision of the company conducting future operations structured
somewhat like a holding company. Picture a diagram resembling an umbrella, with
Patriot being at the peak collecting streams of revenue that flow upward to it
from divisions, subsidiaries or joint ventures that would be represented by the
beads or modules at the tips around the edge of the umbrella-like diagram. One
of those modules already exists in the form of P-Newco and the licensing
activities now being conducted by the TPL Group.
Apart from the rights in the Patent Portfolio licensed to P-Newco, Patriot still
retains certain rights in the portfolio and complete rights to commercialize our
Ignite(TM) and Array products. That business could be another module, either as
a division or perhaps as a joint venture with a suitable partner willing to
invest in the future of those products. Later, other revenue-producing modules
within a defined focus of criteria might be added through product development,
acquisitions or joint ventures as might be warranted by time, circumstances and
available resources. A couple of possibilities have already been given a very
preliminary review by management, but no near-term action on them is currently
being anticipated. We may continue to evaluate opportunities that may exist with
small or underfunded companies that may have unique, compatible products or
proprietary technologies to add to our portfolio. All of this would be
consistent with my personal goal, subject to Board approval, to have Patriot
become a company that is not dependent on a single product line for revenue.
Communications. The Company will be looking at a possible rebranding and
relaunch of its corporate image and portfolio of products in the future in
accordance with any new business plan strategies. Based on the revised plan
under consideration by the Board, our public relations firm will be revising its
PR plan strategies and tactics to get the word out to an expanding number of
media outlets including trade publications, business newspapers, radio and
television. We have a fresh, exciting story to tell, and the more we can get it
before the public as well as industry audiences, the more likely our business
should benefit and, although our lawyers require me to say there can be and are
no assurances, the more likely the value of our shares may increase.
A few of our objectives will be:
o Boost awareness among local San Diego and Silicon Valley business media,
as well as among the local financial community, that Patriot is a
visionary technology solutions provider offering innovative products and
services for a wide variety of industries.
o Boost awareness among regional and national trade media, industry market
analysts, prospective customers and partners by successfully introducing
and promoting all existing and future products
o Create media placements that can be used in cross-promotional marketing -
as a sales piece or published on the Web
As part of my open communication to our shareholders, this letter will be sent
as frequently as we have information of value to you. It may summarize public
press releases and statements, inform you of things in between major news
releases and filings, and -- in compliance with SEC requirements -- will also be
posted on our Website and publicly disseminated to the investment community.
I welcome your feedback. Although I wish I could answer every one of our
shareholder's calls, letters and emails, many of which I receive daily, it's not
physically possible without diverting my attention from business operations
focused on our goal of creating added shareholder value. Also, taking time to
communicate on a one-to-one basis with individual shareholders is often
unproductive, for I spend much time explaining that no matter how much I might
like to answer all their probing questions, in order to comply with applicable
securities laws I cannot divulge certain information to one person unless at the
same time it is publicly disclosed. To help assure our shareholders that they
will be heard, I have set up an email address at patriot@attentiongroup.com
which will be monitored and forwarded to me on a regular basis. I will make my
best effort to see that your questions, compliments, concerns or complaints are
addressed in a timely fashion.
There is much demanding work to be done in setting Patriot on course and
managing the company with appropriate systems and procedures. We are making sure
our company will be prepared to function effectively in its exciting new mode
while also operating in compliance with the added layer of post-Enron laws and
regulations that are consuming costly time and resources of large and small
publicly-held companies all across the country.
You have my assurance that the new management team is approaching its role
enthusiastically, with a positive attitude toward shouldering the added burdens
of compliance and a determination to do our best to produce added shareholder
value to merit your confidence and support.
Thank you for your attention and for your continued confidence in Patriot!
Sincerely,
David H. Pohl
Chairman and CEO
Patriot Scientific Corporation
MULTIMEDIA AVAILABLE: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=4946061
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Contact:
For Patriot Scientific Corporation
Investor Relations:
Hawk Associates
Frank Hawkins or Julie Marshall, 305-451-1888
info@hawkassociates.com
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or
Media Relations:
Attention Group
Daryl Toor, 770-777-9489
dtoor@attentiongroup.com
Source: Patriot Scientific Corporation