Results Include Significant Reduction of Outstanding Warrants; Payment of Cash Dividend; Investment In New Joint Venture CARLSBAD, Calif. -- April 24, 2007
-- Patriot Scientific Corporation (OTC Bulletin Board: PTSC - News) reported net income of $9,617,559 after provision for taxes, or $0.02 per diluted share, for three months ended February 28, 2007. A copy of the company's Form 10-Q, filed April 20, 2007 with the U.S. Securities and Exchange Commission, is available on the company's website, www.ptsc.com, where visitors can now sign up for e-mail alerts.
At the end of the quarter Patriot Scientific had $22,756,330 in current assets that included short-term investments and over $15,388,002 in cash and cash equivalents. Current liabilities of $3,724,956 included $3,000,000 earmarked as an expense to be paid May 1, 2007 related to a settlement of a dispute. The company has no long-term debt. In another favorable development, approximately 34,700,000 warrants have been exercised to acquire shares of the company's common stock in the period from June 1, 2006, through March 12, 2007, leaving a balance of approximately 18,000,000 unexercised warrants outstanding at April 20, 2007.
The quarterly results included $11,656,603 received as the company's share of the net income of Phoenix Digital Solutions, the joint venture entity that is owned half by Patriot Scientific and half by The TPL Group. Phoenix Digital receives its income from licenses purchased by manufacturers who use technologies contained in the MMP Patent Portfolio.
Patriot Scientific and The TPL Group are co-owners of the MMP Portfolio, which Alliacense(TM), a TPL Group enterprise, exclusively manages. The MMP Portfolio patents, filed in the 1980s, protect design techniques that have become essential to a myriad of consumer and commercial digital systems ranging from computers, DVD players, cell phones and portable music players, to communications infrastructure, medical equipment and automobiles.
The Patriot Scientific report disclosed that during the nine months ended February 28, 2007, Phoenix Digital entered into technology licensing agreements with third parties, pursuant to which it received aggregate proceeds of $64,869,000. License proceeds of $2,920,000 relating to an additional license agreement signed in February 2007 were received in March 2007. In March and April 2007, Phoenix Digital entered into licensing agreements with aggregate proceeds of $22,140,000. The dollar amount for each licensing deal varies, depending upon factors that include among other things the relevance of the patents to each licensee's revenue and the extent to which the patented technology is incorporated into specific products.
"Our increasing revenues reflect continued momentum in pursuing our patent portfolio licensing strategy through our joint venture with TPL," stated Patriot Scientific Chairman and CEO David Pohl. "We had a net increase in cash of $11,403,762 during the nine months ended February 28, 2007 as we continued to strengthen our balance sheet and our financial structure. We have subsequently used some of the cash to once again pay a dividend to our shareholders as evidence of our ongoing appreciation for their support."
On February 22, 2007 the board of directors of Patriot Scientific repeated its precedent-setting action of a year ago and declared a dividend of $.02 per share for qualifying stockholders and warrant holders as of March 6, 2007. The dividend was paid April 9, 2007. The board also announced that it has adopted a policy of paying a dividend every six months, subject each time to a determination by the board that payment of a dividend would then be reasonable and prudent in light of the financial condition of the company, other possible applications of the company's available resources, and relevant business considerations.
"We are delighted that the strength of our patent portfolio continues to be validated by the 16 licenses that have been signed thus far with major electronics companies since January of 2006," said Pohl. "Our outlook remains positive for continued revenue based on further progress in licensing more of over 400 companies worldwide that have been notified they are candidates."
Pohl reconfirmed that Patriot Scientific is continuing to actively evaluate sources and opportunities to create additional recurring revenue through possible joint ventures or acquisitions, all with the goal of increasing shareholder value. In February, 2007, Patriot acquired the assets of Holocom Networks, Inc., including patents, trademarks, and equipment, in a foreclosure proceeding. Those assets were assigned a fair value of $250,000 by Patriot for accounting purposes and were later transferred along with $120,000 in cash from Patriot to a newly-formed joint venture, Scripts Secured Data, Inc. (SSDI), in return for 100% of the convertible preferred stock of that new company.
SSDI will use the Holocom brand name and continue to produce and sell the former Holocom products that protect cables carrying classified information transmitted over secure networks owned and managed by government and military organizations. Pohl said that positive initial reports from SSDI for the first 60 days of business show gradually increasing sales. Current projections, although results cannot be assured, indicate that SSDI may realize a marginal profit by the end of April 2007, after just ten weeks of business operations.
Patriot Scientific will hold its annual meeting of shareholders Friday, April 27, 2007 at the La Costa Resort and Spa in Carlsbad, California. Proxy statements were mailed to shareholders April 9, 2007. Further information is available on the company's web site at http://www.ptsc.com
. About Patriot Scientific
Patriot Scientific is a leading intellectual property licensing company that develops, markets and enables innovative technologies to address the demands in fast-growing markets such as wireless devices, smart cards, home appliances and gateways, set-top boxes, entertainment technology, automotive telematics, biomedical devices and industrial controllers. Headquartered in Carlsbad, Calif., information about the company can be found at http://www.ptsc.com.
Copies of Patriot Scientific press releases, current price quotes, stock charts and other valuable information for investors may be found at http://www.hawkassociates.com
. An investment profile on Patriot Scientific may be found at http://www.hawkassociates.com/ptscprofile.aspx
. About the Patent Portfolio
The patent portfolio, marketed as the Moore Microprocessor Patent™ Portfolio, contains intellectual property that is jointly owned by the publicly held Patriot Scientific Corporation and the privately held TPL Group. The portfolio encompasses seven U.S. patents as well as their European and Japanese counterparts. Both TPL and Patriot assert that their jointly owned patents protect techniques used in designing microprocessors, microcontrollers, Digital Signal Processors (DSPs), embedded processors and System-on-Chip (SoC) implementations. The MMP Portfolio is exclusively managed by Alliacense, a TPL Group Enterprise. About Alliacense
Alliacense is a TPL Group Enterprise executing best-in-class design and implementation of intellectual property licensing programs. As a cadre of IP licensing strategists, technology experts and experienced business development/management executives, Alliacense focuses on expanding the awareness and value of TPL's intellectual property portfolios. For more information, visit http://www.alliacense.com