SAN DIEGO, Aug. 20 /PRNewswire-FirstCall/
-- Patriot Scientific Corporation (OTC Bulletin Board: PTSC - News) announced today the filing of its May 31, 2004 Annual Report on Form 10KSB. Jeff Wallin, president and CEO, commented on the filing and the current status of the company in the following Letter to Shareholders: >
We completed our fiscal year ended May 31, 2004 in our strongest financial shape in three years. The balance sheet improved substantially, with cash and cash equivalents totaling $355,940 and prepaid expenses totaling $322,068, which includes $240,719 in a fiduciary account with our attorneys in support of our patent enforcement efforts. We were also able to reduce our accounts payable to $134,600. We had positive stockholders' equity, $148,179, and positive working capital, $153,837, for the first time in three years. These results represent the continued support of investors who believe the value of our technology and patent portfolio as a likely significant revenue generator.
We continue to focus on near-term applications of our small and low power/high performance microprocessor technology with the intention of gaining significant market recognition. With Java-based hand held radio devices and sophisticated smart cards being targeted, we believe validation of our strategy to be evident.
The Semiconductor Industry Association (SIA) forecasts the worldwide sales of chips to grow 28.6% in 2004 followed by a more modest growth of 4.2% in 2005. SIA is projecting a compound annual growth rate of 10.4% for the industry through 2007. More than half of the demand is with state-of-the-art chip foundries making larger silicon wafers of about 300 millimeters in diameter.
Despite a small work force, we aggressively maintain a significant core engineering capability. Last year, we completed the validation of the IGNITE soft-core in 0.18 micron technology with the D-Semi foundry in Korea. Currently, we are completing testing of silicon devices in 0.18 micron geometry from the Silterra foundry in Malaysia. Successful testing of these devices can enable library demand for the IGNITE soft-core offering.
In late 2002, PTSC announced the signing of a LOI with a Chinese semiconductor design company, as well as executing a MOU with a second company in China. Subsequently, we have expanded our efforts in China with another semiconductor design company currently evaluating the IGNITE processor for multiple consumer electronics applications. We remain in serious negotiations with one of the two companies announced in 2002 for the development of a SoC (system on chip) for a domestic (China) smart card. The challenge continues to be final financing for the Chinese company, which was spun off of a larger company early in the negotiations. We continue to be the technology of choice as they seek to secure favorable financing to bring the product to market.
The IGNITE soft-core microprocessor's benefits of low power and Java- capable designs were validated in its selection by General Dynamics Decision Systems (GDDS) for its Software Defined Radio (SDR) proposed to the Department of Defense. In late July, GDDS was notified by the government of its competitive selection. We are awaiting further direction from GDDS.
We remain focused on commercial success through both market adoption of the IGNITE microprocessor technology and aggressive enforcement of key PTSC patents.
In December of 2003, following numerous months of licensing effort, we filed lawsuits against five infringing consumer electronics companies. Shortly thereafter, Intel filed suit against PTSC seeking declaratory judgment that neither their company nor their OEM customers were infringing the PTSC variable clock patent (U.S. Patent Number 5,809,336). The five consumer company cases have subsequently been consolidated with the Intel litigation in the U.S. District Court for the Northern District of California in Oakland. PTSC has also filed suits against Charles Moore, Daniel Leckrone and Technology Properties Limited (TPL) relating to inventorship of the '336 patent. This case is being heard in U.S. District Court for the Northern District of California in San Jose. In June 2004, suits against the five consumer electronics companies and the Intel case were stayed pending the outcome of the PTSC vs Moore/Leckrone/TPL. Currently, discovery is taking place with regard to the Moore et. al. case. We seek opportunities to settle this case using the court's alternative dispute resolution process, but are ready and able to take the issue through trial if settlement is not in the best interests of the shareholders. These actions are being handled on a contingency basis by our law firm and we are responsible for costs other than attorneys fees. Should a trial become necessary, we would expect it to occur in early 2005. After resolution of the inventorship issue, the Intel action will return to the forefront of our efforts. In April 2004, we notified an additional 174 companies of potential infringement. Although we cannot predict the outcome of any of these litigations, we believe in the strength of the PTSC patent portfolio and our legal representation, as well our legal position.
PTSC continues its business development efforts with partnerships and its resident technology to develop new business opportunities. We have initiated a joint effort with a local company for the purpose of developing differentiating wireless products for OEM customers. Additionally, we are actively pursuing emerging opportunities for the protection of proprietary content in consumer electronics products.
We have completed a new JTAG (Joint Test Action Group) offering which is one of several enhancements we have completed to enable more user-friendly adoption of IGNITE by our customers. JTAG is an IEEE-adopted industry standard for testing and debugging hardware and complete target boards with hardware utilizing this technology referred to as "JTAG devices." Coupled with our new IGNITE-ICE (In-Circuit Emulator), we now have the ability to offer a complete network-based, hardware-assisted, JTAG emulator that enables debugging by supporting complex integration with other JTAG devices such as those used in the development of software defined radios. PTSC's new IGNITE-ICE addresses the recent dominant trend in microprocessor design whereby multiple processor cores are combined with other components on a single piece of silicon, delivering improved performance and reduced power consumption. Such applications are popular in several markets including aerospace and defense systems, network infrastructure and consumer electronics equipment requiring real-time data processing.
PTSC acknowledges to its shareholders that commercial viability has been slow to develop, but strongly believes its technology, people and intellectual property holdings to be the solid basis for future success. All efforts are being made to realize significantly increased shareholder value in the second half of 2004 and beyond.
Very sincerely yours,
President and Chief Executive Officer
Patriot Scientific Corp.
About Patriot Scientific
Patriot Scientific is an intellectual property company, developing and marketing innovative and proprietary semiconductor technologies into the fast- growing hand-held wireless and smart card markets. The company's portfolio of patents encompasses what is believed to be fundamental microprocessor technology and includes additional patents pending to protect its technology and architecture.
For Patriot Scientific information, contact Lowell Giffhorn at (858) 674-5018. Detailed information about Patriot Scientific can be found on the website http://www.ptsc.com. Copies of Patriot Scientific press releases, current price quotes, stock charts and other valuable information for investors may be found on the websites http://www.hawkassociates.com and http://www.hawkmicrocaps.com.
An investment profile on Patriot Scientific may be found at http://www.hawkassociates.com/patriot/profile.htm.
Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: Statements in this news release looking forward in time involve risks and uncertainties, including the risks associated with the effect of changing economic conditions, trends in the products markets, variations in the company's cash flow, market acceptance risks, technical development risks, seasonality and other risk factors detailed in the company's Securities and Exchange Commission filings.