Patriot Scientific

Patriot Scientific Reports Profitable Quarter; Q3 FY '08 Net Income $6.3 Million or $0.02 Basic and Diluted Earnings Per Share.

over 10 years ago

From today's PR from Patriot

We have been disappointed over several aspects of the working relationship between our joint venture partner, its licensing and litigation support affiliate, and us. These include concerns over how and what information is shared, invoicing practices and payment demands, and the productivity, efficiency and transparency of the affiliate's activities in general. Regrettably, similar issues have previously surfaced over the course of the joint venture's existence. We have asserted, and remain firm on positions that we believe are fair, supportable and legitimate. We believe that follow-through on our positions is critical to the success of the licensing program.

I posted the following on Sept. 14, 2012. Nothing, I repeat NOTHING has changed, same allegations, different day. Why is Patriot not filing a complaint like the one below.

Let's revisit PTSC amended complaint from Oct 2011

posted on Sep 14, 12 01:26PM Use the IP Check tool [?]

How has the new agreement between PTSC, PDS, TPL and Alliances further served TPL/Alliacense to the detriment of PTSC in light of the allegations below? Why did Patriot agree not to require PDS to make capital calls on TPL? Is this one reason why Carl and Dan have decided not to appoint a third member of PDS despite it being a requirement of the agreements signed in 2006.

PTSC had been concerned about TPL diverting money through Alliacense, contrary to the ComAg. The answer is an amended ComAg where money continues to go through Alliacense with Patriot's blessing?

I had an opportunity to review the original and first amended complaints filed by PTSC. The following hand written notes are based on the first amended complaint (Oct 20, 2011) I tried to capture the substance of what I was reading, however, I may have missed capturing each and every word. Please forgive any errors and/or omissions

1.Incompetence of TPL’s management to run its business affairs causing it to squander and continue to squander over $45 million and its ensuing misconduct towards its JV Partner, Patriot, improperly designed to force Patriot to finance TPL’s on going losses.

2.TPL breached its fiduciary duties to Patriot by improperly commingling its expenses that it charged to their joint venture and by engaging in licensing activities designed to profit through over valuation of its own separate technology at the expense of the interests of the joint venture and Patriot.

3.TPL was paid its 15% totaling approximately $40 million and then some, out of the MMP licensing revenues derived to date AND now Alliacense receives 20%

4.After the 15% TPL shared equally with Patriot 50% of distribution. Patriot believes that TPL has not paid Moore his share of their side of the net revenue and that Moore’s share of their side is 55%

5.TPL commenced on a spending binge. TPL grew its operations to support non MMP portfolios and technologies. TPL’s non MMP activities have not been profitable. Patriot is informed and believes TPL lost over $43 million on non MMP products, activities and technologies

6.By 2009 TPL’s cash woes worsened but it failed to scale back non MMP activities.

7.As such, it has and does continue to this date to experience a substantial “burn” which has rendered it insolvent. Patriot is informed and believes that TPL owes third parties in excess of $30 million.

8.In August 2009 TPL contended that in house work related to resisting patent re-exams were “extra” and outside the scope of its 15% off the top MMP licensing revenue. Its position was wrong and never agreed to by Patriot. Nonetheless, Patriot then agreed without any consideration to temporarily infuse additional cash into the JV beyond that called for under the parties’ agreements

9.This was done expressly based on assurance that TPL would drastically scale back its expenses and “burn” and would remain viable and based on projected MMP licensing revenue

10.Patriot (at TPL’s request) agreed to reduce the parties’ commitments under the terms of the PDS Operating Agreement to otherwise continuously maintain $8 million in capital. Also at TPL’s request, Patriot did not require PDS to make capital calls on its members.

11.Rather than accepting and expressing gratitude for relief from those obligations, TPL continued to seek funds from Patriot to support non MMP activities and its extraordinary overhead. Patriot has now refused to continue to support TPL financially any more than is legally required.

12.TPL’s response has been to threaten to shut down the licensing program. Further to try to coerce Patriot to loan it more money, TPL has focused on a new strategy of improperly diverting licensing revenue to itself through its licensing division Alliacense, contrary to its authority under the ComAg

13.MMP licenses were undervalued and Patriot has been damaged

14.TPL violated its duties to Patriot by exploiting for personal benefit the conflict in simultaneously licensing MMP and non MMP licenses with third party MMP infringers by charging the JV expenses of outside counsel devoted to pursuit of its own portfolios and other TPL intellectual property.

http://agoracom.com/ir/patriot/forums/discussion/topics/545885-let-s-revisit-ptsc-amended-complaint-from-oct-2011/messages/1720429#message