Rick Goener, President and CEO of Patriot Scientific, issued a letter today in order to update all shareholders on the company’s activities. In the letter, he stated his intention to provide regular communication through letters of this sort which will provide insight on topical issues and provide a uniform status report on company activities. Selected highlights from the May letter are as follows:
Update on Positioning Patriot for Future Growth: The company has identified several interesting patent portfolios to expand their licensing efforts. These IP portfolios involve microcontroller, power management, embedded memory and mobile networking IP. The company is engaged in exploratory meetings and will next analyze the attractiveness of licensing prospects based on market assessments, technical support needs, and economic return to Patriot.
Auction Rate Product Obligations: In November 2007, the board and CFO of the company outlined and approved an investment policy to allow certain of the company’s funds not immediately required for the day-to-day operations at the company to be discretionally managed by Deutsche Bank (DB), a large and reputable banking institution. One of the mechanisms used by DB to achieve the objectives of safety and liquidity had been to invest in various FFELP (Federal Family Education Loan Program) Auction Rate Obligations that are sponsored by different state agencies. Since their inception 20 years ago, these investments have operated uninterrupted in a liquid market that provides for monthly interest rate resets.
Shareholders’ Feedback and Concerns: What is the status of future dividends, a potential reverse split, and listing on NASDAQ/NYSE/AMEX? While no specific timeline has been outlined as they move toward an operating company with products, customers, and markets, the company expects not to make further dividend distributions, choosing to instead use the cash and capital assets (stock) of the company to pursue M&A efforts.
In regards to the reverse split, the company believes that a reverse split will not risk a reduction of the market capitalization of the company. Additionally, the company has resumed its share buyback program, and has recently been actively buying shares in the open market as they view the current price to be at an attractive level to redeem shares. Since the resumption of the program in April, the company has purchased over 2 million shares.
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