According to Reuters, the "Software Industry" has an average P/E for the Twelve Trailing Months of 4.75. I found this surprising, as I expected a much higher one. Take Microsoft 10 and Oracle 17 as examples. Just wanted to compare what would be needed in revenues to achieve the P/E expected as standard for the industry if Crossflo is to be the "regulator" that smooths out the peaks and valleys of MMP Licensing.

In the FSX conference presentation, I believe RG indicated they expect magins of about 70% with the Crossflo business. That means, for every dollar, they expect 70 cents to be profit (revenue minus expenses). So to figure out what is needed in gross revenues, we have to take the earnings which should be net income of the company after taxes & expenses, divide it by .65, and then divide that by .70 to get gross revenues. For example:

at $0.50/sh we have a $205M market cap divided by a 5 P/E ratio and that equals earnings of $41M clear. With that in mind, and assuming a 35% tax rate would mean before taxes it would be 41/.65 = $63.1M in profit , which assuming 70% margins would be 63.1/.70 = $90.1M in gross revenues for the trailing 12 months.

To get to a share price of $0.50 which would mean a market cap of $205M we would need earnings of:

For a P/E of 5 at $0.50/sh: need $90.1M per year in revenues (far off IMO)

For a P/E of 20 at $0.50/sh: need $22.5M per year in revenues (in range if plan goes well)

For a P/E of 30 at $0.50/sh: need $15.0M per year in revenues (may be doable this calendar year if MMP picks up and RG's projection on Crossflo is reached)

To get to a share price of $0.35 which would mean a market cap of $143.5M we would need earnings of:

For a P/E of 5 at $0.35/sh: $63.1M per year in revenues (maybe in 2 years)

For a P/E of 20 at $0.35/sh: $15.8M per year in revenues

For a P/E of 30 at $0.35/sh: $10.5M per year in revenues

For FY 2009 to date, PTSC has posted earnings of $0.8M

For FY 2008, PTSC posted earnings of $9.4M

For FY 2007, PTSC posted earnings of $23.7M

For FY 2006, PTSC posted earnings of $28.7M

So while it's clear we've have some hurdles to clear to be worthy of being a "stable, regular non-OTC company", it's important to keep in mind RG has projected revenues in the range of $6M for Crossflo this year (I assume he means calendar year).

So, it looks as though we're kind of in the fulcrum period here where the costs of getting these business up and running have negated any significant earnings over these last 9 months. However, that should begin to change if Crossflo is beginning to gain traction as it may appear, and the MMP is beginning to reach resolutions with USPTO, and if PTSC is able to deliver as projected, and begin to grow the new businesses, then RG should be able to provide GUIDANCE moving forward that becomes pretty reliable from the Software side of the business. Sprinkle in the licensing income, which if even at a rate of only ONE-THIRD of the historical average of the last 3 years and 9 months which would equate to a $9M per year share to PTSC in equity earnings from PDS.

From a CONSERVATIVE view, take those $9M, add in what I would hope can be a min of $10M plus from Crossflo et al next year, and we should begin to approach the types of consistent revenue levels on the low side of the band that will warrant a consistent P/E in the 20 range that can be reflected in steady and significant year over year PPS appreciation.

Baby steps, but perhaps we're seeing the signs.