We had 'em by the balls when we were negotiating with Swartz, trying to stay in business . BTW, none of the current BOD were on the board at that time. The following is just the tip of the iceberg when it comes to the hole PTSC was in. But let's bust on the BOD for the deal they made with Swartz. Right, Ba? Right, LL?

At August 31, 1999, the Company had a working capital deficit of
$1,790,891, cash and cash equivalents of $28,880, and was delinquent to the
Internal Revenue Service for approximately $264,000 and various states for
$41,000 in past due payroll taxes. The Company has funded its operations
primarily through the issuance of securities and debt financings. Cash and cash
equivalents decreased $6,933 during the first fiscal quarter of 2000. The net
cash used in operating activities was $187,093, additions to property and
equipment were $31,667, and funds generated from debt and equity financings were
$211,827. During the first fiscal quarter of 2000, accounts receivable increased
$17,670. Accounts payable and accrued expenses increased $188,468 as a result of
a slow down in payments due to the cash and cash equivalent reduction.

The Company's current cash requirements to sustain its operations for
the next twelve months through August 2000 are estimated to be $1,600,000.
Management of the Company expects that these requirements will be provided by:

Internally:

- sales of accounts receivables under a factoring agreement established with
its bank, and
- sales of licenses and/or intellectual property, and

Externally:

- previous to the receipt of funds from draws under the investment agreement
as discussed in Note 8 or during periods in which draw limitations restrict
the amount of funds available under the investment agreement, short-term
debt instruments with individual and institutional investors, and
- during periods in which draws under the investment agreement support the
Company's cash requirements, draws against the investment agreement.

In February 1999, the Company entered into an investment agreement with
Swartz. The investment agreement entitles the Company, at its option, to issue
and sell its common stock for up to an aggregate of $5 million from time to time
during a three-year period through February 24, 2002, subject to certain
conditions including (1) an effective registration statement must be on file
with the SEC registering the resale of the common shares, and (2) a limitation
on the number of common shares which can be sold to Swartz within a 30 day time
period based on the trading volume of the stock, among other factors. Swartz may
purchase the common stock from the Company at a discount ranging from 10% to 20%
depending on the price of the common stock. In addition to the common stock
purchased, Swartz will receive warrants to purchase an additional 15% of the
common stock equal to 110% of the market price on the last day of the purchasing
period, subject to further semi-annual adjustments if the price of the common
stock goes down. In July 1999, the Company amended and restated the investment
agreement with Swartz to eliminate the discretion of Swartz as to the timing of
its purchase of its common stock. The amended and restated investment agreement
requires Swartz, after the Company put shares of common stock to it, to purchase
its common stock on the twentieth day following the put. The previous agreement
enabled Swartz, in its sole discretion, to purchase the Company's common stock
at any time during a twenty day period following the Company's put to it.