From the 1st amended complaint October 2010

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.

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.

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

Carlsbad, CA and Cupertino, CA - February 3, 2011 - ………Earlier this month Patriot and TPL resolved a number of issues that arose over the past year related to the licensing and litigation activities of the MMP Patent Portfolio. The resolution included an agreement to provide a substantial increase in working capital for the MMP licensing program and patent infringement litigation from MMP licensing proceeds.

From the 10Q 4/11/11

PDS has committed to pay a quarterly amount ranging between $500,000 and $1,000,000 (based upon a percentage of the working capital fund balance of PDS) for supporting efforts to secure licensing agreements by TPL on behalf of PDS. During the nine months ended February 28, 2011 and 2010, PDS expensed $2,000,000 and $1,500,000, respectively, pursuant to this commitment (see Note 11). This expense is recorded in the accompanying statements of operations presented below.

From the August 3, 2011 Newswire

We believe the licensing of MMP and non-MMP Portfolios creates an inherent conflict of interest, and that TPL has promoted the non-MMP portfolios in a manner that inappropriately diverts resources and revenues.

According to the amended complaint PTSC acknowledges that TPL has a new strategy of improperly diverting licensing revenue and has threatened to shut down the licensing program. Then again in the August 3, 2011 press release the Co says that the commingling of portfolios creates an inherent conflict of interest. Really????? And the Co is just now concerned…why wasn’t it concerned before Aug 3.

Please explain to me why PTSC, upon filing its amended complaint, did not demand an immediate halt to the quarterly payments that have been made

To TPL for their supporting efforts to secure licensing agreements (for which they are accused by PTSC of inappropriately diverting resources and revenues).