Cash shortfalls currently experienced by PDS will have an adverse effect on our liquidity. In December 2011, March 2012, April 2012 and May 2012 we contributed $200,000, $150,000, $150,000 and $150,000, respectively, in additional capital to PDS, in order to fund a portion of a legal retainer. To date we have determined that it is in the best interests of the MMP licensing program that we provide our 50% share of capital to provide for PDS expenses including legal retainer payments, as well as licensing and litigation support payments to Alliacense, in the event license revenues received by PDS are insufficient to meet these needs.

On August 15, 2012 PDS’ cash balance was $40,912. Management’s plans for the continued operation of PDS rely on the ability of Alliacense to obtain license agreements to cover the operational costs of PDS. PDS has experienced a decline in licensing revenues and has experienced an increase in legal costs due to the patent litigation actions currently in progress although as a result of the fee arrangement with current litigation counsel, we expect the legal costs of PDS to decrease substantially from 2012 levels. In the event that Alliacense cannot obtain license agreements to cover the operational costs of PDS, we and TPL must decide whether to fund PDS’ legal costs on a go forward basis.

In the event that we provide funding to PDS that is not reciprocated by TPL, which could result in our having a larger ownership percentage in PDS, we may determine that we have controlling financial interest in PDS, in which case, we would be required to consolidate PDS in our consolidated financial statements. If we determine that it is appropriate to consolidate PDS, we would measure the assets, liabilities and noncontrolling interests of PDS at their fair values at the date that we have the controlling financial interest.

http://www.sec.gov/Archives/edgar/data/836564/000101968712003037/ptsc_10k-053112.htm