Yes it is good that 2013 appears to be a good revenue year. However, there are some other items in the 10K that are a bit disturbing.

Our Microprocessor Patents Are In The Process Of Expiring.

We have four unexpired U.S. patents, two of which will expire in 2014 and two of which will expire in 2015, and three European and two Japanese patents expiring in 2016. We also have three U.S. patents, six European, and one Japanese patent all of which expired between August 2009 and June 2013. While expired patents may have certain retrospective statutory benefits, their value as assets for licensing and cash generation is significantly diminished.

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During the fiscal year ended May 31, 2013, PDS entered into licensing agreements with third parties, pursuant to which PDS recognized revenues of $10,620,000.

During the fiscal year ended May 31, 2013, PDS recognized revenues of $1,500,000 for license agreements previously entered into by TPL.

During the fiscal years ended May 31, 2013 and 2012, TPL entered into licensing agreements with third parties, pursuant to which PDS recorded license revenues of approximately $450,000 and $4,029,000, respectively.

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Significant Contractual Legal Relationship What law firm is this?

PTSC through its unconsolidated affiliate, PDS has incurred legal fees from an unrelated law firm and legal subcontractors to provide substantial legal services for the commercialization of the MMP portfolio of microprocessor patents.

Accounts payable balances due this law firm and legal subcontractors as of May 31, 2013 and 2012 were $518,694 and $0, respectively.

Transactions with this law firm and legal subcontractors for the fiscal years ended May 31, 2013 and 2012 were as follows:

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Licensing Fee Dispute Here we go again

In February 2013, PDS received a license fee installment attributable to the January 2013 satisfaction of a contingency contained in an MMP license agreement entered into in May 2012. Alliacense has asserted a claim against PDS for $300,000 under the premise that it is owed a percentage of the license fee installment pursuant to the Program Agreement it entered into with PDS, TPL and us in July 2012. TPL has also asserted a claim against PDS for $225,000 under the premise that it is owed a percentage of the license fee installment pursuant to the terms of the June 2005 Commercialization Agreement between PDS, TPL and us. Our position is that no percentage is due Alliacense as it had not been engaged for services at the time the May 2012 license agreement was entered into, and that it had no role in the satisfaction of the contingency that triggered the installment fee. Regarding TPL, our position is that a percentage to TPL could be justified, subject to, and fully offset by, advances previously made to it by PDS. We intend to vigorously defend our interest in PDS against the assertions made by Alliacense and TPL. While no amounts have been accrued in regards to these matters, we believe pursuant to the criteria defined in Accounting Standards Codification 450-20-50 Disclosure of Certain Loss Contingencies, it is reasonably possible PDS could recognize a charge to earnings in the range of $0 to $300,000

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