Question-and-Answer Session
Operator
(Operator Instruction). Ladies and gentlemen our first comes from [Stan Kaplan from Kaplan & Company].
Stan Kaplan - Kaplan & Company
How many people we have on the call?
Rick Goerner
For what purpose is that Stan? We're happy to take you questions though.
Stan Kaplan - Kaplan & Company
I'd just like to know how many are listening. Is that a secret?
Rick Goerner
No, several dozen.
Stan Kaplan - Kaplan & Company
I will preface my question with some comments so please bear with me. From reviewing the 10-K some important business trends standout, except for a minimal profit in Holocom, an investment made three to four years ago, there is continued deterioration, write-offs, impairments and losses in all Patriot subsidiaries and investments, including the auction rate securities.
The Patriot strategy was supposed to be to invest in companies with a high probability of profitability within 12 months. Instead, over the last one and half years, our management team has continued to throw easy money received from the MMP licenses in to high risk cash draining losers.
Our management pours more shareholder dollars into Talis; there is an $8400, 5/31/08 year-end loss that mushroomed to $488,000 year-end loss for 5/31/09. Management drops our cash into the Avot black hole and we suffer, an $867,000 impairment, and as for the Patriot Data Solutions Group, a $10 million price tag, plus the creation of several hundred thousand dollars of additional monthly expense, along with the $236,000 impairment, and a $2.9 million partial year loss from 9/1/08 to 5/31/09.
Then this July 16, press release, the one that retracted the $3 million to $6 million revenue guidance, we were promised at the last shareholder meeting. At least management admits in the 10-K regarding Avot and PDSG that it was "the inability to meets its business plan".
Think about this, there was approximately $9.7 million flowing to Patriot from the MMP licensees. We didn't need any employees or overhead to collect that $9.7 million, but look how much remained on the bottom-line. After management's investments of our money, there was only $881,509 of net income. That's right, less than 10% of our licensing revenue.
Now these results tell a very clear story, either our management has not exercised proper due diligence, when analyzing our investments or they don't know how to manage the investments they have made or both. Some shareholders who want to blame the Board of Directors, but I say the Board's blame is hiring the current management and letting them stay this long.
- To read the full transcript on Seeking Alpha, click here »
