The Microcap Speculator submits: No, that's not a typo...microcap Patriot Scientific (ticker: PTSC.ob) today announced a cash dividend of $0.02 per share of common stock for shareholders and certain warrant holders of record as of February 24, 2006. The dividend is payable March 22, 2006. Last week it also announced a restructuring of debentures and warrant buyback.
Management was very optimistic about the company's future:
This announcement is especially significant because - until less than 12 months ago - Patriot had never shown a quarterly profit, and had never realized significant revenue from its 10-patent portfolio of seminal microprocessor innovations. Since February of last year, the Company's jointly owned patent portfolio has been successfully licensed to Intel, HP and AMD - in the process, generating nearly $24 million in revenue for Patriot. Based on these licenses and other key factors covered in recent SEC filings, Patriot Scientific currently has a market cap of approximately $64 million dollars.
With these successful license negotiations as precedent, the Company - through its marketing alliance with The TPL Group's Alliacense division, - is actively and confidently negotiating for licenses with other U.S. and foreign companies whose products include high speed microprocessors - more than 150 of which were put on notice of likely infringement - and that includes practically every high-tech consumer electronics manufacturer and systems integrator in the global marketplace.
"We are pleased to be in the strong financial position that enables us to offer our loyal shareholders this significant dividend," said David H. Pohl, Chairman and CEO of Patriot Scientific. "The Company strongly believes that more licensing deals and related revenues are likely, although none are assured," Pohl continued. "Patriot Scientific's Board of Directors will consider and decide whether to take such dividend payment actions in the future, based on future revenues and the financial condition of the Company, as well as market conditions and other factors."
Pohl also said that, "This dividend payment, which is rare in the arena of microcap companies, is another important step toward evidencing Patriot Scientific's current financial strength and the fact that the Board and management firmly believe in the Company's future potential. During the past 12 months, the Company has undergone significant changes in management and operating strategy. As a result of those changes and the licensing revenues related to our jointly owned patent portfolio we are now in a favorable cash position, and we are using some of that cash to pay out our first-ever dividend to shareholders."
The action by Patriot Scientific to issue this dividend - and also last week's decision to retire the debentures and buy back what could amount to up to approximately 20 percent of the Company's total outstanding stock warrants at this juncture - were driven by the same impetus that has guided other strategic re-organizational moves that began in 2005. Last year the Company changed both its executive team and the Company's strategic direction, including the signing of a significant agreement with The TPL Group regarding joint ownership and marketing of its patent portfolio.
Patriot Scientific received licensing revenues of $13 million in 2005. The Company received distribution of an additional $10 million in January of 2006 as a result of a license transaction with systems manufacturer HP regarding Patriot's jointly owned patent portfolio.
"The far-reaching changes in 2005 helped pave the way for new growth-oriented initiatives in 2006," Pohl said. "These changes are positive for Patriot. We continue to move forward with the paramount goal of enhancing shareholder value by prudently addressing Company fundamentals and growing the business."
My take: Who cares about my take? The market loves it. The company announced a $.02 dividend and the stock price is up more than $.05. Unfortunately, I took profits earlier at $.225 so I won't benefit from the frenzy.
DISCLOSURE: I have no position in PTSC.OB. Not a recommendation to buy or sell any security. For informational and educational purposes only.
PTSC 1-Yr Price Performance: