It seems to me to be more than a coincidence that the July Agreement with TPL, PDS, Alliance, whereby Alliacense is now responsible for licensing the MMP, happened around the time Chet Brown received his judgment against Leckrone for around $8Million +. It is my understand that his agreement was with Leckrone/TPL. If Alliacense is now licensing the MMP, it leaves TPL/Leckrone wide open to file BK, thereby screwing Chet (and possibly others) out of his $8million+ and future MMP revenues. Of course if Chet Brown files an appeal on the alter ego issue and wins then it would make sense that Brown could collect from many other Leckrone related accounts/companies. Patriot, is protected from a possible BK because of the new agreement signed in July. Not so for Brown.

I agree that this quarterly report is a blessing, compared to prior reports of income, from the MMP. However, via this new July agreement with TPL/PDS/Alliacense, the expenses have increased once again and subject to PDS approval (Carl and Dan) the $2million cap on advances to Alliacense may be increased. I wouldn't be surprised and half expect that they will vote to increase that amount when the time comes. Just look at the expenses and it's easy to see who is really bringing home the bacon.

From the 10Q emphasis by me

PDS reimburses TPL for payment of all legal and third-party expert fees and other related third-party costs and other expenses, although the majority of third-party costs are paid directly by PDS. During the six months ended November 30, 2012 and 2011, PDS expensed $908,185 and $3,296,798, respectively, pursuant to the agreement. While as a result of the fee arrangement with current litigation counsel we expect the attorney fees of PDS to decrease substantially from fiscal year end 2012 levels, we also expect some offsetting increase for other litigation related costs as the actions before the United States District Court for the Northern District of California (“U.S. District Court”) and the U.S. International Trade Commission (“ITC”) move forward. These expenses are recorded in the accompanying PDS statements of operations presented below.

On July 11, 2012, we entered into the Program Agreement with PDS, TPL, and Alliacense Limited, LLC (“Alliacense”, an affiliate of TPL), and an Agreement (the “TPL Agreement”) with TPL. Pursuant to the Program Agreement, PDS engaged Alliacense to negotiate MMP portfolio licenses and to pursue claims against violators of the MMP portfolio on behalf of PDS, TPL, and the Company. The Program Agreement continues through the useful life of the MMP portfolio patents. Pursuant to the TPL Agreement, we and TPL agreed to certain allocations of obligations in connection with the engagement of Alliacense.

On July 17, 2012, we entered into an Agreement with PDS and TPL whereby we agreed to certain additional allocations of obligations relating to the Program Agreement.

Pursuant to the Program Agreement, PDS has committed to advance Alliacense a quarterly amount of $500,000 which represent an advance of licensing fees due Alliacense, for supporting efforts to secure licensing agreements on behalf of PDS. These payments can be capped at $2,000,000 pursuant to six-month notice from PDS, at which time the PDS management committee will review and decide the warranting of future advance payments. These advances replace the quarterly amounts previously paid to TPL pursuant to the Commercialization Agreement. During the three and six months ended November 30, 2012 PDS expensed $500,000 and $815,000, respectively pursuant to this commitment. These expenses are recorded in the accompanying PDS statement of operations for the three and six months ended November 30, 2012 presented below.

Pursuant to the Program Agreement PDS has committed to pay Alliacense litigation support fees relating to Alliacense’s special work and effort regarding internal costs related to MMP maintenance and litigation support including support in the U.S. District Court and the complaints filed on behalf of TPL, PDS and us with the ITC on July 24, 2012. During the three and six months ended November 30, 2012 PDS expensed $510,418 and $1,453,521, respectively, pursuant to this commitment. Future litigation support payments to Alliacense relating to the ITC litigation fall under a contingency arrangement. These expenses are recorded in the accompanying PDS statement of operations for the three and six months ended November 30, 2012 presented below.

corrections welcome