Agoracom

You obviously haven't thought this all the way through, IMO. I may be completely wrong on some of this (wouldn't be the first time), but heregoes....

First, there is the synergies with our other tech holdings now, and perhaps planned in the future, toward building a "one stop shop for your info security/integration needs", as BillWilke suggests. Perhaps a "package" of tech. That's the more obvious benefit.

There's also the implications I suggested the other day, what with this acquisition coming on the heels of an apparent meeting with the PTO on the '148 (and '336). Perhaps there is renewed confidence that a lot more money is coming to foster the expansion of CrossFlow.

Now there's the more subtle, invisible aspects of the deal itself. It's a going concern, and we picked it up for a mere $10M. Why so cheap? I suspect that CrossFlow has assets (e.g., tooling and equipment) valued at over a million. But I'm hoping it's because CrossFlow has some major "overhang" that we're absorbing, like some major past-year losses due to IR&D expenses (a reasonable suspicion IMO) and little to no sales in its first few years of operations. Tax loss carry-overs that we can now use to offset PTSC's taxes on profits. Thus, the true value of CrossFlow may be much higher than $10M from PTSC's perspective, and the true ultimate cost to PTSC for the acquisition could be something approaching zero when this tax consideration gets thrown in the mix.

Some may recall that one of my thoughts posted in the past regarding any contemplated acquisitions is that they pursue companies with big tax loss carry-overs that we can take advantage of. We're in a somewhat unique situation of having significant income with little in the way of write-offs, so this aspect should be something to be leveraged/considered when reviewing acquisition candidates. I think CrossFlow probably fills this bill nicely, as I believe they only recently "turned the corner" to profitability after several years of eating IR&D expenses to develop their tech - each of those years representing a significant loss. And they fill the bills of having synergistic compelling product, patents, location, capable management and a probable bright future. And again, there is the possibility that with the tax consideration, the real ultimate cost to PTSC is something approaching zero (heck, it could work out to less than zero!).

I'm very pleased with this acquisition. And if there are things in play (taxes) as I suggest above, I am EXTREMELY pleased with this acquisition.

But, alas, I KNOW nuttin'! Most of the above is just IMO (but things point to its "correctness"). Maybe Fut can chime in re: the taxing thoughts (LOL).

Sometimes it's the underlying things that provide the "sweetener". And, as for the "PTSC money to foster Crossflow growth" concern, there have been recent licensees. Money is there or is coming from these (and prior, possibly IMO) licensees, and I strongly believe there will indeed be more licensees in the future.

JMHOs, and I hope this improves your attitude about this acquisition.

SGE