Dear Chairman Letter to PSSR Management ($PSSR)

I think a private company would pay more for PASSUR than the public markets are affording it. I think the company has assets - in senior management, in its niche product, in its reputation - that aren't reflected on the balance sheet or in the stock price. Even the currently bloated sales force could have value to an acquirer.

But I've been wrong before. This is beginning to remind me one of the first companies that really blew up for me, a small closely held telecom svcs provider called Ace*Comm that had a good product but got left out in a market where customers were consolidating and small service providers that remained small missed out. Eventually they sold for $0.60 / share.

I hope the same doesn't happen here.

----

Dear Beck,

Over the past few quarters PASSUR has embarked on a strategy to spend money on new hires in order to ramp business development opportunities.

I’m writing this letter to request some kind of progress report on this effort and express my concerns that perhaps there are alternatives that might better address both the company’s recent lack of growth and improve its capital allocation.

There are two specific issues that I’d like to address around the strategy:

1. While I realize that paying industry veterans to grow the business pipeline is “business as usual” and a “tried and true” tactic, it doesn’t appear to be working. Obviously, the appearance of success and failure is incredibly binary - either orders come or they don’t – and the fact that thus far they haven’t doesn’t mean its failed, it simply remains unknown.

The question, as with all investment decisions, is whether or not to continue the spend towards an uncertain outcome or change tack. Part of answering that question is asking whether or not you can identify, in the absence of substantial new order announcements, if you are hitting pre-determined markers that might offer evidence that we are on the right path.

In short, what can you share with shareholders to demonstrate that in the absence of new orders, this increased spending on new hires / SG&A is actually working?

2. At the last annual meeting, there was some discussion of whether or not you had the right product suite to address the needs of your customers. Specifically, the question was whether or not you needed to add or acquire some skills / capabilities in order to broaden your solution set for customers who might be seeking more comprehensive solutions and also to better leverage your larger sales force, by giving them more to sell.

There is the risk that you are bulking up your sales staff to a sell a product that is too narrow. If this is the case, can you address this through acquisitions / partnerships or would you be better off selling the company to an entity that can plug you into a wider solution and enable you to access the market more efficiently?

In one of our first conversations, you told me that you enjoyed your independence because “it’s more fun to beat the big boys” as a small, nimble and independent company. I get that logic and appreciate that you’re having fun.

However, one should note that you might be having more fun because you’re the company’s highest paid employee. I assure you, it is no fun for your employees to have worthless stock options or for your investors to have worthless stock.

I urge you to please insure that your capital allocation decisions are driven to maximize value for all your stakeholders – your employees, customers and shareholders - and not merely to subsidize your independence, which you may value more than others.

Sincerely

-- END --

ALL RIGHTS RESERVED. PAST HISTORY IS NO GUARANTEE OF PRIOR RETURNS. THIS IS NOT A SOLICITATION FOR BUSINESS NOR A RECOMMENDATION TO BUY OR SELL SECURITIES. I HAVE NO ASSURANCES THAT INFORMATION IS CORRECT NOR DO I HAVE ANY OBLIGATION TO UPDATE READERS ON ANY CHANGES TO AN INVESTMENT THESIS IN THE COMPANIES MENTIONED HERE, WHICH I MAY OWN.