UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)

|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

      For quarterly period ended February 28, 2005

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

      For the transition period from _____________ to _______________

           Commission File Number 0-22182

                         PATRIOT SCIENTIFIC CORPORATION
        (Exact name of small business issuer as specified in its charter)

                  Delaware                                  84-1070278
                  --------                                  ----------
         (State or other jurisdiction of              (I.R.S. Empl. Ident. No.)
         incorporation or organization)

                 10989 Via Frontera, San Diego, California 92127
                 -----------------------------------------------
                    (Address of principal executive offices)

                                 (858) 674-5000
                                 --------------
                           (Issuers telephone number)

Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes _x_ No ___

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

Common Stock, $.00001 par value                         275,776,098
-------------------------------                         -----------
           (Class)                            (Outstanding at April 12, 2005)

Transitional Small Business Disclosure Format (Check one):  Yes |_| No |X|

<PAGE>

                         PATRIOT SCIENTIFIC CORPORATION
                                      INDEX


                                                                          Page
PART I. FINANCIAL INFORMATION

  Item 1. Financial Statements:

           Consolidated Balance Sheets as of February 28, 2005 (unaudited)
              and May 31, 2004                                             3

           Consolidated Statements of Operations for the three and nine
             months ended February 28, 2005 and February 29, 2004
             (unaudited)                                                   4

           Consolidated Statements of Cash Flows for the nine months
             ended February 28, 2005 and February 29, 2004 (unaudited)     5

           Notes to Unaudited Consolidated Financial Statements            6-12

  Item 2. Management's Discussion and Analysis or Plan of Operation        13-25

  Item 3. Controls and Procedures                                          25

PART II. OTHER INFORMATION                                                 25

  Item 1. Legal Proceedings                                                25
  Item 2. Changes in Securities                                            26
  Item 3. Defaults upon Senior Securities                                  *
  Item 4. Submission of Matters to a Vote of Security Holders              *
  Item 5. Other Information                                                *
  Item 6. Exhibits and Reports on Form 8-K                                 26


SIGNATURES                                                                 27


      *     No information provided due to inapplicability of the item.


                                       2
<PAGE>

PART I- FINANCIAL INFORMATION

Item 1. Financial Statements

                         PATRIOT SCIENTIFIC CORPORATION
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                             February 28,     May 31,
                                                                                2005            2004
                                                                            ------------    ------------
                                                                             (Unaudited)
<S>                                                                         <C>             <C>
                             ASSETS (Notes 4 and 5)
Current assets:
       Cash and cash equivalents                                            $    854,328    $    355,940
       Short term investments                                                    208,231          22,646
       Accounts receivable                                                           423           1,225
       Licenses receivable (Note 3)                                            2,750,000              --
       Prepaid expenses                                                          119,684         322,068
                                                                            ------------    ------------

Total current assets                                                           3,932,666         701,879

Property and equipment, net                                                       33,691          68,389
Other assets                                                                      23,891          41,221
Patents and trademarks, net of accumulated amortization of $537,481
   and $501,235                                                                   78,493         114,739
                                                                            ------------    ------------
                                                                            $  4,068,741    $    926,228
                                                                            ============    ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
       Current portion of convertible debentures, net of debt discount of
         none and $27,180 (Note 5)                                          $         --    $    145,320
       Secured notes payable to shareholders (Note 4)                                 --         100,000
       Accounts payable                                                           93,175         134,600
       Accrued liabilities                                                       117,607         160,102
       Contingency fee payable (Note 3)                                          553,600              --
       Deferred maintenance (Note 3)                                             100,000              --
       Current portion of capital lease obligation                                 4,483           8,020
                                                                            ------------    ------------

Total current liabilities                                                        868,865         548,042

Convertible debentures, net of debt discount of $606,296
   and $2,047,966 (Note 5)                                                       374,371         227,701
Long term portion of capital lease obligation                                         --           2,306

Stockholders' equity (Notes 5 and 6)
       Preferred stock, $.00001 par value; 5,000,000 shares
         authorized none outstanding                                                  --              --
       Common stock, $.00001 par value; 400,000,000 shares
         authorized; issued and outstanding 264,940,264 and 171,156,363            2,650           1,712
       Additional paid-in capital                                             54,187,598      49,990,485
       Accumulated deficit                                                   (51,364,743)    (49,844,018)
                                                                            ------------    ------------
Total stockholders' equity                                                     2,825,505         148,179
                                                                            ------------    ------------
                                                                            $  4,068,741    $    926,228
                                                                            ============    ============
</TABLE>

See accompanying summary of accounting policies and notes to unaudited
consolidated financial statements.


                                       3
<PAGE>

                         PATRIOT SCIENTIFIC CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                         Three Months Ended                Nine Months Ended
                                  ------------------------------    ------------------------------
                                    February 28,    February 29,     February 28,     February 29,
                                       2005            2004             2005              2004
                                  -------------    -------------    -------------    -------------
<S>                               <C>              <C>              <C>              <C>
Net sales                         $   2,951,850    $       3,384    $   2,973,148    $      66,584

Cost of sales                                --               --               --           10,472
                                  -------------    -------------    -------------    -------------

Gross profit                          2,951,850            3,384        2,973,148           56,112

Operating expenses:
     Research and development            53,955          154,770          236,296          416,283
     Selling, general and
       administrative                 1,085,575          265,325        1,858,528          937,927
                                  -------------    -------------    -------------    -------------
                                      1,139,530          420,095        2,094,824        1,354,210
                                  -------------    -------------    -------------    -------------
Operating income (loss)               1,812,320         (416,711)         878,324       (1,298,098)
                                  -------------    -------------    -------------    -------------
Other income (expenses):
     Unrealized gain (loss) on
        marketable securities            (2,281)         (27,357)         (14,025)         (50,591)
     Gain on sale of technology              --               --               --           75,500
     Other income                         9,800               --           57,077               --
     Interest expense                (1,160,972)        (531,826)      (2,442,101)      (1,728,042)
                                  -------------    -------------    -------------    -------------
                                     (1,153,453)        (559,183)      (2,399,049)      (1,703,133)
                                  -------------    -------------    -------------    -------------
Net income (loss)                 $     658,867    $    (975,894)   $  (1,520,725)   $  (3,001,231)
                                  =============    =============    =============    =============

Basic and diluted loss
     per common share             $        0.00    $       (0.01)   $       (0.01)   $       (0.02)
                                  =============    =============    =============    =============

Weighted average number of
  common shares outstanding
  during the period (Note 1)        232,871,373      147,831,481      204,784,881      130,404,446
                                  =============    =============    =============    =============
</TABLE>

See accompanying summary of accounting policies and notes to unaudited
consolidated financial statements.


                                       4
<PAGE>

                         PATRIOT SCIENTIFIC CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                             ------------------------------------
                                                                             February 28, 2005  February 29, 2004
                                                                             -----------------  -----------------
<S>                                                                            <C>               <C>
Decrease in Cash and Cash Equivalents
Operating activities:
       Net loss                                                                $   (1,520,725)   $   (3,001,231)
       Adjustments to reconcile net loss
          to cash used in operating activities:
          Amortization and depreciation                                                70,944           101,588
          Non-cash compensation                                                        59,674                --
          Non-cash interest expense related to convertible
              debentures, notes payable and warrants                                2,322,975         1,622,266
       Gain on sale of technology                                                          --           (75,500)
       Unrealized loss on marketable securities                                        14,415            50,591
       Common stock issued for services                                                58,800            45,050
           Changes in:
               Short term investments                                                (200,000)               --
               Accounts receivable                                                        802           (20,679)
               Licenses receivable                                                 (2,750,000)               --
               Prepaid expenses and other assets                                      219,714            11,243
               Accounts payable and accrued liabilities                               577,968           (98,267)
               Deferred maintenance                                                   100,000                --
                                                                               --------------------------------
Net cash used in operating activities                                              (1,045,433)       (1,364,939)
                                                                               --------------------------------

Investing activities:
       Proceeds from sale of technolgy                                                     --             7,500
       Purchase of property, equipment and patents                                         --           (22,195)
                                                                               --------------------------------
       Net cash used for investing activities                                              --           (14,695)
                                                                               --------------------------------

Financing activities:
       Proceeds from the issuance of short term notes payable                              --            10,000
       Proceeds from the issuance of convertible debentures                           490,000         1,460,000
       Proceeds from the issuance of common stock                                     453,250            50,440
       Principal payments on secured notes payable                                   (100,000)               --
       Principal payments for capital lease obligations                                (5,843)           (4,667)
       Proceeds from sales of accounts receivable                                          --            21,280
       Proceeds from exercise of common stock warrants and options                    706,414            50,100
                                                                               --------------------------------
Net cash provided by financing activities                                           1,543,821         1,587,153
                                                                               --------------------------------

Net increase (decrease) in cash and cash equivalents                                  498,388           207,519

Cash and cash equivalents, beginning of period                                        355,940            32,663
                                                                               --------------------------------

Cash and cash equivalents, end of period                                       $      854,328    $      240,182
                                                                               ================================

Supplemental Disclosure of Cash Flow Information:
       Cash payments for interest                                              $       12,994    $       16,568
       Convertible debentures, notes payable and accrued
         interest exchanged for common stock                                   $    2,065,788    $    1,729,706
       Debt discount                                                           $      490,000    $    1,247,500
                                                                               ================================
</TABLE>

      See accompanying summary of accounting policies and notes to unaudited
consolidated financial statements.


                                       5
<PAGE>

                         PATRIOT SCIENTIFIC CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.    BASIS OF PRESENTATION

The consolidated financial statements of Patriot Scientific Corporation
("Patriot") presented herein have been prepared pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form 10-QSB and do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America. These statements
should be read in conjunction with our audited consolidated financial statements
and notes thereto included in Form 10-KSB for the year ended May 31, 2004.

In the opinion of management, the interim consolidated financial statements
reflect all adjustments of a normal recurring nature necessary for a fair
statement of the results for interim periods. Operating results for the three
and nine month periods are not necessarily indicative of the results that may be
expected for the year.

Loss Per Share

We follow Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share." Under SFAS No. 128, basic loss per share is calculated as
loss available to common stockholders divided by the weighted average number of
common shares outstanding. Diluted loss per share is calculated as net loss
divided by the diluted weighted average number of common shares. The diluted
weighted average number of common shares is calculated using the treasury stock
method for common stock issuable pursuant to outstanding stock options and
common stock warrants. Common stock options and warrants of 128,231,757 and
110,421,606 for the nine months ended February 28, 2005 and February 29, 2004,
respectively, were not included in diluted loss per share for the periods as the
effect was antidilutive due to our recording losses in each of those periods.
See Notes 5 and 6 for discussion of commitments to issue additional shares of
common stock and warrants.

Stock Options

The Company applies Accounting Principles Board ("APB") Opinion 25, "Accounting
for Stock Issued to Employees," and related Interpretations in accounting for
all stock option plans. Under APB Opinion 25, compensation cost has been
recognized for stock options granted to employees when the option price is less
than the market price of the underlying common stock on the date of grant.

SFAS No. 123, "Accounting for Stock-Based Compensation," and SFAS No. 148,
"Accounting for Stock-Based Compensation-Transition and disclosure," require the
Company to provide pro forma information regarding net income as if compensation
cost for the Company's stock option plans had been determined in accordance with
the fair value based method prescribed in SFAS No. 123. To provide the required
pro forma information, the Company estimates the fair value of each stock option
at the grant date by using the Black-Scholes option-pricing model. SFAS No. 148
also provides for alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee compensation.
The Company has elected to continue to account for stock based compensation
under APB No. 25.

The Company applies SFAS No. 123 in valuing options granted to consultants and
estimates the fair value of such options using the Black-Scholes option-pricing
model. The fair value is recorded as consulting expense as services are
provided. Options granted to consultants for which vesting is contingent based
on future performance are measured at their then current fair value at each
period end, until vested.

Under the accounting provisions for SFAS No. 123, the Company's net loss per
share would have been increased by the pro forma amounts indicated below:


                                       6
<PAGE>

Patriot Scientific Corporation
Notes to Consolidated Financial Statements (Continued)

<TABLE>
<CAPTION>
                                                    Three Months Ended                         Nine Months Ended
                                          ---------------------------------------    --------------------------------------
                                              February 28,          February 29,        February 28,        February 29,
                                                  2005                2004                  2005                2004
---------------------------------------------------------------------------------    --------------------------------------
<S>                                       <C>                  <C>                   <C>                 <C>
Net income (loss) as reported             $         658,867    $        (975,894)    $      (1,520,725)  $      (3,001,231)
Compensation expense                               (102,100)              (2,000)             (109,020)           (152,074)
                                          -----------------    -----------------     -----------------   -----------------
Net income (loss) pro forma               $         556,767    $        (977,894)    $      (1,629,745)  $      (3,153,305)
                                          =================    =================     =================   =================
As reported per share
     Basic and diluted income (loss)      $            0.00    $           (0.01)    $           (0.01)  $           (0.02)
                                          =================    =================     =================   =================
Pro forma per share
     Basic and diluted income (loss)      $            0.00    $           (0.01)    $           (0.01)  $           (0.02)
                                          =================    =================     =================   =================
</TABLE>

Sale of Accounts Receivable

We follow SFAS No. 140, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities," a replacement of SFAS No. 125. SFAS
No. 140 provides consistent standards for distinguishing transfers of financial
assets that are sales from transfers that are secured borrowings. A $400,000
factoring line we established with a bank enables us to sell selected accounts
receivable invoices to the bank with full recourse against us. These
transactions qualify for a sale of assets since (1) we have transferred all of
our rights, title and interest in the selected accounts receivable invoices to
the bank, (2) the bank may pledge, sell or transfer the selected accounts
receivable invoices, and (3) we have no effective control over the selected
accounts receivable invoices since we are not entitled to or obligated to
repurchase or redeem the invoices before their maturity and we do not have the
ability to unilaterally cause the bank to return the invoices. Under SFAS
No.140, after a transfer of financial assets, an entity recognizes the financial
and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. Pursuant to the provisions of SFAS
No. 140, whenever we sell accounts receivable invoices to the bank, we reflect
the transactions as sales of assets and establish a receivable from the bank for
the retained amount less the costs of the transactions and less any anticipated
future loss in the value of the retained asset. The retained amount equals 20%
of the total accounts receivable invoices sold to the bank less 1% of the total
invoices as an administrative fee and 1.75% per month of the total outstanding
accounts receivable invoices as a finance fee. The estimated future loss reserve
for each receivable included in the estimated value of the retained asset is
based on the payment history of the accounts receivable customer. At February
28, 2005, there were no accounts receivable invoices outstanding under the
factoring line and $400,000 was available for future factoring of accounts
receivable invoices.

2.    RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued Statement of Financial Accounting Standards
No. 123R ("SFAS123R"), Share-Based Payment, an amendment of FASB Statements Nos.
123 and 95. SFAS 123R eliminates the ability to account for share-based
compensation transaction using APB 25 and will require that such transactions be
accounted for using a fair-value-based method and recognized as expenses in the
statement of operations. SFAS 123R allows the use of a modified version of
prospective application, which requires that the fair value of new awards
granted after the effective date of SFAS 123R, plus unvested awards at the date
of adoption, be expensed over the applicable vesting period. The provisions of
SFAS 123R will be effective for interim or annual reporting periods beginning
after December 15, 2005 for the companies that file as small business issuers.
The Company is currently evaluating the impact the implementation guidance and
revisions included in SFAS 123R will have on its consolidated financial
statements.


                                       7
<PAGE>

Patriot Scientific Corporation
Notes to Consolidated Financial Statements (Continued)

3.    LICENSES RECEIVABLE

In February 2005, we entered into two separate licensing agreements with one
customer for the Ignite microprocessor technology and the patent portfolio
technology. The accumulated amount of the two licenses was $3,050,000 of which
$2,950,000 was for licensing fees and $100,000 was for deferred maintenance that
is expected to be provided over a period not to exceed four years. The payment
terms of the agreements were accumulated payments of $300,000 at the time of
execution, three quarterly payments of $750,000 each on April 1, August 15 and
November 15, 2005 and one final payment of $500,000 on February 15, 2006. As a
result of the patent portfolio license, a contingency fee of $553,600 was
incurred that will be payable proportionately ten days after receipt of funds
from the customer. The maintenance revenue will be deferred and recognized as
revenue ratably over a four year term. The Ignite license agreement contained a
royalty provision, under which we could earn royalty income based on our
customer's sales. No royalties were earned during the quarter.

4.    SECURED NOTE PAYABLE

In January 2004, a note held by an affiliate for $200,353 plus accrued interest
of $8,033 was partially used to exercise a warrant with the balance of $100,000
converted into four one year $25,000 notes due September 1, 2005 issued to four
heirs of the estate over which the affiliate is a trustee. In February 2005, the
four notes plus accrued interest were paid in full. The interest rate on the
four notes was 6% and the notes were secured by the assets of the company.

5.    CONVERTIBLE DEBENTURES

Overview. From April 23, 2002 through January 17, 2005, we sold an aggregate of
$5,403,167 of convertible debentures, ranging from 8% to 12%, to a group of
twenty-four investors. The convertible debentures entitle the debenture holder
to convert the principal and unpaid accrued interest into our common stock for
two years from the date of closing.

Number of Shares Debentures May Be Converted Into. The debentures can be
converted into a number of our common shares at conversion prices that initially
equaled $0.0167 to $0.10289 per share.

Resets of Conversion Price and Conversion Shares. A reset date occurs on each
three month anniversary of the closing date of each debenture and on the date
the registration statement becomes effective. If the volume weighted average
price for our common stock for the ten days previous to the reset date is less
than the conversion price in effect at the time of the reset date, then the
number of common shares issuable to the selling shareholder on conversion will
be increased. If the conversion price is reset, the debenture can be converted
into a number of our common shares based on the following calculation: the
amount of the debenture plus any unpaid accrued interest divided by the reset
conversion price which shall equal the volume weighted average price for our
common stock for the ten days previous to the reset date.

Warrants. Concurrent with the issuance of the convertible debentures, we issued
to the debenture holders warrants to purchase shares of our common stock. These
warrants are exercisable for five to seven years from the date of issuance at
either initial negotiated exercise prices or prices equal to 115% of the volume
weighted average price for our common stock for the ten days previous to the
debenture date. The warrant exercise price is generally subject to being reset
on each six month anniversary of its issuance, however, if the warrant holder
elects to have the warrant shares registered, then the exercise price is fixed
at the price in effect on the date of the election.

Options to Purchase Additional Debentures. Subject to the price of our common
stock being equal to or greater than $0.20 per share and a two year limitation,
the debenture holders may purchase additional debentures equal to the value of
their initial debentures. The price at which the optional additional debentures
could be converted would initially equal 115% of the volume weighted average
price for our common stock for the ten days previous to the


                                       8
<PAGE>

Patriot Scientific Corporation
Notes to Consolidated Financial Statements (Continued)

date on which the optional additional debentures were closed. The optional
additional debentures would carry the same warrant amounts and reset privileges
as the initial debentures.

Shareholder Approval. We may currently issue more than 20% of our outstanding
shares under the convertible debentures. If we become listed on the NASDAQ Small
Cap Market or NASDAQ National Market, then we must get shareholder approval to
issue more than 20% of our outstanding shares. Since we are currently a bulletin
board company, we do not need shareholder approval.

Restrictive Covenants. For a period of 18 months from the date of the
debentures, we are prohibited from engaging in certain transactions without
obtaining the debenture holders' prior written approval. These types of
transactions include the issuance of any debt or equity securities in a private
transaction which are convertible or exercisable into shares of common stock at
a price based on the trading price of the common stock at any time after the
initial issuance of such securities; the issuance of any debt or equity
securities with a fixed conversion or exercise price subject to adjustment; and
any private equity line type agreements. Also, so long as the debentures or
warrants are outstanding, we may not, for less than $250 million, sell, convey,
dispose of, spin off or assign any or all of our intellectual property without
the prior written consent of the debenture or warrant holder.

Right of First Refusal. The debenture holders have a right of first refusal to
purchase or participate in any equity securities offered by us in any private
transaction which closes on or prior to the date that is two years after the
issue date of each debenture.

Registration Rights. Except for one debenture issued on March 23, 2004
(designated F), we are responsible for registering the resale of the shares of
our common stock which will be issued on the conversion of the debentures. As of
February 28, 2005, there have been six registration statements (designated A
through E and G).

Security Interest.  The convertible debentures are secured by our assets.

The following tables present the status, as of February 28, 2005, of our
convertible debentures:


                                       9
<PAGE>

Patriot Scientific Corporation
Notes to Consolidated Financial Statements (Continued)

<TABLE>
<CAPTION>
                                          Principal         Conversion Prices          Effective         Shares          Warrant
              Dates of      Aggregate      Balance          -----------------        Registration     Converted at       Shares
   Series     Issuance      Principal     at 2/28/05        Initial      Reset            Date          2/28/05          Issued
   ------     --------      ---------     ----------        -------      -----       ------------     ------------       ------
<S>          <C>           <C>            <C>              <C>         <C>           <C>               <C>             <C>
     A       4/23/2002-    $ 1,000,000     $      --       $0.08616-   $0.04190-        10/29/2002     24,099,548      12,859,175
             6/10/2002                                     $0.10289    $0.04457

     B       8/23/2002-    $   605,000     $      --       $0.05126-   $0.03007-          3/7/2003     14,777,350      11,234,835
             1/24/2003                                     $0.0727     $0.04722

     C       3/24/2003-    $   510,000     $      --       $0.041-     $0.03968-         6/26/2003     10,470,554       9,377,943
             6/9/2003                                      $0.065      $0.06346

     D       8/1/2003-     $   547,500     $      --       $0.0172-    $0.0172-         11/18/2003     25,178,803      22,455,355
             10/21/2003                                    $0.048      $0.0477

     E       12/1/2003-    $ 1,527,500     $      --       $0.0267-    $0.0267-           6/7/2004     46,794,618      30,395,392
             5/11/2004                                     $0.10       $0.04105

     F       3/23/2004     $   723,167     $ 723,167       $0.09       $0.0399     Not  Registered             --       8,035,192

     G       9/28/2004-    $   490,000     $ 257,500       $0.0167-    $0.0167-          2/16/2005      8,433,273      21,690,815
             1/17/2005   ---------------------------       $0.04       $0.04                         ----------------------------

Totals                     $ 5,403,167     $ 980,667                                                  129,754,146     116,048,707
</TABLE>

Convertible debentures issued since April 23, 2002     $ 5,403,167
Less amounts converted to common stock                  (4,422,500)
                                                       -----------
                                                           980,667
Less debt discount                                        (606,296)
                                                       -----------
Convertible debentures at February 28, 2005                374,371
Less current portion                                            --
                                                       -----------
Long term portion                                      $   374,371
                                                       ===========
Maturity dates of outstanding convertible debentures
  March 23, 2006                                       $   723,167
  November 17, 2006                                        157,500
  November 18, 2006                                        100,000
                                                       -----------
                                                       $   980,667
                                                       ===========


                                       10
<PAGE>

Patriot Scientific Corporation
Notes to Consolidated Financial Statements (Continued)

6.    STOCKHOLDERS' DEFICIT

The following table summarizes equity transactions during the nine months ended
February 28, 2005:

                                         Common
                                          Shares         Dollars
                                       ------------   ------------

Balance June 1, 2004                    171,156,363   $ 49,992,197

Sale of common stock                      4,625,000        453,250
Exercise of common stock warrants
   and options                           27,642,677        706,414
Stock issued on conversion of
  debentures and accrued interest        60,720,224      2,065,787
Stock issued for services                   796,000         58,800
Non-cash compensation                            --         59,674
Non-cash interest and debt discount
  related to warrants and debentures             --        854,126
                                       ------------   ------------

Balance February 28, 2005               264,940,264   $ 54,190,248
                                       ============   ============

Stock Options

At February 28, 2005, we had 50,000 options outstanding pursuant to our 1992 NSO
Stock Option Plan exercisable at $1.325 per share expiring in 2005; 2,193,000
options outstanding pursuant to our 1996 Stock Option Plan exercisable at a
range of $0.0425 to $1.325 per share expiring beginning in 2005 through 2010;
2,980,000 options outstanding pursuant to our 2001 Stock Option Plan exercisable
at a range of $0.0425 to $0.1275 per share expiring beginning in 2005 through
2010; and 2,775,000 options outstanding pursuant to our 2003 Stock Option Plan
exercisable at a range of $0.038 to $0.11 per share expiring in 2005 through
2010.

Some of the options outstanding under these plans are not presently exercisable
and are subject to meeting vesting criteria.

Warrants

At February 28, 2005, we had warrants outstanding exercisable into 120,233,757
common shares at exercise prices ranging from $0.0167 to $0.65 per share
expiring beginning in 2006 through 2012. During the nine months ended February
28, 2005, we issued warrants to purchase 27,167,014 shares of common stock which
are subject to repricings at the six month anniversary of the issuance of the
warrant; had investors exercise warrants to purchase 27,522,677 shares of our
common stock; and cancelled warrants to purchase 760,000 shares of our common
stock. For warrants issued in conjunction with the 8% convertible debentures, at
each anniversary date the warrants will be repriced to the lesser of the initial
exercise price or the volume weighted average price for our common stock for the
ten days previous to the reset date. For warrants issued in conjunction with the
equity lines of credit and snap shot warrants, at each anniversary date the
warrants will be repriced to the lesser of the initial exercise price or 110% of
the lowest closing bid price of our common stock for the five trading days
ending on such six month anniversary date. During the nine months ended February
28, 2005, warrants to purchase 41,188,105 shares of common stock with initial or
reset exercise prices ranging from $0.0408 to $0.0938 have been repriced to
exercise prices ranging from $0.0319 to $0.0451.


                                       11
<PAGE>

Patriot Scientific Corporation
Notes to Consolidated Financial Statements (Continued)

During the nine months ended February 28, 2005, we issued to Swartz snap shot
warrants exercisable for five years into 5,476,199 common shares at exercise
prices ranging from $0.0672 to $0.07610. The snap shot warrants are issued under
an agreement with Swartz whereby we will issue to Swartz warrants to purchase
common shares equal to 30% of any common stock or warrants we issue to parties
other than Swartz or their affiliates during the period of April 1, 2003 through
March 19, 2008.

During the nine months ended February 28, 2005, seven warrant holders agreed to
lock up agreements which allowed us to unreserve warrants exercisable into
27,165,413 shares of our common stock until the earlier of an increase in the
authorized number of common shares or April 30, 2005. In exchange for this
agreement, we agreed to extend their warrants by two years.

Common Stock

During the nine months ended February 28, 2005, 796,000 shares of common stock
were issued to a vendor in satisfaction of $58,800 of trade accounts payable and
125,000 and 4,500,000 shares of one-year restricted common stock were sold to
one individual investor and one company at a price of $0.026 and $0.10 per share
for a total of $453,250.


                                       12
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH RESPECT TO OUR
FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CURRENTLY ANTICIPATED AND FROM HISTORICAL RESULTS DEPENDING UPON A VARIETY OF
FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE SUB-HEADING, "RISK FACTORS."
SEE ALSO OUR ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED MAY 31, 2004.

Overview

      Patriot Scientific Corporation ("the Company") develops, markets, and
sells microprocessors, the technology behind the microprocessors, and
complementary products which enable computers and other data processing devices
to communicate. These products can be used to connect to the Internet or other
telecommunication networks. The microprocessor technology product line accounted
for approximately 18% of our revenue in fiscal 2004. The balance of our fiscal
2004 revenue was generated from a communications product line that, subsequent
to a completed last buy program, is now generating minimal revenue. We also have
a patent for special radar technology which, if fully developed, may allow a
potential licensee to penetrate the ground or structures to find various
objects. We also owned gas plasma antenna technology which we sold for $250,000
in August 1999. In fiscal 2004 we received a final royalty payment of $75,500
from the sale of the gas plasma technology. Our strategy is to exploit our
microprocessor technologies through product sales, licensing, strategic
alliances and to litigate against those who may be infringing on our patents.


      Management's discussion and analysis of results of operations and
financial condition are based upon the Company's financial statements. These
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America. These principles require management to
make certain estimates, judgments and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, we evaluate our
estimates based on historical experience and various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

Critical Accounting Policies and Estimates

      We have identified nine accounting principles that we believe are key to
an understanding of our financial statements. These important accounting
policies require management's most difficult, subjective judgments.


                                       13
<PAGE>

1.    Short-term investments

      We place our temporary excess cash in short-term investments. These
investments have maturity dates of less than one year, are placed with reputable
financial institutions and include high-grade commercial paper and certificates
of deposits.

2.    Marketable Securities

      As part of the sale of our gas plasma antenna technology we received
restricted securities in a company that are traded on the OTC bulletin board.
The securities can be traded under Rule 144 after July 2004. We reflect the
value of those securities based on the closing price as of the end of our
reporting period which was $8,146 at February 28, 2005. This amount has been
included in short-term investments. Any unrealized gain or loss between
reporting periods is reflected in our consolidated statement of operations as
non-operating income or loss.

3.    Property, Equipment and Depreciation

      Property and equipment are stated at cost. Depreciation is computed over
the estimated useful life of three to five years using the straight-line method.
Long-lived assets and certain identifiable intangibles to be held and used by
the Company are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. We continuously evaluate the recoverability of our long-lived
assets based on estimated future cash flows and the estimated fair value of such
long-lived assets, and provide for impairment if such undiscounted cash flows
are insufficient to recover the carrying amount of the long-lived asset.

4.    Patents and Trademarks

      Patents and trademarks are carried at cost less accumulated amortization
and are amortized over their estimated useful lives of four years. The carrying
value of patents and trademarks is periodically reviewed and impairments, if
any, are recognized when the expected future benefit to be derived from an
individual intangible asset is less than its carrying value.

5.    Revenue Recognition

      We recognize revenue on the shipment to our customers of communication
products, microprocessor integrated chips and evaluation boards. We also derive
revenue from fees for the transfer of proven and reusable intellectual property
components or the performance of engineering services. We enter into licensing
agreements that will provide licensees the right to incorporate our intellectual
property components in their products with terms and conditions that will vary
by licensee. Generally, these payments will include a nonrefundable technology
license fee, which will be payable upon the transfer of intellectual property,
or a nonrefundable engineering service fee, which generally will be payable upon
achievement of defined milestones. In addition, we anticipate these agreements
will include royalty payments, which will be payable upon sale of a licensee's
product, and maintenance and limited support fees. We will classify all revenue
that involves the future sale of a licensee's products as royalty revenue.
Royalty revenue will be generally recognized in the quarter in which a report is
received from a licensee detailing the shipments of products incorporating our
intellectual property components (i.e., in the quarter following the sale of
licensed product by the licensee). We will classify all revenue that does not
involve the future sale of a licensee's products, primarily license fees and
engineering service fees and maintenance and support fees, as contract revenue.
License fees will be recognized upon the execution of the license agreement and
transfer of intellectual property, provided no further significant performance
obligations exist and collectibility is deemed probable. Fees related to
engineering services contracts, which will be performed on a best efforts basis
and for which we will receive periodic milestone payments, will be recognized as
revenue over the estimated development period, using a cost-based percentage of
completion method. Annual maintenance and support fees, which will be renewable
by the licensee, will be classified as contract revenue and will be amortized
over the period of support, generally 12 months.


6.    Research and Development Costs Research and development costs are expensed
      as incurred.


                                       14
<PAGE>

7.    Stock Options

      The Company applies Accounting Principles Board ("APB") Opinion 25,
"Accounting for Stock Issued to Employees," and related Interpretations in
accounting for all stock option plans. Under APB Opinion 25, compensation cost
has been recognized for stock options granted to employees when the option price
is less than the market price of the underlying common stock on the date of
grant.

      SFAS No. 123, "Accounting for Stock-Based Compensation," and SFAS No. 148,
"Accounting for Stock-Based Compensation-Transition and disclosure," require the
Company to provide pro forma information regarding net income as if compensation
cost for the Company's stock option plans had been determined in accordance with
the fair value based method prescribed in SFAS No. 123. To provide the required
pro forma information, the Company estimates the fair value of each stock option
at the grant date by using the Black-Scholes option-pricing model. SFAS No. 148
also provides for alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee compensation.
The Company has elected to continue to account for stock based compensation
under APB No. 25.


      The Company applies SFAS No. 123 in valuing options granted to consultants
and estimates the fair value of such options using the Black-Scholes
option-pricing model. The fair value is recorded as consulting expense as
services are provided. Options granted to consultants for which vesting is
contingent based on future performance are measured at their then current fair
value at each period end, until vested.

8.    Income Taxes

      Deferred income taxes are provided for by recognizing temporary
differences in certain income and expense items for financial and tax reporting
purposes. Deferred tax assets consist primarily of income tax benefits from net
operating loss carry-forwards. A valuation allowance has been recorded to fully
offset the deferred tax asset as it is more likely than not that the assets will
not be utilized. The valuation allowance decreased approximately $345,000 for
the nine months ended February 28, 2005, from $14,732,000 at May 31, 2004 to
$14,387,000 at February 28, 2005.

9.    Debt Discount

      We issue warrants as part of our convertible debentures and other
financings. We value the warrants using the Black-Scholes pricing model based on
expected fair value at issuance and the estimated fair value is recorded as debt
discount. The debt discount is amortized to non-cash interest over the life of
the debenture assuming the debenture will be held to maturity which is normally
2 years. If the debenture is converted to common stock previous to its maturity
date, any debt discount not previously amortized is expensed to non-cash
interest.



Results of Operations

Three months ended February 28, 2005 compared to three months ended February 29,
2004.


                                       15
<PAGE>

Selected Financial Information

<TABLE>
<CAPTION>
                                               Three Months Ended
                                                                            Increase
                                          2/28/2005       2/29/2004        (Decrease)               %
<S>                                     <C>              <C>              <C>                   <C>
Statements of Operations
  Revenue                               $  2,951,850     $      3,384     $  2,948,466          87129.6%
  Gross profit                             2,951,850            3,384        2,948,466          87129.6%
    % of revenue                                 100%             100%               0%             0.0%
  Operating expenses
    Research and development                  53,955          154,770         (100,815)           -65.1%
    General and administrative             1,085,575          265,325          820,250            309.1%
 Total operating expenses                  1,139,530          420,095          719,435            171.3%
 Gain (loss) on marketable securities         (2,281)         (27,357)          25,076            -91.7%
 Interest expense                         (1,160,972)        (531,826)         629,146            118.3%
 Other income                                  9,800               --            9,800               NM
 Net income (loss)                           658,867         (975,894)      (1,634,761)          -167.5%
 Net loss per share basic and diluted   $         --     $      (0.01)    $       0.01            100.0%
</TABLE>

Revenues

      Our significant revenue increase of $2,948,466 was the result of entering
into two licenses with a single customer- one for our Ignite microprocessor and
the second for our patent portfolio of microprocessor technologies. These
licenses were the first major revenue derived from the microprocessor
technologies and we are uncertain as to when and for how much additional
follow-on licenses will be sold. The Ignite license contains provisions for
royalties based on the customers delivery of items making use of this
technology. We can not be certain of the amount or timing of future royalties
related to that agreement. We continue to receive minor follow-on orders for the
communication products that have reached the end of their life cycle. We no
longer market these products but do fill follow-on orders when economically
feasible. We anticipate that future revenue will be derived from continued
successful microprocessor technology efforts in the form of licensing and
royalties and the successful collection of patent infringement proceeds from
litigation and settlement.

Research and Development

<TABLE>
<CAPTION>
                                                   Three Months Ended
                                                                             Increase
                                              2/28/2005      2/29/2004      (Decrease)              %
<S>                                         <C>            <C>             <C>                    <C>
Research and Development
  Personnel (including consultants)         $     47,573   $    132,667    $    (85,094)         -64.1%
  Facilities                                       6,284         14,495          (8,211)         -56.6%
  Other research and development expenses             98          7,608          (7,510)         -98.7%
                                            ------------   ------------    ------------
                                            $     53,955   $    154,770    $   (100,815)         -65.1%
</TABLE>

      The $100,815, or 65.1%, reduction in research and development was
primarily attributed to a reduction in personnel. In addition, there has been no


                                       16
<PAGE>

significant increase in depreciable equipment related to research and
development for the past three years resulting in a lower depreciation amount
charged to facilities expense. We anticipate an increase in research and
development to upgrade the tools which are used by our potential customers to
implement the microprocessor technology and to expand our offerings on which our
microprocessor can run to include additional operating systems.

General and Administrative

<TABLE>
<CAPTION>
                                                  Three Months Ended
                                                                              Increase
                                                2/28/2005      2/29/2004     (Decrease)               %
<S>                                           <C>            <C>            <C>                       <C>
General and Administrative
  Personnel (including consultants)           $    136,258   $    131,756   $      4,502              3.4%
  Professional fees                                773,114         19,562        753,552           3852.1%
  Facilities                                        71,084         81,132        (10,048)           -12.4%
  Other general and administrative expenses        105,119         32,875         72,244            219.8%
                                              ------------   ------------   ------------
                                              $  1,085,575   $    265,325   $    820,250            309.1%
</TABLE>

      The $820,250, or 309.1%, increase in general and administrative expenses
was attributed to an increase in costs related to the patent portfolio license
revenue which included contingency professional fees ($554,000) and indirect
costs to support our patent enforcement activities ($113,000) coupled with an
increase in costs associated with legal and accounting including registration
statements and auditing of our financial statements ($87,000). Other general and
administrative expenses increased as a result of licenses and dues increasing
($17,000) and an increase in shareholder related expenses ($20,000) as a result
of preparing for an annual meeting which is scheduled for the fourth fiscal
quarter of FY2005 and retaining a new public relations firm. We anticipate
general and administrative expenses to significantly vary as license revenue and
patent litigation proceeds are recognized.

Other income (expense)

<TABLE>
<CAPTION>
                                                   Three Months Ended

                                                2/28/2005       2/29/2004        Change                %
<S>                                           <C>             <C>                   <C>                <C>
Other income (expense)
  Gain (loss) on marketable securities        $     (2,281)   $    (27,357)         25,076            -91.7%
  Other income                                       9,800              --           9,800               NM
  Interest expense, paid in cash or accrued        (30,561)        (28,144)         (2,417)             8.6%
  Non-cash interest expense                     (1,130,411)       (503,682)       (626,729)           124.4%
                                              ------------    ------------    ------------
                                              $ (1,153,453)   $   (559,183)   $   (594,270)           106.3%
</TABLE>

      The increase in other expenses, net of other income, of $594,270, or
106.3%, was primarily attributable to the non-cash interest expense recognized
on the amortization and cancellation of debt discounts related to our
convertible debentures and the recognition of expense on the issuance of
warrants related to our financings ($627,000) partially offset by the reduction
of a loss on marketable securities which were received as partial consideration
for the sale of our gas plasma antenna technology ($25,000). We anticipate that
the non-cash interest expense will decrease over the balance of fiscal 2005 due
to debt discount remaining on our books as of February 28, 2005 ($606,000) which
will be recognized as expense via amortization over 24 months if the underlying
debentures are not converted or written off in their entirety on the conversion
of the underlying debentures.


                                       17
<PAGE>

Nine months ended February 28, 2005 compared to nine months ended February 29,
2004.

Selected Financial Information

<TABLE>
<CAPTION>
                                               Nine Months Ended
                                                                            Increase
                                          2/28/2005        2/29/2004       (Decrease)              %
<S>                                     <C>              <C>              <C>                    <C>
Statements of Operations
  Revenue                               $  2,973,148     $     66,584     $  2,906,564           4365.3%
  Cost of revenue                                 --           10,472          (10,472)              NM
    % of revenue                                   0%              16%            -16%               NM
  Gross profit                             2,973,148           56,112        2,917,036           5198.6%
    % of revenue                                 100%              84%              16%            18.7%
  Operating expenses
    Research and development                 236,296          416,283         (179,987)           -43.2%
    General and administrative             1,858,528          937,927          920,601             98.2%
 Total operating expenses                  2,094,824        1,354,210          740,614             54.7%
 Gain (loss) on marketable securities        (14,025)         (50,591)          36,566            -72.3%
 Interest expense                         (2,442,101)      (1,728,042)         714,059             41.3%
 Gain on sale of technology                       --           75,500          (75,500)              NM
 Other income                                 57,077               --           57,077               NM
 Net loss                                 (1,520,725)      (3,001,231)      (1,480,506)           -49.3%
 Net loss per share basic and diluted   $      (0.01)    $      (0.02)    $      (0.01)           -50.0%
</TABLE>

Revenues

      Our significant revenue increase of $2,906,564 was the result of entering
into two licenses with a single customer- one for our Ignite microprocessor and
the second for our patent portfolio of microprocessor technologies. These
licenses were the first major revenue derived from the microprocessor
technologies and we are uncertain as to when and for how much additional
follow-on licenses will be sold. The Ignite license contains provisions for
royalties based on the customers delivery of items making use of this
technology. We can not be certain of the amount or timing of future royalties
related to that agreement. We continue to receive minor follow-on orders for the
communication products that have reached the end of their life cycle. We no
longer market these products but do fill follow-on orders when economically
feasible. We anticipate that future revenue will be derived from continued
successful microprocessor technology efforts in the form of licensing and
royalties and the successful collection of patent infringement proceeds from
litigation and settlement.

Cost of Revenue

      Our cost of revenue decrease of $10,472, or 100%, was the result of our
fully reserving our inventory in fiscal 2002 and, therefore, minor amounts of
existing inventory can be resold at a zero cost basis. However, in order to
fulfill the minor follow-on orders for communication products, we normally must
procure a portion of additional components and assemblies.


                                       18
<PAGE>

Research and Development

<TABLE>
<CAPTION>
                                                  Nine Months Ended
                                                                             Increase
                                              2/28/2005      2/29/2004      (Decrease)             %
<S>                                         <C>            <C>             <C>                    <C>
Research and Development
  Personnel (including consultants)         $    218,820   $    365,358    $   (146,538)         -40.1%
  Facilities                                      14,344         42,549         (28,205)         -66.3%
  Other research and development expenses          3,132          8,376          (5,244)         -62.6%
                                            ------------   ------------    ------------
                                            $    236,296   $    416,283    $   (179,987)         -43.2%
</TABLE>

      The $179,987, or 43.2%, reduction in research and development was
attributed to a reduction in personnel. In addition, there has been no
significant increase in depreciable equipment related to research and
development for the past three years resulting in a lower depreciation amount
charged to facilities expense. We anticipate an increase in research and
development to upgrade the tools which are used by our potential customers to
implement the microprocessor technology and to expand our offerings on which our
microprocessor can run to include additional operating systems.

General and Administrative

<TABLE>
<CAPTION>
                                                   Nine Months Ended
                                                                              Increase
                                                2/28/2005      2/29/2004     (Decrease)               %
<S>                                           <C>            <C>            <C>                      <C>
General and Administrative
  Personnel (including consultants)           $    375,660   $    390,824   $    (15,164)            -3.9%
  Professional fees                              1,020,965        149,317        871,648            583.8%
  Facilities                                       216,838        228,253        (11,415)            -5.0%
  Other general and administrative expenses        245,065        169,533         75,532             44.6%
                                              ------------   ------------   ------------
                                              $  1,858,528   $    937,927   $    920,601             98.2%
</TABLE>

      The $920,601, or 98.2%, increase in general and administrative expenses
was attributed to an increase in costs related to the patent portfolio license
revenue which included contingency professional fees ($554,000) and indirect
costs to support our patent enforcement activities ($239,000) coupled with an
increase in costs associated with legal and accounting including registration
statements and auditing of our financial statements ($78,000).

Other general and administrative expenses increased as a result of licenses and
dues increasing ($34,000) offset by a decrease in shareholder related expenses
($35,000) as a result of the annual shareholders meeting was held in the second
quarter of the previous fiscal year and is scheduled for the fourth fiscal
quarter of FY2005. We anticipate general and administrative expenses to
significantly vary as contract revenue and patent litigation proceeds are
recognized.

Other income (expense)

<TABLE>
<CAPTION>
                                                    Nine Months Ended

                                                2/28/2005       2/29/2004        Change                %
<S>                                           <C>             <C>                   <C>               <C>
Other income (expense)
  Gain (loss) on marketable securities        $    (14,025)   $    (50,591)         36,566            -72.3%
  Other income                                      57,077              --          57,077               NM
  Gain on sale of technology                            --          75,500         (75,500)              NM
  Interest expense, paid in cash or accrued       (119,126)       (105,776)        (13,350)            12.6%
  Non-cash interest expense                     (2,322,975)     (1,622,266)       (700,709)            43.2%
                                              ------------    ------------    ------------
                                              $ (2,399,049)   $ (1,703,133)   $   (695,916)            40.9%
</TABLE>


                                       19
<PAGE>

      The increase in other expenses, net of other income, of $695,916, or
40.9%, was primarily attributable to the non-cash interest expense recognized on
the amortization and cancellation of debt discounts related to our convertible
debentures and the recognition of expense on the issuance of warrants related to
our financings ($701,000) partially offset by the reduction of a loss on
marketable securities which were received as partial consideration for the sale
of our gas plasma antenna technology ($37,000). Other income included $48,000 of
a negotiated termination on a sublease of our facility. We anticipate that the
non-cash interest expense will decrease over the balance of fiscal 2005 due to
debt discount remaining on our books as of February 28, 2005 ($606,000) which
will be recognized as expense via amortization over 24 months if the underlying
debentures are not converted or written off in their entirety on the conversion
of the underlying debentures.

Capital Resources


                                       20
<PAGE>

Working Capital

                                                        Increase
                         2/28/2005      5/31/2004      (Decrease)

Current assets         $  3,932,666   $    701,879   $  3,230,787
Current liabilities         868,865        548,042        320,823
                       ------------   ------------   ------------
  Working capital      $  3,063,801   $    153,837   $  2,909,964
                       ============   ============   ============

Long-term debt         $    374,371   $    230,007   $    144,364
                       ============   ============   ============

Stockholders' equity   $  2,825,505   $    148,179   $  2,677,326
                       ============   ============   ============


Statements of Cash Flows Select Information

<TABLE>
<CAPTION>
                                                            Nine Months Ended            Increase
                                                         2/28/2005       2/29/2004      (Decrease)
<S>                                                    <C>             <C>             <C>
Net cash provided (used) by:
  Operating activities                                 $ (1,045,433)   $ (1,364,939)   $    319,506
  Investing activities                                 $         --    $    (14,695)   $     14,695
  Financing activities                                 $  1,543,821    $  1,587,153    $    (43,332)


Balance Sheet Select Information

                                                                                         Increase
                                                         2/28/2005       5/31/2004      (Decrease)

Cash and short term investments                        $  1,062,559    $    378,586    $    683,973
                                                       ============    ============    ============

Licenses receivable                                    $  2,750,000    $         --    $  2,750,000
                                                       ============    ============    ============

Prepaid expenses                                       $    119,684    $    322,068    $   (202,384)
                                                       ============    ============    ============

Accounts payable and accrued expenses                  $    210,782    $    294,702    $    (83,920)
                                                       ============    ============    ============

Contingency fee and deferred maintenance               $    653,600    $         --    $    653,600
                                                       ============    ============    ============
</TABLE>

         The increase in working capital of $2,909,964 and stockholders' equity
of $2,677,326 was attributable to the two licenses we entered into with one
major customer during the nine months ended February 28, 2005.

Liquidity

We estimate our current cash requirements to sustain our operations for the next
twelve months through February 28, 2006 to be $1.8 million which will be met
from internal sources including the cash and short term investments of
$1,062,559 and the licenses receivable of $2,750,000.


                                       21
<PAGE>

New Accounting Pronouncements

      In December 2004, the FASB issued Statement of Financial Accounting
Standards No. 123R ("SFAS123R"), Share-Based Payment, an amendment of FASB
Statements Nos. 123 and 95. SFAS 123R eliminates the ability to account for
share-based compensation transaction using APB 25 and will require that such
transactions be accounted for using a fair-value-based method and recognized as
expenses in the statement of operations. SFAS 123R allows the use of a modified
version of prospective application, which requires that the fair value of new
awards granted after the effective date of SFAS 123R, plus unvested awards at
the date of adoption, be expensed over the applicable vesting period. The
provisions of SFAS 123R will be effective for interim or annual reporting
periods beginning after December 15, 2005 for the companies that file as small
business issuers. The Company is currently evaluating the impact the
implementation guidance and revisions included in SFAS 123R will have on its
consolidated financial statements.

Risk Factors

      You should consider the following discussion of risks as well as other
information regarding our common stock. The risks and uncertainties described
below are not the only ones. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial also may impair our business
operations. If any of the following risks actually occur, our business could be
harmed.

Related to our Business

Patriot's Microprocessor Technologies Have Resulted In Limited Revenues and
Several Related Products Are Still in the Development Stage

      We are in the development stage on several components of our
microprocessor technology product line, and the products which have been
commercialized have resulted in limited revenues. Previous to receiving two
licensing agreements in February 2005, our other product lines did not generate
enough revenue to support our company. Therefore, we had and may in the future
have limited financial results upon which you may judge our potential. We may
not be able to continue to report quarterly profits. We have experienced in the
past and may experience in the future many of the problems, delays and expenses
encountered by any early stage business, many of which are beyond our control.
These include:

      o     substantial delays and expenses related to testing and development
            of our new products,
      o     production and marketing problems encountered in connection with our
            new and existing products and technologies,
      o     competition from larger and more established companies, and
      o     lack of market acceptance of our new products and technologies.

Patriot Has a History of Losses, May Have Future Losses and May Not Achieve or
Sustain Annual Profitability

      We may incur operating losses in the future. Sales of our products may
never consistently generate sufficient revenues to fund our continuing
operations. We may never generate consistent positive cash flow or continue to
attain profitability. To date, we have incurred significant losses. As of
February 28, 2005 and May 31, 2004, our accumulated deficits were $51,364,743
and $49,844,018. For the fiscal years ended May 31, 2004 and 2003, we incurred
net losses of $4,149,978 and $3,888,299. These losses have resulted primarily
from:


                                       22
<PAGE>

      o     significant costs associated with the development of our products,
      o     costs associated with the marketing of those products, and
      o     the interest charges and expenses related to equity and debt
            financings.


Patriot's Limited Sales and Marketing Experience Has Affected Our Revenue

      Our operating results depend to a large extent on our ability to
successfully market and sell our products. We currently have limited marketing
capabilities and need to hire additional sales and marketing personnel. In part
as a consequence of our limited resources, we may not be able to recruit, train,
or retain qualified personnel to sell and market our products and may not be
able to develop a successful sales and marketing strategy. We also have very
limited marketing experience. There can be no assurance that any marketing
efforts undertaken by us will be successful or will result in any significant
continuing sales of our products.

Patriot May Experience Difficulties in the Introduction of New Products That
Could Result in Patriot having to Incur Significant Unexpected Expenses or Delay
the Launch of New Products

      Our technologies and products are in various stages of development. Our
development stage products may not be completed in time to allow production or
marketing due to the inherent risks of new product and technology development,
limitations on financing, competition, obsolescence, loss of key personnel and
other factors. Although we may license some of our technology at its current
stage of development, there can be no assurance that we will be able to do so or
that any revenues generated from licensing would be sufficient to support
operations at their current level. Unanticipated technical obstacles can arise
at any time and result in lengthy and costly delays or in a determination that
further development is not feasible. Discovery of microprocessor design errors,
frequent in the industry prior to and after production, could result in lengthy
and costly redesign, fabrication (production) and testing in an industry where
new technology rapidly eclipses prior innovations.

      The development of our technologies has taken longer than anticipated and
could be additionally delayed. Therefore, there can be no assurance of timely
completion and introduction of improved products on a cost-effective basis, or
that such products, if introduced, will achieve market acceptance such that, in
combination with existing products, they will sustain us or allow us to achieve
profitable operations.

Related to Our Industry

Intense Competition in the Market for Microprocessors Could Prevent Patriot From
Increasing or Sustaining Revenue and Prevent Patriot From Achieving or
Sustaining Annual Profitability

      Our products could be rendered noncompetitive or obsolete. Technological
competition from larger and more established microprocessor companies is
significant and expected to increase. Most of the companies with which we
compete and expect to compete have far greater capital resources and more
significant research and development staffs, marketing and distribution programs
and facilities, and many of them have substantially greater experience in the
production and marketing of products. Staff cut backs by us, which have been
occasioned by financial constraints, have increased the differences in capacity
between us and certain of our competitors. Our ability to compete effectively
may be adversely affected by the ability of these competitors to devote greater
resources to the sale and marketing of their products than we can. In addition,
one or more of our competitors may succeed or may already have succeeded in
developing technologies and products that are more effective than any of those
we currently offer or are developing.

Patriot's Limited Ability to Protect Its Intellectual Property May Inadvertently
Adversely Affect Its Ability to Compete

      A successful challenge to our ownership of our technology could materially
damage our business prospects. Our technologies may infringe upon the
proprietary rights of others. Licenses required by us from others may not be
available on commercially reasonable terms, if at all. We rely on a combination


                                       23
<PAGE>

of patents, trademarks, copyrights, trade secret laws, confidentiality
procedures and licensing arrangements to protect our intellectual property
rights. We currently have eight U.S., one European and one Japanese patents
issued. Any issued patent may be challenged and invalidated. Patents may not
issue from any of our pending applications. Any claims allowed from existing or
pending patents may not be of sufficient scope or strength to provide
significant protection for our products. Patents may not be issued in all
countries where our products can be sold so as to provide meaningful protection
or any commercial advantage to us. Our competitors may also be able to design
around our patents.

      Vigorous protection and pursuit of intellectual property rights or
positions characterize the fiercely competitive semiconductor industry, which
has resulted in significant and often protracted and expensive litigation.
Therefore, our competitors may assert that our technologies or products infringe
on their patents or proprietary rights. Problems with patents or other rights
could increase the cost of our products or delay or preclude new product
development and commercialization by us. If infringement claims against us are
deemed valid, we may not be able to obtain appropriate licenses on acceptable
terms or at all. Litigation could be costly and time-consuming but may be
necessary to protect our future patent and/or technology license positions or to
defend against infringement claims. Also, we have initiated legal actions
against companies we believe are infringing on our patents. They in turn have
counter sued and are asking for declaratory relief that their products do not
infringe on our patents. See Legal Proceedings.

      We did not develop the technology which is the basis for our products.
This technology, which was originally known as the ShBoom technology, was
acquired through a series of agreements from one of two persons who are shown as
co- inventors on certain patents, Russell Fish. Charles Moore, the other
identified co-inventor, has since assigned his interest in the ShBoom technology
to Daniel Leckrone and Technology Properties Limited. We have filed a legal
action against Charles Moore, Daniel Leckrone and Technology Properties Limited
to correct and clarify the inventorship, and therefore ownership, of divisions
of the original ShBoom technology. We are contending that Russell Fish was the
sole inventor of the technology covered by three subsequently issued patents,
that Charles Moore was the sole inventor of technology covered by three
subsequently issued patents and that the two jointly are the inventors of
technology covered by one subsequently issued patent. In order to prosecute
patent infringement cases, all owners need to participate in and agree to
proceed with the actions. Therefore, if our action against Charles Moore, Daniel
Leckrone and Technology Properties Limited is not successful, our ability to
prosecute patent infringement cases with regard to one of the patents we contend
was invented by Russell Fish, and the resultant monetary damages which may be
awarded as a result of those infringements, may be diluted, if we are able to
proceed with our patent infringement cases at all. Technology Properties Limited
has exploited and may continue to exploit the technology, independently of our
rights to do so, by selling at least one license to a potential infringer. We
are contending that Technology Properties Limited does not own at least three of
the patents they are licensing. There can be no assurance that we will prevail
in the patent litigation efforts against Charles Moore, Daniel Leckrone and
Technology Properties Limited and, if we are not successful, the value of our
patent portfolio would be diminished. See Legal Proceedings.

Patriot May Face Interruption Of Production And Services Due To Increased
Security Measures In Response To Terrorism

      Our business depends on the free flow of products and services through the
channels of commerce. Recently, in response to terrorists' activities and
threats aimed at the United States, transportation, mail, financial and other
services have been slowed or at certain times stopped altogether. Further delays
or stoppages in transportation, mail, financial or other services could have a
material adverse effect on our business, results of operations and financial
condition. Furthermore, we may experience an increase in operating costs, such
as costs for transportation, insurance and security, as a result of these
activities and potential activities. We may also experience delays in receiving
payments from payers that have been affected by terrorist activities and
potential activities. The U.S. economy in general is being adversely affected by
terrorist activities and potential activities, and any economic downturn could
adversely impact our results of operations, impair our ability to raise capital
or otherwise adversely affect our ability to grow our business.

Related to Our Debt and Equity Offerings and Share Price

If a Large Number of Patriot Shares Are Sold All at Once or In Blocks, The
Market Price of Our Shares Would Most Likely Decline


                                       24
<PAGE>

      Our debenture holders are are not restricted in the price at which they
can sell common stock acquired through the conversion of the debentures or
exercise of warrants issued with the debentures. Shares sold at a price below
the current market price at which the common stock is trading may cause the
market price to decline. The shares of common stock that are issuable on the
conversion of debentures or exercise of the warrants issued concurrently with
the debentures represent a significant portion of our outstanding shares. Should
the price of our stock drop, the number of common shares issuable on the
conversion of these debentures would be subject to reset provisions which would
substantially increase the number of common shares to be issued. To the extent
the debenture holders, and shareholders of currently outstanding common stock,
convert and sell their common stock, the common stock price may decrease due to
the additional shares in the market. This could allow remaining debenture
holders to convert their convertible debentures into even greater amounts of
common stock, the sales of which would further depress the stock price.
Accordingly, we do not know the exact number of shares that will be issued on
the conversions of the debentures.

      In addition, at the option of the debenture holder, interest accruing at
the annual rate of 8% can be converted into shares of our common stock at the
same time and at the same conversion price as the principal portion of the
debenture. Should the debenture holders accumulate interest, a larger number of
shares would be issued on conversion; and if the price of the common stock
declines, the reset provisions which allow greater amounts of shares to be
issued would also be in effect for the interest portion of the debenture.

The Market for Patriot's Stock is Subject to Rules Relating to Low-Priced Stock
Which Limits Our Ability to Attract Competitive Funding

      Our common stock is currently listed for trading in the NASD
Over-The-Counter Bulletin Board Market and is subject to the "penny stock rules"
adopted pursuant to Section 15 (g) of the Securities Exchange Act of 1934, as
amended. In general, the penny stock rules apply to non-NASDAQ or non-national
stock exchange companies whose common stock trades at less than $5.00 per share
or which have tangible net worth of less than $5,000,000 ($2,000,000 if the
company has been operating for three or more years). Such rules require, among
other things, that brokers who trade "penny stock" to persons other than
"established customers" complete certain documentation, make suitability
inquiries of investors and provide investors with certain information concerning
trading in the security, including a risk disclosure document, quote
information, broker's commission information and rights and remedies available
to investors in penny stocks. Many brokers have decided not to trade "penny
stock" because of the requirements of the penny stock rules, and as a result,
the number of broker-dealers willing to act as market makers in such securities
is limited. The "penny stock rules," therefore, may have an adverse impact on
the market for our common stock and may effect our ability to attract
competitive funding.

Our Share Price Could Be Lowered as a Result of Short Sales

      The downward pressure on the price of our common stock as the debenture
holders convert and sell material amounts of common stock could encourage short
sales by the debenture holders or others. When an investor sells stock that he
does not own, it is known as a short sale. The seller, anticipating that the
price of the stock will go down, will buy the stock at a later date. If the
price of the stock goes down, the seller will profit to the extent of the
difference between what he originally sold it for less what he later had to buy
it for. Short sales enable the seller to profit in a down market. Short sales
could place significant downward pressure on the price of our common stock.

On a Significant Drop in the Price of Our Stock, We Could be Subject to a Change
in Control

      There is a possibility that a significant number of shares, the exact
number of which we do not know, of our common stock could be issued on the
conversion of the debentures. This possibly could result in a change in control
of our company. Such a change in control could have a material adverse effect on
our operations and business plans. We are unable to determine the impact such a
change in control could have on our company.


Our Shareholders Will Need to Increase the Authorized Number of Shares


                                       25
<PAGE>

      We currently have 400,000,000 shares of common stock authorized for
issuance. The number of common shares currently outstanding plus the number of
common shares reserved for issuance on the conversion of debenture principal and
accrued interest, and exercise of warrants and options as of April 10, 2005 is
as follows:

Common stock currently outstanding    275,776,098
Reserved for issuance
       Stock option plans               7,998,000
       Warrants                        80,102,819
       Convertible debentures          31,555,623
                                     ------------
Common stock fully diluted            395,432,540
                                     ------------

In addition, in November 2004 through February 2005, we negotiated with seven
investors a lock up of warrants exercisable for up to 27,165,413 shares of our
common stock. These shares are not included in the common stock fully diluted
amount of 395,432,540 common shares reflected above. In order to provide for
reservation of the locked up warrants and to accomplish other corporate
objectives, we will need to obtain the approval of shareholders owning a
majority of our common stock to increase the number of authorized shares. We
have scheduled an annual shareholders' meeting during the second quarter of this
calendar year at which time we will propose an increase in authorized shares.
There can be no assurance that the shareholders will approve the proposal.
Should the shareholders not approve the proposal and we were unable to
internally fund our operations, we would need to cease doing business and/or
liquidate or sell our assets.

Item 3.  Controls and Procedures

Our President and Chief Executive Officer and our Executive Vice President and
Chief Financial Officer conducted an evaluation of our disclosure controls and
procedures (as defined in Securities Exchange Act Rules 13a-14 and 15d-14) as of
January 1, 2005. Based on their evaluation, they concluded that our disclosure
controls and procedures are effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms. There have been no significant changes in our internal
controls or in other factors that could significantly affect these controls
subsequent to the date of this evaluation.

PART II.       OTHER INFORMATION

Item 1.  Legal Proceedings

In December 2003 we filed several lawsuits in United States District Courts
against companies we contend are infringing on our patent number 5,809,336
entitled "High Performance Microprocessor Having Variable Speed Clock." The
defendants and suits are as follows:

<TABLE>
<CAPTION>
Defendant                           U.S. District Court                         Case Number
---------                           -------------------                         -----------
<S>                                 <C>                                         <C>
Sony Corporation of America         Southern District of New York               03CV10142

Fujitsu                             Northern District of California             C035787

Toshiba America, Inc.               Southern District of New York               03CV10180

NEC USA, Inc.                       Eastern District of New York                CV036432

Matsushita                          District of New Jersey                      03CV06210
</TABLE>


                                       26
<PAGE>

      We are requesting the courts to enjoin the defendants from making use of
our patent and are requesting damages for past infringements. In February, with
the consent of the defendants and ourselves, the above five actions were
consolidated into the Fujitsu action in the Northern District of California
under case number C035787.

      In February 2004, Intel Corporation filed a lawsuit against us in the
United States District Court- Northern District of California, case number
C040439, in which they are requesting a declaratory judgment that their
microprocessors, used by the defendants in our consolidated suit, do not
infringe our patent. We filed a counterclaim against Intel contending that they
also are infringing on our patent, and Intel asserted an affirmative defense
that our 5,809,336 patent is invalid.

      Also in February 2004, we filed a lawsuit in the United States District
Court- Northern District of California, case number C040618, against Charles H.
Moore, Technology Properties Limited, and Daniel E. Leckrone. Charles Moore, a
co-inventor of the basic ShBoom technology, is listed as an inventor on several
of the issued patents which were divided from the basic ShBoom technology. Moore
transferred his interest in the ShBoom technology to Daniel Leckrone and
Technology Properties Limited. We are contending that Russell Fish, the other
co-inventor from whom we obtained ownership interests in the ShBoom technology,
is the sole inventor of certain of the issued patents. We are requesting the
court to declare inventorship and ownership on each of our granted patents
related to the suits discussed above and other unasserted claims of infringement
Patriot believes it has. In March 2005, Judge Fogel issued an order
disqualifying our counsel and prohibiting us from using a key witness in the
Moore suit and denied hearing a request for reconsideration of his order. We are
in the process of interviewing alternative counsel to proceed forward with the
Moore suit.

      The Intel lawsuit has been stayed pending the results of the Moore
lawsuit.

Item 2. Changes in Securities

(a) During the three months ended February 28, 2005, we offered and/or sold the
following common stock and warrants, either for cash or in consideration of
services rendered as indicated below, without registration under the Securities
Act of 1933, as amended, and exemption for such sales from registration under
the Act is claimed in reliance upon the exemption provided by Section 4(2)
thereof on the basis that such offers and sales were transactions not involving
any public offering. Appropriate precautions against transfer have been taken,
including the placing of a restrictive legend on all certificates evidencing
such securities. All such sales were effected without the aid of underwriters,
and no sales commissions were paid.


                                       27
<PAGE>

<TABLE>
<CAPTION>
Common Stock
                                                                             Aggregate       Purchase Price Per
              Name                   Date of Sale      Number of Shares    Purchase Price           Share
              ----                   ------------      ----------------    --------------    ------------------
<S>                               <C>                  <C>                 <C>               <C>
Advanced Micro Devices, Inc.      February 22, 2005           4,500,000    $      450,000    $0.100  Cash
</TABLE>

<TABLE>
<CAPTION>
Warrant
                                                                          Initial Exercise               Expiration
         Warrant Holder            Date of Issuance    Number of Shares   Price Per Share                   Date
         --------------            ----------------   ------------------  ---------------             ----------------
<S>                                <C>                <C>                 <C>                         <C>
Stan Caplan                        December 9, 2004              806,452          $0.0310             December 9, 2011
Swartz Private Equity              January 1, 2005             4,674,755          $0.0761              January 1, 2012
Daniel Nunes                       January 17, 2005              403,226          $0.0310             January 17, 2012
</TABLE>

Item 6. Exhibits and Reports on Form 8-K

(a)   Exhibits -

      31.1  Section 302 Certification of Chief Executive Officer

      31.2  Section 302 Certification of Chief Financial Officer

      32.1  Section 906 Certification of Chief Executive Officer

      32.2  Section 906 Certification of Chief Financial Officer

      (b)   Reports on Form 8-K

      A report on Form 8-K was filed on December 22, 2004, related to the
      resignation of a director and chairman of the board.

      A report on Form 8-K was filed on February 28, 2005 announcing three
      agreements with Advanced Micro Devices, Inc.

      A report on Form 8-K was filed on March 7, 2005 announcing a change in our
      independent certified public accountants.

      A report on Form 8-K was filed on March 15, 2005 announcing Judge Fogel's
      decision in the Moore lawsuit.

      A report on Form 8-K was filed on April 4, 2005 announcing our third
      quarter earnings.


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                       28
<PAGE>

                                           PATRIOT SCIENTIFIC CORPORATION


Date: April 18, 2005                       By:   /s/ LOWELL W. GIFFHORN
                                                -----------------------
                                                Executive Vice President and
                                                Chief Financial Officer

                                                (Principal Financial and
                                                Accounting Officer and duly
                                                authorized to sign on behalf
                                                of the Registrant)


                                       29