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 August 31, 2003
                                    ---------------

[ ]      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)


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                        129,930,085
-------------------------------                        -----------
          (Class)                             (Outstanding at October 14, 2003)

Transitional Small Business Disclosure Format (Check one):    Yes ___   No X
                                                                           -



<PAGE>

                         PATRIOT SCIENTIFIC CORPORATION
                                      INDEX


<TABLE>
<CAPTION>

                                                                                    Page
PART I. FINANCIAL INFORMATION

<S>                                                                                  <C>
         Item 1. Financial Statements:

                  Consolidated Balance Sheets as of August 31, 2003 (unaudited)
                     and May 31, 2003                                                 3

                  Consolidated Statements of Operations for the three months
                    ended August 31, 2003 and 2002 (unaudited)                        4

                  Consolidated Statements of Cash Flows for the three months ended
                    August 31, 2003 and 2002 (unaudited)                              5

                  Notes to Unaudited Consolidated Financial Statements               6-16

         Item 2. Management's Discussion and Analysis or Plan of Operation           17-22

         Item 3. Controls and Procedures                                             22

PART II. OTHER INFORMATION                                                           22

         Item 1. Legal Proceedings                                                    *
         Item 2. Changes in Securities                                               22
         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                                    23


SIGNATURES                                                                           23


</TABLE>

         *        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>
                                                                          August 31,               May 31,
                                                                             2003                   2003
                                                                      ------------------     ------------------
                                                                          (Unaudited)

                       ASSETS (Notes 4 and 5)

<S>                                                                   <C>                    <C>
Current assets:
      Cash and cash equivalents                                       $           7,288      $          32,663
      Accounts receivable, net of allowance
        of $10,000 for uncollectible accounts                                     5,763                  3,866
      Prepaid expenses                                                          119,900                 93,030
                                                                      ------------------     ------------------

Total current assets                                                            132,951                129,559

Property and equipment, net                                                     132,245                153,530

Other assets, net                                                                41,121                 53,220

Patents and trademarks, net of accumulated amortization of $535,525
   and $522,948                                                                 118,616                128,925
                                                                      ------------------     ------------------
                                                                      $         424,933      $         465,234
                                                                      ==================     ==================

                LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
      Secured note payable (Note 4)                                   $         635,276      $         635,276
      Current portion of 8% convertible debentures, net of debt
        discount of $120,956 and $103,121 (Note 5)                              159,932                121,879
      Secured notes payable to a related party                                  200,354                180,000
      Accounts payable                                                          364,055                397,180
      Accrued liabilities                                                       229,610                245,822
      Current portion of capital lease obligation                                 6,775                  6,405
                                                                      ------------------     ------------------

Total current liabilities                                                     1,596,002              1,586,562

8% Convertible debentures, net of debt discount of $464,272
   and  $709,890  (Note 5)                                                      235,728                280,110

Long term portion of capital lease obligation                                     8,487                 10,326

Commitments and contingencies (Note 7)

Stockholders' deficit: (Notes 4,5,6 and 7)
      Preferred stock, $.00001 par value; 5,000,000 shares
        authorized none outstanding                                                   -                      -
      Common stock, $.00001 par value; 200,000,000 shares
        authorized; issued and outstanding 123,518,272 and 106,547,807            1,235                  1,066
      Additional paid-in capital                                             45,430,068             44,281,210
      Accumulated deficit                                                   (46,846,587)           (45,694,040)
                                                                      ------------------     ------------------
Total stockholders' deficit                                                  (1,415,284)            (1,411,764)
                                                                      ------------------     ------------------
                                                                      $         424,933      $         465,234
                                                                      ==================     ==================
</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
                                               -------------------------------------
                                                   August 31,          August 31,
                                                      2003                2002
                                               -----------------   -----------------


<S>                                            <C>                 <C>
Net sales                                      $         11,240    $         39,889

Cost of sales                                             6,213               4,909
                                               -----------------   -----------------

Gross profit (loss)                                       5,027              34,980

Operating expenses:
     Research and development                           149,122             209,287
     Selling, general and
       administrative                                   351,470             487,101
                                               -----------------   -----------------
                                                        500,592             696,388
                                               -----------------   -----------------
Operating loss                                         (495,565)           (661,408)
                                               -----------------   -----------------
Other income (expenses):
     Interest income                                          -                 175
     Interest expense                                  (656,982)           (282,208)
                                               -----------------   -----------------
                                                       (656,982)           (282,033)
                                               -----------------   -----------------
Net loss                                       $     (1,152,547)   $       (943,441)
                                               =================   =================

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

Weighted average number of
  common shares outstanding
  during the period (Note 1)                         113,846,895         81,465,757
                                               =================   =================
</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>
                                                                                        Three Months Ended
                                                                       --------------------------------------------------
                                                                            August 31, 2003            August 31, 2002
                                                                       ------------------------   -----------------------
<S>                                                                    <C>                        <C>
Decrease in Cash and Cash Equivalents
Operating activities:
       Net loss                                                        $            (1,152,547)   $             (943,441)
       Adjustments to reconcile net loss
         to cash used in operating activities:
           Amortization and depreciation                                                33,863                    53,695
          Non-cash interest expense related to convertible
              debentures, notes payable and warrants                                   618,067                   254,367
           Changes in:
               Accounts receivable                                                      (5,897)                  (13,688)
               Prepaid expenses and other assets                                       (14,771)                   77,230
               Accounts payable and accrued liabilities                                (17,953)                  (93,174)
                                                                       --------------------------------------------------
Net cash used in operating activities                                                 (539,238)                 (665,011)
                                                                       --------------------------------------------------

Investing activities:
                                                                       --------------------------------------------------
       Purchase of property, equipment and patents                                      (2,269)                  (11,376)
                                                                       --------------------------------------------------

Financing activities:
       Proceeds from the issuance of short term notes payable                           10,000                         -
       Proceeds from the issuance of convertible debentures                            422,500                   592,000
       Proceeds from the issuance of common stock                                       31,000                         -
       Principal payments for capital lease obligations                                 (1,468)                   (1,174)
       Proceeds from sales of accounts receivable                                        4,000                    11,877
       Proceeds from exercise of common stock warrants                                  50,100                         -
                                                                       ------------------------   -----------------------
Net cash provided by financing activities                                              516,132                   602,703
                                                                       --------------------------------------------------

Net decrease in cash and cash equivalents                                              (25,375)                  (73,684)

Cash and cash equivalents, beginning of period                                          32,663                    88,108
                                                                       --------------------------------------------------

Cash and cash equivalents, end of period                               $                 7,288    $               14,424
                                                                       ==================================================

Supplemental Disclosure of Cash Flow Information:
       Cash payments for interest                                      $                 5,005    $                3,172
       Common stock issued on conversion of debentures,
         notes payable and accrued interest                            $               677,642    $                    -
       Interest expense recorded on exercise of warrant                $                35,618    $                    -
       Debt discount                                                   $               354,667    $            1,005,581
       Debt discount cancelled                                         $               400,279    $                    -
                                                                       ==================================================

</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-K for the year ended May 31, 2003.

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
month period 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 73,951,979 and
42,515,180 for the three months ended August 31, 2003 and 2002, 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 7 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)


                                               Three Months Ended
                                    -----------------------------------------
                                         August 31,            August 31,
                                            2003                  2002
-----------------------------------------------------------------------------

Net loss as reported                $       (1,152,547)   $         (943,441)
Compensation expense                           (85,674)             (144,423)
                                    -------------------   -------------------
Net loss pro forma                  $       (1,238,221)   $       (1,087,864)
                                    ===================   ===================
As reported per share
     Basic and diluted loss         $            (0.01)   $            (0.01)
                                    ===================   ===================
Pro forma per share
     Basic and diluted loss         $            (0.01)   $            (0.01)
                                    ===================   ===================

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. During the first three months of
fiscal 2004, we sold $4,000 of our accounts receivable to a bank under the
factoring agreement for $3,200. Pursuant to the provisions of SFAS No. 140, we
reflected the transactions as sales of assets and established 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
was equal to 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 was based on the payment history of the accounts receivable
customer. As of August 31, 2003, there were no qualifying accounts receivable
invoices available to factor resulting in no balance outstanding under the
factoring line and $400,000 remaining available for future factoring of accounts
receivable invoices.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In April 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives) and for hedging activities
under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 149 requires that contracts with comparable
characteristics be accounted for similarly. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designated after June 30, 2003. The adoption of this statement did
not impact our financial position or results of operations.


                                       7
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). SFAS No. 150 is effective
for financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003, except for mandatorily redeemable financial instruments of
nonpublic entities. The adoption of this statement did not impact our financial
position or results of operations.

3. CONTINUED EXISTENCE AND MANAGEMENT'S PLAN

Our consolidated financial statements are presented on the going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. Our ability to continue as a going concern is
contingent upon our obtaining sufficient financing to sustain our operations. We
incurred a net loss of $1,152,547, $3,888,299 and $5,487,051 and negative cash
flow from operations of $539,237, $1,885,762 and $3,632,534 in the three months
ended August 31, 2003 and the years ended May 31, 2003 and 2002, respectively.
At August 31, 2003, we had deficit working capital of $1,463,051 and cash and
cash equivalents of $7,288. We have historically funded our operations primarily
through the issuance of securities and debt financings. Cash and cash
equivalents decreased $25,375 during the three months ended August 31, 2003.

We estimate our current cash requirements to sustain our operations for the next
twelve months through August 2004 to be $2.1 million. Since we are no longer
supporting the communications product line, we are assuming that there will be
no communications product revenue. We have a note payable to Swartz Private
Equity, LLC ("Swartz") of $635,276 at August 31, 2003 which is due March 1,
2004. We also have convertible debentures with a group of investors as of August
31, 2003 aggregating $853,388 and advances of $127,500 on a convertible
debenture that closed subsequent to August 31, 2003. At the option of the
debenture holders, they may purchase additional debentures up to $1 million at
any time during the next two years as long as the price of our common stock is
in excess of $0.20 per share. During the first three months ended August 31,
2003, we obtained $31,000 from the sale of equity to several private investors,
$50,100 from the exercise of a warrant and $10,000 from short term notes entered
into with a related party. Subsequent to August 31, 2003, we obtained an
additional $9,440 from the sale of equity to several private investors and
$187,500 from the issuance of additional convertible debentures net of advances
discussed above.

If the optional amounts under the convertible debentures are not raised in
sufficient amounts, then we may not have funds sufficient to meet our cash
requirements. In such circumstances, we may need to secure additional short-term
debt, private placement debt and/or equity financings with individual or
institutional investors. In addition, we may need to make additional cost
reductions if our cash requirements cannot be met from external sources. We
expect that the $2.1 million requirement will be provided by:

         o        additional debt and/or equity financings; and

         o        proceeds  from the exercise of  outstanding  stock options and
                  warrants.

In addition, we have formulated additional cost reduction plans which can be
implemented if the required funds are not obtainable. We also have remaining a
$400,000 accounts receivable factoring agreement with our bank; however, we have
no eligible accounts receivable to factor as of August 31, 2003.

We anticipate our future revenue to be derived primarily from the sale of
licenses and royalties. To receive this revenue, we may require additional
equipment, fabrication, components and supplies during the next twelve months to
support potential customer requirements and further develop our technologies.
Product introductions such as those currently underway for the Ignite I may
require significant product launch, marketing personnel and other expenditures
that cannot be currently estimated. Further, if expanded development is
commenced or new


                                       8
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

generations of microprocessor technology are accelerated beyond current plans,
additional expenditures we cannot currently estimate, may be required. It is
possible therefore, that higher levels of expenditures may be required than we
currently contemplate resulting from changes in development plans or as required
to support new developments or commercialization activities or otherwise.

If we are unable to obtain the necessary funds, we could be forced to
substantially curtail or cease operations which would have a material adverse
effect on our business. Further, there can be no assurance that we will be able
to timely receive shareholder approval to increase the number of authorized
shares or that required funds, if available, will be available on attractive
terms or that they will not have a significantly dilutive effect on our existing
shareholders. As such, there is substantial doubt about our ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from our possible inability to continue as a going concern.

4. SECURED NOTE PAYABLE

On March 12, 2002, we replaced and superceded a previously issued Secured
Promissory Note with Swartz with an Amended Secured Promissory Note and
Agreement with an effective date of October 9, 2001 and an Addendum to Amended
Secured Promissory Note dated March 12, 2002. The amended note, which originally
was to mature on April 9, 2003, has been extended to March 1, 2004 and amounts
outstanding under the note bear interest at the rate of 5% per annum. Per the
addendum to the amended note, principal and interest payments are deferred until
March 1, 2004.

As part of the consideration for entering into the above amended note, we agreed
to issue warrants to Swartz related to each advance against the note. In
connection with each advance, we issued to Swartz a warrant to purchase a number
of shares of common stock equal to the amount of the advance multiplied by 8.25
at an initial exercise price equal to the lesser of (a) the factor of the
average of the volume weighted average price per share, as defined by Bloomberg
L.P., for each trading day in the period beginning on the date of the previous
advance and ending on the trading day immediately preceding the date of the
current advance multiplied by .70 or (b) the volume weighted average price per
share minus $0.05. In addition, we were obligated under the addendum to the note
to issue to Swartz warrants equal to 20% of the common stock issued between
March 12, 2002 and April 1, 2003 and we are obligated under the antidilution
agreement to issue to Swartz warrants equal to 30% of the common stock issued
subsequent to April 1, 2003 to any parties other than Swartz. In addition, we
agreed to extend the expiration date to December 31, 2006 on certain warrants
that were to expire previous to December 31, 2006. In exchange for these
concessions, Swartz agreed to extend the due date to March 1, 2004 on a note for
$635,276 net of accrued interest and unreserved 20,007,350 shares that have been
reserved for the exercise of warrants for a period the sooner of 1) March 19,
2004, or 2) 90 days after the date on which our common stock exceeds $0.375 for
10 consecutive trading days.

As of August 31, 2003 we issued warrants to purchase up to 18,437,045 shares of
our common stock in accordance with the amended note agreements and antidilution
agreement. The warrants issued were valued using the Black-Scholes pricing model
based on the expected fair value at issuance and the estimated fair value was
also recorded as debt discount.

The note is secured by our assets.

All debt discounts were amortized as additional interest expense over the term
of the note payable. As of August 31, 2003, $1,107,238 had been reflected as
debt discount which was amortized to interest expense during the previous fiscal
years.


                                       9
<PAGE>



PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
<S>                                                                                              <C>
         Advances against the note                                                               $1,790,000
         Less amount applied against $30 million equity line of credit                             (227,800)
         Less amount applied against $25 million equity line of credit                             (926,924)
                                                                                                       -

         Less debt discount
                  Total                                                   1,107,238
                  Amount amortized to expense                            (1,107,238)                   -
                                                                        ------------             ----------

         Note payable at August 31, 2003                                                         $  635,276
                                                                                                 ==========
</TABLE>

On November 9, 2001, an offset of $227,800 from the sale of 2,500,000 shares of
common stock was applied against the final put under the $30 million equity line
of credit discussed below.

On May 30, 2002, an offset of $926,924 from the sale of 14,100,000 shares of
common stock was applied against the first and only put under the $25 million
equity line of credit discussed below.

5.   8% CONVERTIBLE DEBENTURES

Overview. From April 23, 2002 through August 31, 2003, we sold an aggregate of
$2,310,000 of 8% convertible debentures to a group of eleven investors. In
addition, at August 31, 2003, we have received advances totaling $127,500
against a convertible debenture that closed subsequent to the quarter. 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. In addition, the debenture holders received warrants exercisable into a
number of our common shares.

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 $0.0172 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, October 29, 2002 for the first
$1,000,000 of principal, March 7, 2003 for the second $605,000 of principal and
June 26, 2003 for the third $510,000 of principal. 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. On October 29,
2002, the date the registration statement for the first $1,000,000 of principal
became effective, the conversion prices were reset to $0.04457 from initial
conversion prices ranging from $0.08616 to $0.10289. On March 7, 2003, the date
the registration statement for the second $605,000 of principal became
effective, the conversion prices were reset to $0.04722 from initial conversion
prices ranging from $0.05126 to $0.0727. On June 26, 2003, the date the
registration statement for the third $510,000 of principal became effective, the
conversion prices for debentures with initial conversion prices of $0.065 will
reset to $0.06346.

Warrants. Concurrent with the issuance of the convertible debentures, we issued
to the debenture holders warrants to purchase up to 42,011,196 shares of our
common stock. These warrants are exercisable for five years from the date of
issuance at initial exercise 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 subject to being reset on each six month anniversary
of its issuance.


                                       10
<PAGE>


PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 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 certain transactions. These 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 without obtaining the debenture holders' prior written approval.

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. We are responsible for registering the resale of the shares
of our common stock which will be issued on the conversion of the debentures. On
October 29, 2002, a registration statement covering the first $1,000,000 of
debentures was declared effective by the Securities and Exchange Commission. On
March 7, 2003, a registration statement covering the second $605,000 of
debentures was declared effective by the Securities and Exchange Commission. On
June 26, 2003, a registration statement covering the third $510,000 of
debentures was declared effective by the Securities and Exchange Commission.

The convertible debentures are secured by our assets.

                                       11
<PAGE>


PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



<TABLE>
<CAPTION>
<S>                                                                    <C>                <C>
Convertbile debenture dated April 23, 2002                                                $          225,000
Convertbile debentures dated June 10, 2002                                                           775,000
Convertbile debenture dated August 23, 2002                                                          175,000
Convertbile debentures dated October 29, 2002                                                        180,000
Convertbile debenture dated December 16, 2002                                                        100,000
Convertbile debenture dated January 24, 2003                                                         150,000
Convertbile debenture dated March 24, 2003                                                           162,500
Convertbile debenture dated April 15, 2003                                                            10,000
Convertbile debenture dated May 20, 2003                                                             187,500
Convertbile debenture dated June 9, 2003                                                             150,000
Convertbile debentures dated August 1, 2003                                                           75,000
Convertbile debenture dated August 5, 2003                                                           120,000
Advances against debenture issued subsequent to August 31, 2003                                      127,500
Less amounts converted to common stock                                                            (1,456,611)
Less debt discount
                            Total discounts recorded                    $     2,310,000
                            Amount amortized to expense                        (797,425)
                            Amount cancelled on conversion                     (927,346)            (585,229)
                                                                        ---------------   -------------------
Convertible debentures at August 31, 2003                                                            395,660
Less current portion                                                                                 159,932
                                                                                          -------------------
Long term portion                                                                         $          235,728
                                                                                          ===================



</TABLE>



6. INVESTMENT AGREEMENT

$25 MILLION EQUITY LINE OF CREDIT AGREEMENT

Overview. On September 17, 2001, we entered into an investment agreement with
Swartz. The investment agreement entitles us to issue and sell our common stock
to Swartz for up to an aggregate of $25 million from time to time during a
three-year period following the effective date of the registration statement.
This is also referred to as a put right. We filed a registration statement on
Form S-1 on October 11, 2001 that was declared effective on November 5, 2001 for
15,000,000 shares of our common stock which we issued to Swartz during the
fiscal year ended May 31, 2002. There remains approximately $24 million
available under this line conditioned on us filing one or more additional
registration statements. As of August 31, 2003, we have not filed a statement
requesting the registration of additional shares to put to Swartz under the $25
million equity line of credit.

Put Rights. In order to invoke a put right, we must have an effective
registration statement on file with the SEC registering the resale of the common
shares which may be issued as a consequence of the invocation of that put right.
Additionally, we must give at least ten but not more than twenty business days
advance notice to Swartz of the date on which we intend to exercise a particular
put right, and we must indicate the number of shares of common stock we intend
to sell to Swartz. At our option, we may also designate a maximum dollar amount
of common stock (not to exceed $3 million) which we will sell to Swartz during
the put and/or a minimum purchase price per common share at which Swartz may
purchase shares during the put. The number of common shares sold to Swartz may
not exceed 20% of the aggregate daily reported trading volume during each of two
consecutive ten business day periods beginning on the business day immediately
following the day we invoked the put right.

The price Swartz will pay for each share of common stock sold in a put is equal
to the lesser of (i) the market price for each of the two consecutive ten
business day periods beginning on the business day immediately following the day
we invoked the put right minus $0.10, or (ii) X percent of the market price for
each of the two ten day periods,


                                       12
<PAGE>



PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

where, X is equal to 90% if the market price is below $2.00 and 93% if market
price is equal to or greater than $2.00. Market price is defined as the lowest
closing bid price for the common stock during each of the two consecutive ten
business day periods. However, the purchase price may not be less than the
designated minimum per share price, if any, that we indicated in our notice.

Limitations and Conditions Precedent to Our Put Rights. We may not initiate a
put if, as of the proposed date of such put:

o        we have issued shares of our common stock that have been paid for by
         Swartz and the amount of proceeds we have received is equal to the
         maximum offering amount;

o        the registration statement covering the resale of the shares becomes
         ineffective or unavailable for use;

o        our common stock is not actively trading on the OTC Bulletin Board, the
         Nasdaq Small Cap Market, the Nasdaq National Market, the American Stock
         Exchange, or the New York Stock Exchange, or is suspended or delisted
         with respect to the trading on such market or exchange.

If any of the following events occur during the pricing period for a put, the
volume accrual shall cease. For the put, the pricing period shall be adjusted to
end 10 business days after the date that we notify Swartz of the event, and any
minimum price per share we specified shall not apply to the put:

         o        we have announced or implemented a stock split or combination
                  of our common stock between the advanced put notice date and
                  the end of the pricing period;

         o        we have paid a common stock dividend or made any other
                  distribution of our common stock between the advanced put
                  notice date and the end of the pricing period;

         o        we have made a distribution to the holders of our common stock
                  or of all or any portion of our assets or evidences of
                  indebtedness between the put notice date and the end of the
                  pricing period;

         o        we have consummated a major transaction (including a
                  transaction, which constitutes a change of control) between
                  the advance put notice date and the end of the pricing period,
                  the registration statement covering the resale of the shares
                  becomes ineffective or unavailable for use, or our stock
                  becomes delisted for trading on our then primary exchange; or

         o        we discover the existence of facts that cause us to believe
                  that the registration statement contains an untrue statement
                  or omits to state a material fact.

Short Sales. Swartz and its affiliates are prohibited from engaging in short
sales of our common stock unless they have received a put notice and the amount
of shares involved in a short sale does not exceed the number of shares
specified in the put notice.

Shareholder Approval. We may currently issue more than 20% of our outstanding
shares under the investment agreement. 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.

Termination of Investment Agreement. We may also terminate our right to initiate
further puts or terminate the investment agreement by providing Swartz with
notice of such intention to terminate; however, any such termination will not
affect any other rights or obligations we have concerning the investment
agreement or any related agreement.


                                       13
<PAGE>



PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Restrictive Covenants. During the term of the investment agreement and for a
period of two months thereafter, we are prohibited from certain transactions.
These 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 or with a fixed conversion or exercise price
subject to adjustment without obtaining Swartz's prior written approval.

Right of First Refusal. Swartz has a right of first refusal to purchase any
variable priced securities offered by us in any private transaction which closes
on or prior to two months after the termination of the investment agreement and
a right of participation for any equity securities offered by us in any private
transaction which closes on or prior to two months after the termination of the
investment agreement.

Swartz's Right of Indemnification. We are obligated to indemnify Swartz
(including their stockholders, officers, directors, employees and agents) from
all liability and losses resulting from any misrepresentations or breaches we
made in connection with the investment agreement, our registration rights
agreement, other related agreements, or the registration statement.

Waiver and Agreement. On March 12, 2002, we entered into an amended waiver and
agreement with Swartz which replaced and superseded all previous waivers and
agreements. This amended waiver and agreement extended the time of the put
beyond twenty days and redefined the price of the put to be the lesser of the
factor of (a) the volume weighted average price per share, as defined by
Bloomberg L.P., for each day of the put multiplied by .70 or (b) the volume
weighted average price per share minus $0.05 multiplied by 20% of the acceptable
daily volume as defined in the waiver. At the discretion of Swartz, the 20%
daily volume limitation could be increased up to 30% of the daily volume. In
addition, the amended waiver and agreement increased the intended put share
amount for the first put to 14,100,000 shares, which is the total number of
shares we had registered so far under the $25 million equity line of credit. On
May 30, 2002 we closed the first put under the $25 million equity line of credit
by applying the proceeds of $926,924 to the secured note payable discussed in
Note 4.

Warrants. In connection with closing the $25 million equity line of credit, we
issued to Swartz a commitment warrant to purchase 900,000 shares of our common
stock. This warrant was valued on the issuance date using the Black-Scholes
pricing model and the value was recorded as a debt discount.

7. STOCKHOLDERS' DEFICIT

The following table summarizes equity transactions during the three months ended
August 31, 2003:


                                       14
<PAGE>




PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




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

Balance June 1, 2003                         106,547,807     $      44,282,276

Sale of common stock                           1,188,236                31,000
Exercise of common stock warrants              1,334,757                50,100
Stock issued on conversion of
  debentures and accrued interest             14,447,472               677,642
Non-cash interest and debt discount
  related to warrants and debentures                   -               390,285
                                         ----------------    ------------------

Balance August 31, 2003                      123,518,272     $      45,431,303
                                         ================    ==================


STOCK OPTIONS

At August 31, 2003, we had 17,500 options outstanding pursuant to our 1992 ISO
Stock Option Plan exercisable at $1.325 per share expiring in 2005; 50,000
options outstanding pursuant to our 1992 NSO Stock Option Plan exercisable at
$1.325 per share expiring in 2005; 2,026,500 options outstanding pursuant to our
1996 Stock Option Plan exercisable at a range of $0.0425 to $1.325 per share
expiring beginning in 2004 through 2008; and 2,960,000 options outstanding
pursuant to our 2001 Stock Option Plan exercisable at a range of $0.0425 to
$0.69 per share expiring beginning in 2004 through 2008 Also, in August 2003 the
Board of Directors authorized a 2003 Stock Option Plan subject to shareholders
approval.

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

WARRANTS

At August 31, 2003, we had warrants outstanding exercisable into 68,897,979
common shares at exercise prices ranging from $0.0172 to $0.65 per share
expiring beginning in 2004 through 2008. During the three months ended August
31, 2003, we issued warrants to purchase 11,240,268 shares of common stock of
which 11,040,268 are subject to repricings at the six month anniversary of the
issuance of the warrant. 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 three months ended August 31, 2003, warrants to
purchase 27,483,933 shares of common stock with initial or reset exercise prices
ranging from $0.0451 to $0.07303 have been repriced to exercise prices ranging
from $0.04 to $0.0649.

During the three months ended August 31, 2003, we issued to Swartz a snap shot
warrant exercisable for five years into 193,333 common shares at an initial
exercise price of $0.0572 per share. This snap shot warrant was 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 after April 1, 2003.

During the three months ended August 31, 2003, a warrant to purchase 1,334,757
shares of common stock was exercised at a price which was lower than the reset
price at the time of exercise. The difference between the exercise price and the
reset price, $35, 618, was recorded during the quarter as additional interest
expense.



                                       15


<PAGE>




PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

COMMON STOCK

During the three months ended August 31, 2003, we sold to a group of individual
private investors a total of 1,188,236 shares of common stock at prices ranging
from $0.025 to $0.034 for an accumulated total of $31,000. The investors have
agreed to hold these shares for a minimum of one year.



                                       16
<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, "FUTURE
PERFORMANCE AND RISK FACTORS." SEE ALSO OUR ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED MAY 31, 2003.

Our results of operations have been and may continue to be subject to
significant variations. The results for a particular period may vary due to a
number of factors. These include:

         o        Our major product line has had limited revenues

         o        We have incurred significant losses and may continue to do so

         o        Our independent certified public accountants have added an
                  explanatory paragraph to their opinion in which they expressed
                  substantial doubt about our ability to continue as a going
                  concern

         o        The price and the trading volume of our common stock have an
                  effect on the amount of capital we can raise

         o        We will require additional financing

         o        We may need to increase our authorized shares

         o        Large block sales of our stock may decrease the price of our
                  stock

         o        We may be impacted as a result of terrorism

         o        Our products may not be completed on time

         o        The market in which we operate is highly competitive

         o        Protection of our intellectual property is limited; there is a
                  risk of claims for infringement

         o        Our products are dependent on the Internet and Java

         o        Our stock is subject to penny-stock rules

CRITICAL ACCOUNTING POLICIES

We believe that the following represent our critical accounting policies:

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 from 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.

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.

Revenue Recognition

We recognize revenue on the shipment to our customers of communication products,
microprocessor integrated chips and evaluation boards. We anticipate that in the
future we will also derive revenue from fees for the transfer of proven and
reusable intellectual property components or the performance of engineering
services. We anticipate to enter into licensing agreements that will provide
licensees the right to incorporate our intellectual property components in their
products with terms and conditions that we anticipate to vary by licensee.
Generally,




                                       17

<PAGE>





we anticipate 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.

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

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.

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," requires 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.

Use of Estimates
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 31, 2003 AND AUGUST 31,
2002

Net sales. Total net sales for the first fiscal quarter ended August 31, 2003
decreased 71.8% to $11,240 from $39,889 for the corresponding period of the
previous fiscal year. This decrease was due to minimal buys on our matured
communication products during the current quarter after final buys had been
substantially completed during the previous fiscal year. We are currently
expending our efforts on marketing and sale of our microprocessor technology.
The microprocessor technology generated minimal revenue during the first fiscal
quarter ended August 31, 2003. We anticipate that future revenue will be derived
from up front license fees and royalties as a result of the shift in focus to
the commercialization of our microprocessor and related technologies. We cannot
estimate when significant revenue will be generated from the microprocessor
technology.

Cost of sales. Cost of sales as a percentage of net sales increased to 55.3% in
the first fiscal quarter ended August 31, 2003 compared to 12.3% for the
corresponding period of the previous fiscal year. This significant increase was
due to sales during the first quarter of fiscal year 2003 not having associated
costs due to our having written off the communication product inventory during
the previous fiscal year.

                                       18
<PAGE>


Research and development expenses decreased 28.7% from $209,287 for the first
fiscal quarter ended August 31, 2002 compared to $149,122 for the first fiscal
quarter ended August 31, 2003. This decrease was due primarily to a reduction in
consulting services compared to the previous fiscal year related to the
development of a new soft core version of the microprocessor technology in the
amount of $27,000 coupled with a reduction in payroll expense in an amount of
$19,230 and overhead expenses of $11,679.

Selling, general and administrative expenses decreased 27.8% to $351,470 for the
first fiscal quarter ended August 31, 2003 compared to $487,101 for the first
fiscal quarter of the previous fiscal year. This decrease was due to a reduction
in non-cash compensation of $61,118 related to investor relations and a
reduction of $29,969 in professional fees related to financings and litigation.

Other expenses for the first fiscal quarter ended August 31, 2003, were $656,982
compared to other expenses of $282,033 for the corresponding period of the
previous fiscal year. This change resulted primarily from the recognition of
non-cash interest expense of $582,450 related to the amortization of the debt
discount associated with the issuance of warrants under a secured note payable
and convertible debentures coupled with interest expense of $38,819 related to
the note and debentures and $35,618 from the exercise of a warrant for the
current fiscal period compared to $254,367, $27,841 and none, respectively for
the same fiscal period of the previous fiscal year.

INCOME TAXES

Deferred income taxes are provided for temporary differences in recognizing
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 $16,000 in the first
three months of 2004, from $14,291,000 at May 31, 2003 to $14,275,000 at August
31, 2003.

LIQUIDITY AND CAPITAL RESOURCES

In connection with their report on our consolidated financial statements as of
and for the year ended May 31, 2003, Nation Smith Hermes Diamond, our
independent certified public accountants, expressed substantial doubt about our
ability to continue as a going concern because of recurring net losses and
negative cash flow from operations.

At August 31, 2003, we had deficit working capital of $1,463,051 and cash and
cash equivalents of $7,288. We have historically funded our operations primarily
through the issuance of securities and debt financings. Cash and cash
equivalents decreased $25,375 during the three months ended August 31, 2003 due
to net cash used in operations of $539,237 offset by funds generated primarily
from the issuance of convertible debentures of $422,500 and the sale of common
stock and exercise of common stock warrants of $81,100. The net cash used in
operations was $539,237 for the three months ended August 31, 2003 compared to
$665,011 for the corresponding period of the previous fiscal year. The decrease
in cash required in operations was due primarily to a $134,762 reduction in net
loss as adjusted to reconcile to cash used in operating activities between the
two periods. Cash used in investing activities was $2,269 for the three months
ended August 31, 2003 compared to $11,376 for the corresponding period of the
previous fiscal year. Cash provided by financing activities was $516,132 for the
three months ended August 31, 2003 compared to $602,703 for the corresponding
period of the previous fiscal year. This decrease was primarily the result of a
reduced issuance of convertible debentures of $169,500 during the current fiscal
period compared to the corresponding period of the previous fiscal year coupled
with an increase in the sale of common stock and exercise of common stock
warrants of $81,100.

We estimate our current cash requirements to sustain our operations for the next
twelve months through August 2004 to be $2.1 million. Since we are no longer
supporting the communications product line, we are assuming that there will be
no communications product revenue. We have a note payable to Swartz Private
Equity, LLC ("Swartz") of $635,276 at August 31, 2003 which is due March 1,
2004. We also have convertible debentures with a group of investors as of August
31, 2003 aggregating $853,388 and advances of $127,500 on a convertible
debenture that closed subsequent to August 31, 2003. At the option of the
debenture holders, they may purchase additional debentures up to $1 million at
any time during the next two years as long as the price of our common stock is
in excess of $0.20 per share. During the first three months ended August 31,
2003, we obtained $31,000

                                       19
<PAGE>

from the sale of equity to several private investors, $50,100 from the exercise
of a warrant and $10,000 from short term notes entered into with a related
party. Subsequent to August 31, 2003, we obtained an additional $9,440 from the
sale of equity to several private investors and $187,500 from the issuance of
additional convertible debentures net of advances discussed above.

If the optional amounts under the convertible debentures are not raised in
sufficient amounts, then we may not have funds sufficient to meet our cash
requirements. In such circumstances, we may need to secure additional short-term
debt, private placement debt and/or equity financings with individual or
institutional investors. In addition, we may need to make additional cost
reductions if our cash requirements cannot be met from external sources. We
expect that the $2.1 million requirement will be provided by:

         o        additional debt and/or equity financings; and

         o        proceeds from the exercise of outstanding stock options and
                  warrants.


In addition, we have formulated additional cost reduction plans which can be
implemented if the required funds are not obtainable. We also have remaining a
$400,000 accounts receivable factoring agreement with our bank; however, we have
no eligible accounts receivable to factor as of August 31, 2003.

We anticipate our future revenue to be derived primarily from the sale of
licenses and royalties. To receive this revenue, we may require additional
equipment, fabrication, components and supplies during the next twelve months to
support potential customer requirements and further develop our technologies.
Product introductions such as those currently underway for the Ignite I may
require significant product launch, marketing personnel and other expenditures
that cannot be currently estimated. Further, if expanded development is
commenced or new generations of microprocessor technology are accelerated beyond
current plans, additional expenditures we cannot currently estimate, may be
required. It is possible therefore, that higher levels of expenditures may be
required than we currently contemplate resulting from changes in development
plans or as required to support new developments or commercialization activities
or otherwise.

If we are unable to obtain the necessary funds, we could be forced to
substantially curtail or cease operations which would have a material adverse
effect on our business. Further, there can be no assurance that we will be able
to timely receive shareholder approval to increase the number of authorized
shares or that required funds, if available, will be available on attractive
terms or that they will not have a significantly dilutive effect on our existing
shareholders. As such, there is substantial doubt about our ability to continue
as a going concern. The consolidated financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from our possible inability to continue as a going concern.

NEW ACCOUNTING PRONOUNCEMENTS

In April 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives) and for hedging activities
under SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 149 requires that contracts with comparable
characteristics be accounted for similarly. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003, and for hedging
relationships designated after June 30, 2003. The adoption of this statement did
not impact our financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). SFAS No. 150 is effective
for financial instruments entered into or modified after May 31, 2003, and
otherwise is effective


                                       20
<PAGE>

at the beginning of the first interim period beginning after June 15, 2003,
except for mandatorily redeemable financial instruments of nonpublic entities.
The adoption of this statement did not impact our financial position or results
of operations.

FUTURE PERFORMANCE AND RISK FACTORS

THIS REPORT CONTAINS A NUMBER OF FORWARD-LOOKING STATEMENTS WHICH REFLECT OUR
CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE. OUR
FUTURE BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION ARE SUBJECT TO
VARIOUS RISKS AND UNCERTAINTIES, INCLUDING THOSE SUMMARIZED BELOW. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS

CONTAINED HEREIN, WHICH SPEAK ONLY AS OF THE DATE HEREOF. WE UNDERTAKE NO
OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS, TO REFLECT
EVENTS OR CIRCUMSTANCES THAT MAY ARISE AFTER THE DATE OF THIS REPORT.

Since the business combination with Metacomp, effective December 1996, we have
segregated our operations into microprocessor, communication, and radar/antenna
product lines.

The status of these three major technologies is as follows:

o        Ignite I microprocessor technology. This technology is generating minor
         amounts of revenue from the sale of evaluation boards, microprocessors
         and initial license fees related to the intellectual property. We have
         ported the VxWorks operating system and the Sun Microsystems
         personalJava virtual machine to the microprocessor. Although we
         anticipate the sales of licenses and royalties from the microprocessor
         technology will be our main product line, it currently accounted for
         only 24% of our revenue for the three months ended August 31, 2003.

o        High-speed data communications. Revenue from this technology was
         generated primarily from mature communication products that completed
         their life cycles. We have decided to concentrate our efforts on the
         Ignite I microprocessor technology and have discontinued the sale of
         communication products subsequent to the last buys that were shipped
         during the previous fiscal year. Although minimal shipments of
         communications product accounted for 76% of the revenue shipped during
         the first three months ended August 31, 2003, future revenue will come
         from our microprocessor technologies.

o        Radar and antenna. We sold the gas plasma antenna technology in August
         1999. Our radar technology has not generated any revenue and we have
         suspended further development of this technology in order to
         concentrate our resources on the Ignite I microprocessor technology.

During at least the last three years, we have focused the majority of our
efforts on the Ignite I microprocessor technology. This technology is targeted
for the embedded controller and Java language processor marketplaces.

We have experienced in the past and may experience in the future many of the
problems, delays and expenses encountered by any business in the early stages of
development, some of which are beyond our control. We have had limited operating
history, have incurred significant cumulated losses, have only recently
commenced marketing and sales of our products and have not achieved a profitable
level of operations. There can be no assurance of future profitability. We may
require additional funds in the future for operations or to exploit our
technologies. There can be no assurance that any funds required in the future
can be generated from operations or that such required funds will be available
from other potential sources. The lack of additional capital could force us to
substantially curtail or cease operations and would therefore have a material
adverse effect on our business. Further there can be no assurance that any such
required funds, if available, will be available on attractive terms or that they
will not have a significantly dilutive effect on our existing shareholders. Our
technologies are in various stages of development. There can be no assurance
that any of the technologies in development can be completed to commercial
exploitation due to the inherent risks of new technology development limitations
on financing, competition, obsolescence, loss of key technical personnel and
other factors. Our development projects are high risk in nature, where
unanticipated technical obstacles can arise at any time and result in lengthy
and costly delays or result in


                                       21
<PAGE>

determination that further development is unfeasible. There can be no assurance
that the technologies, if completed, will achieve market acceptance sufficient
to sustain us or achieve profitable operations.

We rely primarily on patents to protect our intellectual property rights. There
can be no assurance that patents held by us will not be challenged and
invalidated, that patents will issue from any of our pending applications or
that any claims allowed from existing or pending patents will be sufficient in
scope or strength or be issued in all countries where our products can be sold
to provide meaningful protection or commercial advantage to us. Competitors may
also be able to design around our patents.

Our common shares are traded on the OTC Bulletin Board, are thinly traded and
are subject to special regulations imposed on "penny stocks." Our shares may
experience significant price and volume volatility, increasing the risk of
ownership to investors.

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
October 1, 2003. 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 2.  CHANGES IN SECURITIES

(a) We offered and sold the following common stock, 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.



<TABLE>
<CAPTION>

                                                   Number of       Aggregate     Purchase Price Per
           Name                Date of Sale         Shares      Purchase Price     Share
           ----                ------------         ------      --------------     -----

<S>                                  <C>                <C>               <C>       <C>
Lyle Armstrong                August 1, 2003            44,118            $1,500    $0.034  Cash

Red Oak Inc.                  August 1, 2003            44,118            $1,500    $0.034  Cash

Red Oak Inc.                  August 20, 2003          100,000            $3,000    $0.030  Cash

REC Music Foundation          August 26, 2003        1,000,000           $25,000    $0.025  Cash

</TABLE>


                                       22
<PAGE>


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 - NONE




                                   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.

                                          PATRIOT SCIENTIFIC CORPORATION


Date: October 15, 2003                    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)



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