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 November 30, 2004

[ ]   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                           232,890,435
-------------------------------                           -----------
            (Class)                            (Outstanding at January 14, 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 November 30, 2004
                (unaudited) and May 31, 2004                                  3

             Consolidated Statements of Operations for the three
                and six months ended November 30, 2004 and 2003
                (unaudited)                                                   4

             Consolidated Statements of Cash Flows for the six
                months ended November 30, 2004 and 2003 (unaudited)           5

             Notes to Unaudited Consolidated Financial Statements           6-13

     Item 2. Management's Discussion and Analysis or Plan of Operation     14-28

     Item 3. Controls and Procedures                                         28

PART II. OTHER INFORMATION                                                   28

     Item 1. Legal Proceedings                                               28
     Item 2. Changes in Securities                                           29
     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                                30

SIGNATURES                                                                   30

         *  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>
                                                                                   November 30,                May 31,
                                                                                       2004                     2004
                                                                              --------------------     ---------------------
                                                                                   (Unaudited)
                         ASSETS (Notes 4 and 5)
<S>                                                                           <C>                      <C>
Current assets:
       Cash and cash equivalents                                              $           172,736      $            355,940
       Marketable securities                                                               10,427                    22,646
       Accounts receivable                                                                  3,593                     1,225
       Prepaid expenses                                                                   243,990                   322,068
                                                                              --------------------     ---------------------

Total current assets                                                                      430,746                   701,879

Property and equipment, net                                                                45,256                    68,389

Other assets                                                                               23,891                    41,221

Patents and trademarks, net of accumulated amortization of $525,399
   and $501,235                                                                            90,575                   114,739
                                                                              --------------------     ---------------------
                                                                              $           590,468      $            926,228
                                                                              ====================     =====================

               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
       Current portion of convertible debentures, net of debt discount of     $                        $
         $2,093 and $27,180 (Note 5)                                                       37,907                   145,320
       Secured notes payable to shareholders (Note 4)                                     100,000                   100,000
       Accounts payable                                                                   101,349                   134,600
       Accrued liabilities                                                                132,145                   160,102
       Current portion of capital lease obligation                                          6,541                     8,020
                                                                              --------------------     ---------------------

Total current liabilities                                                                 377,942                   548,042

Convertible debentures, net of debt discount of $1,372,907
   and  $2,047,966  (Note 5)                                                              484,760                   227,701

Long term portion of capital lease obligation                                                   -                     2,306

Stockholders' equity (deficit) (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 210,916,855 and 171,156,363                     2,109                     1,712
       Additional paid-in capital                                                      51,749,267                49,990,485
       Accumulated deficit                                                            (52,023,610)              (49,844,018)
                                                                              --------------------     ---------------------
Total stockholders' equity (deficit)                                                     (272,234)                  148,179
                                                                              --------------------     ---------------------
                                                                              $           590,468      $            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                    Six Months Ended
                                                -------------------------------------  -------------------------------------
                                                   November 30,        November 30,       November 30,        November 30,
                                                       2004                2003               2004                2003
                                                -----------------  ------------------  -----------------  ------------------
<S>                                             <C>                <C>                 <C>                <C>
Net sales                                       $         18,748   $          51,960   $         21,298   $          63,200

Cost of sales                                                  -               4,259                  -              10,472
                                                -----------------  ------------------  -----------------  ------------------

Gross profit                                              18,748              47,701             21,298              52,728

Operating expenses:
     Research and development                             54,037             112,391            182,341             261,513
     Selling, general and
       administrative                                    392,552             321,132            772,954             672,602
                                                -----------------  ------------------  -----------------  ------------------
                                                         446,589             433,523            955,295             934,115
                                                -----------------  ------------------  -----------------  ------------------
Operating loss                                          (427,841)           (385,822)          (933,997)           (881,387)
                                                -----------------  ------------------  -----------------  ------------------
Other income (expenses):
     Unrealized gain (loss) on
       marketable securities                               2,444             (23,234)           (12,219)            (23,234)
     Gain on sale of technology                                -              75,500                  -              75,500
     Other income                                            479                   -             47,752                   -
     Interest expense                                   (648,223)           (539,234)        (1,281,128)         (1,196,216)
                                                -----------------  ------------------  -----------------  ------------------
                                                        (645,300)           (486,968)        (1,245,595)         (1,143,950)
                                                -----------------  ------------------  -----------------  ------------------
Net loss                                        $     (1,073,141)  $        (872,790)  $     (2,179,592)  $      (2,025,337)
                                                =================  ==================  =================  ==================

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

Weighted average number of
  common shares outstanding
  during the period (Note 1)                         198,970,399         129,716,912        190,971,852        121,738,543
                                                =================  ==================  =================  ==================
</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>
                                                                                      Six Months Ended
                                                                     -------------------------------------------------
                                                                         November 30, 2004         November 30, 2003
                                                                     -----------------------   -----------------------
<S>                                                                  <C>                       <C>
Decrease in Cash and Cash Equivalents
Operating activities:
       Net loss                                                      $      (2,179,592)        $      (2,025,337)
       Adjustments to reconcile net loss
         to cash used in operating activities:
           Amortization and depreciation                                        47,297                    67,726
          Non-cash compensation                                                 22,175                         -
          Non-cash interest expense related to convertible
              debentures, notes payable and warrants                         1,192,563                 1,118,584
       Gain on sale of technology                                                    -                   (75,500)
       Unrealized loss on marketable securities                                 12,219                    23,234
       Common stock issued for services                                         14,800                         -
           Changes in:
               Accounts receivable                                              (2,368)                  (52,836)
               Prepaid expenses and other assets                                95,408                     3,443
               Accounts payable and accrued liabilities                         (2,103)                   81,211
                                                                     --------------------------------------------
Net cash used in operating activities                                         (799,601)                 (859,475)
                                                                     --------------------------------------------

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                    452,500                   722,500
       Proceeds from the issuance of common stock                                3,250                    47,040
       Principal payments for capital lease obligations                         (3,785)                   (3,023)
       Proceeds from sales of accounts receivable                                    -                    21,280
       Proceeds from exercise of common stock warrants                         164,432                    50,100
                                                                     --------------------------------------------
Net cash provided by financing activities                                      616,397                   847,897
                                                                     --------------------------------------------

Net increase (decrease) in cash and cash equivalents                          (183,204)                  (26,273)

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

Cash and cash equivalents, end of period                             $         172,736         $           6,390
                                                                     --------------------------------------------

Supplemental Disclosure of Cash Flow Information:
       Cash payments for interest                                    $           2,226         $           6,303
       Convertible debentures, notes payable and accrued
         interest exchanged for common stock                         $       1,062,104         $       1,268,259
       Debt discount                                                 $         452,500         $         622,500
                                                                     --------------------------------------------
</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
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 140,221,312 and
90,525,744 for the six months ended November 30, 2004 and 2003, 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)

<TABLE>
<CAPTION>
                                               Three Months Ended                            Six Months Ended
                                    -----------------------------------------    ------------------------------------------
                                          November 30,          November 30,           November 30,         November 30,
                                            2004                  2003                   2004                   2003
-----------------------------------------------------------------------------    ------------------------------------------
<S>                                 <C>                   <C>                    <C>                   <C>
Net loss as reported                $       (1,073,141)   $         (872,790)    $       (2,179,592)   $        (2,025,337)
Compensation expense                           (10,110)              (64,400)               (12,993)              (150,074)
                                    -------------------   -------------------    -------------------   --------------------
Net loss pro forma                  $       (1,083,251)   $         (937,190)    $       (2,192,585)   $        (2,175,411)
                                    ===================   ===================    ===================   ====================
As reported per share
     Basic and diluted loss         $            (0.01)   $            (0.01)    $            (0.01)   $             (0.02)
                                    ===================   ===================    ===================   ====================
Pro forma per share
     Basic and diluted loss         $            (0.01)   $            (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 November
30, 2004, 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 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.

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 would require that such transactions
be accounted for using a fair-value-based method and recognized as expenses in
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.

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 $2,179,592, $4,149,978 and $3,888,299 and negative cash
flow from operations of $799,601, $2,075,972 and $1,885,762 in the six months
ended November 30, 2004 and the years ended May 31, 2004 and 2003, respectively.
At November 30, 2004, we had working capital of $52,804 and cash and cash
equivalents of $172,736. We have historically funded our operations primarily
through the issuance of securities and debt financings. Cash and cash
equivalents decreased $183,204 during the six months ended November 30, 2004.

We estimate our current cash requirements to sustain our operations for the next
twelve months through November 2005 to be $1.8 million. Since we are no longer
supporting the communications product line, we are assuming that there will be
no communications product revenue. We have issued 8% convertible debentures as
our primary source of funding since 2002. At the option of the debenture
holders, they may purchase additional debentures up to $1 million at any time
during the two years following their purchase as long as the price of our common
stock is in excess of $0.20 per share. During the first six months ended
November 30, 2004, we obtained $452,500 from the issuance of 8% convertible
debentures and $164,432 from the exercise of warrants. Subsequent to November
30, 2004, we obtained $25,000 from the issuance of 8% convertible debentures and
$169,032 from the exercise of warrants.

If exercise of warrants are not in sufficient amounts, then we may not have
funds sufficient to meet our cash requirements. In such circumstances, we would
need to secure additional debt and/or equity financings with individual or
institutional investors. In addition, we would be required to make additional
cost reductions if our cash requirements cannot be met from external sources. We
expect that the $1.8 million requirement will be provided by:

     o  additional debt and/or equity financings;

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

     o  proceeds from revenue contracts and patent enforcement activities.


                                       8
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In addition, we have formulated additional cost reduction plans which can be
implemented if the required funds are not obtainable. As of November 30, 2004,
we also have remaining $400,000 under an accounts receivable factoring agreement
with our bank.

We anticipate our future revenue to be derived primarily from the sale of
licenses, royalties and the proceeds from litigation or settlements of patent
infringement cases. 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 and
to fund the expenses of protracted patent enforcement litigation. Product
introductions such as those currently underway for the Ignite microprocessor 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.

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. The interest rate on
the four notes is 6% and the notes are secured by the assets of the company.

5.   CONVERTIBLE DEBENTURES

Overview. From April 23, 2002 through November 18, 2004, we sold an aggregate of
$5,365,667 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.


                                       9
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 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. Except for one debenture issued on March 23, 2004, 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 November 30, 2004,
there have been five registration statements (designated A through E).
Debentures issued from September 28, 2004 through November 18, 2004 (designated
G) have registration rights but have not been registered as of November 30,
2004.

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

The following tables present the status, as of November 30, 2004, of our
convertible debentures:


                                       10
<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 11/30/04    Initial     Reset              Date          11/30/04        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      $ 10,000   $0.041-     $0.03968-         6/26/2003     10,179,007       9,377,943
              6/9/2003                                 $0.065      $0.06346

     D        8/1/2003-      $ 547,500      $ 30,000   $0.0172-    $0.0172-         11/18/2003     24,353,803      22,455,355
             10/21/2003                                $0.048      $0.0477

     E       12/1/2003-    $ 1,527,500     $ 682,000   $0.0267-    $0.0267-           6/7/2004     26,880,016      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-      $ 452,500     $ 452,500   $0.0167-    $0.0167-      Not  Registered           --      20,481,137
                         ----------------------------                                        -------------------------------
             11/18/2004                                $0.04       $0.04

Totals                     $ 5,365,667    $1,897,667                                            100,289,724     114,839,029
</TABLE>


                                       11
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<S>                                                         <C>
Convertible debentures issued since April 23, 2002          $        5,365,667
Less amounts converted to common stock                              (3,468,000)
                                                               ----------------
                                                                       1,897,667
Less debt discount                                                  (1,375,000)
                                                               ----------------
Convertible debentures at November 30, 2004                            522,667
Less current portion                                                    37,907
                                                            -------------------
Long term portion                                           $          484,760
                                                            ===================
Maturity dates of outstanding convertible debentures
  April 15, 2005                                            $           10,000
  September 30, 2005                                                    30,000
  December 1, 2005                                                      25,000
  February 2, 2006                                                      77,000
  March 23, 2006                                                       723,167
  March 24, 2006                                                       200,000
  April 26, 2006                                                       100,000
  May 11, 2006                                                         280,000
  September 28, 2006                                                    50,000
  November 16, 2006                                                    145,000
  November 17, 2006                                                    157,500
  November 18, 2006                                                    100,000
                                                            -------------------
                                                              $        1,897,667
                                                            ===================
</TABLE>

6.   STOCKHOLDERS' DEFICIT

The following table summarizes equity transactions during the six months ended
November 30, 2004:


                                       12
<PAGE>

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

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

Sale of common stock                             125,000                3,250
Exercise of common stock warrants              8,083,689              164,432
Stock issued on conversion of
  debentures and accrued interest             31,255,803            1,062,104
Stock issued for services                        296,000               14,800
Non-cash compensation                                  -               22,175
Non-cash interest and debt discount
  related to warrants and debentures                   -              492,418
                                         ----------------     ----------------

Balance November 30, 2004                    210,916,855      $    51,751,376
                                         ================     ================

STOCK OPTIONS

At November 30, 2004, we had 50,000 options outstanding pursuant to our 1992 NSO
Stock Option Plan


                                       13
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

exercisable at $1.325 per share expiring in 2005; 1,948,000 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 2008; 2,230,000 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 2008; and
2,205,000 options outstanding pursuant to our 2003 Stock Option Plan exercisable
at a range of $0.0345 to $0.11 per share expiring in 2005 through 2009.

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

Warrants

At November 30, 2004, we had warrants outstanding exercisable into 133,788,312
common shares at exercise prices ranging from $0.0167 to $0.65 per share
expiring beginning in 2006 through 2011. During the six months ended November
30, 2004, we issued warrants to purchase 21,282,581 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 8,083,689 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 six months ended November
30, 2004, 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.

During the six months ended November 30, 2004, we issued to Swartz snap shot
warrants exercisable for five years into 801,444 common shares at an exercise
price of $0.0672. The 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 six months ended November 30, 2004, six warrant holders agreed to
lock up agreements which allowed us to unreserve warrants exercisable into
18,606,452 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 six months ended November 30, 2004, 296,000 shares of common stock
were issued to a vendor in satisfaction of $14,800 of trade accounts payable and
125,000 shares of one-year restricted common stock were sold to one individual
investor at a price of $0.026 per share for a total of $3,250.


                                       14
<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.

1.       Going Concern

         These financial statements are presented on the basis that the Company
is a going concern. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable
length of time. The Company has incurred significant operating losses and has
had negative cash flows from operating activities for each of the years ended
May 31, 2004 and 2003, had negative working capital and a stockholders' deficit
for the year ended May 31, 2003 and used convertible debentures for raising
substantially all of its working capital. These factors raise substantial doubt
as to the Company's ability to continue as a going concern.

      Management's plans to eliminate the going concern situation include, but
are not limited to, the following:

      o  Obtain additional equity or debt financing from investors including the
         exercise of outstanding warrants.

      o  Obtain revenue producing contracts by successfully negotiating
         licensing, development and product opportunities within the
         microprocessor market place.

      o  Aggressively pursue patent infringement opportunities by litigating
         with companies alleged to be infringing on our issued patents.

      o  If funds are not satisfactorily available to continue operations at our
         current level, put in place cost reduction programs. Such reduction
         programs could include a scale back in the support of the
         microprocessor technology with total emphasis being placed on patent
         infringement activity. If, in the future, there is patent infringement
         success, additional funds would be available for the microprocessor
         technology.

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. 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.


                                       16
<PAGE>

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.

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 increased approximately $378,000 for
the six months ended November 30, 2004, from $14,732,000 at May 31, 2004 to
$15,110,000 at November 30, 2004.

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.


                                       17
<PAGE>

RESULTS OF OPERATIONS

Three months ended November 30, 2004 compared to three months ended November 30,
2003.

SELECTED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                                                           Increase
                                                     11/30/2004         11/30/2003        (Decrease)         %
<S>                                              <C>                  <C>                <C>              <C>
Statements of Operations
  Revenue                                        $     18,748         $   51,960         $  (33,212)        -63.9%
  Cost of revenue                                           -              4,259             (4,259)       -100.0%
    % of revenue                                           0%                 8%                -8%        -100.0%
  Gross profit                                         18,748             47,701            (28,953)        -60.7%
    % of revenue                                         100%                92%                 8%           8.9%
  Operating expenses
    Research and development                           54,037            112,391            (58,354)        -51.9%
    General and administrative                        392,552            321,132             71,420          22.2%
 Total operating expenses                             446,589            433,523             13,066           3.0%
 Gain (loss) on marketable securities                   2,444            (23,234)            25,678          NM
 Interest expense                                    (648,223)          (539,234)           108,989          20.2%
 Gain on sale of technology                                 -             75,500             75,500          NM
 Other income                                             479                  -                479          NM
 Net loss                                          (1,073,141)          (872,790)           200,351          23.0%
 Net loss per share basic and diluted            $      (0.01)        $    (0.01)        $        -           0.0%
</TABLE>


                                       18
<PAGE>

Revenues

         Our revenue decrease of $33,212, or 63.9%, was due to a continuing lack
of significant revenue producing contracts. Our microprocessor product line has
failed to generate any significant contracts. 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 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 $4,259, or 100%, was commensurate with
the reduction in revenue. We fully reserved 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. We anticipate that future cost of revenue will be commensurate with
the success of receiving microprocessor licenses and royalties and patent
infringement proceeds.

Research and Development

<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                                                 Increase
                                                  11/30/2004     11/30/2003      (Decrease)          %
<S>                                             <C>             <C>             <C>                   <C>
Research and Development
  Personnel (including consultants)             $      50,620   $     99,477    $    (48,857)        -49.1%
  Facilities                                            3,407         12,914          (9,507)        -73.6%
  Other research and development expenses                  10              -              10         NM
                                                --------------  -------------   -------------
                                                $      54,037   $    112,391    $    (58,354)        -51.9%
</TABLE>

         The $58,354, or 51.9%, 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. When and if funds become available, 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
                                                    11/30/2004        11/30/2003       (Decrease)          %
<S>                                             <C>               <C>                <C>                    <C>
General and Administrative
  Personnel (including consultants)             $       134,733   $       121,094    $      13,639          11.3%
  Professional fees                                     122,793            44,917           77,876         173.4%
  Facilities                                             65,662            61,759            3,903           6.3%
  Other general and administrative expenses              69,364            93,362          (23,998)        -25.7%
                                                ----------------  ----------------     ------------
                                                $       392,552   $       321,132    $      71,420          22.2%
</TABLE>


                                       19
<PAGE>

         The $71,420, or 22.2%, increase in general and administrative expenses
was attributed to an increase in personnel costs as a result of expensing stock
options to consultants. Professional fees increased $77,876 primarily as a
result of patent infringement costs increasing ($84,000) offset by a decrease in
costs associated with registration statements and auditing of our financial
statements ($6,000). Other general and administrative expenses decreased as a
result of licenses and dues increasing ($17,000) offset by a reduction in
shareholder related expenses ($46,000) as a result of not holding an annual
meeting during FY2005. We anticipate general and administrative expenses to
remain stable at the current levels until such time as contract revenue and
patent litigation proceeds are recognized at which time additional personnel and
other fees would be expected to increase.

Other income (expense)

<TABLE>
<CAPTION>
                                                          Three Months Ended

                                                     11/30/2004         11/30/2003           Change            %
<S>                                             <C>                 <C>                         <C>            <C>
Other income (expense)
  Gain (loss) on marketable securities          $           2,444   $        (23,234)           25,678        -110.5%
  Other income                                                479                  -               479          NM
  Gain on sale of technology                                    -             75,500           (75,500)         NM
  Interest expense, paid in cash or accrued               (41,070)           (38,718)           (2,352)          6.1%
  Non-cash interest expense                              (607,153)          (500,516)         (106,637)         21.3%
                                                ------------------  -----------------      ------------
                                                $        (645,300)  $       (486,968)   $     (158,332)         32.5%
</TABLE>

         The increase in other expenses, net of other income, of $158,332, or
32.5%, was primarily attributable to the final payment related to the sale of
our gas plasma antenna technology received during fiscal year 2004 ($75,000) and
by 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 ($107,000)
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 ($26,000). We anticipate that the non-cash interest expense will
remain stable over the balance of fiscal 2005 due to a large debt discount
remaining on our books as of November 30, 2004 ($1,375,000) 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.

Six months ended November 30, 2004 compared to six months ended November 30,
2003.

Selected Financial Information

<TABLE>
<CAPTION>
                                                           Six Months Ended
                                                                                             Increase
                                                     11/30/2004         11/30/2003          (Decrease)         %
<S>                                             <C>                 <C>                 <C>                      <C>
Statements of Operations
  Revenue                                       $          21,298   $         63,200    $       (41,902)        -66.3%
  Cost of revenue                                               -             10,472            (10,472)       -100.0%
    % of revenue                                               0%                17%               -17%        -100.0%
  Gross profit                                             21,298             52,728            (31,430)        -59.6%
    % of revenue                                             100%                83%                17%          19.9%
  Operating expenses
    Research and development                              182,341            261,513            (79,172)        -30.3%
    General and administrative                            772,954            672,602            100,352          14.9%
 Total operating expenses                                 955,295            934,115             21,180           2.3%
 Gain (loss) on marketable securities                     (12,219)           (23,234)            11,015         -47.4%
 Interest expense                                      (1,281,128)        (1,196,216)            84,912           7.1%
 Gain on sale of technology                                     -             75,500             75,500        NM
 Other income                                              47,752                  -             47,752        NM
 Net loss                                              (2,179,592)        (2,025,337)           154,255           7.6%
 Net loss per share basic and diluted           $           (0.01)  $          (0.02)   $         (0.01)        -50.0%
</TABLE>


                                       20
<PAGE>

Revenues

         Our revenue decrease of $41,902, or 66.3%, was due to a continuing lack
of significant revenue producing contracts. Our microprocessor product line has
failed to generate any significant contracts. 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 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 commensurate with
the reduction in revenue. We fully reserved 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. We anticipate that future cost of revenue will be commensurate with
the success of receiving microprocessor licenses and royalties and patent
infringement proceeds.

Research and Development

<TABLE>
<CAPTION>
                                                          Six Months Ended
                                                                                        Increase
                                                    11/30/2004        11/30/2003       (Decrease)          %
<S>                                             <C>               <C>                <C>                    <C>
Research and Development
  Personnel (including consultants)             $       171,247   $       232,691    $     (61,444)        -26.4%
  Facilities                                              8,060            28,054          (19,994)        -71.3%
  Other research and development expenses                 3,034               768            2,266         295.1%
                                                ----------------  ----------------     ------------
                                                $       182,341   $       261,513    $     (79,172)        -30.3%
</TABLE>

         The $79,172, or 30.3%, 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. When and if funds become available, 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>
                                                         Six Months Ended
                                                                                        Increase
                                                    11/30/2004        11/30/2003       (Decrease)          %
<S>                                             <C>               <C>                <C>                     <C>
General and Administrative
  Personnel (including consultants)             $       239,402   $       259,068    $     (19,666)         -7.6%
  Professional fees                                     247,852           129,754          118,098          91.0%
  Facilities                                            145,754           147,121           (1,367)         -0.9%
  Other general and administrative expenses             139,946           136,659            3,287           2.4%
                                                ----------------  ----------------     ------------
                                                $       772,954   $       672,602    $     100,352          14.9%
</TABLE>


                                       21
<PAGE>

         The $100,352, or 14.9%, increase in general and administrative expenses
was attributed to a decrease in personnel costs of $20,000 offset by an increase
in professional fees of $118,098 primarily as a result of patent infringement
costs increasing ($142,000) offset by a decrease in costs associated with
registration statements and auditing of our financial statements ($24,000). We
anticipate general and administrative expenses to remain stable at the current
levels until such time as contract revenue and patent litigation proceeds are
recognized at which time additional personnel and other fees would be expected
to increase.

Other income (expense)

<TABLE>
<CAPTION>
                                                    Six Months Ended

                                                     11/30/2004         11/30/2003           Change            %
<S>                                             <C>                   <C>                  <C>                 <C>
Other income (expense)
  Gain (loss) on marketable securities          $         (12,219)           (23,234)           11,015         -47.4%
  Other income                                             47,752                  -            47,752          NM
  Gain on sale of technology                                    -             75,500           (75,500)         NM
  Interest expense, paid in cash or accrued               (88,564)           (77,632)          (10,932)         14.1%
  Non-cash interest expense                            (1,192,564)        (1,118,584)          (73,980)          6.6%
                                                ------------------    ---------------      ------------
                                                $      (1,245,595)    $   (1,143,950)      $  (101,645)          8.9%
</TABLE>

         The increase in other expenses, net of other income, of $101,645, or
8.9%, was primarily attributable to the final payment related to the sale of our
gas plasma antenna technology received during fiscal year 2004 ($75,000) and by
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 ($74,000)
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 ($11,000) and a one-time settlement with a subtenant who abandoned
our adjoining space ($47,000). We anticipate that the non-cash interest expense
will remain stable over the balance of fiscal 2005 due to a large debt discount
remaining on our books as of November 30, 2004 ($1,375,000) 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.


                                       22
<PAGE>

CAPITAL RESOURCES

Working Capital

<TABLE>
<CAPTION>
                                                                                               Increase
                                                     11/30/2004           5/31/2004           (Decrease)
<S>                                             <C>                   <C>                 <C>
Current assets                                  $         430,746     $        701,879    $       (271,133)
Current liabilities                                       377,942              548,042            (170,100)
                                                ------------------   ------------------   -----------------
  Working capital                               $          52,804     $        153,837    $       (101,033)
                                                ==================   ==================   =================

Long-term debt                                  $         484,760     $        230,007    $        254,753
                                                ==================   ==================   =================

Stockholders' equity (deficit)                  $        (272,234)    $        148,179    $       (420,413)
                                                ==================   ==================   =================

<CAPTION>

Statements of Cash Flows Select Information

                                                            Six Months Ended                   Increase
                                                     11/30/2004           11/30/2003          (Decrease)
<S>                                             <C>                   <C>                 <C>
Net cash provided (used) by:
  Operating activities                          $        (799,601)    $       (859,475)   $         59,874
  Investing activities                          $               -     $        (14,695)   $         14,695
  Financing activities                          $         616,397     $        847,897    $       (231,500)

Balance Sheet Select Information

                                                                                               Increase
                                                     11/30/2004           5/31/2004           (Decrease)

Cash and cash equivalents                       $         172,736    $         355,940    $       (183,204)
                                                ==================   ==================   =================

Prepaid expenses                                $         243,990    $         322,068    $        (78,078)
                                                ==================   ==================   =================

Accounts payable and accrued expesnes           $         233,494    $         294,702    $        (61,208)
                                                ==================   ==================   =================
</TABLE>

         The decrease in working capital of $101,033 and stockholders' equity
(deficit) of $420,413 was attributable to a reduction in cash flows from
financing activities ($231,500) by the company during the six months ended
November 30, 2004. This slow down in financing activities was a result of the
higher than normal cash and cash equivalents available at the beginning of the
year ($355,940).

Liquidity

         We estimate our current cash requirements to sustain our operations for
the next twelve months through November 2005 to be $1.8 million. Since we are no
longer supporting the communications product line, we are assuming that there
will be no communications product revenue. We have issued 8% convertible
debentures as our primary source of funding since 2002. At the option of the
debenture holders, they may purchase additional debentures up to $1 million at


                                       23
<PAGE>

any time during the two years following their purchase as long as the price of
our common stock is in excess of $0.20 per share. During the first six months
ended November 30, 2004, we obtained $452,500 from the issuance of 8%
convertible debentures and $164,432 from the exercise of warrants. Subsequent to
November 30, 2004, we obtained $25,000 from the issuance of 8% convertible
debentures and $169,032 from the exercise of warrants.

         If exercise of warrants are not in sufficient amounts, then we may not
have funds sufficient to meet our cash requirements. In such circumstances, we
would need to secure additional debt and/or equity financings with individual or
institutional investors. In addition, we would be required to make additional
cost reductions if our cash requirements cannot be met from external sources. We
expect that the $1.8 million requirement will be provided by:

      o  additional debt and/or equity financings;

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

      o  proceeds from revenue contracts and patent enforcement activities.

         In addition, we have formulated additional cost reduction plans which
can be implemented if the required funds are not obtainable. As of November 30,
2004, we also have remaining $400,000 under an accounts receivable factoring
agreement with our bank.

         We anticipate our future revenue to be derived primarily from the sale
of licenses, royalties and the proceeds from litigation or settlements of patent
infringement cases. 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 and
to fund the expenses of protracted patent enforcement litigation. Product
introductions such as those currently underway for the Ignite microprocessor 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 at


                                       24
<PAGE>

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.

            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 would require that such
transactions be accounted for using a fair-value-based method and recognized as
expenses in 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. Our other product lines have
not generated enough revenue to support our company. Therefore, we have limited
financial results upon which you may judge our potential. We may not become
profitable. 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, EXPECTS FUTURE LOSSES AND MAY NOT ACHIEVE OR
SUSTAIN ANNUAL PROFITABILITY

         We expect to incur operating losses in the future. Sales of our
products may never generate sufficient revenues to fund our continuing
operations. We may never generate positive cash flow or attain profitability. To
date, we have incurred significant losses. As of May 31, 2004, our accumulated
deficit was $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. Because of this record of
losses, there is substantial doubt about our ability to continue as a going
concern. These losses have resulted primarily from:

      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.

         Should our losses continue and should we be unable to fund our
operations from external sources, we would need to cease doing business and/or
liquidate or sell our assets.

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
sales of our products. A continued lack of significant revenues from the sale of
our products would require us to cease doing business and/or liquidate or sell
our assets.

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.


                                       26
<PAGE>

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
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. 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 co- inventors. We have
been, and may again be, subject to claims from such prior parties related to the
technology. Such parties may also attempt to exploit the technology
independently of our rights to do so. The asset purchase agreement and plan of
reorganization between Patriot, nanoTronics Corporation and Helmut Falk was the
agreement under which we acquired the basic ShBoom technology. The agreement
also contained a number of warranties and indemnities related to the ownership
of the technology and other matters. We believe nanoTronics Corporation has been
liquidated and, due to Mr. Falk's death in July 1995, our ability to obtain
satisfaction for any future claims as a result of a breach of the agreement may
be limited.

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

PATRIOT MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL TO FUND ITS OPERATIONS WHEN
NEEDED


                                       27
<PAGE>

         A lack of additional funding could force us to substantially curtail or
cease our operations, which would have a material adverse effect on our
business. Our ability to raise additional funds under the debenture agreement is
subject to certain conditions. These conditions include the effectiveness of a
registration statement covering the resale of the shares sold on the conversion
of the debentures or the exercise of the warrants issued concurrently with the
debentures. We estimate our current annual cash requirements to sustain our
operations to be $1.8 million. There can be no assurance that any future funds
required will be generated from operations or from other potential sources.
Further, any such required funds may only be available on unattractive terms and
may significantly dilute the value of our existing shares.

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

         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.


                                       28
<PAGE>

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

         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 January 14, 2005 is
as follows:

Common stock currently outstanding                   232,890,435
Reserved for issuance
       Stock option plans                              8,181,688
       Warrants                                      111,883,790
       Convertible debentures                         46,585,278
                                                ----------------
Common stock fully diluted                           399,541,191
                                                ----------------

In addition, in November 2004 we negotiated with seven investors a lock up of
warrants exercisable for up to 18,606,452 shares of our common stock. These
shares are not included in the common stock fully diluted amount of 399,541,191
common shares reflected above. In order to obtain additional equity financing,
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
anticipate to hold 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
fund our operations from external sources, 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
October 1, 2004. 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:


Defendant                       U.S. District Court                 Case Number
---------                       -------------------                 -----------
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


         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. 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.

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

Item 2.  Changes in Securities

(a) During the three months ended November 30, 2004, 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.


                                       30
<PAGE>

COMMON STOCK

<TABLE>
<CAPTION>
                                                           Aggregate        Purchase Price Per
Name              Date of Sale       Number of Shares    Purchase Price           Share
------------    ----------------     ----------------    --------------     ------------------
<S>             <C>                       <C>                <C>               <C>
Red Oak Inc.    October 20, 2004          125,000            $3,250            $0.026  Cash
</TABLE>

WARRANT

<TABLE>
<CAPTION>
                                                                        Initial Exercise          Expiration
    Warrant Holder              Date of Issuance     Number of Shares   Price Per Share              Date
-----------------------        ------------------    ----------------   ----------------      ------------------
<S>                            <C>                       <C>                <C>               <C>
Wayne Opperman                 September 28, 2004        1,250,000          $0.0400           September 28, 2009
Wayne Opperman                  November 16, 2004        1,600,000          $0.0250            November 16, 2011
James & Josephine Zolin         November 16, 2004        1,600,000          $0.0250            November 16, 2011
Victor Gabourel                 November 16, 2004        1,600,000          $0.0250            November 16, 2011
Richard Daniels                 November 16, 2004        1,000,000          $0.0250            November 16, 2011
Lincoln Ventures LLC            November 17, 2004        9,431,137          $0.0167                April 1, 2011
Lincoln Ventures LLC            November 18, 2004        4,000,000          $0.0250                April 1, 2011
</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.

                                   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: January 14, 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)


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