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, 2005

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

         For the transition period from _____________ to _______________

                         Commission File Number 0-22182

                         PATRIOT SCIENTIFIC CORPORATION

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

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

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

                                 (858) 674-5000
                                 --------------
                           (Issuer's 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 |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_|  No |X|

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                         304,719,593
-------------------------------                         -----------
           (Class)                            (Outstanding at November 30,2005)

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


                                       1
<PAGE>

                         PATRIOT SCIENTIFIC CORPORATION

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                          PAGE
                                                                                                                          ----
<S>                                                                                                                       <C>
PART I. FINANCIAL INFORMATION
     ITEM 1. Financial Statements
        Consolidated Balance Sheets as of November 30, 2005 (unaudited) and May 31, 2005                                  3
        Consolidated Statements of Operations for the three and six months ended November 30, 2005 and 2004
          (unaudited)                                                                                                     4
        Consolidated Statements of Cash Flows for the six months ended November 30, 2005 and 2004 (unaudited)             5
        Notes to Unaudited Consolidated Financial Statements                                                              6-13
     ITEM 2. Management's Discussion and Analysis or Plan of Operation                                                    14-23
     ITEM 3. Controls and Procedures                                                                                      23

PART II. OTHER INFORMATION
     ITEM 1. Legal Proceedings                                                                                            24-26
     ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                  *
     ITEM 3. Defaults Upon Senior Securities                                                                              *
     ITEM 4. Submission of Matters to a Vote of Security Holders                                                          *
     ITEM 5. Other Information                                                                                            26
     ITEM 6. Exhibits                                                                                                     26-30

     SIGNATURES                                                                                                           31
</TABLE>

* No information provided due to inapplicability of the item.



                                       2
<PAGE>

                          PART I- FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                         PATRIOT SCIENTIFIC CORPORATION
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                              November 30, 2005     May 31, 2005
----------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                   <C>
ASSETS                                                                           (Unaudited)

Current Assets:
   Cash and cash equivalents (including $2,559,670 held by a consolidated
      entity at November 30, 2005)                                            $      8,478,982      $    591,426
   Marketable securities and short term investments                                    614,283           697,524
   Restricted short term investment                                                    204,774           201,648
   Licenses receivable                                                                 500,000         2,000,000
   Accounts receivable                                                                   2,625                --
   Prepaid expenses and other current assets                                           243,186           121,758
----------------------------------------------------------------------------------------------------------------

Total current assets                                                                10,043,850         3,612,356

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $204,222
   and $1,085,703                                                                       25,588            21,376

OTHER ASSETS                                                                                --            23,891

PATENTS AND TRADEMARKS, net of accumulated amortization of $566,975
   and $549,563                                                                         48,999            66,411
----------------------------------------------------------------------------------------------------------------
                                                                              $     10,118,437      $  3,724,034
================================================================================================================

LIABILITIES, MINORITY INTEREST, AND STOCKHOLDERS' EQUITY

Current liabilities:
   Line of credit                                                             $        100,000      $    100,000
   Current portion of convertible debentures, net of debt discount
      of $132,078 and $301,320                                                         616,090           421,847
   Accounts payable                                                                    138,704           268,458
   Accrued liabilities                                                                 487,404           505,153
   Current portion of capital lease obligation                                              --             2,306
   Accrued contested fee payable                                                       346,000           346,000
----------------------------------------------------------------------------------------------------------------

Total current liabilities                                                            1,688,198         1,643,764

CONVERTIBLE DEBENTURES, net of debt discount of $ -  and $111,559                           --            45,942
----------------------------------------------------------------------------------------------------------------

Total liabilities                                                                    1,688,198         1,689,706
----------------------------------------------------------------------------------------------------------------

MINORITY INTEREST IN EQUITY OF CONSOLIDATED ENTITY                                   1,279,835                --

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock, $.00001 par value; 5,000,000 shares authorized:
     none outstanding                                                                       --                --
   Common stock, $.00001 par value: 500,000,000 shares authorized:
     304,719,593 and 280,492,013 issued and outstanding                                  3,047             2,805
   Additional paid-in capital                                                       56,517,567        54,569,091
   Accumulated deficit                                                             (49,370,210)      (52,537,568)
----------------------------------------------------------------------------------------------------------------
   Total stockholders' equity                                                        7,150,404         2,034,328
----------------------------------------------------------------------------------------------------------------

                                                                              $     10,118,437      $  3,724,034
================================================================================================================
</TABLE>

See accompanying 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,
                                                 2005              2004                2005             2004
-----------------------------------------------------------------------------------------------------------------
<S>                                        <C>                <C>                <C>                <C>
Revenues:

   Licenses and royalties                  $          --      $          --      $  10,000,000      $          --
   Other                                          10,202             18,748             20,272             21,298
-----------------------------------------------------------------------------------------------------------------
                                                  10,202             18,748         10,020,272             21,298
-----------------------------------------------------------------------------------------------------------------

Operating expenses:
   Research and development                      109,553             54,037            198,260            182,341
   Selling, general and administrative         1,623,692            392,552          3,299,411            772,954
   Settlement and license expense                     --                 --          3,855,132                 --
-----------------------------------------------------------------------------------------------------------------
                                               1,733,245            446,589          7,352,803            955,295
-----------------------------------------------------------------------------------------------------------------

Operating income (loss)                       (1,723,043)          (427,841)         2,667,469           (933,997)
-----------------------------------------------------------------------------------------------------------------

Other income (expense):
   Unrealized gain (loss) on
       marketable securities                      (1,137)             2,444             (1,137)           (12,219)
   Other income                                   80,918                479            134,375             47,752
   Interest expense                             (111,030)          (648,223)          (313,514)        (1,281,128)
-----------------------------------------------------------------------------------------------------------------
                                                 (31,249)          (645,300)          (180,276)        (1,245,595)
-----------------------------------------------------------------------------------------------------------------

Income (loss) before minority
   interest in loss of consolidated
   entity and income taxes                    (1,754,292)        (1,073,141)         2,487,193         (2,179,592)

Minority interest in loss of
   consolidated entity                           479,596                 --            720,165                 --
-----------------------------------------------------------------------------------------------------------------

Income (loss) before income taxes             (1,274,696)        (1,073,141)         3,207,358                 --

Provision for income taxes                            --                 --             40,000
-----------------------------------------------------------------------------------------------------------------

Net income (loss)                          $  (1,274,696)     $  (1,073,141)     $   3,167,358      $  (2,179,592)
=================================================================================================================

Basic income (loss) per common share       $          --      $       (0.01)     $        0.01      $       (0.01)
-----------------------------------------------------------------------------------------------------------------

Diluted income (loss) per common share     $          --      $       (0.01)     $        0.01      $       (0.01)
-----------------------------------------------------------------------------------------------------------------

Weighted average number of common
   shares outstanding-basic                  303,431,364        198,970,399        297,350,377        190,971,852
Weighted average number of common
   shares outstanding-diluted                303,431,364        198,970,399        359,485,955        190,971,852
=================================================================================================================
</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                       4
<PAGE>

                         PATRIOT SCIENTIFIC CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                            Six Months Ended
                                                                                    --------------------------------
                                                                                     November 30,       November 30,
                                                                                         2005               2004
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                <C>
OPERATING ACTIVITIES:
     Net income (loss)                                                              $   3,167,358      $  (2,179,592)
     Adjustments to reconcile net income (loss) to net cash provided by (used
       in) operating activities:
         Amortization and depreciation                                                     29,240             47,297
         Non-cash compensation                                                                 --             22,175
         Non-cash interest expense related to convertible debentures, notes
           payable and warrants                                                           280,801          1,192,563
         Unrealized loss on marketable securities                                           1,137             12,219
         Common stock issued for services and other                                       206,250             14,800
         Expense related to warrant repricing and issuance                              1,397,491                 --
         Accrued interest income added to investments                                     (21,022)                --
         Loss in consolidated entity allocated to minority interest                      (720,165)                --
     Changes in:
           Accounts receivable                                                             (2,625)            (2,368)
           Prepaid and other assets                                                       (97,537)            95,408
           Licenses receivable                                                          1,500,000                 --
           Accounts payable and accrued expenses                                         (193,321)            (2,103)
--------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities                                     5,599,465           (799,601)
--------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
     Proceeds from sale of marketable securities                                          100,000                 --
     Purchase of property and equipment                                                   (16,040)                --
--------------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities                                                  83,960                 --
--------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
     Proceeds from the issuance of convertible debentures                                      --            452,500
     Proceeds from the issuance of common stock                                                --              3,250
     Minority interest investment in consolidated entity                                2,000,000                 --
     Payments for capital lease obligations                                                (2,306)            (3,785)
     Proceeds from exercise of common stock warrants and options                          206,437            164,432
--------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities                                               2,204,131            616,397
--------------------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    7,887,556           (183,204)
CASH AND CASH EQUIVALENTS, beginning of period                                            591,426            355,940
--------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD (1)                                        $   8,478,982      $     172,736
====================================================================================================================

(1) Included in cash at November 30, 2005 is $2,559,670 held by a consolidated
entity which amount can only be used for the operations of that entity.

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

     Cash payments for interest                                                     $       2,637      $       2,226
     Convertible debentures and accrued interest exchanged for common stock         $     138,540      $   1,062,104
====================================================================================================================
</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                       5
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.    BASIS OF PRESENTATION

The  unaudited   consolidated   financial   statements  of  Patriot   Scientific
Corporation  (the "Company,"  "we" or "us") 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, 2005.

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.  Additionally,  during the quarter
ended  August  31,  2005,   the  Company   entered  into  certain   nonrecurring
transactions related to the TPL agreement, which is more fully described in Note
5. Operating results for the three and six month periods ended November 30, 2005
are not necessarily  indicative of the results that may be expected for the year
ending May 31, 2006.

EARNINGS (LOSS) PER SHARE

We  follow  Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  128,
"Earnings  per Share."  Under SFAS No.  128,  basic  income  (loss) per share is
calculated  as income  (loss)  available to common  stockholders  divided by the
weighted average number of common shares outstanding.  Diluted income (loss) per
share is  calculated  as net  income  (loss)  available  to common  stockholders
divided by the diluted weighted average number of common shares outstanding. 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 and the  if-converted  method for  convertible
debentures.  For the six month period ended November 30, 2005,  potential common
shares of approximately  62,136,000 arising from our stock options and warrants,
were  included in the  determination  of diluted  earnings per share.  Potential
common shares arising from an additional 5,100,000 options and warrants, as well
as  approximately  11,200,000  related to our convertible  debentures,  were not
included  in the  calculation  of diluted  earnings  per share for the six month
period ended  November  30, 2005 as they were  considered  to be  anti-dilutive.
Potential  common  shares  related  to all  options,  warrants  and  convertible
debentures  were  considered  to be  anti-dilutive  for the  three and six month
periods  ended  November 30, 2004 and for the three month period ended  November
30, 2005 due to our reported loss in those periods.

In December  2003, the Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation No. 46(R) ("FIN 46(R)"),  which further clarified and amended FIN
46,   "Consolidation  of  Variable  Interest   Entities",   which  requires  the
consolidation  of  entities  in which an  enterprise  absorbs a majority  of the
entity's expected losses,  receives a majority of the entity's expected residual
returns, or is the primary beneficiary, as a result of ownership, contractual or
other financial  interests in the entity.  At November 30, 2005, the Company has
an interest in a limited  liability  company in which it is considered to be the
primary  beneficiary.  As a result,  the  Company has  consolidated  the limited
liability company under FIN 46 (See Note 5).

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 (loss) 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. See "Recent Accounting Pronouncements."


                                       6
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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 a  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.

Had the  Company  employed  the  accounting  provisions  for SFAS No.  123,  the
Company's  reported  net  income  (loss) and per share  amounts  would have been
changed by the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                        Three Months Ended                      Six Months Ended
                                  --------------------------------      --------------------------------
                                    November 30,      November 30,        November 30,      November 30,
                                        2005              2004               2005               2004
                                  --------------------------------      --------------------------------
<S>                               <C>                <C>                <C>                <C>
Net income (loss)-as reported     $  (1,274,696)     $  (1,073,141)     $   3,167,358      $  (2,179,592)
Compensation expense                         --            (10,110)          (182,250)           (12,993)
                                  --------------------------------      --------------------------------

Net income (loss)-pro forma       $  (1,274,696)     $  (1,083,251)     $   2,985,108      $  (2,192,585)
                                  ================================      ================================
As reported per share:
    Basic                         $          --      $       (0.01)     $        0.01      $       (0.01)
                                  --------------------------------      --------------------------------
    Diluted                       $          --      $       (0.01)     $        0.01      $       (0.01)
                                  --------------------------------      --------------------------------
Pro forma per share:
    Basic                         $          --      $       (0.01)     $        0.01      $       (0.01)
                                  --------------------------------      --------------------------------
    Diluted                       $          --      $       (0.01)     $        0.01      $       (0.01)
                                  --------------------------------      --------------------------------
</TABLE>

2.    RECENT ACCOUNTING PRONOUNCEMENTS

In December  2004,  the FASB  issued  SFAS 123R,  "Share  Based  Payment."  This
statement  replaces  SFAS No. 123 and  supersedes  APB Opinion 25. SFAS No. 123R
requires that the cost of share-based payment transactions (including those with
employees  and  non-employees)  be  recognized  as  compensation  based  on  the
estimated fair value of the equity instrument awarded.  SFAS No. 123R applies to
all  share-based  payment  transactions  in which an  entity  acquires  goods or
services by issuing (or offering to issue) its shares,  options, or other equity
instruments  or by incurring  liabilities  in amounts  based on the price of the
entity's  shares or other equity  instruments,  or that require (or may require)
settlement  by the issuance of an entity's  shares or other equity  instruments.
This  statement  applies  to all new  awards  granted  during  the  fiscal  year
beginning  after  December 15, 2005 and to previous  awards that are modified or
cancelled after such date. The Company has not yet fully evaluated the effect of
adopting SFAS No. 123R on its consolidated financial statements.

In December 2004, the FASB issued SFAS No. 153, Exchange of Nonmonetary  Assets,
an amendment of APB Opinion No. 29,  "Accounting for Nonmmonetary  Transaction."
SFAS No. 153 is based on the  principle  that  exchanges of  nonmonetary  assets
should be measured based on the fair market value of the assets exchanged.  SFAS
No. 153 eliminates the exception of nonmonetary  exchanges of similar productive
assets and replaces it with a general  exception  for  exchanges of  nonmonetary
assets  that  do not  have  commercial  substance.  SFAS  153 is  effective  for
nonmonetary asset exchanges in fiscal periods beginning after June 15, 2005. The
Company  does not  believe  that the  provisions  of SFAS  No.  153 will  have a
material impact on its consolidated financial statements.

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections," which replaces APB Opinion No. 20, "Accounting  Changes," and FASB
Statement No. 3, "Reporting Accounting Changes in Interim Financial Statements,"
and changes the requirements for the accounting for and reporting of a change in
accounting principle.  SFAS No. 154 requires retrospective  application to prior
periods' financial statements of changes in accounting  principle,  unless it is
impracticable to determine either the period-specific  effects or the cumulative
effect of the  change.  SFAS No. 154 is  effective  for  accounting  changes and
correction  of errors made in fiscal years  beginning  after  December 15, 2005.
Early adoption is permitted for accounting changes and correction of errors made
in fiscal years beginning after the date SFAS No. 154 was issued. At the present
time,  the Company  does not believe  that  adoption of SFAS No. 154 will have a
material effect on its consolidated financial statements.

3.    CONTINUED EXISTENCE AND MANAGEMENT'S PLAN

Through May 31, 2005, the Company had incurred  reported net losses and has used
significant amounts of cash in its operations. Historically, the Company has had
to rely on obtaining  financing to fund its  operations;  such  financing  often
being at unfavorable  terms to the Company due to its poor financial  condition.
Management of the Company believes that 2005 represented a turning point for the


                                       7
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Company.  During 2005 and during the six months ended  November  30,  2005,  the
Company was able to resolve legal disputes involving  ownership and other issues
related to its patented technologies.  As a result, the Company has been able to
enter into two significant  license agreements for its technology which resulted
in the Company  obtaining  approximately  $13,000,000  in the  aggregate.  These
agreements  are  discussed  more  fully in  Notes 4 and 5 to these  consolidated
financial statements. Prospectively, the Company anticipates that it may need to
spend  additional  funds in its efforts to further develop its  technologies and
expand the technologies'  markets.  The Company believes that the funds obtained
through these agreements will be sufficient to meet the Company's obligations as
they come due for the foreseeable  future. If expanded  development is commenced
or new generations of microprocessor  technology are accelerated  beyond current
plans,  additional expenditures may be required. At the present time, management
believes that it has the funds  available to meet the obligations of the Company
as they  come due for the  foreseeable  future.  In the event  that the  Company
cannot do so, it will be  required  to  curtail  or alter  its  future  plans of
operations.

4.    LICENSE AGREEMENTS

In February 2005,  the Company  entered into two separate  licensing  agreements
with one customer for the Company's  Ignite  microprocessor  technology  and the
patent  portfolio  technology.  The  aggregate  amount of the two  licenses  was
$3,050,000,  of which  $2,950,000  was for  licensing  fees and $100,000 was for
maintenance  services.  Maintenance  under  the  agreements  is  expected  to be
provided  over a period  not to exceed  four  years.  The  payment  terms of the
agreements  require  aggregate  payments of  $300,000 at the time of  execution,
three  quarterly  payments of $750,000  each on April 1, August 15, and November
15, 2005 and one final payment of $500,000 on February 15, 2006.  Total payments
received  to date under the  agreements  include  $1,050,000  in fiscal 2005 and
$1,500,000 in fiscal 2006. The agreements also provide for the future payment of
royalties  to  the  Company  based  on  sales  of  product  using  the  licensed
technology.  In  connection  with the  license  agreement,  the  Company  became
obligated  to the former  co-inventor  of the Ignite  technology  for  $207,600,
payable  in  quarterly  installments  of  $51,900,  of  which  $103,800  remains
outstanding at November 30, 2005 and is included in accrued liabilities.

Also, in  conjunction  with entering into these license  agreements,  as well as
other  license  agreements  (See Note 5), the legal  advisor who had  previously
assisted  the  Company in its  negotiations  has  asserted a claim  against  the
Company for amounts  which the advisor  believes it is entitled.  The Company is
contesting the matter and the outcome of this matter is currently unknown. Based
on its current  assessment of the matter, the Company has accrued a liability of
$346,000 as of November  30,  2005.  The Company  intends to  vigorously  defend
itself in this matter;  however,  it is possible  that,  were the Company not to
prevail in the suit, the ultimate  amount payable to such legal advisor could be
significantly higher than the current accrued liability.

5.    CREATION OF CONSOLIDATED LIMITED LIABILITY COMPANY /LICENSE AGREEMENT

In June 2005,  the Company  entered into an agreement  with the  co-inventor  of
certain  of the  Company's  technology  pursuant  to which the  Company  and the
co-inventor  resolved  all  legal  disputes  between  them.  As a result  of the
agreement,  the Company  formed a new limited  liability  company (the "JV LLC")
with the  co-inventor  into which both parties  contributed  their rights to the
technologies.  The Company believes, based upon consultation with its attorneys,
that it was not  required by  applicable  law or other  existing  agreements  to
obtain  approval for the  contribution  of the license rights to the JV LLC from
stockholders  or any parties other than its various  warrant  holders.  Both the
Company and the other member of the JV LLC agreed to establish a working capital
fund for the JV LLC of  $4,000,000,  of which  the  Company's  contribution  was
$2,000,000. The Company and the other member of the JV LLC are obligated to fund
future working  capital  requirements at the discretion of the JV LLC management
committee, in order to maintain working capital of not more than $8,000,000, and
neither  the  Company  nor  the  other  member  of the JV LLC  are  required  to
contribute more than  $2,000,000 in any fiscal year. The Company  received a 50%
interest in the JV LLC.  For  accounting  purposes  the newly  formed  entity is
considered to be a variable  interest  entity,  as defined in FIN 46R, for which
the  Company is  considered  to be the  primary  beneficiary.  Accordingly,  the
accounts and transactions of the JV LLC have been consolidated with those of the
Company  and the other  member of the JV LLC's  interest  in the JV LLC has been
presented as a minority interest in the consolidated financial statements of the
Company as of and for the three and six month periods  ended  November 30, 2005.
The JV LLC has  committed  to pay the other  member of the JV LLC  $500,000 on a
quarterly  basis for work done by the other  member on behalf of the JV LLC. The
JV LLC has paid  $1,000,000 to the other member and expensed such amounts during
the six month period ended November 30, 2005. At November 30, 2005, the JV LLC`s
sole  asset  was  approximately  $2,560,000  in cash.  Although  this  amount is
reported  together with the Company's cash balances in the consolidated  balance
sheet as of November 30, 2005,  the Company does not have the ability to control
the JV LLC and this cash is not  available  for use by the  Company.  The JV LLC
reported a net loss for the three and six month periods ended  November 30, 2005
of approximately $480,000 and $1,440,000, respectively.


                                       8
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Concurrently  with  forming  the JV LLC,  the  Company  entered  into a  license
agreement  with a third party pursuant to which it received  $10,000,000,  which
amount was recorded as license revenue during the quarter ended August 31, 2005.
In connection  with entering into the license  agreement and forming the JV LLC,
the Company incurred  various cash and non-cash  expenses.  Direct,  incremental
cash costs incurred with the transactions  included $170,000 paid to a committee
of the  Company's  board of  directors  for their  efforts in  consummating  the
transactions,  approximately $1,328,000 paid to certain of the Company's warrant
holders to obtain their  approval of the  agreement,  and  $960,000  paid to the
former  co-inventor  of the  technology.  As more fully  discussed  in Note 4, a
former legal advisor of the Company may assert a success fee against the Company
based upon  proceeds  received by the Company under this license  agreement.  No
amount  has been  accrued  for this  contingency  as the  Company  believes  the
probability  of any amount being paid to the advisor for this license  agreement
is remote. The Company believes,  based upon consultation with its attorneys, it
was not  required  by  applicable  law or other  existing  agreements  to obtain
approval  for  the  contribution  of the  license  rights  to  the  JV LLC  from
stockholders or any parties other than its various warrant holders.

The Company also granted new  warrants and agreed to reprice  other  outstanding
warrants  in order to obtain  the  necessary  approvals  from  certain  security
interest holders as well as to obtain the release of their security interests in
the  Company's  intellectual  property,  and to finalize  the limited  liability
company  agreement.  The Company granted a warrant to the other member of the JV
LLC to acquire up to  3,500,000  shares of the  Company's  common stock at a per
share price of $0.125.  The warrant  has a term of seven  years.  At the date of
grant, the right to acquire 1,400,000 common shares vested. The right to acquire
the remaining  2,100,000  shares will vest in 700,000  increments  only upon the
Company's  common  stock  attaining a per share stock price of $0.50,  $0.75 and
$1.00. As additional consideration to the warrant holders for providing approval
for the transaction, the Company agreed to reset the per share exercise price of
approximately  35,000,000  warrants to $0.015 for which the warrant holders also
conveyed  other  warrants  to acquire  12,000,000  shares  back to the  Company.
Further, the Company issued additional warrants to acquire approximately 290,000
shares of the Company's common stock at a per share price of $0.03. The warrants
issued and repriced were valued using the Black Scholes method and the following
assumptions:  volatility  of 123%, no  dividends,  risk free  interest  rates of
approximately  4%, and contractual  terms ranging from five to seven years.  The
value of the warrants  issued and repriced in excess of the current value of the
warrants  reconveyed  and the  value of the  warrants  previously  expensed  was
approximately  $1,397,000,  which  amount,  together  with  the  cash  component
previously  described,  is  reflected  as an  expense in the three and six month
periods ended November 30, 2005.

6.    CONVERTIBLE DEBENTURES

Overview. From fiscal 2002 through fiscal 2005, the Company raised approximately
$5,400,000  through  the  issuance  of  convertible  debentures,  having  stated
interest  rates  ranging from 8% to 12%, to a limited  group of  investors.  The
convertible  debentures  entitle the debenture  holder to convert the principal,
and any accrued interest thereon,  into shares of the Company's common stock for
up to two years from the date of issuance. The following represents a summary of
certain salient features of the convertible debentures.

Number of Shares of Common Stock Into Which the Debentures May Be Converted. The
debentures were initially  convertible into shares of common stock at conversion
prices  ranging  from  approximately  $0.02 to $0.10 per share.  The  debentures
contain provisions which allow for the conversion rate to be reset on a periodic
basis based on a comparison of the market price of the Company's common stock to
the conversion  price of the debentures.  On those  measurement  dates where the
market  price is less than the  conversion  rate, a new  conversion  rate is set
based on a weighted  average  of the market  price for the ten days prior to the
reset  measurement  date. As of November 30, 2005, the reset conversion rates on
debentures  outstanding  range from $0.02 to $0.09.  The Company has  received a
waiver letter from the holders of the  convertible  debentures  which  specifies
that the holders will not request conversion of their debentures or exercise any
related  warrants into shares of the  Company's  common stock unless the Company
has  sufficient  authorized  but unissued  shares to satisfy the  conversion  or
exercise at such time a request is made by the debenture holders.

Warrants.  Concurrent  with the  issuance  of the  convertible  debentures,  the
Company  issued to the  debenture  holders  warrants to  purchase  shares of the
Company's  common stock.  These warrants are exercisable for five 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 the warrants' 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.


                                       9
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Options to Purchase Additional Debentures. Subject to the price of the Company's
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 may be converted would initially equal 115% of the volume
weighted  average price for the Company's 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.

Stockholder  Approval.  The  Company  may  currently  issue more than 20% of its
outstanding  shares  under the  convertible  debentures.  If the Company were to
become listed on the NASDAQ Capital Market or NASDAQ  National  Market,  then it
must get stockholder  approval to issue more than 20% of its outstanding shares.
Currently, stockholder approval is not required.

Restrictive  Covenants.  For a period of 18 months  from the date of issuance of
the   debentures,   the  Company  is  prohibited   from  entering  into  certain
transactions.  These  transactions  include  the  issuance of any debt or equity
securities in a private  transaction  which are convertible or exercisable  into
shares of common stock at a price based on the trading price of the common stock
at any time after the initial issuance of such  securities,  the issuance of any
debt or equity  securities with a fixed  conversion or exercise price subject to
adjustment,  and any private equity line type agreements  without  obtaining the
debenture  holders'  prior  written  approval.  Additionally,  so  long  as  the
debentures  remain  outstanding,  the Company  cannot  declare or pay  dividends
without the debenture holders' approval.

Right of First Refusal.  The debenture  holders have a right of first refusal to
purchase or participate in any equity  securities  offered by the Company 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,  the
Company is responsible  for  registering  the resale of the shares of its common
stock which will be issued on the  conversion of the  debentures.  As of May 31,
2005, there have been six registration statements (designated A through G).

Security Interest.  The convertible debentures were secured by substantially all
assets of the Company  through June 2005,  at which time the  debenture  holders
agreed  to  release  their  security  interests  in the  Company's  intellectual
property. (See Note 5).


                                       10
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The  following   tables  present  the  status  and  activity  of  the  Company's
convertible debentures as of and through November 30, 2005:

<TABLE>
<CAPTION>
                                                                                            Shares
                                         Principal           Conversion Prices         Converted as
                                        Balance at    ------------------------------        of              Warrant
            Dates of      Aggregate      November                                         November           Shares
 Series     Issuance      Principal      30, 2005         Initial           Reset         30, 2005           Issued
----------------------------------------------------------------------------------------------------------------------
<S>          <C>           <C>              <C>       <C>              <C>              <C>               <C>
   A         4/23/02-     $1,000,000        $         $  0.08616-      $  0.04190-      24,099,548        12,859,175
             6/10/02                                      0.10289          0.04457

   B         8/23/02-        605,000       --            0.05126-         0.04381-      14,777,350        11,234,835
             1/24/03                                       0.0727          0.04722

   C         3/24/02-        510,000       --              0.041-           0.041-      10,470,554         9,377,943
             6/9/03                                         0.065            0.065

   D         8/1/03-         547,500       --             0.0172-          0.0172-      25,178,803        22,455,355
             10/21/03                                       0.048           0.0477

   E         12/1/03-      1,527,500       --             0.0267-          0.0267-      46,794,618        30,395,392
             5/11/04                                         0.10             0.10

   F         3/23/04         723,168     723,168             0.09             0.09              --         8,035,192

   G         9/28/04-        490,000     25,000         0.016710-        0.016710-      20,729,062        21,690,815
             1/17/05                                         0.04             0.04
----------------------------------------------------------------------------------------------------------------------

                          $5,403,168   $ 748,168                                       142,049,935       116,048,707
======================================================================================================================
</TABLE>

Convertible debentures issued since April 2002                      $ 5,403,168
Less debentures converted to common stock                            (4,655,000)
-------------------------------------------------------------------------------
                                                                        748,168
Less debt discount                                                      132,078
-------------------------------------------------------------------------------

Convertible debentures at November 30, 2005, all current                616,090
-------------------------------------------------------------------------------

Maturity dates of outstanding convertible debentures
    March 23, 2006                                                  $   723,168
    November 17, 2006                                                    25,000
-------------------------------------------------------------------------------

                                                                    $   748,168
===============================================================================

At November 30, 2005, the Company's convertible debentures were convertible into
approximately  10,550,000 shares of the Company's common stock. During the three
month period ended August 31,  2005,  holders of  debentures  having a principal
balance of $132,500  converted their debentures,  together with accrued interest
thereon of $6,040,  into  8,295,789  shares of the Company's  common  stock.  No
debentures were converted during the three month period ended November 30, 2005.


                                       11
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7.    STOCKHOLDERS' EQUITY

The following table summarizes equity  transactions  during the six months ended
November 30, 2005:

<TABLE>
<CAPTION>
                                                                    Common
                                                                     Shares          Amount
                                                                  -----------     -----------

<S>                                                               <C>             <C>
Balance June 1, 2005                                              280,492,013     $54,571,896

Exercise of common stock options                                      850,000          78,400
Exercise of common stock warrants                                   2,905,830         128,037
Cashless exercise of common stock warrants                         11,550,961              --
Stock issued on conversion of
    debentures and accrued interest                                 8,295,789         138,540
Stock issued to co-inventor of technology                             625,000          81,250
Issuance of common stock warrants in connection with new
    venture/license agreement                                              --         556,675
Extension of term of warrants previously issued to consultant              --         125,000
Effect of repricing and conveyance in connection with new
    venture/license agreement                                              --         840,816
                                                                  -----------     -----------

Balance November 30, 2005                                         304,719,593     $56,520,614
                                                                  ===========     ===========
</TABLE>

STOCK OPTION ACTIVITY

At November 30, 2005, we had 1,880,000 options outstanding  pursuant to our 1996
Stock Option Plan,  exercisable  at prices ranging from $0.04 to $1.18 per share
and expiring through 2010;  1,943,000 options  outstanding  pursuant to our 2001
Stock Option Plan,  exercisable  at prices ranging from $0.04 to $0.13 per share
and expiring  through 2010; and 3,575,000  options  outstanding  pursuant to our
2003 Stock Option Plan,  exercisable  at prices  ranging from $0.04 to $0.16 per
share expiring through 2010. Some of the options  outstanding  under these plans
are not presently exercisable and are subject to vesting criteria.

During the quarter ended August 31, 2005, we issued options to acquire 1,350,000
shares of our common stock at a per share price of $0.16 to members of our Board
of Directors. No options were issued during the quarter ended November 30, 2005.
During the quarter ended August 31, 2005,  options to purchase 850,000 shares of
our common  stock were  exercised  for  proceeds  of  $78,400.  No options  were
exercised during the quarter ended November 30, 2005.

WARRANTS

At November 30, 2005, we had warrants  outstanding  exercisable  into 84,790,708
common  shares at  exercise  prices  ranging  from $0.015 to $0.65 per share and
expiring  through June 2012.  During the six months ended  November 30, 2005, we
issued  warrants to purchase  3,790,290  shares of common  stock,  had investors
exercise warrants to purchase  16,122,163 shares of our common stock,  2,905,830
of which were exercised for cash proceeds of $128,037.  The remaining 13,216,333
warrants were exercised  pursuant to a cashless exercise and resulted in the net
issuance of 11,550,961  shares of our common stock.  During the six months ended
November 30, 2005 the Company  also  cancelled  warrants to purchase  12,000,000
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, 2005, no warrants  were  repriced in connection  with
these agreements.  The Company repriced other warrants to purchase approximately
35,000,000 common shares to $0.015 (See Note 5).


                                       12
<PAGE>

PATRIOT SCIENTIFIC CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

COMMON STOCK

On July 22,  2005,  625,000  shares  of common  stock  valued at $0.13 per share
(based on the fair value on the date of issuance) were issued to the co-inventor
of certain technology.  The Company recorded an expense of $81,250 in connection
with the issuance of these shares.

8.    INCOME TAXES

During the six months ended  November 30, 2005,  the Company  recorded a $40,000
provision for income taxes which related to California state alternative minimum
taxes. Deferred income taxes are provided for the difference in the treatment of
certain  income and expense  items for  financial  and tax  reporting  purposes.
Deferred tax assets consist  principally of income tax benefits arising from the
Company's  net  operating  loss  carry-forwards.  During  the six  months  ended
November  30,  2005,  the  Company  utilized  approximately  $4,900,000  of  its
available net operating loss  carryforwards to offset its taxable income arising
during the six month period ended  November 30, 2005. At November 30 and May 31,
2005, a valuation allowance of approximately $12,800,000 and $14,700,000,  which
amounts are equal to the Company's  net deferred tax assets at those dates,  has
been recorded,  as management has not determined that it is more likely than not
that the benefit from the  deferred tax asset will be realized.  At November 30,
2005,  the Company has federal and state net operating  loss  carry-forwards  of
approximately  $30,000,000 and  $16,000,000,  respectively,  that expire through
2025  and  2015,  respectively.   Annual  usage  of  these  net  operating  loss
carryforwards may be limited in the future due to changes in our stockholders.

9.    CONTINGENCIES

Legal.  During the quarter ended August 31, 2005, the Company  terminated two of
its officers,  each of whom had an employment contract with the Company.  One of
the officers  agreed to accept  approximately  $150,000 as severance and to have
the maturity  date of options  held by him extended for one year.  Approximately
$48,000  owed to him remains  outstanding  at November 30,  2005.  Further,  the
Company agreed to accelerate the vesting of all outstanding warrants held by the
officer and to extend  their term to  September  2006.  The Company  recorded an
expense of approximately  $125,000  related to this warrant  modification in the
quarter ended August 31, 2005.

The Company has not reached an agreement  with the other  officer,  however,  it
accrued  approximately  $50,000  during the three month  period ended August 31,
2005 for amounts  which it believes  may be due to this  individual.  The former
officer  has filed a  complaint  against the  Company  seeking  arbitration  and
claiming he is owed approximately $1,500,000.  The Company believes the claim is
without merit and intends to vigorously defend itself.

Guarantees  and  Indemnities.  The  Company  has  made  certain  guarantees  and
indemnities,  under which it may be required to make payments to a guaranteed or
indemnified party. The Company  indemnifies its directors,  officers,  employees
and  agents  to the  maximum  extent  permitted  under  the laws of the State of
Delaware. In connection with its facility lease, the Company has indemnified its
lessor for certain claims arising from the use of the  facilities.  The duration
of the guarantees and indemnities varies, and in many cases is indefinite. These
guarantees  and  indemnities  do not provide for any  limitation  of the maximum
potential future payments the Company could be obligated to make.  Historically,
the Company has not been  obligated to make any  payments for these  obligations
and no liabilities  have been recorded for these  guarantees and  indemnities in
the accompanying consolidated balance sheets.


                                       13
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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, 2005.

OVERVIEW

In June 2005,  Patriot  Scientific  Corporation  (the  "Company,"  "we" or "us")
entered  into an  agreement  with Intel  Corporation  for the  licensing  of its
technology.   Management  of  the  Company  believes  the  agreement  represents
continued validation of the Company's position that its intellectual property is
being infringed by major manufacturers of microprocessor technology. The Company
also entered into a series of agreements with Technology Properties Limited Inc.
("TPL") and others to  facilitate  the pursuit of  infringers  of the  Company's
intellectual  property,  many of which  infringers are large scale.  The license
agreements signed in the first quarter of fiscal 2006 represent a starting point
to work toward more favorable terms in future negotiations.  Management believes
that  utilizing  the option of working  through TPL, as compared to creating and
using a Company licensing team for those activities, is a prudent way to achieve
the desired  results as the Company seeks to obtain fair value from the users of
its intellectual property.

The Company continues efforts to develop,  market and sell 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 telecommunications networks.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our  consolidated  financial  statements  have been prepared in accordance  with
accounting principles generally accepted in the United States of America,  which
require  us to make  estimates  and  judgments  that  significantly  affect  the
reported  amounts of assets,  liabilities,  revenues and  expenses,  and related
disclosure of contingent  assets and  liabilities.  Actual  results could differ
from  those  estimates,  and  such  differences  could  affect  the  results  of
operations  reported  in future  periods.  We  believe  the  following  critical
accounting policies affect our most significant  estimates and judgments used in
the preparation of our consolidated financial statements.

1. Revenue Recognition

Accounting for revenue recognition is complex and affected by interpretations of
guidance  provided  by  several  sources,  including  the  Financial  Accounting
Standards  Board ("FASB") and the Securities  and Exchange  Commission  ("SEC").
This guidance is subject to change.  We follow the guidance  established  by the
SEC in Staff Accounting Bulletin No. 104, as well as generally accepted criteria
for revenue recognition,  which require that, before revenue is recorded,  there
is  persuasive  evidence of an  arrangement,  the fee is fixed or  determinable,
collection  is  reasonably  assured,  and delivery to our customer has occurred.
Applying  these criteria to certain of our revenue  arrangements  requires us to
carefully  analyze the terms and conditions of our license  agreements.  Revenue
from our technology  license  agreements is generally  recognized at the time we
enter into a contract and provide our customer with the licensed technology.  We
believe that this is the point at which we have performed all of our obligations
under  the  agreement;  however,  this  remains  a highly  interpretive  area of
accounting  and future license  agreements  may result in a different  method of
revenue  recognition.  Fees for  maintenance  or  support  of our  licenses  are
recorded on a straight-line basis over the underlying period of performance.

2. Assessment of Contingent Liabilities

We are involved in various  legal  matters,  disputes,  and patent  infringement
claims  which  arise in the  ordinary  conduct  of our  business.  We accrue for
estimated  losses at the time when we can make a reliable  estimate of such loss
and  it  is  probable  that  it  has  been  incurred.   By  their  very  nature,
contingencies  are difficult to estimate.  We continually  evaluate  information
related  to all  contingencies  to  determine  that  the  basis on which we have
recorded our estimated exposure is appropriate.


                                       14
<PAGE>

3. Stock Options and Warrants

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

Statement of Financial  Accounting  Standards ("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
others and  estimates  the fair value of such  options  using the  Black-Scholes
option-pricing  model.  The fair value is recorded  as expense as  services  are
provided or other  obligations are incurred.  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.  The  Black-Scholes
model  requires the use of various  inputs,  including  volatility of our stock,
duration of the warrant,  and interest  rates,  over which we use our  judgment.
Given  that  we have  recorded  significant  non-cash  expenses  related  to the
issuance  of our  warrants  to  third-parties,  including  the six months  ended
November 30, 2005,  our  estimation  of the value of warrants  issued  remains a
critical component of our financial statements.

4. Debt Discount

We have  issued  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
two years.  If the  debenture is converted to common stock prior to its maturity
date,  any debt  discount  not  previously  amortized  is  expensed  to non-cash
interest.

5. 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.

6. 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.  We have historically  provided a valuation allowance equal to 100% of
our net deferred tax asset. In spite of the net income recorded by us during the
six  months  ended  November  30,  2005,  we do not  believe  that we have ample
evidence of  overcoming  the "more  likely  than not"  criteria  established  by
generally  accepted  accounting  principles.  We will  continue  to monitor  our
financial  operating results,  and other factors, to determine when, if ever, we
meet this criteria.

7. Accounting for Limited Liability Company

During the quarter ended August 31, 2005, we entered into a newly formed limited
liability  company  with a third  party.  Although we do not control the limited
liability  company from a voting  interest  standpoint,  we consider the limited
liability  company to be a  variable  interest  entity,  as that term is defined
under accounting  principles  generally accepted in the United States of America
(FIN 46(R)),  and under such definition and  interpretation of FIN 46(R), we are
required to consolidate  the results of the limited  liability  company with our
own.


                                       15
<PAGE>

RESULTS OF OPERATIONS

Comparison  of the Six Months  Ended  November  30,  2005 and Six  Months  Ended
November 30, 2004.

In June 2005, we entered into an agreement with Intel Corporation  licensing our
intellectual property for a one-time payment of $10,000,000. The license revenue
was  recognized  during the six months ended  November 30, 2005.  During the six
months ended November 30, 2004 no such agreement was signed.  In connection with
entering into the agreement with Intel Corporation, we entered into an agreement
with the co-owner of our  patented  technologies,  through  which we settled all
legal disputes between us and agreed to jointly pursue others who have infringed
upon our joint  rights.  It is not possible to predict  when,  if ever,  we will
again be  successful  in obtaining  future  license  agreements.  Product  sales
amounting to  approximately  $20,000 were also recorded in the six-month  period
ended November 30, 2005 in connection with  communications  products that are no
longer  marketed by the Company.  Inventory  associated  with the sales of these
communications  products is carried at zero value and cost of sales is therefore
zero.  Total sales of  communications  products for the  six-month  period ended
November 30, 2004 amounted to approximately $21,000.

Research and development expenses amounted to approximately $198,000 for the six
months  ended  November 30, 2005 and  approximately  $182,000 for the six months
ended  November  30, 2004.  A manager and an engineer  employed  during the 2004
period were not employed during the 2005 period.  Expenses  related to salaries,
benefits,  training and other employee expenses declined  approximately  $13,000
resulting from the staff  reductions.  Consulting and related  support  expenses
increased  from  approximately  $6,000 during the six months ended  November 30,
2004 to  approximately  $36,000 for the six months ended  November 30, 2005,  as
research  and  development  activities  moved to outside  contractors.  Costs of
components, supplies and equipment increased by approximately $5,000 for the six
months ended  November 30, 2005 as compared  with the six months ended  November
30, 2004  connected with product  development  and support of the Ignite product
line.  Depreciation  for fixed assets  associated  with research and development
activities declined from approximately  $6,000 for the six months ended November
30, 2004 to less than $1,000 for the six months  ended  November  30,  2005,  as
equipment became fully depreciated and was not replaced.

Selling,  general  and  administrative  expenses  increased  from  approximately
$773,000 for the six months ended November 30, 2004 to approximately  $3,299,000
for the six  months  ended  November  30,  2005.  Legal and  accounting  related
expenses  increased by approximately  $477,000 for the six months ended November
30, 2005 compared  with the six months ended  November 30, 2004 related to legal
matters in  connection  with  intellectual  property and  formation of a limited
liability  company,  the license  agreement  with Intel  Corporation,  and legal
issues related to former  employees and other  corporate  matters.  In addition,
salary costs increased  approximately $452,000 for the six months ended November
30, 2005  compared  with the six months  ended  November 30, 2004 as a result of
changes in management  personnel that included accrued  severance  costs.  Other
increases  for the six months ended  November 30, 2005 as compared  with the six
months ended November 30, 2004 included public relations and consultant expenses
of  approximately  $171,000,  insurance  expenses of  approximately  $38,000 and
travel  expenses of  approximately  $35,000.  Offsetting  these  increases  were
decreases in patent enforcement expenses of approximately  $68,000 and a decline
in rent  expense of  approximately  $55,000 as the accrued  rent  liability  was
amortized  against rent expense.  Finally,  our newly created limited  liability
company,  which we have consolidated  since its creation in June 2005,  incurred
$1,000,000  in  expenses  paid to the  other  member  of the  limited  liability
company,  as  part  of the  quarterly  fee to be paid  to the  other  member  in
accordance  with our  limited  liability  company  agreement  and  approximately
$481,000 in legal and other operational expenses.

Settlement  and license  expenses  amounting to  approximately  $3,855,000  were
recorded  during the six months ended  November 30, 2005 in connection  with the
agreements   involving  the  formation  of  a  limited  liability  company  and,
separately,  a license agreement with Intel Corporation.  The expenses consisted
of both cash and  non-cash  elements  related to  incremental,  direct  costs of
completing  the  transactions.  In  connection  with  the  transactions,  it was
necessary for the Company to obtain the consent of certain debenture and warrant
holders.  The necessary  consents,  together  with certain  warrants held by the
debenture   holders  and  the  release  of  their  security   interests  in  our
intellectual  property,  were  obtained in exchange  for cash,  new warrants and
repriced  warrants.  The expenses resulted  primarily from cash payments to debt
holders of  approximately  $1,300,000,  to  co-owners  of  various  intellectual
property  assets of  approximately  $960,000 and to a committee of the Company's
board  of  directors  of  approximately  $170,000.   Non-cash  expenses  totaled
approximately  $1,400,000 and resulted  primarily from the incremental  value of
the effect of repricing  various  warrants and granting other warrants in excess
of the expense  previously  recognized  for warrants  granted to these  security
holders, as well as the value of the warrants reconveyed to the Company.


                                       16
<PAGE>

Other  income and  expense  items for the  Company  amounted to a net expense of
approximately  $1,245,000  for  the six  months  ended  November  30,  2004  and
decreased  to a net expense of  approximately  $180,000 for the six months ended
November  30,  2005.  Other  income for the six months  ended  November 30, 2004
primarily  resulted  from a one-time  settlement  with a subtenant  amounting to
approximately  $47,000.  For the six months ended November 30, 2005 other income
primarily   resulted  from  interest  and  dividend  income  in  the  amount  of
approximately   $134,000.   Cash  and   non-cash   interest   expense   declined
significantly  from  approximately  $1,281,000 for the six months ended November
30, 2004 to approximately $314,000 for the six months ended November 30, 2005 as
the  amortization  of debt  discount has  declined.  The value of debt  discount
features  recorded  upon the  issuance  of a  debenture  is expensed as non-cash
interest over the term of the debt.  However,  as the  debentures  are converted
into common  stock,  any  remaining  balance of debt  discount is  recognized as
non-cash  interest in that period.  Non- cash interest  expense  decreased  from
approximately  $1,193,000  for  the  six  months  ended  November  30,  2004  to
approximately $281,000 for the six months ended November 30, 2005.

During the six months ended November 30, 2005, the Company  recorded a provision
for income taxes of $40,000 related to California state alternative minimum tax.
Also,  during the six months  ended  November  30,  2005,  the Company  utilized
approximately  $4,900,000 of its available net operating loss  carry-forwards to
offset its taxable income arising in the quarter.

The Company  recorded a net loss for the six months  ended  November 30, 2004 of
approximately  $2,180,000  compared with net income of approximately  $3,167,000
for the six months ended November 30, 2005.

Comparison  of the Three Months  Ended  November 30, 2005 and Three Months Ended
November 30, 2004.

Product  sales  amounting  to   approximately   $10,000  were  recorded  in  the
three-month  period ended  November 30, 2005 in connection  with  communications
products that are no longer marketed by the Company.  Inventory  associated with
the sales of these communications  products is carried at zero value and cost of
sales  is  therefore  zero.  Total  sales  of  communications  products  for the
three-month period ended November 30, 2004 amounted to approximately $19,000.

Research and  development  expenses  amounted to  approximately  $54,000 for the
three months ended  November 30, 2004 and  approximately  $110,000 for the three
months  ended  November 30, 2005.  The increase was  primarily  due to severance
costs in connection with staff  reductions  amounting to  approximately  $55,000
during the three months ended November 30, 2005. The total costs of salaries and
related expenses  amounted to  approximately  $45,000 for the three months ended
November 30, 2004 and increased to approximately  $64,000,  including  severance
costs,  for the three months ended  November  30, 2005.  Consulting  and related
support  expenses  increased from  approximately  $6,000 during the three months
ended  November  30, 2004 to  approximately  $28,000 for the three  months ended
November  30,  2005 as  research  and  development  activities  moved to outside
contractors.   Depreciation  for  fixed  assets  associated  with  research  and
development  activities  amounted to  approximately  $3,000 for the three months
ended  November 30, 2004 and was not present in the three months ended  November
30, 2005, as equipment became fully depreciated and was not replaced.

Selling,  general  and  administrative  expenses  increased  from  approximately
$392,000  for  the  three  months  ended  November  30,  2004  to  approximately
$1,624,000  for the three months ended  November 30, 2005.  Legal and accounting
related expenses increased by approximately  $215,000 for the three months ended
November 30, 2005 compared with the three months ended November 30, 2004 related
to legal matters connected with  intellectual  property and legal issues related
to former  employees and other  corporate  matters as well as increases in audit
and  accounting  related fees from  outside  firms.  In  addition,  salary costs
increased  approximately  $154,000 for the three months ended  November 30, 2005
compared with the three months ended November 30, 2004 as a result of changes in
management  personnel that included accrued severance costs. Other increases for
the three months ended  November  30,  2005,  as compared  with the three months
ended  November 30, 2004,  included  public and investor  relations  expenses of
approximately  $23,000,  insurance expenses of approximately  $28,000 and travel
related  expense of  approximately  $17,000.  Offsetting  these  increases  were
decreases in patent  enforcement  expenses of approximately  $92,000,  marketing
expenses of approximately $47,000 and a decline in rent expense of approximately
$35,000 as accrued rent liability was amortized  against rent expense.  Finally,
our newly created limited liability  company,  which we have consolidated  since
its  creation in June 2005,  incurred  $500,000  in  expenses  paid to the other
member of the limited liability company, as part of the quarterly fee to be paid
to the other member in accordance with our limited  liability  company agreement
and approximately $466,000 in legal and other operational expenses.


                                       17
<PAGE>

Other  income and  expense  items for the  Company  amounted to a net expense of
approximately  $645,000  for the  three  months  ended  November  30,  2004  and
decreased to a net expense of  approximately  $31,000 for the three months ended
November  30, 2005.  Other  income for the three months ended  November 30, 2005
primarily   resulted  from  interest  and  dividend  income  in  the  amount  of
approximately  $81,000.  Other  income  amounted to less than $1,000  during the
three months ended November 30, 2004.  Interest expense  declined  significantly
from  approximately  $648,000 for the three  months  ended  November 30, 2004 to
approximately  $111,000 for the three months ended November 30, 2005,  resulting
primarily  from a decline in non-cash  interest from  approximately  $607,000 to
approximately $93,000 for the respective three month periods as the amortization
of debt discount declined. The value of debt discount features recorded upon the
issuance of a debenture  is expensed as non-cash  interest  over the term of the
debt.  However, as the debentures are converted into common stock, any remaining
balance of debt discount is recognized as non-cash interest in that period.

The Company  recorded a net loss for the three months ended November 30, 2004 of
approximately  $1,073,000  compared with a net loss of approximately  $1,275,000
for the three months ended November 30, 2005.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash,  marketable  securities and short-term  investment  balances
increased  from  approximately  $1,289,000  as of May 31, 2005 to  approximately
$9,093,000  as of November 30, 2005.  We also held  short-term  certificates  of
deposit amounting to approximately $202,000 as of May 31, 2005 and approximately
$205,000  as  of  November  30,  2005.   Total  current  assets  increased  from
approximately  $3,612,000 as of May 31, 2005 to approximately  $10,044,000 as of
November  30, 2005.  Total  current  liabilities  increased  from  approximately
$1,644,000  as of May 31, 2005 to  approximately  $1,688,000  as of November 30,
2005. The improvement in the current position of the Company primarily  resulted
from the license  agreement with Intel  Corporation that was recorded during the
six months ended  November 30, 2005.  Included  within both our cash and current
assets totals at November 30, 2005 is approximately $2,560,000 of cash, which is
held by a newly created  limited  liability  company,  which we consolidate  for
accounting  purposes.  As this cash has been  invested  by both us and the other
member into this  entity,  its use is limited to the  operations  of the limited
liability company.

During  the  six  months  ended  November  30,  2005,  the  Company's  operating
activities generated approximately $5,599,000 of cash. The Company's net income,
adjusted  for  non-cash  expense  items,  primarily  resulted  from the  license
agreement with Intel Corporation.  The Company's operating  activities used cash
amounting to  approximately  $800,000  during the six months ended  November 30,
2004,  primarily due to the Company's net loss as adjusted for non-cash  expense
items. During the six months ended November 30, 2005, we invested  approximately
$16,000 in the purchase of fixed assets and received  $100,000 in proceeds  from
the maturity of marketable  securities.  No such investment  activities occurred
during the six months  ended  November  30,  2004.  Cash  provided by  financing
activities  increased  from  approximately  $616,000  for the six  months  ended
November 30, 2004 to approximately  $2,204,000 for the six months ended November
30, 2005. The increase primarily resulted from the minority interest  investment
in a consolidated  entity in the 2005 fiscal period amounting to $2,000,000.  No
such  transaction  occurred during the 2004 fiscal period.  Cash was provided by
the exercise of common stock  warrants  and options  amounting to  approximately
$164,000  during  the six  months  ended  November  30,  2004 and  approximately
$206,000  during the six months ended November 30, 2005.  Additionally,  cash in
the amount of  approximately  $453,000 was  provided by issuance of  convertible
debentures  during the six months ended  November 30, 2004. No such  transaction
occurred during the 2005 fiscal period.

Included in financing activities is $2,000,000 invested by the other member into
a limited  liability  company,  which we  consolidate  for  financial  reporting
purposes.  The limited liability company was created for the purposes of jointly
pursuing infringers of our technologies.  In connection with the creation of the
limited  liability  company,  both the other  member  and we have  committed  to
funding the operations of the limited liability company, if necessary,  up to an
additional  $4,000,000,  with no more than $2,000,000  being required in any one
year. The limited liability company agreement  provides that the other member is
to be paid $500,000 on a quarterly  basis by the limited  liability  company for
services performed by the other member.


                                       18
<PAGE>

The  Company's  current  working  capital  position as of November 30, 2005,  is
expected to provide the funds necessary to support the Company's  operations for
the next 12 months.  During the six months ended  November 31, 2005, we incurred
significant cash and non-cash  expenses related to the TPL and limited liability
company transactions,  which we expect to be of a nonrecurring nature. Given the
unpredictable  nature of our revenue  stream,  we have  attempted  to curb other
non-strategic expenses. The Company is currently assessing various strategies to
pursue in the future,  which may  include,  among other  things,  expanding  our
commitment  to  research  and  development  or  making   acquisitions  of  other
technologies.

During  recent  years we have relied upon  financing  activities  to provide the
funds necessary for the Company's  operations including the sale of common stock
and the issuance of debentures and notes payable for cash. In addition,  we have
issued stock and warrants and options for the purchase of the  Company's  common
stock in  return  for  services.  Although  we have  entered  into  two  license
agreements  in  fiscal  2005 and the  first  quarter  of  fiscal  2006 that have
resulted in our reporting significant revenue, there can be no assurance that we
will be able to achieve  profitable  operations in the future.  Should the funds
generated from these  agreements be insufficient to fund our operations,  we may
be forced to curtail our operations or seek additional  external funding.  There
can be no assurance that  additional  funding would be available to us or, if it
is available, that it would be on terms favorable to us.

RECENT ACCOUNTING PRONOUNCEMENTS

In December  2004,  the FASB  issued  SFAS 123R,  "Share  Based  Payment."  This
statement  replaces  SFAS No. 123 and  supersedes  APB Opinion 25. SFAS No. 123R
requires that the cost of share-based payment transactions (including those with
employees  and  non-employees)  be  recognized  as  compensation  based  on  the
estimated fair value of the equity instrument awarded.  SFAS No. 123R applies to
all  share-based  payment  transactions  in which an  entity  acquires  goods or
services by issuing (or offering to issue) its shares,  options, or other equity
instruments  or by incurring  liabilities  in amounts  based on the price of the
entity's  shares or other equity  instruments,  or that require (or may require)
settlement  by the issuance of an entity's  shares or other equity  instruments.
This  statement  applies  to all new  awards  granted  during  the  fiscal  year
beginning  after December 15, 2005 and to previous awards that are remodified or
cancelled after such date. The Company has not yet fully evaluated the effect of
adopting SFAS No. 123R on its financial statements.

In  December  2004,  the FASB  issued SFAS No.  153,  "Exchange  of  Nonmonetary
Assets,"  an  amendment  of APB  Opinion  No. 29,  "Accounting  for  Nonmonetary
Transaction."  SFAS  No.  153  is  based  on the  principle  that  exchanges  of
nonmonetary  assets  should be measured  based on the fair  market  value of the
assets exchanged. SFAS No. 153 eliminates the exception of nonmonetary exchanges
of  similar  productive  assets and  replaces  it with a general  exception  for
exchanges of nonmonetary assets that do not have commercial substance.  SFAS 153
is effective for nonmonetary  asset exchanges in fiscal periods  beginning after
June 15, 2005.  The Company does not believe that the provisions of SFAS No. 153
will have a material impact on its financial statements.

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections," which replaces APB Opinion No. 20, "Accounting  Changes," and FASB
Statement No. 3, "Reporting Accounting Changes in Interim Financial Statements,"
and changes the requirements for the accounting for and reporting of a change in
accounting principle.  SFAS No. 154 requires retrospective  application to prior
periods' financial statements of changes in accounting  principle,  unless it is
impracticable to determine either the period-specific  effects or the cumulative
effect of the  change.  SFAS No. 154 is  effective  for  accounting  changes and
correction  of errors made in fiscal years  beginning  after  December 15, 2005.
Early adoption is permitted for accounting changes and correction of errors made
in fiscal years beginning after the date SFAS No. 154 was issued. At the present
time,  the Company  does not believe  that  adoption of SFAS No. 154 will have a
material effect on its 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, as 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.


                                       19
<PAGE>

WE ARE  CURRENTLY  INVOLVED IN A LEGAL  DISPUTE  WHICH  COULD  IMPACT OUR FUTURE
RESULTS OF OPERATIONS AND WORKING CAPITAL

We are currently in a dispute with a former legal advisor, pursuant to which the
legal  advisor is asserting a claim  against the proceeds we received  under our
recently  signed license  agreements.  We believe that the advisor's claim lacks
merit. However, if we do not prevail in this dispute, the amount payable to such
legal advisor could affect our business and operations.  In addition,  if we are
required to litigate  this  matter,  or otherwise  settle the matter  outside of
court,  the cost of resolving this matter may impact our future reported results
of operations and consume a significant amount of cash.

RELATED TO OUR BUSINESS

OUR  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.

WE HAVE A HISTORY  OF  LOSSES,  EXPECTS  FUTURE  LOSSES  AND MAY NOT  ACHIEVE OR
SUSTAIN ANNUAL PROFITABILITY

We have a history of reported  losses.  For the fiscal  years ended May 31, 2005
and 2004, we reported net losses of  approximately  $2,700,000  and  $4,100,000,
respectively.  These  losses have  resulted  primarily  from  significant  costs
associated  with the  development  of our products,  costs  associated  with the
marketing of those products,  and the interest  charges and expenses  related to
equity and debt financings. Although we have entered into two license agreements
in fiscal 2005 and the first quarter of fiscal 2006,  which have resulted in our
reporting significant revenue, there can be no assurance that we will be able to
achieve  sustained  profitable  operations  in  the  future.  Should  the  funds
generated from these  agreements be insufficient to fund our operations,  we may
be forced to curtail our operations or seek additional  external funding.  There
can be no assurance that  additional  funding would be available to us or, if it
is available, that it would be on terms favorable to us.

OUR 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  in  addition  to  patent  portfolio  licensing
activities  currently  outsourced  to the TPL Group.  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 in the absence of  significant  revenues
from  patent  portfolio  licensing  activities  would  require us to cease doing
business and/or liquidate or sell our assets.


                                       20
<PAGE>

WE MAY EXPERIENCE  DIFFICULTIES  IN THE  INTRODUCTION OF NEW PRODUCTS THAT COULD
RESULT IN US 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  will 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 US FROM
INCREASING  OR  SUSTAINING  REVENUE AND PREVENT US 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.

OUR  LIMITED  ABILITY TO PROTECT OUR  INTELLECTUAL  PROPERTY  MAY  INADVERTENTLY
ADVERSELY AFFECT OUR 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. (See our discussion of Legal Proceedings below.) 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  us,  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.


                                       21
<PAGE>

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

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.  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 OUR SHARES  ARE SOLD ALL AT ONCE OR IN BLOCKS,  THE MARKET
PRICE OF OUR SHARES WOULD MOST LIKELY DECLINE

Our  debenture  holders 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 stockholders 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.

IF A LARGE  NUMBER OF OUR SHARES  ARE SOLD ALL AT ONCE OR IN BLOCKS,  THE MARKET
PRICE OF OUR SHARES WOULD MOST LIKELY DECLINE

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  (the
"Exchange  Act").  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 affect our ability to
attract competitive funding.


                                       22
<PAGE>

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
the amount the seller  originally  sold it for less the amount the seller  later
had to pay to buy it.  Short sales enable the seller to profit in a down market.
Short sales could place significant downward pressure on the price of our common
stock.

ON A SIGNIFICANT DROP IN THE PRICE OF OUR STOCK, WE COULD BE SUBJECT TO A CHANGE
IN CONTROL

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

ITEM 3. CONTROLS AND PROCEDURES

As required by Rule  13a-15(e)  under the Exchange Act, as of November 30, 2005,
the end of the period to which this quarterly  report  relates,  we have carried
out an  evaluation  of the  effectiveness  of the  design and  operation  of our
disclosure  controls and  procedures.  This evaluation was carried out under the
supervision  and  with  the  participation  of  our  management,  including  our
President  and our Chief  Financial  Officer.  Based upon that  evaluation,  our
President and Chief Financial Officer concluded that the disclosure controls and
procedures are effective.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that information required to be disclosed in our report filed
or  submitted  under the Exchange Act is  recorded,  processed,  summarized  and
reported,  within the time  periods  specified  in the  Securities  and Exchange
Commission's  rules and  forms.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required  to be  disclosed  in our  reports  filed  under  the  Exchange  Act is
accumulated and  communicated  to management,  including the President and Chief
Executive Officer as appropriate,  to allow timely decisions  regarding required
disclosure.

There were no changes to our  internal  control  over  financial  reporting  (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most
recently  completed fiscal quarter that materially  affected,  or are reasonably
likely to materially affect, our internal control over financial reporting.


                                       23
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In  December  2003,  Patriot  Scientific  Corporation,  a  Delaware  corporation
(hereinafter referred to as the "Company," "we" or "us"), 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

The Company was requesting that the courts enjoin the defendants from making use
of our patent and requested  damages for past  infringements.  In February 2005,
with the consent of the  defendants,  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 requested 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.

In February 2004, the Company filed a lawsuit (the "Inventorship Litigation") in
the United States District Court- Northern  District of California,  case number
C040618, against TPL, Charles H. Moore, an individual ("Moore" and together with
the Company and TPL, the  "Parties"),  and Daniel E.  Leckrone,  an  individual.
Counterclaims  were  filed  seeking  a  declaration  from  the  Court  that  the
inventors,  as stated in the original patent filings,  were the inventors of the
respective patents.

On June 7, 2005,  the  Company  entered  into a Master  Agreement  (the  "Master
Agreement") by and among the Company,  TPL and Moore. Moore and TPL were parties
to  certain  lawsuits  filed by the  Company  alleging  infringement  of certain
microprocessor science and design patents ("Patents") and a lawsuit filed by the
Company  alleging  claims  for  declaratory   judgment  for   determination  and
correction of inventorship  of the Patents.  The  transactions  described in the
Master  Agreement  and  related  agreements  form a part  of the  settlement  or
dismissal of the Inventorship Litigation.

Pursuant to the Master Agreement, the Parties have agreed, in pertinent part, as
follows:

(a) The Company  entered into a patent license  agreement (the "Intel  License")
with Intel Corporation ("Intel"), pursuant to which the Company licensed certain
rights in the Patents to Intel.

(b) The Company and TPL will cause certain of their respective  interests in the
Patents to be licensed to a limited  liability company that will be owned 50% by
the Company and 50% by TPL (the "JV LLC").

(c) The JV LLC will  engage  TPL to  commercialize  the  Patents  pursuant  to a
Commercialization  Agreement  among  the  JV  LLC,  TPL  and  the  Company  (the
"Commercialization Agreement").


                                       24
<PAGE>

(d) The Parties will settle all or cause to be dismissed  all  litigation  among
them  pursuant  to a  stipulated  final  judgment,  including  the  Inventorship
Litigation.

On June 7, 2005, in connection  with the Master  Agreement,  the Company entered
into  the  Commercialization  Agreement  by and  among  the JV LLC,  TPL and the
Company. Pursuant to the Commercialization  Agreement, the JV LLC has granted to
TPL the exclusive right to grant licenses and sub-licenses of the Patents and to
pursue claims against violators of the Patents.

The Parties  executed and filed a stipulated  final judgment in the Inventorship
Litigation,  which  provided  for a dismissal  of the  Company's  third  amended
complaint and final judgment in favor of TPL and Moore on their counterclaims.

In October 2005 we dismissed  the  infringement  claims  above.  Pursuant to the
rights afforded to TPL under the Master Agreement, TPL filed patent infringement
claims in the Eastern  District of Texas on October 24,  2005,  against  various
Japanese  manufacturers.  This new  complaint  set  forth  broader  theories  of
infringement than those we had initiated in the Northern District of California,
including  with respect to more  products and with respect to claims  related to
the "336," "584" and "148" patents (all part of the 1989 patent  applications of
Russell Fish and Charles Moore).

The  infringement  defendants  in the Texas  action  filed five new  declaratory
relief  actions in the  Northern  District of  California  on November  28, 2005
against TPL, the  Company,  and Charles  Moore asking that Court to declare that
they are not  infringing  on our patents  and/or that the patents are not valid.
Those defendants  attempted to have their claims declared to be administratively
"related"  to the action we dismissed  in October but their  effort,  apparently
designed to slow down the infringement litigation by requiring the litigation to
go forward in Northern  District of California,  has not succeeded.  We recently
joined  with TPL in  Motions to Dismiss or  Transfer  those  declaratory  relief
actions  to  the  Eastern  District  of  Texas,   where  we  expect  the  patent
infringement litigation will be handled more expeditiously.

Additional Litigation:

      Beatie and Osborne, LLP v. Patriot Scientific Corporation, et al.,
      United States District Court, Case No. 05-CV-6425 (S.D.N.Y)

This is an action by a New York law firm,  Beatie  and  Osborn  ("BandO"),  that
formerly represented the Company in patent infringement  litigation commenced by
the Company  against  certain  various  microprocessor  chip  manufacturers,  in
litigation still pending,  with the exception of Intel, in the Northern District
of California.  In addition,  BandO  represented the Company in the Inventorship
Litigation.  BandO undertook such representation of the Company on a contingency
fee basis and had previously  reached an agreement with the Company with respect
to  transmission  of  anticipated  litigation  costs in  connection  with  those
underlying litigation matters.  BandO is believed to presently hold in its trust
account  approximately  $210,000 of the Company's  funds advanced for litigation
costs, and BandO claims it is entitled to be reimbursed  approximately  $240,000
in litigation  costs.  The Company  disputes  BandO's claim to those  litigation
costs.

On March 8, 2005,  BandO was disqualified by United States District Judge Jeremy
Fogel  in  the  Inventorship   Litigation.   BandO  subsequently  withdrew  from
representation of the Company in the patent infringement litigation.

BandO initiated  litigation in the Supreme Court of New York on or about June 8,
2005,  claiming breach of contract,  quantum meruit and unjust  enrichment,  and
alleging claims against the Company and former Company  representatives  Jeffery
Wallin and Lowell  Giffhorn,  for fraud and  interference  with the  contractual
relationship.  BandO claims a contingency fee under the terms of its contingency
fee agreement,  with respect to licensing  agreements entered and possibly to be
entered  into by the  Company.  The  Company  denies  past,  present  or  future
liability to BandO, and intends to vigorously defend this action.

The Company  caused a removal of the action to the United States  District Court
for the  Southern  District  of New  York,  and has  filed a motion  to have the
litigation  transferred  to  California.  A decision is expected by the District
Court this upcoming  quarter.  Discovery has yet to be commenced in the New York
litigation.  However, the Company has claimed that the disqualification of BandO
in the Inventorship  Litigation and its withdrawal from the patent  infringement
litigation has caused a forfeiture of any rights of BandO to a contingency  fee.
Further, the Company is evaluating  commencing a legal malpractice claim against
BandO that the Company believes will exceed the claims asserted by BandO. As for
the  agreement  regarding  costs and fees,  the Company hopes to show that BandO
breached  the terms of the  agreement  and is not entitled to any costs from the
escrow. This assumes, for the sake of argument,  that BandO would have any right
to the funds in escrow as a result of Judge Fogel's Order disqualifying BandO on
various  grounds,  including  violation of the California  Rules of Professional
Responsibility.


                                       25
<PAGE>

Litigation  is  inherently  uncertain  and while the Company  believes  that the
claims  brought  by  BandO  do  not  have  merit,  especially  in  light  of the
disqualification  previously  described,  there  can be no  assurances  that the
resolution  of the matter will not  negatively  impact the  Company's  financial
position or its results of operations in the future.

On September 23, 2005, Lowell Giffhorn, a former executive officer and a current
director of the Company  submitted a demand for  arbitration  with the  American
Arbitration  Association related to the termination of Mr. Giffhorn's employment
with the Company.  Mr.  Giffhorn  asserts that the termination of his employment
with the Company was unlawful,  retaliatory,  wrongful,  violated public policy,
violated the  covenant of good faith and fair  dealing and  violated  securities
laws.  Mr.  Giffhorn is seeking  damages of $1,500,000  in  connection  with his
claims.  The Company  intends to  vigorously  defend itself with regard to these
claims. Despite the inherent  uncertainties of litigation,  the Company does not
believe that the foregoing will have a material  adverse impact on its financial
condition, results of operations, or cash flows.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

On  November  14,  2005,  the  company  filed  a  Certificate  of  Amendment  of
Certificate of Incorporation  (the "Amendment")  with the Delaware  Secretary of
State. Pursuant to the Amendment,  the number of authorized shares of the common
stock of the  Company  was  increased  to  500,000,000  shares and the number of
authorized  shares  of the  preferred  stock of the  Company  was  increased  to
5,000,000 shares.

The Amendment was previously  approved by the Shareholders of the Company at our
fiscal 2005 Annual Meeting of Shareholders held on April 14, 2005.

The Amendment is attached  hereto as Exhibit 3.3.6 to this  Quarterly  Report on
Form  10-QSB  and is  incorporated  herein  by  this  reference.  The  preceding
discussion of the Amendment is qualified by reference to the Amendment  attached
as Exhibit 3.3.6.

ITEM 6. EXHIBITS

Those exhibits marked with an asterisk (*) refer to exhibits filed herewith. The
other  exhibits  are  incorporated  herein by  reference,  as  indicated  in the
following list.

EXHIBIT NO.                              DESCRIPTION
--------------------------------------------------------------------------------

(2.0)        PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
             SUCCESSION

(2.2)        Assets Purchase Agreement and Plan of Reorganization dated June 22,
             1994, among the Company, nanoTronics Corporation and Helmut Falk,
             incorporated by reference to Exhibit 10.4 to Form 8-K dated July 6,
             1994

(3.0)        ARTICLES AND BYLAWS


                                       26
<PAGE>

EXHIBIT NO.                              DESCRIPTION
--------------------------------------------------------------------------------

(3.1)        Original Articles of incorporation of the Company's predecessor,
             Patriot Financial Corporation, incorporated by reference to Exhibit
             3.1 to registration statement on Form S-18, file no. 33-23143-FW

(3.2)        Articles of Amendment of Patriot Financial Corporation, as filed
             with the Colorado Secretary of State on July 21, 1988, incorporated
             by reference to Exhibit 3.2 to registration statement on Form S-18,
             File No. 33-23143-FW

(3.3)        Certificate of Incorporation of the Company, as filed with the
             Delaware Secretary of State on March 24, 1992, incorporated by
             reference to Exhibit 3.3 to Form 8-K dated May 12, 1992

(3.3.1)      Certificate of Amendment to the Certificate of Incorporation of the
             Company, as filed with the Delaware Secretary of State on April 18,
             1995, incorporated by reference to Exhibit 3.3.1 to Form 10-KSB for
             the fiscal year ended May 31, 1995

(3.3.2)      Certificate of Amendment to the Certificate of Incorporation of the
             Company, as filed with the Delaware Secretary of State on June
             24,1997, incorporated by reference to Exhibit 3.3.2 to Form 10-KSB
             for the fiscal year ended May 31, 1997, filed July 18, 1997

(3.3.3)      Certificate of Amendment to the Certificate of Incorporation of the
             Company, as filed with the Delaware Secretary of State on April 28,
             2000, incorporated by reference to Exhibit 3.3.3 to Registration
             Statement on Form S-3 filed May 5, 2000

(3.3.4)      Certificate of Amendment to the Certificate of Incorporation of the
             Company, as filed with the Delaware Secretary of State on May 6,
             2002, incorporated by reference to Exhibit 3.3.4 to Registration
             Statement on Form S-3 filed June 27, 2002

(3.3.5)      Certificate of Amendment to the Certificate of Incorporation of the
             Company, as filed with the Delaware Secretary of State on October
             16, 2003, incorporated by reference to Exhibit 3.3.5 to
             Registration Statement on Form SB-2 filed May 21, 2004

(3.3.6)*     Certificate of Amendment to the Certificate of Incorporation of the
             Company, as filed with the Delaware Secretary of State on November
             14, 2005

(3.4)        Articles and Certificate of Merger of Patriot Financial Corporation
             into the Company dated May 1, 1992, with Agreement and Plan of
             Merger attached thereto as Exhibit A, incorporated by reference to
             Exhibit 3.4 to Form 8-K dated May 12, 1992

(3.5)        Certificate of Merger issued by the Delaware Secretary of State on
             May 8, 1992, incorporated by reference to Exhibit 3.5 to Form 8-K
             dated May 12, 1992

(3.6)        Certificate of Merger issued by the Colorado Secretary of State on
             May 12, 1992, incorporated by reference to Exhibit 3.6 to Form 8-K
             dated May 12, 1992

(3.7)        Bylaws of the Company, incorporated by reference to Exhibit 3.7 to
             Form 8-K dated May 12, 1992

(4.0)        INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDER, INCLUDING
             INDENTURES

(4.1)        Specimen common stock certificate, incorporated by reference to
             Exhibit 4.1 Form 8-K dated May 12, 1992

(4.2)        Form of Stock Purchase Warrant (Labway Corporation) dated February
             29, 1996, exercisable to purchase 253,166 common shares at $1.58
             per share until August 31, 1996, granted to investors in connection
             with an offering of securities made in reliance upon Regulation S,
             incorporated by reference to Exhibit 4.2 to Form 10-QSB for fiscal
             quarter ended February 29, 1996, filed March 15, 1996


                                       27
<PAGE>

EXHIBIT NO.                              DESCRIPTION
--------------------------------------------------------------------------------

(4.3)        Form of 6% Convertible Subordinated Promissory Note due September
             30, 1998 aggregating $1,500,000 to six investors incorporated by
             reference to Exhibit 4.3 to Form 10-QSB for fiscal quarter ended
             August 31, 1996, filed October 15, 1996

(4.4)        Form of 5% Convertible Term Debenture (CC Investments, LDC) due
             June 2, 1999 aggregating $2,000,000 to two investors incorporated
             by reference to Exhibit 4.4 to Form 8-K dated June 16, 1997

(4.5)        Form of Stock Purchase Warrant (CC Investments, LDC) dated June 2,
             1997 exercisable to purchase an aggregate of 400,000 common shares
             at $1.69125 per share until June 2, 2002, granted to two investors
             in connection with the offering of securities in Exhibit 4.4
             incorporated by reference to Exhibit 4.5 to Form 8-K filed June 17,
             1997

(4.6)        Registration Rights Agreement dated June 2, 1997 by and among the
             Company and CC Investments, LDC and the Matthew Fund, N.V. related
             to the registration of the common stock related to Exhibits 4.4 and
             4.5 incorporated by reference to Exhibit 4.6 to Form 8-K filed June
             17, 1997

(4.7)        Form of Warrant to Purchase Common Stock (Swartz Family
             Partnership, L.P.) dated June 2, 1997 exercisable to purchase an
             aggregate of 211,733 common shares at $1.69125 per share until June
             2, 2002, granted to a group of investors in connection with the
             offering of securities in Exhibit 4.4 incorporated by reference to
             Exhibit 4.7 to Form 8-K filed June 17, 1997

(4.8)        Registration Rights Agreement dated June 2, 1997 by and among the
             Company and Swartz Investments, LLC related to the registration of
             the common stock related to Exhibit 4.7 incorporated by reference
             to Exhibit 4.8 to Form 8-K filed June 17, 1997

(4.9)        Form of 5% Convertible Term Debenture (CC Investments, LDC) due
             June 2, 1999 aggregating $1,000,000 to two investors incorporated
             by reference to Exhibit 4.9 to Form 10-KSB for the fiscal year
             ended May 31, 1998, filed August 19, 1998

(4.10)       Form of Stock Purchase Warrant (CC Investments, LDC) dated November
             24, 1997 exercisable to purchase an aggregate of 200,000 common
             shares at $1.50 per share until June 2, 2002, granted to two
             investors in connection with the offering of securities described
             in Exhibit 4.9 incorporated by reference to Exhibit 4.10 to Form
             10-KSB for the year ended May 31, 1998, filed August 19, 1998

(4.11)       Form of Warrant to Purchase Common Stock (Swartz Family
             Partnership, L.P.) dated November 24, 1997 exercisable to purchase
             an aggregate of 105,867 common shares at $1.50 per share until June
             2, 2002, granted to a group of investors in connection with the
             offering of securities described in Exhibit 4.9 incorporated by
             reference to Exhibit 4.11 to Form 10-KSB for the year ended May 31,
             1998, filed August 19, 1998

(4.12)       Form of Warrant to Purchase Common Stock (Investor Communications
             Group, Inc.) dated June 16, 1997 exercisable to purchase an
             aggregate of 130,000 common shares at prices ranging from $2.50 to
             $7.50 per share until June 15, 1999 incorporated by reference to
             Exhibit 4.12 to Form 10-KSB for the year ended May 31, 1998, filed
             August 19, 1998

(4.13)       Warrant to Purchase Common Stock issued to Spellcaster
             Telecommunications, Inc. dated April 28, 1998 exercisable to
             purchase an aggregate of 100,000 common shares at $1.25 per share
             until April 28, 2000 incorporated by reference to Exhibit 4.13 to
             Form 10-KSB for the year ended May 31, 1998, filed August 19, 1998

(4.14)       Investment agreement dated February 24, 1999 by and between the
             Company and Swartz Private Equity, LLC Ior a maximum aggregate
             amount of $5,000,000 incorporated by reference to Exhibit 4.14 to
             Form 10-QSB/A for the fiscal quarter ended November 30, 1998, filed
             March 5, 1999


                                       28
<PAGE>

EXHIBIT NO.                              DESCRIPTION
--------------------------------------------------------------------------------

(4.15)       Registration Rights Agreement dated February 24, 1999 by and
             between the Company and Swartz Private Equity, LLC related to the
             registration of the common stock related to Exhibit 4.14
             incorporated by reference to Exhibit 4.15 to Form 10-QSB/A for the
             fiscal quarter ended November 30, 1998, filed March 5, 1999

(4.16)       Form of Warrant to Purchase Common Stock (Swartz Private Equity,
             LLC) dated February 24, 1999 exercisable to purchase common shares
             in connection with the offering of securities in Exhibit 4.14
             incorporated by reference to Exhibit 4.16 to Form 10-QSB/A for the
             fiscal quarter ended November 30, 1998, filed March 5, 1999

(4.17)       Amended and Restated Investment Agreement dated July 12, 1999 by
             and between the Company and Swartz Private Equity, LLC for a
             maximum aggregate amount of $5,000,000 incorporated by reference to
             Exhibit 4.17 to Pre-Effective Amendment No. 2 to Registration
             Statement on Form SB-2 filed July 15, 1999

(4.18)       Investment Agreement dated May 2, 2000 by and between the Company
             and Swartz Private Equity, LLC for a maximum aggregate amount of
             $30,000,000 incorporated by reference to Exhibit 4.18 to
             Registration Statement on Form S-3 filed May 5, 2000

(4.18.1)     Waiver and Agreement dated September 24, 2001 amending the
             Investment Agreement (1) dated May 2, 2000 by and between the
             Company and Swartz Private Equity, LLC for a maximum aggregate
             amount of $30,000,000 incorporated by reference to Exhibit 4.18.1
             to Registration Statement on Form S-1 filed October 11, 2001

(4.19)       2001 Stock Option Plan of the Company dated February 21, 2001
             incorporated by reference to Exhibit 4.19 to Registration Statement
             on Form S-8 filed March 26, 2001

(4.20)       Investment agreement dated September 17, 2001 by and between the
             Company and Swartz Private Equity, LLC for a maximum aggregate
             amount of $25,000,000 incorporated by reference to Exhibit 4.20 to
             Registration Statement on Form S-1 filed October 11, 2001

(4.21)       Registration Rights Agreement dated September 17, 2001 by and
             between the Company and Swartz Private Equity, LLC related to the
             registration of the common stock related to Exhibit 4.20
             incorporated by reference to Exhibit 4.21 to Registration Statement
             on Form S-1 filed October 11, 2001

(4.22)       Warrant to Purchase Common Stock dated September 17, 2001
             exercisable to purchase common shares in connection with the
             Offering of securities in Exhibit 4.20 incorporated by reference to
             Exhibit 4.22 to Registration Statement on Form S-1 filed October
             11, 2001

(4.23)       Financial Consulting Services Agreement between the Company and M.
             Blaine Riley, Randall Letcavage and Rosemary Nguyen incorporated by
             reference to Exhibit 4.23 to Registration Statement on Form S-8
             filed January 22, 2002

(4.24)       Form of 8% Convertible Debenture (Lincoln Ventures, LLC) due June
             10, 2004 aggregating $1,000,000 to six investors incorporated by
             reference to Exhibit 4.24 to Registration Statement on Form S-3
             filed June 27, 2002

(4.25)       Form of Stock Purchase Warrant (Lincoln Ventures, LLC) dated June
             10, 2002 exercisable to purchase an aggregate of 12,859,175 common
             shares at initial exercise prices ranging from $0.08616 to $0.10289
             per share until June 10, 2007, granted to six investors in
             connection with the offering of securities described in Exhibit
             4.24 incorporated by reference to Exhibit 4.25 to Registration
             Statement on Form S-3 filed June 27, 2002


                                       29
<PAGE>

EXHIBIT NO.                              DESCRIPTION
--------------------------------------------------------------------------------

(4.26)       Form of Registration Rights Agreement (Lincoln Ventures, LLC) dated
             June 10, 2002 by and among the Company and six investors related to
             the registration of the common stock related to Exhibit 4.24
             incorporated by reference to Exhibit 4.26 to Registration Statement
             on Form S-3 filed June 27, 2002

(4.27)       2003 Stock Option Plan of the Company dated July 2, 2003
             incorporated by reference to Exhibit 4.27 to Registration Statement
             on Form S-8 filed September 4, 2003

(4.28)       Form of 8% Convertible Debenture, Stock Purchase Warrant,
             Registration Rights Agreement and Securities Purchase Agreement for
             financings entered into between September 28, 2004 and January 17,
             2005 incorporated by reference to Exhibit 4.28 to Registration
             Statement on Form SB-2 filed February 2, 2005.

(31.0)       RULE 13A-14(A)/15D-14(A) CERTIFICATIONS

(31.1)*      Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
             under the Securities Exchange Act of 1934

(31.2)*      Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
             under the Securities Exchange Act of 1934

(32.0)       SECTION 1350 CERTIFICATIONS

(32.1)*      Certification of Chief Executive Officer pursuant to 18 U.S.C.
             ss.1350, as adopted pursuant to ss.906 of The Sarbanes-Oxley Act of
             2002

(32.2)*      Certification of Chief Financial Officer pursuant to 18 U.S.C.
             ss.1350, as adopted pursuant to ss.906 of The Sarbanes-Oxley Act of
             2002


                                       30
<PAGE>

                                   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 23, 2006                  By:/s/ THOMAS J. SWEENEY
                                           -------------------------------------
                                           Thomas J. Sweeney,
                                           Chief Financial Officer


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


                                       31