** **

**FORM      10-Q**

| x | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES                EXCHANGE ACT OF 1934 |
|---|---------------------------------------------------------------------------------------------------------------------------------|

| o | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES                EXCHANGE ACT OF 1934 |
|---|----------------------------------------------------------------------------------------------------------------------------------|

**PATRIOT      SCIENTIFIC CORPORATION**

| Delaware(State                or other jurisdiction ofincorporation                or organization) | 84-1070278(I.R.S.                Employer Identification No.) |
|-----------------------------------------------------------------------------------------------------|---------------------------------------------------------------|

| 6183                Paseo Del Norte, Suite 180, Carlsbad, California(Address                of principal executive offices) | 92011(Zip                Code) |
|----------------------------------------------------------------------------------------------------------------------------------|--------------------------------|

----

**INDEX**

|                                                                                                                                                         | **Page** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| **PART                I. FINANCIAL INFORMATION**                                                                                                             |     |
| ITEM                1. Financial Statements                                                                                                                  |     |
| Condensed                consolidated Balance Sheets as of August 31, 2006 (unaudited) and                May 31,                2006                        | 3        |
| Condensed                consolidated Statements of Operations for the three months ended                August                31, 2006 and 2005 (unaudited) | 4        |
| Condensed                consolidated Statements of Cash Flows for the three months ended                August                31, 2006 and 2005 (unaudited) | 5        |
| Notes                to Condensed consolidated Financial Statements (unaudited)                                                                              | 6-21     |
| ITEM                2. Management’s Discussion and Analysis of Financial Condition and Results                of Operations                            | 22-29    |
| ITEM                3. Quantitative and Qualitative Disclosures About Market                Risk                                                             | 30       |
| ITEM                4. Controls and Procedures                                                                                                               | 30       |
|                                                                                                                                                         |     |
| **PART                II. OTHER INFORMATION**                                                                                                                |     |
| ITEM                1. Legal Proceedings                                                                                                                     | 31       |
| ITEM                1A. Risk Factors                                                                                                                         | 32       |
| ITEM                2. Unregistered Sales of Equity Securities and Use of                Proceeds                                                            | 32-33    |
| ITEM                3. Defaults Upon Senior Securities                                                                                                       | 33       |
| ITEM                4. Submission of Matters to a Vote of Security Holders                                                                                   | 33       |
| ITEM                5. Other Information                                                                                                                     | 33       |
| ITEM                6. Exhibits and Reports on Form 8-K                                                                                                      | 33-40    |
|                                                                                                                                                         |     |
| **SIGNATURES**                                                                                                                                               |     |

----

**PART      I- FINANCIAL INFORMATION**

**Item      1. Financial Statements**

**Patriot      Scientific Corporation**

**Condensed      Consolidated**
**Balance      Sheets**

|                                                                                                                                                                      |       | **August                31, 2006** | ** **  | **May                31, 2006** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------|-------------|---------------------------------|------------|
| ** **                                                                                                                                                                | ** ** | **(Unaudited)**                    | ** **  |                            |       |
| **ASSETS**                                                                                                                                                                |       |                               |        |                            |       |   |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| Current                Assets:                                                                                                                                            |       |                               |        |                            |       |   |   |
| Cash                and cash equivalents                                                                                                                                  |       | $                                  | 9,679,687   |                            | $          | 3,984,240 |   |
| Restricted                cash and cash equivalents                                                                                                                       |       |                               | 100,954     |                            |       | 100,320 |   |
| Marketable                securities and short term investments                                                                                                           |       |                               | 5,994,017   |                            |       | 3,518,879 |   |
| Accounts                receivable                                                                                                                                        |       |                               | 8,313       |                            |       | 4,113 |   |
| Prepaid                expenses and other current assets                                                                                                                  |       |                               | 343,750     |                            |       | 407,418 |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| Total                current assets                                                                                                                                       |       |                               | 16,126,721  |                            |       | 8,014,970 |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| **Property                and equipment, net**                                                                                                                            |       |                               | 64,134      |                            |       | 64,006 |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| **Other                assets, net**                                                                                                                                      |       |                               | 8,190       |                            |       | 8,190 |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| **Investment                in affiliated company**                                                                                                                       |       |                               | 4,444,440   |                            |       | 3,952,914 |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| **Patents                and trademarks**,                net of accumulated amortization of $590,026 and $584,387                                                        |       |                               | 25,948      |                            |       | 31,587 |   |
|                                                                                                                                                                      |       | $                                  | 20,669,433  |                            | $          | 12,071,667 |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                                                             |       |                               |        |                            |       |   |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| Current                liabilities:                                                                                                                                       |       |                               |        |                            |       |   |   |
| Accounts                payable                                                                                                                                           |       | **$**                              | 377,295     |                            | **$**      | 695,323 |   |
| Accrued                liabilities and other                                                                                                                              |       |                               | 151,461     |                            |       | 154,730 |   |
| Accrued                contested fee payable                                                                                                                              |       |                               | 54,063      |                            |       | 394,063 |   |
| Accrued                income taxes payable                                                                                                                               |       |                               | 3,457,600   |                            |       | - |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| Total                current liabilities                                                                                                                                  |       |                               | 4,040,419   |                            |       | 1,244,116 |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| Total                liabilities                                                                                                                                          |       |                               | 4,040,419   |                            |       | 1,244,116 |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| **Commitments                and contingencies**                                                                                                                     |       |                               |        |                            |       |   |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
| **Stockholders’                equity:**                                                                                                                            |       |                               |        |                            |       |   |   |
| Preferred                stock, $0.00001 par value; 5,000,000 shares authorized: none                outstanding                                                          |       |                               | -           |                            |       | - |   |
| Common                stock, $0.00001 par value: 500,000,000 shares authorized: 369,413,587                and                366,199,765 shares issued and outstanding   |       |                               | 3,694       |                            |       | 3,661 |   |
| Additional                paid-in capital                                                                                                                                 |       |                               | 71,202,223  |                            |       | 69,551,981 |   |
| Accumulated                deficit                                                                                                                                        |       |                               | (52,737,818 | )                               |       | (58,728,091 | ) |
| Common                stock held in treasury, at cost - 2,075,003 shares and no shares                as of                August 31, 2006 and May 31, 2006, respectively |       |                               | (1,839,085  | )                               |       | - |   |
| Total                stockholders’ equity                                                                                                                           |       |                               | 16,629,014  |                            |       | 10,827,551 |   |
|                                                                                                                                                                      |       |                               |        |                            |       |   |   |
|                                                                                                                                                                      |       | $                                  | 20,669,433  |                            | **$**      | 12,071,667 |   |

*See      accompanying notes to unaudited condensed consolidated financial      statements.*

----

**Patriot      Scientific Corporation**

**Condensed      Consolidated Statements of Operations**

**(Unaudited)**

|                                                                          |   | **Three                months ended**  |        |
|-------------------------------------------------------------------------------|--------|---------------------------------------------|-------------|
|                                                                          |   | **August                31, 2006**          | ** **  | **August                31, 2005** |   |
|                                                                          |   |                                        |        |   |   | **(As                restated, see Note 2)** |   |
| Revenues                                                                      |   |                                        |        |   |   |   |   |
| Licenses                and royalties                                         |   | $                                           | -           |   | $ | 10,000,000 |   |
| Other                                                                         |   |                                        | 26,375      |   |   | 10,070 |   |
|                                                                          |   |                                        | 26,375      |   |   | 10,010,070 |   |
| Operating                expenses:                                            |   |                                        |        |   |   |   |   |
| Research                and development                                       |   |                                        | -           |   |   | 88,707 |   |
| Selling,                general and administrative                            |   |                                        | 2,732,524   |   |   | 1,162,396 |   |
| Settlement                and license expense                                 |   |                                        | -           |   |   | 1,918,054 |   |
| Total                operating expenses                                       |   |                                        | 2,732,524   |   |   | 3,169,157 |   |
| Operating                income (loss)                                        |   |                                        | (2,706,149  | ) |   | 6,840,913 |   |
| Other                income (expense):                                        |   |                                        |        |   |   |   |   |
| Interest                and other income                                      |   |                                        | 126,767     |   |   | 33,893 |   |
| Loss                on sale of assets                                         |   |                                        | (543        | ) |   | - |   |
| Interest                expense                                               |   |                                        | -           |   |   | (202,484 | ) |
| Change                in fair value of warrant and derivative liabilities     |   |                                        | -           |   |   | 1,079,799 |   |
| Equity                in earnings of affiliated company                       |   |                                        | 12,070,198  |   |   | (247,569 | ) |
| Total                other income, net                                        |   |                                        | 12,196,422  |   |   | 663,639 |   |
|                                                                          |   |                                        |        |   |   |   |   |
| Net                income before income taxes                                 |   |                                        | 9,490,273   |   |   | 7,504,552 |   |
|                                                                          |   |                                        |        |   |   |   |   |
| Provision                for income taxes                                     |   |                                        | 3,500,000   |   |   | **-** |   |
|                                                                          |   |                                        |        |   |   |   |   |
| Net                income                                                     |   | $                                           | 5,990,273   |   | $ | 7,504,552 |   |
|                                                                          |   |                                        |        |   |   |   |   |
| Basic                income per common share                                  |   | **$**                                       | 0.02        |   | $ | 0.03 |   |
|                                                                          |   |                                        |        |   |   |   |   |
| Diluted                income per common share                                |   | **$**                                       | 0.01        |   | $ | 0.02 |   |
|                                                                          |   |                                        |        |   |   |   |   |
| Weighted                average number of common shares outstanding - basic   |   |                                        | 368,837,051 |   |   | 291,335,488 |   |
|                                                                          |   |                                        |        |   |   |   |   |
| Weighted                average number of common shares outstanding - diluted |   |                                        | 420,646,769 |   |   | 367,216,524 |   |

*See      accompanying notes to unaudited condensed consolidatedfinancial      statements.*

----

**Patriot      Scientific Corporation**

**Condensed      Consolidated Statements of Cash Flows **

**(Unaudited)**

|                                                                                                                                 |   | **Three                months ended**  |        |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|-------------|
|                                                                                                                                 |   | **August                31, 2006**          |        | **August                31, 2005** |   |
|                                                                                                                                 |   |                                        |        | (As                restated, see Note 2) |   |
| **Operating                activities:**                                                                                             |   |                                        |        |   |   |   |   |
| Net                income                                                                                                            |   | $                                           | 5,990,273   |   | $ | 7,504,552 |   |
| Adjustments                to reconcile net income to net cash provided by (used in) operating                activities:            |   |                                        |        |   |   |   |   |
| Amortization                and depreciation                                                                                         |   |                                        | 10,635      |   |   | 14,536 |   |
| Non-cash                interest expense related to convertible debentures, notes payable                and                warrants |   |                                        | -           |   |   | 187,256 |   |
| Expense                related to extension of expiration date of stock options                                                      |   |                                        | 324         |   |   | 125,000 |   |
| Net                gain related to warrant re-pricing, reconveyance and                issuance                                      |   |                                        | -           |   |   | (538,208 | ) |
| Non                cash compensation relating to issuance of stock options and vesting                of                warrants     |   |                                        | 1,584,451   |   |   | - |   |
| Accrued                interest income added to investments                                                                          |   |                                        | (634        | ) |   | (13,644 | ) |
| Equity                in earnings of affiliated company                                                                              |   |                                        | (12,070,198 | ) |   | 247,569 |   |
| Loss                on disposal of fixed assets                                                                                      |   |                                        | 543         |   |   | - |   |
| Issuance                of stock                                                                                                     |   |                                        | -           |   |   | 81,250 |   |
| Change                in fair value of derivative liabilities                                                                        |   |                                        | -           |   |   | (1,079,799 | ) |
| Changes                in operating assets and liabilities:                                                                          |   |                                        |        |   |   |   |   |
| Accounts                receivable                                                                                                   |   |                                        | (4,200      | ) |   | - |   |
| Prepaid                and other assets                                                                                              |   |                                        | 63,668      |   |   | (85,564 | ) |
| Licenses                receivable                                                                                                   |   |                                        | -           |   |   | 750,000 |   |
| Accounts                payable and accrued expenses                                                                                 |   |                                        | (321,297    | ) |   | (8,165 | ) |
| Accrued                contested fee payable                                                                                         |   |                                        | (340,000    | ) |   | - |   |
| Income                tax payable                                                                                                    |   |                                        | 3,457,600   |   |   | - |   |
| Net                cash provided by (used in) operating activities                                                                   |   |                                        | (1,628,835  | ) |   | 7,184,783 |   |
|                                                                                                                                 |   |                                        |        |   |   |   |   |
| **Investing                activities:**                                                                                             |   |                                        |        |   |   |   |   |
| Proceeds                from sales of short-term investments                                                                         |   |                                        | 1,839,085   |   |   | **-** |   |
| Purchases                of short-term investments                                                                                   |   |                                        | (4,314,223  | ) |   | - |   |
| Purchases                of property and equipment                                                                                   |   |                                        | (5,667      | ) |   | (9,541 | ) |
| Investment                in affiliated company                                                                                      |   |                                        | -           |   |   | (2,000,000 | ) |
| Distributions                from affiliated company                                                                                 |   |                                        | 11,578,672  |   |   | - |   |
| Net                cash provided by (used in) investing activities                                                                   |   |                                        | 9,097,867   |   |   | (2,009,541 | ) |
|                                                                                                                                 |   |                                        |        |   |   |   |   |
| **Financing                activities:**                                                                                             |   |                                        |        |   |   |   |   |
| Net                repayment on line of credit                                                                                       |   |                                        | -           |   |   | (902 | ) |
| Payments                for capital lease obligations                                                                                |   |                                        | **-**       |   |   | (2,306 | ) |
| Proceeds                from exercise of common stock warrants and options                                                           |   |                                        | 65,500      |   |   | 206,437 |   |
| Repurchase                of common stock for treasury                                                                               |   |                                        | (1,839,085  | ) |   | - |   |
| Net                cash provided by (used in) financing activities                                                                   |   |                                        | (1,773,585  | ) |   | 203,229 |   |
|                                                                                                                                 |   |                                        |        |   |   |   |   |
| **Net                increase in cash and cash equivalents**                                                                         |   |                                        | 5,695,447   |   |   | 5,378,471 |   |
| **Cash                and cash equivalents, beginning of period**                                                                    |   |                                        | 3,984,240   |   |   | 591,426 |   |
| **Cash                and cash equivalents, end of period**                                                                          |   | **$**                                       | 9,679,687   |   | $ | 5,969,897 |   |
|                                                                                                                                 |   |                                        |        |   |   |   |   |
| **Supplemental                Disclosure of Cash Flow Information:**                                                                 |   |                                        |        |   |   |   |   |
|                                                                                                                                 |   |                                        |        |   |   |   |   |
| Cash                payments for interest                                                                                            |   | $                                           | -           |   | $ | - |   |
| Cash                payments for income taxes                                                                                        |   | $                                           | 42,400      |   | $ | 2,400 |   |
|                                                                                                                                 |   |                                        |        |   |   |   |   |
| **Supplemental                Disclosure of Non-Cash Investing and Financing                Activities:**                            |   |                                        |        |   |   |   |   |
|                                                                                                                                 |   |                                        |        |   |   |   |   |
| Convertible                debentures, notes payable and accrued interest exchanged for common                stock                  |   | $                                           | -           |   | $ | 138,540 |   |
| Reclassification                of derivative liabilities associated with debt conversions and warrant                exercises      |   | $                                           | -           |   | $ | 1,569,420 |   |
| Cashless                exercise of warrants                                                                                         |   | $                                           | 30          |   | $ | 116 |   |

*See      accompanying notes to unaudited condensed consolidatedfinancial      statements*
*.*

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements**

**1.      Basis of Presentation and Summary of Significant Accounting      Policies**

**Reclassifications**

**Investment      in Affiliated Company**

**Derivative      Financial Instruments**

*Accounting      for Derivative Instruments and Hedging Activities*
*Accounting      for Derivative Financial Instruments Indexed to, and Potentially Settled in,      a      Company's Own Stock*

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements**

**Derivative      Financial Instruments, continued**

| Estimated                dividends     |   |   | None                      |
|----------------------------------------|--------|--------|---------------------------|
| Expected                volatility     |   |   | 101                - 229% |
| Risk-free                interest rate |   |   | 3.5                - 5.1% |
| Expected                term (years)   |   |   | 2                - 7      |

**Revenue      Recognition**

**Net      Income Per Share**

*Earnings      Per Share*

|                                                     |   | **Three                  Months Ended August 31, 2006** |      |
|----------------------------------------------------------|--------|---------------------------------------------------------|-----------|
|                                                     |   | Numerator                  (Income)                     |      | Denominator(Shares) |   | Per                  Share Amount |   |
| Basic                  EPS:                              |   |                                                    |      |   |   |   |   |   |   |   |
| Net                  income                              |   | $                                                       | 5,990,273 |   |   | 368,837,051 |   | $ | 0.02 |   |
| Diluted                  EPS:                            |   |                                                    |      |   |   |   |   |   |   |   |
| Effect                  of dilutive securities:          |   |                                                    |      |   |   |   |   |   |   |   |
| Options                  and warrants                    |   |                                                    | -         |   |   | 51,809,718 |   |   |   |   |
| Income                  available to common stockholders |   | $                                                       | 5,990,273 |   |   | 420,646,769 |   | $ | 0.01 |   |

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements**

**Net      Income Per Share, continued**

|                                                     |   | **Three                  Months Ended August 31, 2005****(As                  restated, See Note                  2)** |      |
|----------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                     |   | Numerator                  (Income)                                                                                    |      | Denominator                  (Shares) |   | Per                  Share Amount |   |
| Basic                  EPS:                              |   |                                                                                                                   |      |   |   |   |   |   |   |   |
| Net                  income                              |   | $                                                                                                                      | 7,504,552 |   |   | 291,335,488 |   | $ | 0.03 |   |
|                                                     |   |                                                                                                                   |      |   |   |   |   |   |   |   |
| Diluted                  EPS:                            |   |                                                                                                                   |      |   |   |   |   |   |   |   |
| Effect                  of dilutive securities:          |   |                                                                                                                   |      |   |   |   |   |   |   |   |
| Options                  and warrants                    |   |                                                                                                                   | -         |   |   | 75,881,036 |   |   |   |   |
|                                                     |   |                                                                                                                   |      |   |   |   |   |   |   |   |
| Income                  available to common stockholders |   | $                                                                                                                      | 7,504,552 |   |   | 367,216,524 |   | $ | 0.02 |   |

**Stock-Based      Compensation**

***Change      in Accounting Principle***

*Share-Based      Payment*
*Accounting      for Stock Issued to Employees*
*Share-Based      Payment*
*Accounting      for Stock Based Compensation.*

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**Stock-Based      Compensation, continued**

***Summary      of Assumptions and Activity***

|                                                                                                                                   |   | **Three                Months Ended**             |      |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------|-----------|
|                                                                                                                                   |   | **August                31, 2005****(Unaudited)** |      |
|                                                                                                                                   |   | (As                restated see Note 2)           |      |
|                                                                                                                                   |   |                                              |      |
| Net                income - as reported                                                                                                |   | $                                                 | 7,504,552 |   |
|                                                                                                                                   |   |                                              |      |   |
| Add:                Share-based employee compensation included in net income, net of                tax                effects         |   |                                              | -         |   |
|                                                                                                                                   |   |                                              |      |   |
| Deduct:                Share-based employee compensation expense determined under fair value                method, net of tax effects |   |                                              | 182,250   |   |
|                                                                                                                                   |   |                                              |      |   |
| Net                income - pro forma                                                                                                  |   | $                                                 | 7,322,302 |   |
|                                                                                                                                   |   |                                              |      |   |
| Net                income per common share - as reported                                                                               |   |                                              |      |   |
| Basic                                                                                                                                  |   | $                                                 | 0.03      |   |
| Diluted                                                                                                                                |   | $                                                 | 0.02      |   |
|                                                                                                                                   |   |                                              |      |   |
| Net                income per common share - pro forma                                                                                 |   |                                              |      |   |
| Basic                                                                                                                                  |   | $                                                 | 0.03      |   |
| Diluted                                                                                                                                |   | $                                                 | 0.02      |   |

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**Stock-Based      Compensation, continued**

|                                   |   | **Three                Months Ended**          |                   | **Three                Months Ended**         |   |
|----------------------------------------|--------|------------------------------------------------|------------------------|-----------------------------------------------|--------|
|                                   |   | **August                31, 2006 (Unaudited)** |                   | **August                31, 2005(Unaudited)** |   |
|                                   |   |                                           |                   |                                          |   |
| Expected                term           |   |                                           | 5                years |                                          |   | 5                years |   |
| Expected                volatility     |   |                                           | 156                    | %                                             |   | 128 | % |
| Risk-free                interest rate |   |                                           | 5.00                   | %                                             |   | 3.72 | % |
| Expected                dividends      |   |                                           | -                      |                                          |   | - |   |

|                                                        |   | **Shares** |      | **Weighted                Average Exercise Price** |   | **Weighted                Average Remaining Contractual Term (Years)** |   |  **Aggregate                Intrinsic Value** |   |
|-------------------------------------------------------------|--------|------------|-----------|----------------------------------------------------|--------|------------------------------------------------------------------------|--------|----------------------------------------------------|--------|
|                                                        |   |       |      |                                               |   |                                                                   |   |                                          |   |
| Options                outstanding at June 1, 2006          |   |       | 5,460,000 |                                               | $      | 0.34                                                                   |   |                                               |   |   |   |   |   |
| Options                granted                              |   |       | 1,500,000 |                                               | $      | 0.17                                                                   |   |                                               |   |   |   |   |   |
| Options                exercised                            |   |       | (50,000   | )                                                  | $      | 0.11                                                                   |   |                                               |   |   |   |   |   |
| Options                forfeited                            |   |       | (250,000  | )                                                  | $      | 0.08                                                                   |   |                                               |   |   |   |   |   |
|                                                        |   |       |      |                                               |   |                                                                   |   |                                               |   |   |   |   |   |
|  Options                outstanding at August 31, 2006 |   |       | 6,660,000 |                                               | $      | 0.32                                                                   |   |                                               | 3.21   |   | $ | 3,361,750 |   |
|                                                        |   |       |      |                                               |   |                                                                   |   |                                               |   |   |   |   |   |
|  Options                exercisable at August 31, 2006 |   |       | 6,625,000 |                                               | $      | 0.31                                                                   |   |                                               | 3.20   |   | $ | 3,357,550 |   |

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**Stock-Based      Compensation, continued**

|                                                       |   | **Shares** |       | **Weighted                Average Grant Date Fair Value Per Share** |   |
|------------------------------------------------------------|--------|------------|------------|---------------------------------------------------------------------|--------|
|                                                       |   |       |       |                                                                |   |
| Non-vested                stock options at June 1, 2006    |   |       | 345,000    |                                                                | $      | $0.24 |   |
| Non-vested                stock options granted            |   |       | 1,500,000  |                                                                | $      | $1.02 |   |
| Vested                stock options                        |   |       | (1,560,000 | )                                                                   | $      | $1.01 |   |
| Forfeited/cancelled                stock options           |   |       | (250,000   | )                                                                   | $      | $0.06 |   |
|                                                       |   |       |       |                                                                |   |   |   |
| Non-vested                stock options at August 31, 2006 |   |       | 35,000     |                                                                | $      | $0.71 |   |

|                                                                                                      |   | **Three                Months Ended** |      |
|-----------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                                                                      |   | **August                31, 2006**    |      |
| Employee                stock-based compensation expense included in:                                     |   |                                  |      |   |
| Selling,                general and administrative                                                        |   | $                                     | 1,575,000 |   |
|                                                                                                      |   |                                  |      |   |
| Employee                stock-based compensation expense related to employee stock                options |   | $                                     | 1,575,000 |   |

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**2.      Restatement of Previously Issued Financial Statements**

|                                                                          |   | **Statement                of Operations** |      |
|-------------------------------------------------------------------------------|--------|--------------------------------------------|-----------|
| **Three                months ended August 31, 2005**                         |   | **As                Previously Reported**  |      | **Adjustments** |   | **As                Restated** |   |
| Selling,                general and administrative expenses                   |   | $                                          | 1,675,719 |   | $ | (513,323 | ) | $ | 1,162,396 |   |
| Settlement                and license expense                                 |   | $                                          | 3,855,132 |   | $ | (1,937,078 | ) | $ | 1,918,054 |   |
| Operating                income                                               |   | $                                          | 4,390,512 |   | $ | 2,450,401 |   | $ | 6,840,913 |   |
| Change                in fair value of warrant and derivative                 |   |                                       |      |   |   |   |   |   |   |   |
| liabilities                                                                   |   | $                                          | -         |   | $ | 1,079,799 |   | $ | 1,079,799 |   |
| Equity                in earnings (loss) of affiliated company                |   | $                                          | -         |   | $ | (247,569 | ) | $ | (247,569 | ) |
| Interest                and other income                                      |   | $                                          | 53,457    |   | $ | (19,564 | ) | $ | 33,893 |   |
| Total                other income (expense)                                   |   | $                                          | (149,027  | ) | $ | 812,666 |   | $ | 663,639 |   |
| Income                before minority interest in loss of consolidated entity |   | $                                          | 4,241,485 |   | $ | (4,241,485 | ) | $ | - |   |
| Minority                interest in loss of consolidated entity               |   | $                                          | 240,569   |   | $ | (240,569 | ) | $ | - |   |
| Income                before income taxes loss                                |   | $                                          | 4,482,054 |   | $ | 3,022,498 |   | $ | 7,504,552 |   |
| Provision                for income taxes                                     |   | $                                          | (40,000   | ) | $ | 40,000 |   | $ | - |   |
| Net                income                                                     |   | $                                          | 4,442,054 |   | $ | 3,062,498 |   | $ | 7,504,552 |   |

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements**

**Restatement      of Previously Issued Financial Statements, continued**

|                                                  |   |  **Statement                of Operations** |   |
|-------------------------------------------------------|--------|--------------------------------------------------|--------|
| **Three                months ended August 31, 2005** |   |  **As                Previously Reported**  |   |  **Adjustments** |   |  **As                Restated** |   |
| INCOME                PER COMMON SHARE:               |   |                                             |   |   |   |   |   |   |   |   |
| Basic                                                 |   | $                                                | 0.02   |   | $ | 0.01 |   | $ | 0.03 |   |
| Diluted                                               |   | $                                                | 0.01   |   | $ | 0.01 |   | $ | 0.02 |   |

|                                                                                                        |   |  **Statement                      of Cash Flows** |      |
|-------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------|-----------|
| **Three                      months ended August 31, 2005**                                                 |   |  **As                      Previously Reported**  |      |  **Adjustments** |   |  **As                      Restated** |   |
| Net                      income                                                                             |   | $                                                      | 4,442,054 |   | $ | 3,062,498 |   | $ | 7,504,552 |   |
| Change                      in fair value of warrant and derivative liabilities                             |   | $                                                      | -         |   | $ | (1,079,799 | ) | $ | (1,079,799 | ) |
| Net                      gain related to warrant re-pricing, reconveyance and                      issuance |   | $                                                      | -         |   | $ | (538,208 | ) | $ | (538,208 | ) |
| Non-cash                      expense related to warrant re-pricing and issuance                            |   | $                                                      | 1,397,491 |   | $ | (1,397,491 | ) | $ | - |   |
| Loss                      in consolidated entity allocated to minority interest                             |   | $                                                      | (240,569  | ) | $ | 240,569 |   | $ | - |   |
| Equity                      in earnings of investee                                                         |   | $                                                      | -         |   | $ | 247,569 |   | $ | 247,569 |   |
| Accounts                      payable and accrued expenses                                                  |   | $                                                      | 31,835    |   | $ | (40,000 | ) | $ | (8,165 | ) |

**3.      License Agreements**

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**4.      Investment in Affiliated Company/License Agreement**

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements**

**Investment      in Affiliated Company/License Agreement, continued**

**Condensed      Balance Sheet**

| ASSETS:                                                    |   |   |      |   |
|------------------------------------------------------------|--------|--------|-----------|--------|
|                                                       |   |   |      |   |
| Cash                                                       |   | $      | 8,695,729 |   |
| Prepaid                expenses                            |   |   | 15,000    |   |
|                                                       |   |   |      |   |
| Total                assets                                |   | $      | 8,710,729 |   |
|                                                       |   |   |      |   |
| LIABILITIES                AND MEMBERS’ EQUITY:      |   |   |      |   |
|                                                       |   |   |      |   |
| Accounts                payable and accrued expenses       |   | $      | 299,585   |   |
|                                                       |   |   |      |   |
| Members’                equity                       |   |   | 8,411,144 |   |
|                                                       |   |   |      |   |
| Total                liabilities and members’ equity |   | $      | 8,710,729 |   |

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**Investment      in Affiliated Company/License Agreement, continued**

**Condensed      Statement of Income**

| Revenues                          |   | $      | 25,749,000 |   |
|-----------------------------------|--------|--------|------------|--------|
| Operating                expenses |   |   | 1,717,917  |   |
|                              |   |   |       |   |
| Operating                income   |   |   | 24,031,083 |   |
|                              |   |   |       |   |
| Interest                income    |   |   | 109,312    |   |
|                              |   |   |       |   |
|                              |   |   |       |   |
| Net                income         |   | $      | 24,140,395 |   |

**5.      Convertible Debentures**

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**Convertible      Debentures, continued**

|   |   |                               |              | Original  |   | Principal                   Balance at May 31, |   | Conversion                  Prices |   | Effective                  Registration |   | Shares                  Converted as of May 31, |   | Warrant                  Shares |            |
|--------|--------|------------------------------------|-------------------|-----------|--------|-----------------------------------------------------|--------|------------------------------------|--------|-----------------------------------------|--------|-------------------------------------------------|--------|---------------------------------|-----------------|
| Series |   | Dates                  of Issuance |              | Principal |   | 2006                                                |   | Initial                            |   | Reset                                   |   | Date                                            |   | 2006                            |            | Issued |   |
| A      |   |                               | 4/23/02-6/10/02   |      | $      | 1,000,000                                           |   | $                                  | -      |                                    | $      | 0.08616-0.10289                                 |   | $                               | 0.04190-0.04457 |   |   | 10/29/2002 |   |   | 24,099,548 |   |   | 12,859,175 |   |
|   |   |                               |              |      |   |                                                |   |                               |   |                                    |   |                                            |   |                            |            |   |   |   |   |   |   |   |   |   |   |
| B      |   |                               | 8/23/02-1/24/03   |      |   | 605,000                                             |   |                               | -      |                                    |   | 0.05126-0.0727                                  |   |                            | 0.04381-0.04722 |   |   | 3/7/2003 |   |   | 14,777,350 |   |   | 11,234,835 |   |
|   |   |                               |              |      |   |                                                |   |                               |   |                                    |   |                                            |   |                            |            |   |   |   |   |   |   |   |   |   |   |
| C      |   |                               | 3/24/02-6/9/03    |      |   | 510,000                                             |   |                               | -      |                                    |   | 0.041-0.065                                     |   |                            | 0.041-0.065     |   |   | 6/26/2003 |   |   | 10,470,554 |   |   | 9,377,943 |   |
|   |   |                               |              |      |   |                                                |   |                               |   |                                    |   |                                            |   |                            |            |   |   |   |   |   |   |   |   |   |   |
| D      |   |                               | 8/1/03-10/21/03   |      |   | 547,500                                             |   |                               | -      |                                    |   | 0.0172-0.048                                    |   |                            | 0.0172-0.0477   |   |   | 11/18/2003 |   |   | 25,178,803 |   |   | 22,455,355 |   |
|   |   |                               |              |      |   |                                                |   |                               |   |                                    |   |                                            |   |                            |            |   |   |   |   |   |   |   |   |   |   |
| E      |   |                               | 12/1/03-5/11/04   |      |   | 1,527,500                                           |   |                               | -      |                                    |   | 0.0267-0.10                                     |   |                            | 0.0267-0.10     |   |   | 6/7/2004 |   |   | 46,794,618 |   |   | 30,395,392 |   |
|   |   |                               |              |      |   |                                                |   |                               |   |                                    |   |                                            |   |                            |            |   |   |   |   |   |   |   |   |   |   |
| F      |   |                               | 3/23/04           |      |   | 723,168                                             |   |                               | -      |                                    |   | 0.09                                            |   |                            | 0.09            |   |   | Not                  Registered |   |   | 20,877,430 |   |   | 8,035,192 |   |
|   |   |                               |              |      |   |                                                |   |                               |   |                                    |   |                                            |   |                            |            |   |   |   |   |   |   |   |   |   |   |
| G      |   |                               | 9/28/04-1/17/05   |      |   | 232,500                                             |   |                               | -      |                                    |   | 0.016710-0.04                                   |   |                            | 0.01670-0.04    |   |   | 5/22/2006 |   |   | 8,267,358 |   |   | 8,259,678 |   |
|   |   |                               |              |      |   |                                                |   |                               |   |                                    |   |                                            |   |                            |            |   |   |   |   |   |   |   |   |   |   |
| G      |   |                               | 11/17/04-11/18/04 |      |   | 257,500                                             |   |                               | -      |                                    |   | 0.016710-0.04                                   |   |                            | 0.01670-0.04    |   |   | Not                  Registered |   |   | 14,107,672 |   |   | 13,431,137 |   |
|   |   |                               |              |      | $      | 5,403,168                                           |   |                               | -      |                                    |   |                                            |   |                            |            |   |   |   |   |   | 164,573,333 |   |   | 116,048,707 |   |

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**6.      Stockholders’ Equity**

|                                                                          |   | Common                  Stock |        | Additional                  Paid-in |   |  Accumulated |   |  Treasury |       |
|-------------------------------------------------------------------------------|--------|-------------------------------|-------------|-------------------------------------|--------|-------------------|--------|----------------|------------|
|                                                                          |   | Shares                        |        | Amounts                             |   | Capital           |   |  Deficit  |       | Stock |   |
| Balance                  June 1, 2006                                         |   |                          | 366,199,765 |                                | $      | 3,661             |   | $              | 69,551,981 |   | $ | (58,728,091 | ) | $ | - |   |
|                                                                          |   |                          |        |                                |   |              |   |           |       |   |   |   |   |   |   |   |
| Exercise                  of warrants and options at $0.11 to $0.40 per share |   |                          | 200,000     |                                |   | 3                 |   |           | 65,497     |   |   | - |   |   | - |   |
| Cashless                  exercise of warrants                                |   |                          | 3,013,822   |                                |   | 30                |   |           | (30        | ) |   | - |   |   | - |   |
| Extension                  of stock options previously issued to a consultant |   |                          | -           |                                |   | -                 |   |           | 324        |   |   | - |   |   | - |   |
| Non-cash                  compensation                                        |   |                          | -           |                                |   | -                 |   |           | 1,584,451  |   |   | - |   |   | - |   |
| Repurchase                  of common stock for treasury                      |   |                          | -           |                                |   | -                 |   |           | -          |   |   | - |   |   | (1,839,085 | ) |
| Net                  income                                                   |   |                          | -           |                                |   | -                 |   |           | -          |   |   | 5,990,273 |   |   | - |   |
| Balance                  August 31, 2006                                      |   |                          | 369,413,587 |                                | $      | 3,694             |   | $              | 71,202,223 |   | $ | (52,737,818 | ) | $ | (1,839,085 | ) |

***Stock      Options***
***and Warrant Activity***

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements**

**Stockholders’      Equity, continued**

**7.      Commitments and Contingencies **

***Litigation***

*Beatie      and Osborne, LLP v. Patriot Scientific Corporation*

*Patriot      Scientific Corporation v. Russell Fish*

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**Commitments      and Contingencies, continued**

*Lowell      Giffhorn Arbitration *

*Patent      Litigation*

***Profit      Sharing Plan***

----

**Patriot      Scientific Corporation**

**Notes      to Unaudited Condensed Consolidated Financial Statements **

**Commitments      and Contingencies, continued**

***Current      401(k) Plan***

***Employment      Contract***

** **

***Guarantees      and Indemnities***

**8.      Subsequent Events**

----

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

**Overview      **

*Accounting      For Derivative Instruments and Hedging Activities*
*Accounting      for Derivative Financial Instruments Indexed to, and Potentially Settled in,      a      Company's Own Stock*

----

**Critical      Accounting Policies and Estimates **

----

| 5. | Derivative                Financial Instruments |
|----|-------------------------------------------------|

*Accounting      For Derivative Instruments and Hedging Activities *
*Accounting      for Derivative Financial Instruments Indexed to, and Potentially Settled in,      a      Company's Own Stock *

----

| 8. | Investment                in Affiliated Company |
|----|-------------------------------------------------|

**Results      of Operations **

----

----

**Liquidity      and Capital Resources**

**Recent      Accounting Pronouncements **

*Share-Based      Payment*
*Accounting      for Stock-Based Compensation *

----

*Accounting      for Uncertainty in Income Taxes - an interpretation of FASB Statement No.      109*
*Accounting      for Income Taxes*

**Risk      Factors **

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

**WE      HAVE A HISTORY OF LOSSES AND, THEREFORE, MAY NOT CONTINUE ANNUAL      PROFITABILITY**

**OUR      LIMITED ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY MAY INADVERTENTLY ADVERSELY      AFFECT OUR ABILITY TO COMPETE**

----

**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      SHARE PRICE COULD BE LOWERED AS A RESULT OF SHORT SALES**

----

**Item        3. Quantitative and Qualitative Disclosures About Market        Risk**

N/A

**Item      4. Controls and Procedures**

***Evaluation      of Disclosure Controls and Procedures***

*Remediation      of Material Weaknesses Pertaining to Disclosure Controls and Procedures*

*Changes      in Internal Control over Financial Reporting*

----

**PART      II- OTHER INFORMATION **

**Item      1. Legal Proceedings **

*Beatie      and Osborne, LLP v. Patriot Scientific Corporation*

*Patriot      Scientific Corporation v. Russell Fish*

*Lowell      Giffhorn Arbitration *

----

*Patent      Litigation*

**Item      1A. Risk Factors**

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds**

| **Period**                           |   | **Total                  Number of Shares Purchased** |      | **Average                  Price Paid per Share** |   | **Total                  Number of Shares Purchased as Part of Publicly Announced Plans                  or                  Programs** |   |
|--------------------------------------|--------|-------------------------------------------------------|-----------|---------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|
| June                  1 - 30, 2006   |   |                                                  | -         |                                              | $      | -                                                                                                                                       |   |   | - |   |
| July                  1 - 31, 2006   |   |                                                  | 2,075,003 |                                              | $      | 0.89                                                                                                                                    |   |   | 2,075,003 |   |
| August                  1 - 31, 2006 |   |                                                  | -         |                                              | $      | -                                                                                                                                       |   |   | - |   |
| Total                                |   |                                                  | 2,075,003 |                                              | $      | 0.89                                                                                                                                    |   |   | 2,075,003 |   |

*Issuance      of Common Stock*

----

**Item      3. Defaults Upon Senior Securities**

**Item      4. Submission of Matters to a Vote of Security Holders**

**Item      5. Other Information**

**Item      6. Exhibits and Reports on Form 8-K**

| **Exhibit No.** |   | **Document**                                                                                                                                                                                                                                                                                                                                                                          |
|----------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1                  |   | Agreement                to Exchange Technology for Stock in Patriot Scientific Corporation,                incorporated by reference to Exhibit 2.1 to Form 8-K dated                August 10, 1989*                                                                                                                                                                      |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                  |
| 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*                                                                                            |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                  |
| 2.2.1                |   | Amendment                to Development Agreement dated April 23, 1996 between the Company and                Sierra Systems, incorporated by reference to Exhibit 2.2.1 to                Pre-Effective Amendment No. 1 to Registration Statement on Form SB-2                filed April 29, 1996*                                                              |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                  |
| 2.3                  |   | Form                of Exchange Offer dated December 4, 1996 between the Company and                certain shareholders of Metacomp, Inc. incorporated by reference                to                Exhibit 2.3 to Form 8-K filed January 9,                1997*                                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                  |
| 2.4                  |   | Letter                of Transmittal to Accompany Shares of Common Stock of Metacomp, Inc.                Tendered Pursuant to the Exchange Offer Dated December 4, 1996                incorporated by reference to Exhibit 2.4 to Form 8-K filed                January 9, 1997*                                                                                     |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                  |
| 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* |

----

| **Exhibit No.** |   | **Document**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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*                                                                                                                                                                                                            |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.4                  |   | 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*                                                                                                                                                                                                                                                                                                                                       |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                 |   | 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*                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.1                  |   | 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* |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 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*                                                                                                                                                                                       |

----

| **Exhibit No.** |   | **Document**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|----------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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 for 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*                                                                                                                                                                                     |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 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*                                                                                                                                                                                                                                                                                                                                        |

----

| **Exhibit No.** |   | **Document**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|----------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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* |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 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.*                                                                                                                                                                  |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.29                 |   | Approval                Rights Agreement and Termination of Antidilution Agreement and Addendum                to                Warrants dated October 10, 2006, incorporated by reference to                Exhibit 4.29 to Form 10-KSB for the fiscal year ended May 31,                2006*                                                                                                                                                                                                                                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.1                 |   | 1992                Incentive Stock Option Plan of the Company, incorporated by reference                to                Exhibit 10.1 to Form 8-K dated May 12,                1992*                                                                                                                                                                                                                                                                                                                                                                                                         |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.1.1               |   | Amendment                to 1992 Incentive Stock Option Plan dated January 11, 1995,                incorporated by reference to Exhibit 10.1.1 to Form S-8 filed                July 17, 1996*                                                                                                                                                                                                                                                                                                                                                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.2                 |   | 1992                Non-Statutory Stock Option Plan of the Company, incorporated by reference                to Exhibit 10.2 to Form 8-K dated May 12,                1992*                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.2.1               |   | Amendment                to 1992 Non-Statutory Stock Option Plan dated January 11, 1995                incorporated by reference to Exhibit 10.2.1 to Form 10-KSB for fiscal                year ended May 31, 1996, filed August 16,                1996*                                                                                                                                                                                                                                                                                                                                |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 10.3                 |   | Lease                Agreement between the Company’s subsidiary Metacomp, Inc. and Clar-O-Wood                Partnership, a California limited partnership dated April 11, 1991 as                amended November 11, 1992 and November 2, 1995 incorporated by                reference to Exhibit 10.3 to Form 10-KSB for fiscal year ended                May 31, 1997, filed July 18,                1997*                                                                                                                                                          |

----

| **Exhibit No.** |   | **Document**                                                                                                                                                                                                                                                                                                                                                                                                      |
|----------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.4                 |   | Stock                Purchase Agreement dated November 29 and 30, 1995, between the                Company and SEA, Ltd., incorporated by reference to Exhibit 10.4 to                Form 8-K filed December 11, 1995*                                                                                                                                                                            |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.4.1               |   | Letter                Amendment to Stock Purchase Agreement dated January 31, 1996, between                the Company and SEA, Ltd., incorporated by reference to                Exhibit 10.4.1 to Form 10-QSB for fiscal quarter ended                February 29, 1996, filed March 15, 1996*                                                                                              |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.5                 |   | 1995                Employee Stock Compensation Plan of the Company, incorporated by                reference                to Exhibit 10.5 to Form 10-QSB for fiscal quarter ended                November 30, 1995, filed December 28, 1995*                                                                                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.6                 |   | Letter                Stock and Warrant Agreement dated January 10, 1996 between the                Company and Robert E. Crawford, Jr., incorporated by reference to                Exhibit 10.6 to Form 10-QSB for fiscal quarter ended                February 29, 1996, filed March 15, 1996*                                                                                        |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.7                 |   | Non-Exclusive                Manufacturing and Line of Credit Agreement dated February 28, 1996,                between the Company and Labway Corporation, incorporated by reference                to                Exhibit 10.7 to Form 10-QSB for fiscal quarter ended                February 29, 1996, filed March 15, 1996*                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.8                 |   | Distribution                and Representation Agreement dated February 28, 1996, between the                Company and Innoware, Inc., incorporated by reference to Exhibit 10.8                to Form 10-QSB for fiscal quarter ended February 29, 1996, filed                March 15, 1996*                                                                                             |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.9                 |   | Employment                Agreement dated November 20, 1995 between the Company and Elwood G.                Norris, incorporated by reference to Exhibit 10.9 to Registration                Statement on Form SB-2 filed March 18, 1996*                                                                                                                                                         |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.9.1               |   | First                Amendment to Employment Agreement dated May 17, 1996 between the                Company and Elwood G. Norris, incorporated by reference to                Exhibit 10.9.1 to Pre-Effective Amendment No. 2 to Registration                Statement on Form SB-2 filed May 23, 1996*                                                                            |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.10                |   | Employment                Agreement dated November 20, 1995 between the Company and Robert                Putnam, incorporated by reference to Exhibit 10.10 to Registration                Statement on Form SB-2 filed March 18, 1996*                                                                                                                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.11                |   | Sales                Contractual Agreement dated March 19, 1996 between the Company and                Evolve Software, Inc., incorporated by reference to Exhibit 10.11 to                Pre-Effective Amendment No. 1 to Registration Statement on Form SB-2                filed April 29, 1996*                                                                                          |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.11.1              |   | Two                Year Stock Purchase Warrant dated March 19, 1996 Granted to Evolve                Software, Inc. Providing for the Purchase of up to 50,000 Common                Shares at                $2.85, incorporated by reference to Exhibit 10.11.1 to Pre-Effective                Amendment No. 1 to Registration Statement on Form SB-2 filed                April 29, 1996* |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.12                |   | Employment                Agreement dated as of May 8, 1996 between the Company and                Michael A. Carenzo, including Schedule A - Stock Option                Agreement, incorporated by reference to Exhibit 10.12 to                Pre-Effective Amendment No. 2 to Registration Statement on                Form SB-2 filed May 23, 1996*                      |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.12.1              |   | First                Amendment to Employment Agreement dated as of May 8, 1996 between the                Company and Michael A. Carenzo dated September 23, 1996, incorporated                by reference to Exhibit 10.12.1 to Form 10-KSB for the fiscal                year ended May 31, 1997, filed July 18, 1997*                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.13                |   | 1996                Stock Option Plan of the Company dated March 25, 1996 and approved by                the Shareholders on May 17, 1996, incorporated by reference to                Exhibit 10.13 to Pre-Effective Amendment No. 2 to Registration                Statement on Form SB-2 filed May 23, 1996*                                                                     |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.14                |   | Sales                Contractual Agreement dated June 20, 1996 between the Company and                Compunetics Incorporated incorporated by reference to Exhibit 10.14                to Form 10-KSB for fiscal year ended May 31, 1996, filed                August 16, 1996*                                                                                                             |

----

| **Exhibit No.** |   | **Document**                                                                                                                                                                                                                                                                                                            |
|----------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.15                |   | Sales                Contractual Agreement dated July 31, 1996 between the Company and                Premier Technical Sales, Inc. incorporated by reference to                Exhibit 10.15 to Form  10-KSB for fiscal year ended May 31,                1996, filed August 16, 1996*        |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.16                |   | Employment                Agreement dated January 1, 1997 between the Company and                Norman J. Dawson incorporated by reference to Exhibit 10.16 to                Form 10-KSB for fiscal year ended May 31, 1997, filed July 18,                1997*                             |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.17                |   | Employment                Agreement dated January 1, 1997 between the Company and                Jayanta K. Maitra incorporated by reference to Exhibit 10.17 to                Form 10-KSB for fiscal year ended May 31, 1997, filed                July 18, 1997*                       |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.18                |   | Technology                License and Distribution Agreement dated June 23, 1997 between the                Company and Sun Microsystems, Inc. incorporated by reference to                Exhibit 10.18 to Form 10-KSB for the fiscal year ended May 31,                1997, filed July 18, 1997* |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.19                |   | Employment                Agreement dated March 23, 1999 between the Company and James T.                Lunney incorporated by reference to Exhibit 10.19 to Form 10-KSB for                the fiscal year ended May 31, 1998, filed August 19,                1998*                         |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.20                |   | Employment                Agreement dated July 28, 1997 between the Company and Phillip                Morettini incorporated by reference to Exhibit 10.20 to                Form 10-KSB for the fiscal year ended May 31, 1998, filed                August 19, 1998*                        |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.21                |   | Employment                Agreement dated July 23, 1998 between the Company and Lowell W.                Giffhorn incorporated by reference to Exhibit 10.21 to                Form 10-KSB for the fiscal year ended May 31, 1998, filed                August 19, 1998*                  |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.22                |   | Secured                Promissory Note dated June 12, 2000 between the Company and                James T. Lunney incorporated by reference to Exhibit 10.22 to                Form 10-KSB for the fiscal year ended May 31, 2000, filed                August 29, 2000*                       |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.23                |   | Purchase                Agreement dated June 29, 2000 between the Company and 4S 37/38, LLC                incorporated by reference to Exhibit 10.23 to Form 10-KSB for the                fiscal year ended May 31, 2000*                                                                              |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.24                |   | Employment                Agreement dated October 2, 2000 between the Company and                Miklos B. Korodi incorporated by reference to Exhibit 10.24 to                Form 10-QSB for the fiscal quarter ended November 30, 2000, filed                January 12, 2001*              |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.25                |   | Employment                Agreement dated December 1, 2000 between the Company and                Richard G. Blum incorporated by reference to Exhibit 10.25 to                Form 10-QSB for the fiscal quarter ended November 30, 2000, filed                January 12, 2001*              |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.26                |   | Employment                Agreement dated January 29, 2001 between the Company and Serge J.                Miller incorporated by reference to Exhibit 10.26 to Form 10-KSB                for the fiscal year ended May 31, 2001, filed August 29,                2001*                       |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.27                |   | Lease                Agreement dated February 23, 2001 between the Company and Arden                Realty Finance IV, LLC incorporated by reference to Exhibit 10.27 to                Form 10-KSB for the fiscal year ended May 31, 2001, filed                August 29, 2001*              |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.28                |   | Employment                Agreement dated January 1, 2001 between the Company and David H.                Pohl incorporated by reference to Exhibit 10.28 to Form 10-KSB                for the fiscal year ended May 31, 2001, filed August 29,                2001*                     |
|                 |   |                                                                                                                                                                                                                                                                                                                    |
| 10.29                |   | Employment                Agreement dated April 26, 2001 between the Company and David H.                Pohl incorporated by reference to Exhibit 10.29 to Form 10-KSB for                the fiscal year ended May 31, 2001, filed August 29,                2001*                           |

----

| **Exhibit No.** |   | **Document**                                                                                                                                                                                                                                                                                                                                  |
|----------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.30                |   | Employment                Agreement dated November 17, 2001 between the Company and                Lowell W. Giffhorn incorporated by reference to Exhibit 10.30 to                Registration Statement on Form S-3 filed June 27,                2002*                                                            |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.31                |   | Employment                Agreement dated December 20, 2001 between the Company and Jayanta                Maitra incorporated by reference to Exhibit 10.31 to Registration                Statement on Form S-3 filed June 27, 2002*                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.32                |   | Consulting                Agreement dated March 7, 2002 between the Company and SDMC, Inc.                incorporated by reference to Exhibit 10.32 to Registration Statement                on Form S-3 filed June 27, 2002*                                                                                            |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.33                |   | Employment                Agreement dated January 2, 2004 between the Company and Jayanta                Maitra incorporated by reference to Exhibit 10.33 to Registration                statement on Form SB-2 filed May 21, 2004*                                                                                      |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.34                |   | Consulting                Agreement dated March 18, 2004 between the Company and SDMC, Inc.                incorporated by reference to Exhibit 10.34 to Registration Statement                en Form SB-2 filed May 21, 2004*                                                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.35                |   | Employment                Agreement dated June 1, 2004 between the Company and Patrick Nunally                incorporated by reference to Exhibit 10.35 to Form 10-KSB for the                fiscal year ended May 31, 2004, filed August 19,                2004*                                                      |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.36                |   | Amendment                No. 1 to Employment Agreement dated July 12, 2004 between the                Company and Patrick Nunally incorporated by reference to                Exhibit 10.36 to Form 10-KSB for the fiscal year ended May 31,                2004, filed August 19, 2004*                             |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.37                |   | Employment                Agreement dated September 1, 2004 between the Company and Lowell W.                Giffhorn incorporated by reference to Exhibit 10.37 to Registration                Statement on Form SB-2 filed February 2, 2005*                                                                                 |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.38                |   | IGNITE                License Agreement with Advanced Micro Devices, Inc., dated                February 21, 2005, incorporated by reference to Exhibit 10.38 to                Form 10-KSB for the fiscal year ended May 31,                2006*                                                                             |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.39                |   | Patent                Portfolio License Agreement with Advanced Micro Devices, Inc., dated                February 21, 2005, incorporated by reference to Exhibit 10.39 to                Form 10-KSB for the fiscal year ended May 31,                2006*                                                                   |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.40                |   | Master                Agreement, dated as of June 7, 2005, by and among the Company,                Technology Properties Limited Inc., a California corporation and                Charles                H. Moore, an individual, incorporated by reference to Exhibit 10.40                to Form 8-K filed June 15, 2005* |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.41                |   | Commercialization                Agreement dated as of June 7, 2005 by and among the JV LLC,                Technology Properties Limited Inc., a California corporation, and                the                Company, incorporated by reference to Exhibit 10.41 to Form 8-K filed                June 15, 2005*            |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.42                |   | Limited                Liability Company Operating Agreement of JV LLC, a Delaware limited                liability company, dated as of June 7, 2005, incorporated by                reference to Exhibit 10.42 to Form 8-K filed June 15,                2005*                                                               |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 10.43                |   | Agreement                for Part-Time Employment dated August 3, 2005 between the Company and                Thomas J. Sweeney, incorporated by reference to Exhibit 99.3 to Form                8-K filed August 9, 2005*                                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 14.1                 |   | Code                of Ethics for Senior Financial Officers incorporated by reference                to                Exhibit 14.1 to Form 10-K for the fiscal year ended May 31,                2003, filed August 29, 2003*                                                                                            |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 31.1                 |   | Certification                of David H. Pohl, CEO, pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002**                                                                                                                                                                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 31.2                 |   | Certification                of Thomas J. Sweeney, CFO, pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002**                                                                                                                                                                                                       |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 32.1                 |   | Certification                of David H. Pohl, CEO, pursuant to Section 906 of the Sarbanes-Oxley                Act of 2002**                                                                                                                                                                                                           |
|                 |   |                                                                                                                                                                                                                                                                                                                                          |
| 32.2                 |   | Certification                of Thomas J. Sweeney, CFO, pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002**                                                                                                                                                                                                       |

----

| **Exhibit No.** |   | **Document**                                                                                                                                                                                                                                                                                                                                                                                              |
|----------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 99.1                 |   | Form                of ISO Plan Option (Gaspar) dated May 29, 1992, incorporated by                reference to Exhibit 28.2 to registration statement on                Form SB-2, file no. 33-57858*                                                                                                                                                                                     |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 99.2                 |   | Form                of NSO Plan Option (Berlin) dated May 29, 1992, incorporated by                reference to Exhibit 28.3 to registration statement on                Form SB-2, file no. 33-57858*                                                                                                                                                                                     |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 99.3                 |   | Form                of Incentive Stock Option Agreement to the Company’s 1996 stock Option                Plan (individual agreements differ as to number of shares, dates,                prices                and vesting), incorporated by reference to Pre-Effective Amendment                No. 2 to Registration Statement on Form SB-2 filed May 23,                1996*        |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 99.4                 |   | Form                of Non-Qualified Stock Option Agreement to the Company’s 1996 Stock Option                Plan (individual agreement differ as to number of shares, date, prices                and                vesting), incorporated by reference to Pre-Effective Amendment No. 2                to Registration Statement on Form SB-2 filed May 23,                1996* |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 99.5                 |   | Press                Release of the Company dated November 4, 1996 incorporated by                reference to Exhibit 99.5 to Form 8-K filed January 9,                1997*                                                                                                                                                                                                         |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 99.6                 |   | Form                of Incentive Stock Option Agreement to the Company’s 2001 Stock Option                Plan incorporated by reference to Exhibit 99.6 to Registration                Statement on Form S-8 filed March 26, 2001*                                                                                                                                                       |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 99.7                 |   | Form                of Non-Qualified Stock Option Agreement to the Company’s 2001 Stock Option                Plan incorporated by reference to Exhibit 99.7 to Registration                Statement on Form S-8 filed March 26, 2001*                                                                                                                                              |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 99.8                 |   | Form                of Incentive Stock Option Agreement to the Company’s 2003 Stock Option                Plan incorporated by reference to Exhibit 99.8 to Registration                Statement on Form S-8 filed September 4, 2003*                                                                                                                                                    |
|                 |   |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 99.9                 |   | Form                of Non-Qualified Stock Option Agreement to the Company’s 2003 Stock Option                Plan incorporated by reference to Exhibit 99.9 to Registration                Statement on Form S-8 filed September 4,                2003*                                                                                                                            |

|  | * | Previously                filed in indicated registration statement or                report. |
|--|---|-----------------------------------------------------------------------------------------------|

|   | ** | Exhibit filed                herewith this Quarterly Report on Form 10-Q for the quarterly period                ended August 31, 2006. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                        |                                                                     |                             |
|---------------------------------------------|--------------------------------------------------------------------------|----------------------------------|
| DATED:                October 23, 2006 |   PATRIOT                SCIENTIFIC                CORPORATION |
|                                   |                                                                |                        |
|                                             |                                                                          | /S/                DAVID H. POHL |
|                                        | David                H. PohlChief                Executive Officer       |

| Signature                                        |   | Title                                       |   | Date                                 |
|--------------------------------------------------|--------|---------------------------------------------|--------|--------------------------------------|
|                                             |   |                                        |   |                                 |
| /S/                DAVID H. POHL                 |   | President,                Chief Executive   |   | October                23, 2006      |
| David                H. Pohl                     |   | Officer,                and Director        |   |                                 |
|                                             |   |                                        |   |                                 |
| /S/                THOMAS J. SWEENEY   |   | Chief                Financial Officer and  |   | October 23,                2006 |
| Thomas                J. Sweeney                 |   | Principal                Accounting Officer |   |                                 |
|                                             |   |                                        |   |                                 |
| /S/                CARLTON M. JOHNSON       |   | Director                                    |   | October 23,                2006 |
| Carlton                M. Johnson                |   |                                        |   |                                 |
|                                             |   |                                        |   |                                 |
| /S/                GLORIA H. FELCYN              |   | Director                                    |   | October 23,                2006 |
| Gloria                H. Felcyn                  |   |                                        |   |                                 |
|                                             |   |                                        |   |                                 |
| /S/                HELMUT FALK, JR.         |   | Director                                    |   | October 23,                2006 |
| Helmut                Falk, Jr.                  |   |                                        |   |                                 |
|                                             |   |                                        |   |                                 |
| /S/                JAMES L. TURLEY               |   | Director                                    |   | October                23, 2006      |
| James                L. Turley                   |   |                                        |   |                                 |

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