** **

**FORM      10-QSB/A**

**Amendment      No. 1**

| 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) |
|----------------------------------------------------------------------------------------------------------------------------------|--------------------------------|

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** **

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**TABLE      OF CONTENTS**

| **PART                I**                          |
|----------------------------------------------------|
|                                               |   |
| **Item                1. Financial Statements**    | **4** |
|                                               |   |
| **Item                3. Controls and Procedures** | **4** |
|                                               |   |
| **PART                II**                         |
|                                               |   |
| **Item                6. Exhibits**                | **5** |

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**PART      I **

**ITEM      1.**
**FINANCIAL      STATEMENTS**

**ITEM      3.**
**CONTROLS      AND PROCEDURES**

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

***Effect      of Restatement on Disclosure Controls***

** **

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|  | i) | The                Company did not maintain effective controls over the identification                of a                variable conversion feature and put option embedded within its convertible                debt instruments and the determination of the appropriate accounting                treatment for those debt                instruments. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ii) | The                Company did not maintain effective controls over the accounting for                its                investment in Phoenix Digital, LLC and the determination of the                appropriate accounting treatment for the                investment. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Changes      in Internal Control over Financial Reporting***

**PART      II **

**Item      6. Exhibits **

| **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*                                       |

----

| **Exhibit No.** | **Document**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.2                  | Articles of                Amendment of Patriot Financial Corporation, as filed with the Colorado                Secretary of State on July 21, 1988, incorporated by reference to                Exhibit 3.2 to registration statement on Form S-18, File                No. 33-23143-FW*                                                                                                                                                                                                                                             |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.3                  | Certificate                of Incorporation of the Company, as filed with the Delaware Secretary                of                State on March 24, 1992, incorporated by reference to                Exhibit 3.3 to Form 8-K dated May 12, 1992*                                                                                                                                                                                                                                                                                          |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.3.1                | Certificate                of Amendment to the Certificate of Incorporation of the Company,                as filed                with the Delaware Secretary of State on April 18, 1995, incorporated                by reference to Exhibit 3.3.1 to Form 10-KSB for the fiscal year                ended May 31, 1995*                                                                                                                                                                                                             |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.3.2                | Certificate                of Amendment to the Certificate of Incorporation of the Company,                as filed                with the Delaware Secretary of State on June 24,1997, incorporated by                reference to Exhibit 3.3.2 to Form 10-KSB for the fiscal year                ended May 31, 1997, filed July 18, 1997*                                                                                                                                                                                     |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.3.3                | Certificate                of Amendment to the Certificate of Incorporation of the Company,                as filed with the Delaware Secretary of State on April 28, 2000,                incorporated by reference to Exhibit 3.3.3 to Registration Statement                on Form S-3 filed May 5, 2000*                                                                                                                                                                                                                          |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.3.4                | Certificate                of Amendment to the Certificate of Incorporation of the Company,                as filed                with the Delaware Secretary of State on May 6, 2002, incorporated by                reference to Exhibit 3.3.4 to Registration Statement on Form S-3                filed June 27, 2002*                                                                                                                                                                                                                 |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.3.5                | Certificate                of Amendment to the Certificate of Incorporation of the Company,                as filed                with the Delaware Secretary of State on October 16, 2003,                incorporated by reference to Exhibit 3.3.5 to Registration Statement                on Form SB-2 filed May 21, 2004*                                                                                                                                                                                                            |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 3.4                  | 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*                                                                                                                                                                                                                                                                   |

----

| **Exhibit No.** | **Document**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.5                  | Form                of Stock Purchase Warrant (CC Investments, LDC) dated June 2, 1997                exercisable to purchase an aggregate of 400,000 common shares at                $1.69125                per share until June 2, 2002, granted to two investors in connection                with the offering of securities in Exhibit 4.4 incorporated by                reference to Exhibit 4.5 to Form 8-K filed June 17,                1997*                                                                                      |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.6                  | Registration                Rights Agreement dated June 2, 1997 by and among the Company and CC                Investments, LDC and the Matthew Fund, N.V. related to the registration                of                the common stock related to Exhibits 4.4 and 4.5 incorporated by                reference to Exhibit 4.6 to Form 8-K filed June 17,                1997*                                                                                                                                                                   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.7                  | Form                of Warrant to Purchase Common Stock (Swartz Family Partnership, L.P.)                dated June 2, 1997 exercisable to purchase an aggregate of 211,733                common shares at $1.69125 per share until June 2, 2002, granted to a                group of investors in connection with the offering of securities                in                Exhibit 4.4 incorporated by reference to Exhibit 4.7 to Form 8-K                filed June 17, 1997*                                                         |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.8                  | Registration                Rights Agreement dated June 2, 1997 by and among the Company and                Swartz Investments, LLC related to the registration of the common                stock                related to Exhibit 4.7 incorporated by reference to Exhibit 4.8                to Form 8-K filed June 17, 1997*                                                                                                                                                                                                                  |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.9                  | Form                of 5% Convertible Term Debenture (CC Investments, LDC) due June 2,                1999 aggregating $1,000,000 to two investors incorporated by reference                to                Exhibit 4.9 to Form 10-KSB for the fiscal year ended May 31,                1998, filed August 19, 1998*                                                                                                                                                                                                                             |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.10                 | Form                of Stock Purchase Warrant (CC Investments, LDC) dated November 24,                1997 exercisable to purchase an aggregate of 200,000 common shares                at                $1.50 per share until June 2, 2002, granted to two investors in                connection with the offering of securities described in Exhibit 4.9                incorporated by reference to Exhibit 4.10 to Form 10-KSB for the year                ended May 31, 1998, filed August 19, 1998*                              |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.11                 | Form                of Warrant to Purchase Common Stock (Swartz Family Partnership, L.P.)                dated November 24, 1997 exercisable to purchase an aggregate of                105,867 common shares at $1.50 per share until June 2, 2002, granted                to a group of investors in connection with the offering of securities                described in Exhibit 4.9 incorporated by reference to                Exhibit 4.11 to Form 10-KSB for the year ended May 31, 1998,                filed August 19, 1998* |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.12                 | Form                of Warrant to Purchase Common Stock (Investor Communications Group,                Inc.)                dated June 16, 1997 exercisable to purchase an aggregate of 130,000                common shares at prices ranging from $2.50 to $7.50 per share until                June 15, 1999 incorporated by reference to Exhibit 4.12 to Form                10-KSB for the year ended May 31, 1998, filed August 19,                1998*                                                                                |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.13                 | Warrant                to Purchase Common Stock issued to Spellcaster Telecommunications,                Inc.                dated April 28, 1998 exercisable to purchase an aggregate of 100,000                common shares at $1.25 per share until April 28, 2000 incorporated by                reference to Exhibit 4.13 to Form 10-KSB for the year ended                May 31, 1998, filed August 19, 1998*                                                                                                                         |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.14                 | Investment                agreement dated February 24, 1999 by and between the Company and                Swartz Private Equity, LLC 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*                                                                                                              |

----

| **Exhibit No.** | **Document**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.16                 | Form                of Warrant to Purchase Common Stock (Swartz Private Equity, LLC)                dated                February 24, 1999 exercisable to purchase common shares in connection                with the offering of securities in Exhibit 4.14 incorporated by                reference to Exhibit 4.16 to Form 10-QSB/A for the fiscal quarter                ended November 30, 1998, filed March 5, 1999*                                                                                                                                                          |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.17                 | Amended                and Restated Investment Agreement dated July 12, 1999 by and between                the Company and Swartz Private Equity, LLC for a maximum aggregate                amount                of $5,000,000 incorporated by reference to Exhibit 4.17 to                Pre-Effective Amendment No. 2 to Registration Statement on Form SB-2                filed July 15, 1999*                                                                                                                                                                                     |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.18                 | Investment                Agreement dated May 2, 2000 by and between the Company and Swartz                Private Equity, LLC for a maximum aggregate amount of $30,000,000                incorporated by reference to Exhibit 4.18 to Registration Statement                on Form S-3 filed May 5, 2000*                                                                                                                                                                                                                                                                                  |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.18.1               | Waiver                and Agreement dated September 24, 2001 amending the Investment                Agreement (1) dated May 2, 2000 by and between the Company and                Swartz Private Equity, LLC for a maximum aggregate amount of $30,000,000                incorporated by reference to Exhibit 4.18.1 to Registration Statement                on Form S-1 filed October 11, 2001*                                                                                                                                                                                   |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.19                 | 2001                Stock Option Plan of the Company dated February 21, 2001 incorporated                by reference to Exhibit 4.19 to Registration Statement on Form S-8                filed March 26, 2001*                                                                                                                                                                                                                                                                                                                                                                               |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.20                 | Investment                agreement dated September 17, 2001 by and between the Company and                Swartz Private Equity, LLC for a maximum aggregate amount of $25,000,000                incorporated by reference to Exhibit 4.20 to Registration Statement                on Form S-1 filed October 11, 2001*                                                                                                                                                                                                                                                                      |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.21                 | Registration                Rights Agreement dated September 17, 2001 by and between the Company                and Swartz Private Equity, LLC related to the registration of the                common                stock related to Exhibit 4.20 incorporated by reference to                Exhibit 4.21 to Registration Statement on Form S-1 filed                October 11, 2001*                                                                                                                                                                                                |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.22                 | Warrant                to Purchase Common Stock dated September 17, 2001 exercisable to                purchase common shares in connection with the Offering of securities                in                Exhibit 4.20 incorporated by reference to Exhibit 4.22 to                Registration Statement on Form S-1 filed October 11,                2001*                                                                                                                                                                                                                           |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.23                 | Financial                Consulting Services Agreement between the Company and M. Blaine                Riley, Randall Letcavage and Rosemary Nguyen incorporated by reference                to                Exhibit 4.23 to Registration Statement on Form S-8 filed                January 22, 2002*                                                                                                                                                                                                                                                                                      |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.24                 | Form                of 8% Convertible Debenture (Lincoln Ventures, LLC) due June 10, 2004                aggregating $1,000,000 to six investors incorporated by reference                to                Exhibit 4.24 to Registration Statement on Form S-3 filed                June 27, 2002*                                                                                                                                                                                                                                                                                             |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 4.25                 | Form                of Stock Purchase Warrant (Lincoln Ventures, LLC) dated June 10, 2002                exercisable to purchase an aggregate of 12,859,175 common shares                at                initial exercise prices ranging from $0.08616 to $0.10289 per share                until                June 10, 2007, granted to six investors in connection with the                offering of securities described in Exhibit 4.24 incorporated by                reference to Exhibit 4.25 to Registration Statement on Form S-3 filed                June 27, 2002* |
|                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 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*                                                                                                                                                                                       |

----

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

----

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

----

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

----

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

----

| **Exhibit No.** | **Document**                                                                                                                                                                                                                                                                                                                                                                                              |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |                                                                                                                                                                                                                                                                                                                                                                                                      |
| 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-QSB for the quarterly                period ended November 30, 2005. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PATRIOT      SCIENTIFIC CORPORATION**

**INDEX**

| ** **                                                                                                                                                                                                |   | **Page**                   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------|
| **PART                I. FINANCIAL INFORMATION**                                                                                                                                                          |   |                       |
| **ITEM                1. Financial Statements**                                                                                                                                                           |   |                       |
| Unaudited                Condensed Consolidated Balance Sheets as of November 30, 2005 (restated)                and May 31, 2005 (restated)                                                              |   | 2                          |
| Unaudited                Condensed Consolidated Statements of Operations for the three and                six                months ended November 30, 2005 (restated) and 2004                (restated) |   | 3                          |
| Unaudited                Condensed Consolidated Statements of Cash Flows for the six months                ended                November 30, 2005 (restated) and 2004 (restated)                          |   | 4                          |
| Notes                to Unaudited Condensed Consolidated Financial Statements                                                                                                                             |   | 5 -                19 |
|                                                                                                                                                                                                      |   |                       |
| **OTHER                INFORMATION**                                                                                                                                                                      |   |                       |
| **SIGNATURES**                                                                                                                                                                                            |   |                       |

----

**PART      I- FINANCIAL INFORMATION**

**Item      1. Financial Statements**

**Patriot      Scientific Corporation**

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

|                                                                                                                                                             |   | November                30, 2005        |        | May                31, 2005 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|-------------|-----------------------------|--------|
|                                                                                                                                                             |   | As                restated (See Note 2) |        |
| **ASSETS**                                                                                                                                                       |   | (Unaudited)                             |        |                        |   |
|                                                                                                                                                             |   |                                    |        |                        |   |
| Current                assets:                                                                                                                                   |   |                                    |        |                        |   |   |   |
| Cash                and cash equivalents                                                                                                                         |   | $                                       | 5,919,312   |                        | $      | 591,426 |   |
| Marketable                securities and short term investments                                                                                                  |   |                                    | 614,283     |                        |   | 697,524 |   |
| Restricted                short term investment                                                                                                                  |   |                                    | 204,774     |                        |   | 201,648 |   |
| Licenses                receivable                                                                                                                               |   |                                    | 500,000     |                        |   | 2,000,000 |   |
| Accounts                receivable                                                                                                                               |   |                                    | 2,625       |                        |   | - |   |
| Prepaid                expenses and other current assets                                                                                                         |   |                                    | 243,186     |                        |   | 121,758 |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| Total                current assets                                                                                                                              |   |                                    | 7,484,180   |                        |   | 3,612,356 |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| **Property                and equipment, net**                                                                                                                   |   |                                    | 25,588      |                        |   | 21,376 |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| **Investment                in affiliated company**                                                                                                              |   |                                    | 1,279,835   |                        |   | - |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| **Patents                and trademarks**,                net of accumulated amortization of $566,975 and $549,563                                               |   |                                    | 48,999      |                        |   | 66,411 |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| **Other                assets, net**                                                                                                                             |   |                                    | -           |                        |   | 23,891 |   |
|                                                                                                                                                             |   | $                                       | 8,838,602   |                        | $      | 3,724,034 |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY (DEFICIT)**                                                                                          |   |                                    |        |                        |   |   |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| Current                liabilities:                                                                                                                              |   |                                    |        |                        |   |   |   |
| Line                of credit                                                                                                                                    |   | $                                       | 100,000     |                        | $      | 100,000 |   |
| Current                portion of convertible debentures, net of debt discount of $132,078                and                $301,320                            |   |                                    | 616,090     |                        |   | 421,847 |   |
| Accounts                payable                                                                                                                                  |   |                                    | 138,704     |                        |   | 268,458 |   |
| Accrued                liabilities                                                                                                                               |   |                                    | 447,404     |                        |   | 505,153 |   |
| Current                portion of capital lease obligation                                                                                                       |   |                                    | -           |                        |   | 2,306 |   |
| Accrued                contingency fee payable                                                                                                                   |   |                                    | 346,000     |                        |   | 346,000 |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| Total                current liabilities                                                                                                                         |   |                                    | 1,648,198   |                        |   | 1,643,764 |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| Warrant                and derivative liabilities                                                                                                                |   |                                    | 4,784,531   |                        |   | 9,274,712 |   |
| Convertible                debentures, net of debt discount of $ - and $111,559                                                                                  |   |                                    | -           |                        |   | 45,942 |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| Total                liabilities                                                                                                                                 |   |                                    | 6,432,729   |                        |   | 10,964,418 |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| **Commitments                and contingencies**                                                                                                                 |   |                                    |        |                        |   |   |   |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
| **Stockholders’                equity (deficit):**                                                                                                         |   |                                    |        |                        |   |   |   |
| Preferred                stock, $0.00001 par value; 5,000,000 shares authorized: none                outstanding                                                 |   |                                    | -           |                        |   | - |   |
| Common                stock, $0.00001 par value: 500,000,000 shares authorized: 304,719,593                and                280,492,013 issued and outstanding |   |                                    | 3,047       |                        |   | 2,805 |   |
| Additional                paid-in capital                                                                                                                        |   |                                    | 57,701,056  |                        |   | 55,459,253 |   |
| Accumulated                deficit                                                                                                                               |   |                                    | (55,298,230 | )                           |   | (62,702,442 | ) |
| Total                stockholders’ equity (deficit)                                                                                                        |   |                                    | 2,405,873   |                        |   | (7,240,384 | ) |
|                                                                                                                                                             |   |                                    |        |                        |   |   |   |
|                                                                                                                                                             |   | $                                       | 8,838,602   |                        | $      | 3,724,034 |   |

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

----

**Patriot      Scientific Corporation**

**Condensed      Consolidated Statements of Operations**

**(Unaudited)**

|                                                                        |   | Three                Months Ended       |        | Six                Months Ended         |   |
|-----------------------------------------------------------------------------|--------|-----------------------------------------|-------------|-----------------------------------------|--------|
|                                                                        |   | November                30 2005         |        | November                30, 2004        |   | November                30, 2005 |   | November                30, 2004 |   |
| Revenues:                                                                   |   | As                restated (See Note 2) |        | As                restated (See Note 2) |   |
|                                                                        |   |                                    |        |                                    |   |   |   |   |   |
| Licenses                and royalties                                       |   | $                                       | -           |                                    | $      | - |   | $ | 10,000,000 |   | $ | - |   |
| Other                                                                       |   |                                    | 10,202      |                                    |   | 18,748 |   |   | 20,272 |   |   | 21,298 |   |
|                                                                        |   |                                    | 10,202      |                                    |   | 18,748 |   |   | 10,020,272 |   |   | 21,298 |   |
|                                                                        |   |                                    |        |                                    |   |   |   |   |   |   |   |   |   |
| Operating                expenses:                                          |   |                                    |        |                                    |   |   |   |   |   |   |   |   |   |
| Research                and development                                     |   |                                    | 109,553     |                                    |   | 54,037 |   |   | 198,260 |   |   | 182,341 |   |
| Selling,                general and administrative                          |   |                                    | 657,338     |                                    |   | 392,552 |   |   | 1,819,734 |   |   | 772,954 |   |
| Settlement                and license expense                               |   |                                    | -           |                                    |   | - |   |   | 1,918,054 |   |   | - |   |
| Total                operating expenses                                     |   |                                    | 766,891     |                                    |   | 446,589 |   |   | 3,936,048 |   |   | 955,295 |   |
|                                                                        |   |                                    |        |                                    |   |   |   |   |   |   |   |   |   |
| Operating                income (loss)                                      |   |                                    | (756,689    | )                                       |   | (427,841 | ) |   | 6,084,224 |   |   | (933,997 | ) |
|                                                                        |   |                                    |        |                                    |   |   |   |   |   |   |   |   |   |
| Other                income (expense):                                      |   |                                    |        |                                    |   |   |   |   |   |   |   |   |   |
| Unrealized                gain (loss) on marketable securities              |   |                                    | (1,137      | )                                       |   | 2,444 |   |   | (1,137 | ) |   | (12,219 | ) |
| Other                income                                                 |   |                                    | 59,758      |                                    |   | 479 |   |   | 93,648 |   |   | 47,752 |   |
| Interest                expense                                             |   |                                    | (111,030    | )                                       |   | (1,129,880 | ) |   | (313,514 | ) |   | (1,742,985 | ) |
| Change                in fair value of warrant and derivative liabilities   |   |                                    | 1,181,356   |                                    |   | (1,460,882 | ) |   | 2,261,155 |   |   | 760,072 |   |
| Equity                in loss of affiliated company                         |   |                                    | (472,596    | )                                       |   | - |   |   | (720,165 | ) |   | - |   |
| Total                other income (expense), net                            |   |                                    | 656,351     |                                    |   | (2,587,839 | ) |   | 1,319,987 |   |   | (947,380 | ) |
|                                                                        |   |                                    |        |                                    |   |   |   |   |   |   |   |   |   |
| Net                income (loss)                                            |   | $                                       | (100,338    | )                                       | $      | (3,015,680 | ) | $ | 7,404,211 |   | $ | (1,881,377 | ) |
|                                                                        |   |                                    |        |                                    |   |   |   |   |   |   |   |   |   |
| Basic                income (loss) per common share                         |   | $                                       | -           |                                    | $      | (0.02 | ) | $ | 0.02 |   | $ | (0.01 | ) |
|                                                                        |   |                                    |        |                                    |   |   |   |   |   |   |   |   |   |
| Diluted                income (loss) per common share                       |   | $                                       | -           |                                    | $      | (0.02 | ) | $ | 0.02 |   | $ | (0.01 | ) |
|                                                                        |   |                                    |        |                                    |   |   |   |   |   |   |   |   |   |
| Weighted                average number of common shares outstanding-basic   |   |                                    | 303,431,364 |                                    |   | 198,970,399 |   |   | 297,350,377 |   |   | 190,971,852 |   |
| Weighted                average number of common shares outstanding-diluted |   |                                    | 303,431,364 |                                    |   | 198,970,399 |   |   | 370,675,410 |   |   | 190,971,852 |   |

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

----

**Patriot      Scientific Corporation**

**Condensed      Consolidated Statements of Cash Flows **

**(Unaudited)**

|                                                                                                                                            |   | Six                Months Ended         |       |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|------------|
|                                                                                                                                            |   | November                30, 2005        |       | November                30, 2004 |   |
|                                                                                                                                            |   | As                restated (See Note 2) |       |
| **Operating                activities:**                                                                                                        |   |                                    |       |   |   |   |   |
| Net                income (loss)                                                                                                                |   | $                                       | 7,404,211  |   | $ | (1,881,377 | ) |
| Adjustments                to reconcile net income (loss) to net cash provided by (used in)                operating                activities: |   |                                    |       |   |   |   |   |
| Amortization                and depreciation                                                                                                    |   |                                    | 29,240     |   |   | 47,297 |   |
| Equity                in loss of affiliated company                                                                                             |   |                                    | 720,165    |   |   | - |   |
| Change                in fair value of warrant and derivative liabilities                                                                       |   |                                    | (2,261,155 | ) |   | (760,072 | ) |
| Net                gain related to warrant re-pricing, reconveyance and                issuance                                                 |   |                                    | (538,208   | ) |   | - |   |
| Non-cash                interest expense related to convertible debentures, notes payable                and                warrants            |   |                                    | 280,801    |   |   | 1,654,420 |   |
| Non-cash                compensation related to issuance of stock options and vesting of                warrants                                |   |                                    | -          |   |   | 22,175 |   |
| Issuance                of common stock, options and warrants for services and                other                                             |   |                                    | 81,250     |   |   | 14,800 |   |
| Expense                related to extension of expiration date of stock options                                                                 |   |                                    | 125,000    |   |   | - |   |
| Unrealized                loss on marketable securities                                                                                         |   |                                    | 1,137      |   |   | 12,219 |   |
| Accrued                interest income added to investments                                                                                     |   |                                    | (21,022    | ) |   | - |   |
| Changes                in:                                                                                                                      |   |                                    |       |   |   |   |   |
| Accounts                receivable                                                                                                              |   |                                    | (2,625     | ) |   | (2,368 | ) |
| Prepaid                and other assets                                                                                                         |   |                                    | (97,537    | ) |   | 95,408 |   |
| Licenses                receivable                                                                                                              |   |                                    | 1,500,000  |   |   | - |   |
| Accounts                payable and accrued expenses                                                                                            |   |                                    | (181,462   | ) |   | (2,103 | ) |
| Net                cash provided by (used in) operating activities                                                                              |   |                                    | 7,039,795  |   |   | (799,601 | ) |
|                                                                                                                                            |   |                                    |       |   |   |   |   |
| **Investing                activities:**                                                                                                        |   |                                    |       |   |   |   |   |
| Proceeds                from sale of marketable securities                                                                                      |   |                                    | 100,000    |   |   | - |   |
| Purchases                of property and equipment                                                                                              |   |                                    | (16,040    | ) |   | - |   |
| Investment                in affiliated company                                                                                                 |   |                                    | (2,000,000 | ) |   | - |   |
| Net                cash used in investing activities                                                                                            |   |                                    | (1,916,040 | ) |   | - |   |
|                                                                                                                                            |   |                                    |       |   |   |   |   |
| **Financing                activities:**                                                                                                        |   |                                    |       |   |   |   |   |
| Proceeds                from the issuance of convertible debentures                                                                             |   |                                    | -          |   |   | 452,500 |   |
| Proceeds                from the issuance of common stock                                                                                       |   |                                    | -          |   |   | 3,250 |   |
| Payments                on capital lease obligations                                                                                            |   |                                    | (2,306     | ) |   | (3,785 | ) |
| Proceeds                from exercise of common stock warrants and options                                                                      |   |                                    | 206,437    |   |   | 164,432 |   |
| Net                cash provided by financing activities                                                                                        |   |                                    | 204,131    |   |   | 616,397 |   |
|                                                                                                                                            |   |                                    |       |   |   |   |   |
| **Net                increase (decrease) in cash and cash equivalents**                                                                         |   |                                    | 5,327,886  |   |   | (183,204 | ) |
| **Cash                and cash equivalents,**beginning                of period                                                                 |   |                                    | 591,426    |   |   | 355,940 |   |
| **Cash                and cash equivalents, end of period**                                                                                     |   | $                                       | 5,919,312  |   | $ | 172,736 |   |
|                                                                                                                                            |   |                                    |       |   |   |   |   |
| **Supplemental                Disclosure of Cash Flow Information:**                                                                            |   |                                    |       |   |   |   |   |
|                                                                                                                                            |   |                                    |       |   |   |   |   |
| Cash                payments for interest                                                                                                       |   | $                                       | 2,637      |   | $ | 2,226 |   |
| Cash                payments for income taxes                                                                                                   |   | $                                       | -          |   | $ | 4,800 |   |
|                                                                                                                                            |   |                                    |       |   |   |   |   |
| **Supplemental                Disclosure of Non-Cash Investing and Financing                Activities:**                                       |   |                                    |       |   |   |   |   |
|                                                                                                                                            |   |                                    |       |   |   |   |   |
| Convertible                debentures, notes payable and accrued interest exchanged for common                stock                             |   | $                                       | 138,540    |   | $ | 1,062,104 |   |
| Reclassification                of derivative liabilities associated with debt conversions and warrant                exercises                 |   | $                                       | 1,690,705  |   | $ | 1,400,857 |   |
| Cashless                exercise of warrants                                                                                                    |   | $                                       | 116        |   | $ | - |   |

*See      accompanying 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*

----

**Derivative      Financial Instruments, continued**

|                                   |   | 2005   |                      | 2004   |   |
|----------------------------------------|--------|--------|---------------------------|--------|--------|
|                                   |   |   |                      |   |   |
| Estimated                dividends     |   |   | None                      |   |   | None |   |
| Expected                volatility     |   |   | 101                - 229% |   |   | 161                - 266% |   |
| Risk-free                interest rate |   |   | 3.5                - 5.1% |   |   | 1.3                - 4.4% |   |
| Expected                term (years)   |   |   | 2                - 7      |   |   | 2                - 7 |   |

**Revenue      Recognition**

**Net      Income Per Share**

*Earnings      Per Share*

|                                                                     |   | **Three                Months Ended November 30, 2005****As                restated (See Note 2)** |     |
|--------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|----------|
|                                                                     |   | Numerator                (Loss)                                                                    |     | Denominator                (Shares) |   | Per                Share Amount |   |
| Basic                EPS:                                                |   |                                                                                               |     |   |   |   |   |   |   |   |
| Net                loss                                                  |   | $                                                                                                  | (100,338 | ) |   | 303,431,364 |   | $ | - |   |
|                                                                     |   |                                                                                               |     |   |   |   |   |   |   |   |
| Diluted                EPS:                                              |   |                                                                                               |     |   |   |   |   |   |   |   |
| Effect                of  dilutive                 securities: |   |                                                                                               |     |   |   |   |   |   |   |   |
| Options                and  warrants                                |   |                                                                                               | -        |   |   | - |   |   |   |   |
|                                                                     |   |                                                                                               |     |   |   |   |   |   |   |   |
| Loss                available to common shareholders                     |   | $                                                                                                  | (100,338 | ) |   | 303,431,364 |   | $ | - |   |

----

**Net      Income Per Share, continued**

|                                                                     |   | **Three                Months Ended November 30, 2004****As                restated (See Note 2)** |       |
|--------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|------------|
|                                                                     |   | Numerator                (Loss)                                                                    |       | Denominator                (Shares) |   | Per                Share Amount |   |
| Basic                EPS:                                                |   |                                                                                               |       |   |   |   |   |   |   |   |
| Net                loss                                                  |   | $                                                                                                  | (3,015,680 | ) |   | 198,970,399 |   | $ | (0.02 | ) |
|                                                                     |   |                                                                                               |       |   |   |   |   |   |   |   |
| Diluted                EPS:                                              |   |                                                                                               |       |   |   |   |   |   |   |   |
| Effect                of  dilutive                 securities: |   |                                                                                               |       |   |   |   |   |   |   |   |
| Options                and  warrants                                |   |                                                                                               | -          |   |   | - |   |   |   |   |
|                                                                     |   |                                                                                               |       |   |   |   |   |   |   |   |
| Loss                available to common shareholders                     |   | $                                                                                                  | (3,015,680 | ) |   | 198,970,399 |   | $ | (0.02 | ) |

|                                                         |   | **Six                Months Ended November 30, 2005****As                restated (See Note 2)** |      |
|--------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------|-----------|
|                                                         |   | Numerator                (Income)                                                                |      | Denominator                (Shares) |   | Per                Share Amount |   |
| Basic                EPS:                                    |   |                                                                                             |      |   |   |   |   |   |   |   |
| Net                income                                    |   | $                                                                                                | 7,404,211 |   |   | 297,350,377 |   | $ | 0.02 |   |
|                                                         |   |                                                                                             |      |   |   |   |   |   |   |   |
| Diluted                EPS:                                  |   |                                                                                             |      |   |   |   |   |   |   |   |
| Convertibledebenturesinterest                                |   |                                                                                             | 30,077    |   |   |   |   |   |   |   |
| Effect                of dilutive                securities: |   |                                                                                             |      |   |   |   |   |   |   |   |
| Convertible                debentures                   |   |                                                                                             |      |   |   | 11,189,455 |   |   |   |   |
| Options                and  warrants                    |   |                                                                                             | -         |   |   | 62,135,578 |   |   |   |   |
|                                                         |   |                                                                                             |      |   |   |   |   |   |   |   |
| Income                available to common shareholders       |   | $                                                                                                | 7,434,288 |   |   | 370,675,410 |   | $ | 0.02 |   |

|                                                                     |   | **Six                Months Ended November 30, 2004****As                restated (See Note 2)** |       |
|--------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------|------------|
|                                                                     |   | Numerator                (Loss)                                                                  |       | Denominator                (Shares) |   | Per                Share Amount |   |
| Basic                EPS:                                                |   |                                                                                             |       |   |   |   |   |   |   |   |
| Net                loss                                                  |   | $                                                                                                | (1,881,377 | ) |   | 190,971,852 |   | $ | (0.01 | ) |
|                                                                     |   |                                                                                             |       |   |   |   |   |   |   |   |
| Diluted                EPS:                                              |   |                                                                                             |       |   |   |   |   |   |   |   |
| Effect                of  dilutive                 securities: |   |                                                                                             |       |   |   |   |   |   |   |   |
| Options                and  warrants                                |   |                                                                                             | -          |   |   | - |   |   |   |   |
|                                                                     |   |                                                                                             |       |   |   |   |   |   |   |   |
| Loss                available to common shareholders                     |   | $                                                                                                | (1,881,377 | ) |   | 190,971,852 |   | $ | (0.01 | ) |

----

**Stock-Based      Compensation**

*Accounting      for Stock-Based Compensation*
*Accounting      for Equity Instruments that are Issued to Other Than Employees for Acquiring,      or      in Conjunction with Selling Goods or Services*

*Accounting      for Stock-Based Compensation—Transition and Disclosure*
*Accounting      for Stock Issued to Employees*

|                                                                                                                                                          |   | **Three                Months Ended November 30,** |     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|----------|
|                                                                                                                                                          |   | **2005**                                           |     | **2004** |   |
|                                                                                                                                                          |   | **As                restated (See Note 2)**        |     |
| Net                loss as reported                                                                                                                           |   | $                                                  | (100,338 | ) | $ | (3,015,680 | ) |
| Add:                                                                                                                                                          |   |                                               |     |   |   |   |   |
| Share-based                compensation expense included in reported net income, net of tax                effects                                            |   |                                               | -        |   |   | - |   |
| Deduct:                                                                                                                                                       |   |                                               |     |   |   |   |   |
| Total                share-based employee compensation expense under fair value based                method                for all awards, net of tax effects |   |                                               | -        |   |   | 10,110 |   |
|                                                                                                                                                          |   |                                               |     |   |   |   |   |
| Pro                forma net loss                                                                                                                             |   | $                                                  | (100,338 | ) | $ | (3,025,790 | ) |

|                                                            |   |   |   |   |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|--------|
| Net                loss per common share, as reported - basic   |   |   | -      |   | $      | (0.02 | ) |
| Net                loss per common share, as reported - diluted |   |   | -      |   | $      | (0.02 | ) |
|                                                            |   |   |   |   |   |   |   |
| Net                loss per common share, pro forma - basic     |   |   | -      |   | $      | (0.02 | ) |
| Net                loss per common share, pro forma - diluted   |   |   | -      |   | $      | (0.02 | ) |

----

**Stock-Based      Compensation, continued**

|                                                                                                                                                          |   | **Six                Months Ended November 30,** |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|-----------|
|                                                                                                                                                          |   | **2005**                                         |      | **2004** |   |
|                                                                                                                                                          |   | **As                restated (See Note 2)**      |      |
| Net                income (loss) as reported                                                                                                                  |   | $                                                | 7,404,211 |   | $ | (1,881,377 | ) |
| Add:                                                                                                                                                          |   |                                             |      |   |   |   |   |
| Share-based                compensation expense included in reported net income, net of tax                effects                                            |   |                                             | -         |   |   | - |   |
| Deduct:                                                                                                                                                       |   |                                             |      |   |   |   |   |
| Total                share-based employee compensation expense under fair value based                method                for all awards, net of tax effects |   |                                             | 182,250   |   |   | 12,993 |   |
|                                                                                                                                                          |   |                                             |      |   |   |   |   |
| Pro                forma net income (loss)                                                                                                                    |   | $                                                | 7,221,961 |   | $ | (1,894,270 | ) |

|                                                                     |   |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Net                income (loss) per common share, as reported - basic   |   | $      | 0.02   |   | $      | (0.01 | ) |
| Net                income (loss) per common share, as reported - diluted |   | $      | 0.02   |   | $      | (0.01 | ) |
|                                                                     |   |   |   |   |   |   |   |
| Net                income (loss) per common share, pro forma - basic     |   | $      | 0.02   |   | $      | (0.01 | ) |
| Net                income (loss) per common share, pro forma - diluted   |   | $      | 0.02   |   | $      | (0.01 | ) |

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

----

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

|                                                              |   |  Condensed                Consolidated Balance Sheet     |        |
|-------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|-------------|
| As                of November 30, 2005                            |   |  As                Previously Reported                                       |        |  Adjustments |   |  As                Restated |   |
| Cash                and cash equivalents                          |   | $                                                                                 | 8,478,982   |   | $ | (2,559,670 | ) | $ | 5,919,312 |   |
| Total                current assets                               |   | $                                                                                 | 10,043,850  |   | $ | (2,559,670 | ) | $ | 7,484,180 |   |
| Investment                in affiliated company                   |   | $                                                                                 | -           |   | $ | 1,279,835 |   | $ | 1,279,835 |   |
| Total                assets                                       |   | $                                                                                 | 10,118,437  |   | $ | (1,279,835 | ) | $ | 8,838,602 |   |
| Accrued                liabilities                                |   | $                                                                                 | 487,404     |   | $ | (40,000 | ) | $ | 447,404 |   |
| Total                current liabilities                          |   | $                                                                                 | 1,688,198   |   | $ | (40,000 | ) | $ | 1,648,198 |   |
| Warrant                and derivative liabilities                 |   | $                                                                                 | -           |   | $ | 4,784,531 |   | $ | 4,784,531 |   |
| Total                liabilities                                  |   | $                                                                                 | 1,688,198   |   | $ | 4,744,531 |   | $ | 6,432,729 |   |
| Minority                interest in equity of consolidated entity |   | $                                                                                 | 1,279,835   |   | $ | (1,279,835 | ) | $ | - |   |
| Additional                paid-in capital                         |   | $                                                                                 | 56,517,567  |   | $ | 1,183,489 |   | $ | 57,701,056 |   |
| Accumulated                deficit                                |   | $                                                                                 | (49,370,210 | ) | $ | (5,928,020 | ) | $ | (55,298,230 | ) |
| Total                stockholders’ equity                   |   | $                                                                                 | 7,150,404   |   | $ | (4,744,531 | ) | $ | 2,405,873 |   |
| Total                liabilities and stockholders’ equity   |   | $                                                                                 | 10,118,437  |   | $ | (1,279,835 | ) | $ | 8,838,602 |   |

|                                                            |   | Condensed                Consolidated Statement of Operations |       |
|-----------------------------------------------------------------|--------|---------------------------------------------------------------|------------|
| Three                months ended November 30, 2005             |   | As                Previously Reported                         |       | Adjustments |   | As                Restated |   |
| Selling,                general and administrative expense      |   | $                                                             | 1,623,692  |   | $ | (966,354 | ) | $ | 657,338 |   |
| Total                operating expense                          |   | $                                                             | 1,733,245  |   | $ | (966,354 | ) | $ | 766,891 |   |
| Operating                loss                                   |   | $                                                             | (1,723,043 | ) | $ | 966,354 |   | $ | (756,689 | ) |
| Other                income                                     |   | $                                                             | 80,918     |   | $ | (21,160 | ) | $ | 59,758 |   |
| Change                in fair value of warrant and              |   |                                                          |       |   |   |   |   |   |   |   |
| derivative                liabilities                           |   | $                                                             | -          |   | $ | 1,181,356 |   | $ | 1,181,356 |   |
| Equity                in loss of affiliated company             |   | $                                                             | -          |   | $ | (472,596 | ) | $ | (472,596 | ) |
| Total                other income (expense)                     |   | $                                                             | (31,249    | ) | $ | 687,600 |   | $ | 656,351 |   |
| Loss                before minority interest in income of       |   |                                                          |       |   |   |   |   |   |   |   |
| consolidated                entity and income taxes             |   | $                                                             | (1,754,292 | ) | $ | 1,653,954 |   | $ | (100,338 | ) |
| Minority                interest in loss of consolidated entity |   | $                                                             | 479,596    |   | $ | (479,596 | ) | $ | - |   |
| Net                loss                                         |   | $                                                             | (1,274,696 | ) | $ | 1,174,358 |   | $ | (100,338 | ) |
| LOSS                PER COMMON SHARE:                           |   |                                                          |       |   |   |   |   |   |   |   |
| Basic                                                           |   | $                                                             | -          |   | $ | - |   | $ | - |   |
| Diluted                                                         |   | $                                                             | -          |   | $ | - |   | $ | - |   |

----

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

|                                                                 |   | Condensed                Consolidated Statement of Operations |      |
|-----------------------------------------------------------------|--------|---------------------------------------------------------------|-----------|
| Six                months ended November 30, 2005               |   | As                Previously Reported                         |      | Adjustments |   | As                Restated |   |
| Selling,                general and administrative expense      |   | $                                                             | 3,299,411 |   | $ | (1,479,677 | ) | $ | 1,819,734 |   |
| Settlement                and license expense                   |   | $                                                             | 3,855,132 |   | $ | (1,937,078 | ) | $ | 1,918,054 |   |
| Total                operating expense                          |   | $                                                             | 7,352,803 |   | $ | (3,416,755 | ) | $ | 3,936,048 |   |
| Operating                income                                 |   | $                                                             | 2,667,469 |   | $ | 3,416,755 |   | $ | 6,084,224 |   |
| Other                income (expense)                           |   | $                                                             | 134,375   |   | $ | (40,727 | ) | $ | 93,648 |   |
| Change                in fair value of warrant and              |   |                                                          |      |   |   |   |   |   |   |   |
| derivative                liabilities                           |   | $                                                             | -         |   | $ | 2,261,155 |   | $ | 2,261,155 |   |
| Equity                in loss of affiliated company             |   | $                                                             | -         |   | $ | (720,165 | ) | $ | (720,165 | ) |
| Total                other income (expense)                     |   | $                                                             | (180,276  | ) | $ | 1,500,263 |   | $ | 1,319,987 |   |
| Income                before minority interest in income of     |   |                                                          |      |   |   |   |   |   |   |   |
| consolidated                entity and income taxes             |   | $                                                             | 2,487,193 |   | $ | 4,917,018 |   | $ | 7,404,211 |   |
| Minority                interest in loss of consolidated entity |   | $                                                             | 720,165   |   | $ | (720,165 | ) | $ | - |   |
| Income                before income taxes                       |   | $                                                             | 3,207,358 |   | $ | 4,196,853 |   | $ | 7,404,211 |   |
| Provision                for income taxes                       |   | $                                                             | (40,000   | ) | $ | 40,000 |   | $ | - |   |
| Net                income                                       |   | $                                                             | 3,167,358 |   | $ | 4,236,853 |   | $ | 7,404,211 |   |
| INCOME                PER COMMON SHARE:                         |   |                                                          |      |   |   |   |   |   |   |   |
| Basic                                                           |   | $                                                             | 0.01      |   | $ | 0.01 |   | $ | 0.02 |   |
| Diluted                                                         |   | $                                                             | 0.01      |   | $ | 0.01 |   | $ | 0.02 |   |

|                                                               |   | Condensed                Consolidated Statement of Cash Flows |      |
|--------------------------------------------------------------------|--------|---------------------------------------------------------------|-----------|
| Six                months ended November 30, 2005                  |   | As                Previously Reported                         |      | Adjustments |   | As                Restated |   |
| Net                income                                          |   | $                                                             | 3,167,358 |   | $ | 4,236,853 |   | $ | 7,404,211 |   |
| Equity                in earnings of affiliated company            |   | $                                                             | -         |   | $ | 720,165 |   | $ | 720,165 |   |
| Change                in fair value of derivative liabilities      |   | $                                                             | -         |   | $ | (2,261,155 | ) | $ | (2,261,155 | ) |
| Net                gain related to warrant re-pricing,             |   |                                                          |      |   |   |   |   |   |   |   |
| reconveyance                and issuance                           |   | $                                                             | -         |   | $ | (538,208 | ) | $ | (538,208 | ) |
| Issuance                of stock, options and warrants             |   |                                                          |      |   |   |   |   |   |   |   |
| for                services and other                              |   | $                                                             | 206,250   |   | $ | (125,000 | ) | $ | 81,250 |   |
| Expense                related to extension of expiration date of  |   |                                                          |      |   |   |   |   |   |   |   |
| stock                options                                       |   | $                                                             | -         |   | $ | 125,000 |   | $ | 125,000 |   |
| Non-cash                interest expense related to warrant        |   |                                                          |      |   |   |   |   |   |   |   |
| repricing                and issuance                              |   | $                                                             | 1,397,491 |   | $ | (1,397,491 | ) | $ | - |   |
| Loss                in consolidated entity allocated to minority   |   |                                                          |      |   |   |   |   |   |   |   |
| interest                                                           |   | $                                                             | (720,165  | ) | $ | 720,165 |   | $ | - |   |
| Changes                in accounts payable and accrued liabilities |   | $                                                             | (193,321  | ) | $ | 11,859 |   | $ | (181,462 | ) |
| Net                cash provided by operating activities           |   | $                                                             | 5,599,465 |   | $ | 1,440,330 |   | $ | 7,039,795 |   |
| Investment                in affiliated company                    |   | $                                                             | -         |   | $ | (2,000,000 | ) | $ | (2,000,000 | ) |
| Net                cash provided by (used in) investing activities |   | $                                                             | 83,960    |   | $ | (2,000,000 | ) | $ | (1,916,040 | ) |
| Minority                interest investment in consolidated entity |   | $                                                             | 2,000,000 |   | $ | (2,000,000 | ) | $ | - |   |
| Net                cash provided by financing activities           |   | $                                                             | 2,204,131 |   | $ | (2,000,000 | ) | $ | 204,131 |   |
| Net                increase in cash and cash equivalents           |   | $                                                             | 7,887,556 |   | $ | (2,559,670 | ) | $ | 5,327,886 |   |
| Cash                and cash equivalents, end of period            |   | $                                                             | 8,478,982 |   | $ | (2,559,670 | ) | $ | 5,919,312 |   |

----

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

|                                                      |   |  Condensed                Consolidated Balance Sheet     |        |
|-----------------------------------------------------------|--------|-----------------------------------------------------------------------------------|-------------|
| As                of May 31, 2005                         |   |  As                Previously Reported                                       |        |  Adjustments |   |  As                Restated |   |
| Warrant                and derivative liabilities         |   | $                                                                                 | -           |   | $ | 9,274,712 |   | $ | 9,274,712 |   |
| Total                liabilities                          |   | $                                                                                 | 1,689,706   |   | $ | 9,274,712 |   | $ | 10,964,418 |   |
| Additional                paid-in capital                 |   | $                                                                                 | 54,569,091  |   | $ | 890,162 |   | $ | 55,459,253 |   |
| Accumulated                deficit                        |   | $                                                                                 | (52,537,568 | ) | $ | (10,164,874 | ) | $ | (62,702,442 | ) |
| Total                stockholders’ equity (deficit) |   | $                                                                                 | 2,034,328   |   | $ | (9,274,712 | ) | $ | (7,240,384 | ) |

|                                                      |   | Condensed                Consolidated Statement of Operations |       |
|-----------------------------------------------------------|--------|---------------------------------------------------------------|------------|
| Three                months ended November 30, 2004       |   | As                Previously Reported                         |       | Adjustments |   | As                Restated |   |
| Interest                expense                           |   | $                                                             | (648,223   | ) | $ | (481,657 | ) | $ | (1,129,880 | ) |
| Change                in fair value of warrant and        |   |                                                          |       |   |   |   |   |   |   |   |
| derivative                liabilities                     |   | $                                                             | -          |   | $ | (1,460,882 | ) | $ | (1,460,882 | ) |
| Total                other expense                        |   | $                                                             | (645,300   | ) | $ | (1,942,539 | ) | $ | (2,587,839 | ) |
| Loss                before minority interest in income of |   |                                                          |       |   |   |   |   |   |   |   |
| consolidated                entity                        |   | $                                                             | (1,073,141 | ) | $ | (1,942,539 | ) | $ | (3,015,680 | ) |
| Net                loss                                   |   | $                                                             | (1,073,141 | ) | $ | (1,942,539 | ) | $ | (3,015,680 | ) |
| LOSS                PER COMMON SHARE:                     |   |                                                          |       |   |   |   |   |   |   |   |
| Basic                                                     |   | $                                                             | (0.01      | ) | $ | (0.01 | ) | $ | (0.02 | ) |
| Diluted                                                   |   | $                                                             | (0.01      | ) | $ | (0.01 | ) | $ | (0.02 | ) |

|                                                           |   | Condensed                Consolidated Statement of Operations |       |
|-----------------------------------------------------------|--------|---------------------------------------------------------------|------------|
| Six                months ended November 30, 2004         |   | As                Previously Reported                         |       | Adjustments |   | As                Restated |   |
| Interest                expense                           |   | $                                                             | (1,281,128 | ) | $ | (461,857 | ) | $ | (1,742,985 | ) |
| Change                in fair value of warrant and        |   |                                                          |       |   |   |   |   |   |   |   |
| derivative                liabilities                     |   | $                                                             | -          |   | $ | 760,072 |   | $ | 760,072 |   |
| Total                other income                         |   | $                                                             | (1,245,595 | ) | $ | 298,215 |   | $ | (947,380 | ) |
| Loss                before minority interest in income of |   |                                                          |       |   |   |   |   |   |   |   |
| consolidated                entity                        |   | $                                                             | (2,179,592 | ) | $ | 298,215 |   | $ | (1,881,377 | ) |
| Net                loss                                   |   | $                                                             | (2,179,592 | ) | $ | 298,215 |   | $ | (1,881,377 | ) |
| LOSS                PER COMMON SHARE:                     |   |                                                          |       |   |   |   |   |   |   |   |
| Basic                                                     |   | $                                                             | (0.01      | ) | $ | - |   | $ | (0.01 | ) |
| Diluted                                                   |   | $                                                             | (0.01      | ) | $ | - |   | $ | (0.01 | ) |

|                                                            |   | Condensed                Consolidated Statement of Cash Flows |       |
|-----------------------------------------------------------------|--------|---------------------------------------------------------------|------------|
| Six                months ended November 30, 2004               |   | As                Previously Reported                         |       | Adjustments |   | As                Restated |   |
| Net                loss                                         |   | $                                                             | (2,179,592 | ) | $ | 298,215 |   | $ | (1,881,377 | ) |
| Change                in fair value of warrant and              |   |                                                          |       |   |   |   |   |   |   |   |
| derivative                liabilities                           |   | $                                                             | -          |   | $ | (760,072 | ) | $ | (760,072 | ) |
| Non-cash                interest expense related to convertible |   |                                                          |       |   |   |   |   |   |   |   |
| debentures,                notes payable and warrants           |   | $                                                             | 1,192,563  |   | $ | 461,857 |   | $ | 1,654,420 |   |

----

**3.**
**License      Agreements**

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

----

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

**UNAUDITED      CONDENSED BALANCE SHEET - Phoenix Digital Solutions, LLC**

| **Assets:**                                                |   |   |      |
|------------------------------------------------------------|--------|--------|-----------|
|                                                       |   |   |      |
| Cash                                                       |   | $      | 2,559,670 |   |
|                                                       |   |   |      |   |
| Total                assets                                |   | $      | 2,559,670 |   |
|                                                       |   |   |      |   |
| **Liabilities                and members’ equity:**  |   |   |      |   |
|                                                       |   |   |      |   |
| Liabilities                                                |   | $      | -         |   |
|                                                       |   |   |      |   |
| Members’                equity                       |   |   | 2,559,670 |   |
|                                                       |   |   |      |   |
| Total                liabilities and members’ equity |   | $      | 2,559,670 |   |

----

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

**UNAUDITED      CONDENSED STATEMENT OF OPERATIONS - Phoenix Digital Solutions,      LLC**

| Revenues                          |   | $      | -          |   |
|-----------------------------------|--------|--------|------------|--------|
|                              |   |   |       |   |
| Operating                expenses |   |   | 1,481,055  |   |
|                              |   |   |       |   |
| Operating                loss     |   |   | (1,481,055 | )      |
|                              |   |   |       |   |
| Interest                income    |   |   | 40,727     |   |
|                              |   |   |       |   |
| Net                loss           |   | $      | (1,440,328 | )      |

**5.**
**Convertible      Debentures**

----

**Convertible      Debentures, continued**

|   |   |                             |     |                              |   | Principal                Balance at    |   | Conversion                Prices |    | Effective |   | Shares                Converted as                of |   | Warrant                                |      |
|--------|--------|----------------------------------|----------|-----------------------------------|--------|----------------------------------------|--------|----------------------------------|---------|-----------|--------|------------------------------------------------------|--------|----------------------------------------|-----------|
| Series |   | Dates                of Issuance |     | Original                Principal |   | November                30, 2005  |   | Initial                          |    | Reset     |   | Registration                Date                |   | November                30, 2005  |      | SharesIssued  |   |
|   |   |                             |     |                              |   |                                   |   |                             |    |      |   |                                                 |   |                                   |      |   |   |
| A      |   |                             | 4/23/02- |                              | $      | 1,000,000                              |   | $                                | -       |      | $      | 0.08616-                                             |   | $                                      | 0.04190-  |   |   | 10/29/2002 |   |   | 24,099,548 |   |   | 12,859,175 |   |
|   |   |                             | 6/10/02  |                              |   |                                   |   |                             |    |      |   | 0.10289                                              |   |                                   | 0.04457   |   |   |   |   |   |   |   |   |   |   |
|   |   |                             |     |                              |   |                                   |   |                             |    |      |   |                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| B      |   |                             | 8/23/02- |                              |   | 605,000                                |   |                             | -       |      |   | 0.05126-                                             |   |                                   | 0.04381-  |   |   | 3/7/2003 |   |   | 14,777,350 |   |   | 11,234,835 |   |
|   |   |                             | 1/24/03  |                              |   |                                   |   |                             |    |      |   | 0.0727                                               |   |                                   | 0.04722   |   |   |   |   |   |   |   |   |   |   |
|   |   |                             |     |                              |   |                                   |   |                             |    |      |   |                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| C      |   |                             | 3/24/02- |                              |   | 510,000                                |   |                             | -       |      |   | 0.041-                                               |   |                                   | 0.041-    |   |   | 6/26/2003 |   |   | 10,470,554 |   |   | 9,377,943 |   |
|   |   |                             | 6/9/03   |                              |   |                                   |   |                             |    |      |   | 0.065                                                |   |                                   | 0.065     |   |   |   |   |   |   |   |   |   |   |
|   |   |                             |     |                              |   |                                   |   |                             |    |      |   |                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| D      |   |                             | 8/1/03-  |                              |   | 547,500                                |   |                             | -       |      |   | 0.0172-                                              |   |                                   | 0.0172-   |   |   | 11/18/2003 |   |   | 25,178,803 |   |   | 22,455,355 |   |
|   |   |                             | 10/21/03 |                              |   |                                   |   |                             |    |      |   | 0.048                                                |   |                                   | 0.0477    |   |   |   |   |   |   |   |   |   |   |
|   |   |                             |     |                              |   |                                   |   |                             |    |      |   |                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| E      |   |                             | 12/1/03- |                              |   | 1,527,500                              |   |                             | -       |      |   | 0.0267-                                              |   |                                   | 0.0267-   |   |   | 6/7/2004 |   |   | 46,794,618 |   |   | 30,395,392 |   |
|   |   |                             | 5/11/04  |                              |   |                                   |   |                             |    |      |   | 0.10                                                 |   |                                   | 0.10      |   |   |   |   |   |   |   |   |   |   |
|   |   |                             |     |                              |   |                                   |   |                             |    |      |   |                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| F      |   |                             | 3/23/04  |                              |   | 723,168                                |   |                             | 723,168 |      |   | 0.09                                                 |   |                                   | 0.09      |   |   | Not                Registered |   |   | - |   |   | 8,035,192 |   |
|   |   |                             |     |                              |   |                                   |   |                             |    |      |   |                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| G      |   |                             | 9/28/04- |                              |   | 490,000                                |   |                             | 25,000  |      |   | 0.016710-                                            |   |                                   | 0.016710- |   |   | 5/22/2006 |   |   | 20,729,062 |   |   | 21,690,815 |   |
|   |   |                             | 1/17/05  |                              |   |                                   |   |                             |    |      |   | 0.04                                                 |   |                                   | 0.04      |   |   |   |   |   |   |   |   |   |   |
|   |   |                             |     |                              |   |                                   |   |                             |    |      |   |                                                 |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
|   |   |                             |     |                              | $      | 5,403,168                              |   | $                                | 748,168 |      |   |                                                 |   |                                   |      |   |   |   |   |   | 142,049,935 |   |   | 116,048,707 |   |

| Convertible                debentures issued since April 2002           |   | $      | 5,403,168  |   |
|-------------------------------------------------------------------------|--------|--------|------------|--------|
| Less:                debentures converted to common stock               |   |   | (4,655,000 | )      |
|                                                                    |   |   | 748,168    |   |
| Less:                debt discount                                      |   |   | (132,078   | )      |
|                                                                    |   |   |       |   |
| Convertible                debentures at November 30, 2005, all current |   |   | 616,090    |   |
|                                                                    |   |   |       |   |
| Maturity                dates of outstanding convertible debentures     |   |   |       |   |
| March                23, 2006                                           |   | $      | 723,168    |   |
| November                17, 2006                                        |   |   | 25,000     |   |
|                                                                    |   |   |       |   |
|                                                                    |   | $      | 748,168    |   |

----

**Convertible      Debentures, continued**

**6.**
**Stockholders’      Equity**

***Private      Stock Offerings***

***Stock      Options and Warrant Activity***

----

**Stockholders’      Equity, continued**

**7.**
**Commitments      and Contingencies**

**Litigation      and Arbitration**

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

*Lowell      Giffhorn Arbitration*

*Patent      Litigation*

----

**Commitments      and Contingencies, continued**

***Profit      Sharing Plan***

***Employment      Contract***

***Guarantees      and Indemnities***

----

|                                    |                                          |                             |
|-----------------------------------------|-----------------------------------------------|----------------------------------|
|                                    | PATRIOT                SCIENTIFIC CORPORATION |
|                               |                                     |                        |
| DATED:                November 27, 2006 |                                          | /S/                DAVID H. POHL |
|                                    | David                H. Pohl                  |
|                                    | Chief                Executive Officer        |

| Signature                                                              |   | Title                                                                   |   | Date                             |
|------------------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|----------------------------------|
|                                                                   |   |                                                                    |   |                             |
| /S/                DAVID H. POHLDavid                H. Pohl           |   | President,                Chief Executive Officer, and Director         |   | November                27, 2006 |
|                                                                   |   |                                                                    |   |                             |
| /S/                THOMAS J. SWEENEYThomas                J. Sweeney   |   | Chief                Financial Officer and Principal Accounting Officer |   | November                27, 2006 |
|                                                                   |   |                                                                    |   |                             |
| /S/                CARLTON M. JOHNSONCarlton                M. Johnson |   | Director                                                                |   | November                27, 2006 |
|                                                                   |   |                                                                    |   |                             |
| /S/                GLORIA H. FELCYNGloria                H. Felcyn     |   | Director                                                                |   | November                27, 2006 |
|                                                                   |   |                                                                    |   |                             |
| /S/                HELMUT FALK, JR.Helmut                Falk, Jr.     |   | Director                                                                |   | November                27, 2006 |
|                                                                   |   |                                                                    |   |                             |
| /S/                JAMES L. TURLEYJames                L. Turley       |   | Director                                                                |   | November                27, 2006 |

----