Each of those companies is a candidate for licensing, and over 200 of them have already engaged in further communications with the licensing team.

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The growing worldwide pipeline of licensing candidates that are in various stages of dialogues with the Alliacense team includes the names of many well-known global manufacturing companies and product brands.

The Board is currently seeking to fill an available Board seat by adding someone having significant investment banking credentials.

Although the analyst who wrote the report reached share price conclusions and projections that were more conservative than we had expected, publication of the report helped Patriot Scientific achieve wider attention in the investment world.

We continued to purchase shares during the months of December 2006 and January 2007. The Board and management believed that our stock was undervalued in the market and that it was a prudent use of corporate funds for the company to purchase more of its shares. As of this writing, we have purchased over 10 million shares of Patriot Scientific Corporation common stock in the open market.

We recently entered into a joint venture to which we are transferring relevant portions of the patents and assets formerly held by HNI. That entity will engage in the secured pathway system business, using the Holocom trade name that was acquired as part of the foreclosure process. The major portion of the interest held by HNI in the multi-domain computer business, which is in the early stages of development under a license from the original inventor, is likely to be sold soon to a group that has expressed interest. It is anticipated that a 10% interest will be retained by our joint venture entity.

In another important step, we are in the process of engaging a business development executive or advisory group whose primary responsibility will be to identify and qualify other acquisition and joint venture opportunities for consideration. In addition, we have had preliminary discussions to be followed with meetings in the near future regarding a possible joint venture in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />China or Taiwan intended to update and adapt our Ignite microprocessor technology for various market applications.

In December 2006, the Fish lawsuit was settled in principle through mediation and on February 14, 2007 the settlement was finalized.

In recent developments in February 2007, a license agreement was entered with NEC Corporation and certain NEC subsidiaries that are defendants in the lawsuit. In connection with that transaction, four of the five NEC defendants, excluding NEC Electronics America, Inc., will be dismissed from the lawsuit.

As separate applications for re-examination had already been filed with the Patent and Trademark Office by parties involved in the patent litigation pending in Texas, we found it curious, but not alarming, when we learned of the apparently unrelated application filed by the purported public-interest group, including some gratuitous and disparaging statements included in their publicity-seeking press release.

Claiming that a patent should not have been issued due to the existence of prior art is a strategy that is often used defensively by companies seeking to avoid liability for patent infringement. Various efforts to claim the existence of prior art have been dealt with by our licensing team and their attorneys in negotiations with companies that at first had resisted licensing but later signed license agreements.

An important claims construction hearing is scheduled for May 3, 2007, in which the respective parties must offer presentations to defend or attack the validity of the claims upon which the patents in issue are based. We understand that the outcome of that hearing may not be known for 30 days or more after the hearing is concluded.

The meeting will be held at the La Costa Resort and Spa in Carlsbad, California. Further details will be announced soon and proxy materials will be mailed to shareholders.