C O M P A N Y I N T E R V I E W

Patriot Scientific Corporation (PTSC)

TWST: What is Patriot Scientific Corporation?

Mr. Turley: Patriot Scientific is a high-tech
company outside of San Diego that's been around
for 20 years. We are a publicly held high-tech company
and like most high-tech firms that are 20 years
old, we have developed a number of different products,
including radar technology, communication
equipment and ISDN technology. More recently the
company developed a 32-bit microprocessor chip
that we sold through the 1990s and in the early part
of this decade. The chip was very innovative and
sold reasonably well; in fact, we still sell the chip to
this day. But something that came out of that chip
development is that we were granted a handful of
patents on some of the technologies that fit into the
chip and, much to our surprise and delight, those
patents turned out to be enormously valuable and
helpful to us and to the market at large.
So, for the last couple of years, since the
summer of 2005, we have been offering those
patents under license to pretty much every chip
and microprocessor company in the world. It's
been enormously successful for us and in the span
of just two years, we have already licensed 21
companies to our patents and we have a list of literally
more than 300 companies still to go.

TWST: Give us an idea of the overall platform. Is it relying on the
one set of technology or is there additional development going on?

Mr. Turley: The patents were granted just
a few years ago during the development of our microprocessor
chip, and they have many years left
to go. The patents expire around 2015, so we've
got a long road ahead of us. There is a portfolio of
the patents; that is, we license them as a bundle
rather than having people pick and choose which
of the patents is applicable for their product. We
say, "You know what? Just take the whole bundle
at once and that way your full product line is covered
moving ahead and backward." So we license
the portfolio of patents and they apply to pretty
much every microprocessor chip made.
It's pretty boring to list details of a patent but
broadly speaking, they enable technologies to make
the chips run faster, which of course is something
everybody wants to do. The patents also cover ways
to save energy and use less electricity, which, again,
is something everybody wants to do. In our analysis,
we've discovered that nearly every chip company
in the world is making use of this technology
and therefore it is an ideal patent licensee.

TWST: You are saying risk of obsolescence is not near term?

Mr. Turley: No. We are not even halfway
through the life of these patents. We are licensing
firms at the rate of about one a month; as I said,
we've got 21 licensees so far; companies like Intel
and AMD took licenses early on. Hewlett-Packard
is a licensee. Companies like Casio, Pentax, Fujitsu,
Nikon, Lexmark - the list goes on and on. These
are big companies that are using Patriot Scientific's
technologies in just about every conceivable type of
product from computers to digital cameras to photocopiers
- it can be almost anything.

TWST: What's the drag as far as signing companies? Is it simply
balancing your esources against the deals to be made? Are there ways
to speed up the process? Does it just have its own timing?

Mr. Turley: It's a little bit of both.
Although we are really happy with the rate at
which we have been signing licenses, of course
we prefer it to be faster. With 300 plus companies
still to go, I'm going to die an old man before I
can sign all of them at this rate. So having said
that, we are happy with the rate, but I would prefer
it to be quicker.
The drag initially was that people just
didn't realize that they were using technology.
There is fair amount of education involved in
showing people that, "gee, you are using this
technology, you've put it in your products and
they are working very well, but golly, we invented
this a few years ago," and we so we offer
them an opportunity to purchase the patent portfolio.
There is some initial resistance up front
simply because people are not aware. We think
that awareness is going to pick up and we have
some evidence that the license rate is increasing.
Now that companies like Sony, AMD, Intel,
Hewlett-Packard and the others are taking licenses,
it's becoming clear to everybody else
that it is something they are going to need to do
in order to continue to innovate their own prod-
So we suspect that the wheels will start
turning a bit more quickly.

TWST: What's the financial snapshot of the company today - balance
sheet, P&L? What are the strengths? What items are you focused on for
improvement?

Mr. Turley: The company is doing fantastically
well. We just filed our 10-K for the fiscal
year 2007. It could hardly be any better. Our top
line is about $49 million. That's about double what
it was the year before that. The company has no
debt to speak of, no debt whatsoever. We bought
back outstanding warrants and reduced the overhang.
We are immensely profitable, as you might
expect, with $49 million in licensing revenue coming
in. We have got more than $20 million in cash
in the bank that we are ready to deploy to expand
the company in the future. And, again, we have
every expectation of more licensing revenue coming
in for many years. So the revenue, the cash
hoard, the shareholder equity, all of that looks like
it's going up and to the right in the future. It is
looking extremely good for us.

TWST: What models, what strategies have you looked at as faras use of
that cash? Obviously, the future business may be more dependent on how
well you steward as opposed to how well you license.

Mr. Turley: True enough, the licensing
has been very, very good for us in the last couple
of years and the company has even paid out cash
dividends, not once, not twice, but three times,
which almost never happens for a Pink Sheet
company such as ours. We've paid three dividends
to our long-time shareholders, which made
them extremely happy. Going forward, we may
do that again. But more than that, what I'm looking
for is to turn that cash hoard into investments.
What I would like to see Patriot Scientific do is
start developing new products and selling new
products into the market, whether that be software,
whether that be microprocessor chips
again, or whether that be black boxes that go into
the industrial, consumer or automotive markets. I
think we are going to invest that cash into R&D
or acquisitions or some combination of the two,
so that we return to being a product company in
the next 12 to 15 months.

TWST: What historically has been the shareholder base with the
company? Has that base undergone any recent changes?

Mr. Turley: It hasn't really. We are extremely
broad-based, with 16,000 shareholders,
none of whom holds more than about 8% of the
company. There are no major shareholders. There
is nobody with undue influence on the company.
It's spread out among retail shareholders, institutional
shareholders, private equity firms; it's all
across the map.

TWST: In your discussions with the investment community, are there any
recurring questions or misperceptions? Is the story understood?

Mr. Turley: Unfortunately, the story is not
very well understood, which is part of my job as
the President and chief communicator of the company,
to explain the fantastic opportunity we're sitting
on. The patents that the company holds are
fundamental to pretty much every sort of chip
making, and, as I said, many of the largest companies
out there have already purchased a license.
We've got hundreds to go; it's like holding a patent
to water. Everybody needs it, all we need is our
share, our recognition; it is something that the
company developed that we have a right to license.
Obviously, we are very happy to license it. We
don't litigate; we don't go around suing people for
using the technology. We'd much rather license
people in very friendly and open and businesslike
way. It's working for us very well. A lot of Patriot
Scientific's long-time shareholders get that, but
people who are new to the firm don't quite realize
what a gold mine the company is sitting on, how
fundamental our technology is, how vital our technology
is, and the enormous upside that is ahead of
us in licensing our technology to electronics companies
around the world.

TWST: Introduce us to your top-level management team, two or three of
your key individuals.

Mr. Turley: I'm Chief Executive; I have
been on board for the last three months. I succeeded
our previous Chief Executive, David Pohl. Our
Chief Financial Officer has been on board for a
couple of years and he has done a fantastic job of
righting the financial ship, as it were. We've gone
through Sarbanes-Oxley, Section 404, you name it.
We have the most fantastically squeaky-clean balance
sheet I have ever seen. If people are interested
in it, they can download the 10-K. Again, we have
no debt. The financial health of the company never
been better and we have our CFO and Controller to
thank for that. We have a very active Board of
Directors, people who have been with the company
for a long time. We have an Audit Committee, and
we have technology people. In fact, we just recently
appointed a new Board member. Dr. Nick
Tredennick from Silicon Valley has joined our
Board of Directors and he has a fantastic track
record in technology startups and technology investments,
and we are really, really pleased to have
him on board. With his guidance and the guidance
of the rest of Board, we are really looking forward
to the next phase in Patriot Scientific's growth.

TWST: At this point, what should investors focus on as we track and
assess your performance? Are there key metrics or events or
combinations to focus on? What should matter to the investor? What
matters to you?

Mr. Turley: Right now, I think the key
thing that investors focus on is new licensing revenue.
As I said, we have licensed 21 companies so
far. We have 300 still to go and so what everybody
watches for is the announcement of new license.
Who did we sign today, who can we sign tomorrow?
So that's the pipeline, that's the short-term
upside. Longer term, we are going to take the
money that we received from our licensing and
turn that toward acquisitions or R&D or some
combination of those, so that we start a second revenue
stream. In addition to the licensing revenue,
which will continue for many years, we want to
start a second revenue stream as a product company.
Again, it could be software, it could be services,
hardware or it could be microprocessors. We
will announce that when we are ready. And then,
for the very long term, for our longer-term investors,
we have the wonderful combination of
both licensing fees from our patent portfolio and
the product revenue from our second product line,
which puts us in a very strong position to do more
acquisitions, to fund our own R&D, to be completely
self-sustained, keep the debt off the balance
sheet and to watch the Patriot Scientific share price
grow and grow

TWST: What compels investors today to include Patriot as part of their
current portfolios and part of their longer-term investment
strategies?

Mr. Turley: The number one thing that
makes the company exciting as an investment is
that it is sitting on a goldmine of fundamental electronic
technologies that pretty much every chipmaker
in the world needs but doesn't yet have. So
that represents fantastic upside for us. If investors
need confirmation that the patent portfolio is as
valuable as we say, they only have to look at the 21
companies that have already bought them. Sony,
Epson, Nikon, AMD, Hewlett Packard, Intel, companies
like that. Those companies don't roll over
and sign a license for frivolous reasons. They are
truly buying into fundamental technology that they
use in their product. So that establishes the credibility
and value of our patent portfolio. It doesn't
take a lot of imagination to see the enormous upside
ahead of the company. But, as if that weren't
enough, we are going to take the revenue from that
patent licensing and build a whole second revenue
stream based around a shipping product. We intend
to do that either through acquisition or through
R&D or some combination of those. And it's going
to be soon; it's going to be, I think, in the next 12
to 18 months when we'll show the world what our
second product line is. So we'll have really a twopronged
approach for building Patriot Scientific
for the future.

TWST: Does it actually pay to stay public, to go through that expense
when you have a plan that can be executed?

Mr. Turley: Now that we are public, we intend
to stay so. We have been through the Sarbanes-
Oxley compliance, we have a fantastic 10-K. We
have a great financial team in place. Going public
is very difficult. If we weren't public already, I'd
certainly think twice about it. But now that we are
here and we have this process down cold, I don't
see any reason to take the company private.
Furthermore, it gives us a little bit of added leverage
as we go out on the acquisition trail because if
we were to acquire a private firm, we would then
offer them a public listing, which may be attractive
to them. We have our big war chest but we might
also be attractive to potential acquisition targets. I
think we have got it pretty well figured out.