All,

I have been a shareholder since 2002 and would never have made the meeting if it were held in CA, but since they opted to have it at my hometown, I was able to finagle the day off from work to attend. It was my first ever shareholder meeting of any kind, so a fascinating experience personally.

I wanted to say up front, that I have greatly appreciated the efforts by other “posters” who attended previous PTSC shareholders meeting to give us their summary notes. For people unable to attend but have the hard earned money invested, it was helpful, or at least enlightening beyond measure. The summary below is translated from the notes I took at the meeting. It is by no means perfect or all inclusive. No recording devise allowed, so it was just me and my writing hand trying to keep up and listen at the same time. On top of the speed of presentations and switching through slides fast, occasional tangents, my hand cramping while still trying to listen, and some material too technical to try to put to paper, this is the best I could do.

- If something is in normal font, it is right out of my notes

- If it is in “quotes”, then I quote verbatim (as best I recollected) what someone said.

- If it is in italics, then I am adding my IMO

Please bear in mind that everything I write is from one mere shareholder’s interpretation/opinion of what transpired at the meeting. I don’t even pretend to know or understand everything that is going on in regards to the company or what everything I heard means (or if I heard it correctly). In other words, this is somewhat IMO to a certain degree. I respectfully request others attendees “proofread” what I write and offer corrections if I misheard or misinterpreted something improperly.

Agenda (1-Pager available at sign-in, a more detailed breakdown of Agenda Item #5 was only available on the slide show screen.

1.Call to Order and Introductions

2.Proof of Due Calling of Meeting and quorum

3.Ratification of Independent Auditors

4.Election of Directors

5.Adjournment of Formal Meeting

6.Presentations

7.Questions and Answers

On the video screen (Breakout of Item #6/7):

I.Shareholder Meeting Formal Business

II.IP Counsel Presentation

III.TPL Presentation

IV.Q & A (The first one, broken up because TPL people had to catch plane)

V.Patriot Scientific Presentations

VI.Q: & A

1:59 PM -Shareholder meeting began at 1:59 PM, 35-40 people in attendance, but that also included Dan Leckrone, Tom Coy, Larry Henneman seated in the audience. Cliff begins and announces he will act as Chairman of the meeting. Introduces the Board (sitting and facing the audience to the right of Cliff Flowers). BOD present from closest to Cliff to farthest away: Carlton Johnson, Gloria Felcyn, Dharmesh Mistry, Helmut Falk, Jr, Donald Shrock. Cliff says there are two groups on conference line: I only caught one of them and partial names, but it was our independent auditors, KMJ (names I wrote downwere Charlie ____ and Tony Price). I could not make out who the others (or other group) on the conference line were, but I surmise about 4-8 people in total. My sense is that they didn’t hear the first ½ of the meeting “too well” as the speaker system was moved up to the table near Cliff halfway through the meeting. I also suspect this was just a private line and not something typical shareholders could dial into.

2:04 PM – Official Business of Meeting (Cliff)

-Proof of Meeting, A complete list of stockholders is present. 410 million shares. 334 million shares present or 80% of the shares of the company present at meeting. We have a quorum. Ratify auditors. Election of board. 2:10 PM - They do the vote and Official Vote tally person asks if anyone wants to pledge there votes who have already not done so by now. Goofy me, I was the only one in the room that raised my hand (guess I should have voted on-line, duh) and an official vote person came up to me, verified my paperwork, and had me add my vote.

-There were 205 million votes to APROVE the auditors

-The entire BOD was re-elected, but they did not provide a vote total for this (no surprise)

-Gloria 2nd motions to moves to adjourn

2:11 PM – 2:40 PM (Mac Leckrone) 28 power pt slides

Mac L: Alliacense update, Background slides, Licensing began in 2005. Have 8 active licensing programs. 50 people at Alliacense. He goes over the organizational breakdown, spending most time on reverse engineering group – they continue to grow their capabilities there.

Their Database – 15,000 Chips, 10,000 products, comprising 1500 (!!!) companies. Mac had a lot of great charts that I wish I could have reproduced for you all, but I only got this one close to its entirety. Also, also of his charts showed a comparison of where we were in Nov ’08 vs. Jan 2010.

I got most of the first chart:

Title: MMP Claim Chart Production (Chart)

April 2006: 934

Next Date? provided: 4,441

Next Date? provided: 9,202

January 2010: 15,495 – he states that thus 15K+ number and database is “unprecedented in the history of the industry”

·# of customer meetings since November 2008: 501, equated to 1.2 million air travel miles.

Active Accounts (Chart - Again, a comparison from late 2008 vs. Jan 2010, I wish I had gotten this whole chart, because it had good info about number of companies, but here is what I wrote with blank or question marks where I didn’t catch what was on there):

Active Accts: Oct 2008 = 453,Jan 2010 = 512

Companies with > 1 Bil in Revs: Oct 2008 = 407, Jan 2010 = 453

Prod_____?: Oct 2008 = 342, Jan 2010 = 408

_________?: Oct 2008 = 172, Jan 2010 = 222

Licensed: Oct 2008 = ??, Jan 2010 = 69

·Meeting actively with 200 companies

Mac Leckrone then provide a chart of that looked like a thermometer ofthe 22 industry segment they are targeting and “ # of respondents to our licensing”. It was way too huge to put to paper in the time I had, but it showed each industry segment, its name, how many potential companies we have to license and how many in each segment and which segment had a lot of licensing done. It was a horizontal bar chart that had colors extending to the right depending on magnitude of activity or licensed, or other depending. Honestly, this is about as much as I could note about it:

Of the 22 Industry segments, I wrote down the top 5 (who had their bar going farthest to rights (x-axis was # of companies, y-axis what 22 industry segments)

#1 Networking and Communications (35 companies)

#2 Industrial Products

#3 Medical Equipment

#4 Aerospace and Defense (23)

#5 Audiovisual

·We got our 1st China License – Mac noted that reputation is it is hard to penetrate – no Chinese company want to be the first. Mac special noted this accomplishment, but he didn’t name the company, I am sure we can figure this out from the list that has licensed.

2:30 PM – Mac talks about MMP Re-exam

·Provided a chart of MMP re-exam timeline from Nov 2008 and the chart as it looks now.

·As of 1/28/2010 Prior Art References

‘336 – 600 prior arts

‘749 – 600 prior arts

‘584 – 275 prior arts

‘890 – 5 prior arts

‘148 – 380 prior arts

Why so much activity? In a bullet point on the slide and spoken verbatim by Mac: “Some fear strong patents and escalating prices – Their attacks have backfired “by an measure”. Every concluded activity (by the USPTO) has been concluded in favor of the MMP.

“What doesn’t kill you makes you stronger”

·EP 730 European patent confirmed

‘584 – Adverse Markman overcome. NEC/Toshiba requests overcome – New Claim 29, new claims don’t suffer from adverse markman in TX. A recent (?) Fish and Richardson (F & R) request denied.

‘336 – 6th request on patent – F & R request via a 3rd party (no name provided by Mac). The F & R request was granted. However,Mac states recent F&R request: “the claims no longer exist, prior art is already considered” – he states it is likely to fail under its own weight. (He appeared not worried at all).

Chart: Effective Royalty Rate (ERR) – Line chart with y-axis being ERR, x-axis being chronological list of licenses. Bottom line: It is steadily trending upward. He said “that rate is going up”. He then talked a bit about strategy - they want (and can) do deal now, but they want to stay strong and hold to their plan. Honestly, he implied that there are many, many factors involved in negotiations (that he didn’t want to divulge or get into in this forum).

Mac Leckrone’s presentation ends at 2:40 PM CT, 28 slides

2:40 – 2:49 PM --- II. IP Counsel Presentation (Larry Henneman)

Cliff introduced Larry as brilliant patent lawyer who can also speak engineering but also plain English. Dan L piped up from audience ”and he has 8 kids”.

My take is that Larry H is humble and well-spoken, and employs that kind of approach to dealing with the PTO.

Quick Highlights:

-Larry H went and described the re-exam process. Re-exam request, followed by TPL/PTSC having 2 months to reply, but choosing “no” to respond to this “so we don’t plant seeds in examiners mind”. PTO proposes non-final action which is usually a broad brush evaluation by examiners and pretty much allows the request, then TPL/PTSC responds, when we can tell PTO why they are wrong. When PTO does put out that proposed action, Alliacense goes and picks it apart piece by piece, then Larry and Carl (and others) get together and strategize.

-“We have built up good credibility with examiners now.”

-We address concerns in ways that don’t hurt patents.

-Larry says, a couple of times. USPTO “final” doesnt mean “final”.

Larry H presentation (no slides) ends at 2:49 PM.

2:50 PM – TPL Presentation (Dan Leckrone) – 5-10 slides

I am not going to spend a lot of time here because I have so much too write and because he (Dan L) is annoying. But, I will give him credit, he knows he is annoying, and somehow, that makes him slightly less annoying to me. He was very conscious of the time and talked from 2:50 PM – 3:11 PM. His topic was about the 15 “evil” companies (RIMM, HP, Apple, IBM, Cisco were the only ones I wrote down) that I trying to push through, via intense lobbying, patent reform that is a clear and present danger. Two key items:

1) Next 2,3,4 weeks critical for people to contact legislators: Go to TPL site to find a template for what to write to your legislator.

2) Clear and Present Danger: A) PTO had advised president to support the current legislation, B) Administrative jobs bill may include a slipped in patent bill attached. 3) Concerned that Patent Bill will ignore Bayh-Dole Phenomenon.

Dan Leckrone’s presentation ends at 3:11 PM CT

IV. Q & A because Mac and Larry H have a plane to catch, so it is broken up into 2 Q & A session.

1) Stan Caplan (This guy talked a lot at the SHM, but IMO was a great advocate for shareholders (and expressed their angst) and really put the BOD to the fire.

Stan (to Mac): Is ‘336 recertified. Mac: Yes in respect to 3 merged reexams.

2) Tom Burns? (CEO of Holocom): Tom: Presentation better than last few, a lot more concise. Question is, for every $100 collected in royalties, what $ goes to litigation costs and what comes to Patriot? Mac didn’t really answer this question in specific numbers. Mac said that licensing program is still young. Tom: Do you see litigation costs going down? Mac: No. More litigation is going to be required.

There was a lot of back and forth here that I am not summarizing because there was no bottom line, but bottom line is what Cliff said at the end of this questioner. Cliff: Before PDS margin were 80%, Lately, they are running at 60%.

3) Robert Bass? Robert: Funding of 950K to TPL? Dan L and other responded, somewhat disjointededly: Effort to get PTSC BOD more focused on process. TPL is viable – will be around.

It got confirmed that the 950K is above and beyond the 50% split of funding to PDS. However, TPL is burdened with > portion of expenses….

4) John Doe #1 (All I got was he is a local (?) patent attorney): Q: 15K claim charts sent out, licensed 60 odd companies, what plans to make 15000 claim chart speed up (i.e. acceleration in licenses)?

Mac L: It’s a numbers game. Strategy is to extract maximum value out of portfolio. Mac muses out loud, What’s the crossover pt (tipping point) to go to trial? (Mac didn’t really answer it, just implying that it’s a dynamic process and lots of factors go into it). Dan L, our resident folk tail/analogy expert pipes in about we being the “Johnny Appleseed “ and planting seeds. “We are building a brand awareness.”

5) Stan (to Leckrones): Do you have a predictable range for revenues that you can share with BOD (not necessarily shareholders)? Dan L: Yes.

3:35 PM - Cliff chimes in that Larry and Mac have plane to catch……

6) Last question by Mr. ______: Question of Ownership and Chick Moore. Dan L: All I can remember Dan L saying is, .”it will be extinguished” and something like “its without merit”.

3:37 PM - 5 minute break. There was food and drinks in the back, mainly cookies and cake slices and fruit.

3:48 PM - Cliff asks to reconvene

3:51 PM – V. Patriot Presentation (Cliff Flowers from 3:51 PM -4:00 PM)

·Cliff was humble and acknowledged that the PTSC results are disappointing and wont rehash it, and instead will focus on going ahead, but wont avoid discussion of the poor results.

·PDSG – revs below expectations, engaged Eclat. Cognizant look at technical aspects of CDX.

·PTSC now has a clear understanding of next steps. Product quality is not the reason for failure of expectations. Things are difficult because:

·Small size of PTSC

·No name recognition

·Progress in getting partners is slow

·Economy

·So 2 alternatives:

A)Stay the course (i.e. go it alone) – Multi Year Commitment (to get foot in the door and gain traction in sales) – focus on Justice and Public Safety – State and Local governments. Problem is these entities are risk averse and rather deal with big companies they already know and have dealt with. With this alternative, PTSC would have to target more market sectors. At the end of February, there will be a new version of CDX.

B)2nd Alternative. Staying on course is not best permanent course for PTSC. Alternative #2 is Partnering, being led by BIG partner who has that name recognition. Eclat is looking for the Partner and can achieve access to key people in these potential partners (i.e. the person(s)that can make the decisions to partner up with PTSC). PTSC will share info with shareholders when they know who that partner will be.

Other stiff Cliff said:

-M & A on hold

Alternatives to do: Rebuild cash, start up dividends, renew purchase of shares – all things they are evaluating (Bottom line I interpreted, is they (and we obviously) have been burned and are proceeding very cautiously). The plan is to develop alternatives in conjunction with a permanent CEO. Obtaining a CEO maybe be 90-120 days out. I didn’t sense that this was imminent.

4:01 PM –PDSG/CDX Tom (Kooy,VP of Product development and Management joined PTSC in May 2008)

-New product line coming out end of February, named CDX 4, the Next Generation (Slogan is Right Info, Right Place, Right Time)

-PDSG primary success has been selling professional services to JPS clients

-Struggle has been going up against IBM, SUN, Oracle, HP

-Previous version, CDX3 had been highly dependent on professional services expertise (meaning, the people had to be there to teach other how to use it, thereby slowing their ability to market many places at once)

-Differences in CDX 4:

a)Full Service architecture

b)Incorporates “Best of Breed” enterprise service offerings – wholly configurable and scalable

c)CDX Exchange builder – The Engineers knowledge (i.e. professional expertise) is now in the software.

d)Simplifies deployment – speeds up time of delivery

e)CDX4 seeks to increase return on investment, incorporate all JPS national standards- Tom says it is the 1st platform to embrace that.

f)SOA =governance – I didnt catch much about this expect he said it a 40 Billion dollar business.

g)Can License CDX4 to our competitors. It is “agnostic”, can plug and play with other tools – No proprietary “hooks” intrinsic

h)CDX Connect for NDEX– Coming out in early February)

Tom Kooy presentation ends at 4:25 PM CT

4:26 PM – VI. 2nd Q & A (Cliff Presiding)

1)Joe Schmoe (Chubby older guy up front with wife there). He handed copy of 10K to Cliff. Basically, he compared profits in 2007 to 2009 and looked at employees being 31 (and 5 BOD) now vs. much less later. Said total income was 28 x less in 2009 (I’d say this guy is not an Agoracom reader). Q: Is it necessary to have that many directors?.

Cliff answered kindly: NOW – PDSG 13 employees, burn rate per quarter is 700-800K. PTSC, 5 employee, burn rate 500-600K per quarter (Don’t quote me on the employee numbers.

2)Mr. ______- wanted to know how CEO search is gong. Also, suggested setting up PTSC as shell company that pays out royalties. He sees dismal track record – Is BOD willing to consider? Gloria: BOD is discussing this possibility very seriously. We did divvies before w/pretaxtax carryover benefits (or something like that). Our tax rate now is 44%. Company is focused on increasing shareholder value (Honestly, Gloria seemed the most troubled up there by the situation and mentioned that she has family and friends who she urged to buy stock too) .

3)Stan (and now he lets then have it): Q#1: How many people did not fly in for this meeting. People raised hands. There were 16-18 people in the audience who did NOT FLY.

Stan Q #2: He commented on the losses in detail:

A)Talis, paid 1.5 mil, write-off to $0

B)Avot, paid 1.3 mil, nearly 0, except for 500K note, Cliff thinks they will get that back

C)Iameter 536K, Cliff stated that Iameter was sold on Monday for 250L

D)Vigilys – 175K paid, Cliff says not written down, its part of CDX

E)CDX/Vigilys – paid 10 mil for, have funded an additional 6 mil, but its worth far less (cant remember what number was stated)

F)Stan: TOTAL 17-18 mil dollars lost in last 12-15 months, after discussion back and forth with Cliff, this is the number both sides agreed to.

After the statement, Stan focused on Don Schrock and comes up with a long winded story about investment advisor asking for money but you never getting your investment back, etc. I didn’t follow it too well, as I took a mental break.

Bottom Line from Cliff as Don didn’t have good answers: Refocusing on MMP in the near future. ( I think that was fine, Stan just voices the frustrations that many of us shareholders are feeling in regards to PTSC failed attempt to create a recurring revenue stream outside the MMP.

4)Joe Schmoe (To Ms. Felcyn): In 13 meeting in the last year and as chair of Audit Committee, have officers of company kept you updated adequately? I believe Gloria said yes, and later says that there are procedure in place for auditing TPL, so other TPL products are not co-mingled. Gloria went to TPL offices – and noted that TPL are carrying a big burden of the expenses. And noted that TPL puts a lot of effort into charging PTSC appropriately.

5)Tom Burns (Holocom CEO) Tom talked about his company and how well it is doing (went over revs and profits and that they have a small acquisition in mind (encryption and storage device?)

6)Stan: Jokes he has got to go up there and say something nice. Got a chuckle from all. He says if PPS was $3 we would all be hugging each other and happy. Shareholders have kids. family, college tuition to fund. (To paraphrase - This is real money Patriot!) He mentioned the blowing of 17 mil in one year again. Stan thinks BOD cares. Request that is be more shareholder oriented – give to shareholders something they deserve.

7)Jeff ___: Q: Does the BOD feel that they will be a success. Gloria: she had 900K shares, family of hers have bought share – she absolutely believes this company is going to succeed. Gloria says we have learned our lesson and states that she regrets and that she wished BOD would have acted perhaps one quarter earlier.

Other BOD comments: Carlton Johnson: “We are coming out of a severe attack (on our patents)”. Also, TPL (or maybe all other licensing firms?) have had the most, historically, 2-3 reexams. The MMP has had 17-18. I think Carlton is trying to make clear the enormity and” unprecedentedness” of the attack.

Dan L: Talk to your legislative reps in the next 2-4 weeks. It is critical time. Dan L “ PTSC has had the hell beaten out of it”

And with that, Cliff Flowers stepped in and said, let all go home folks. Meeting over.

Meeting adjourns at 5:10 PM CT.

That is all everyone, it isn’t everything in my notes, but nearly. Hopefully this provides you a sense (from my observation/perspective and IMO of what went on. IMO, lots of good clarifying information if you listened carefully. I could probably add a lot more of my own take on this stuff, but honestly, got to put in some work today at the office. If you have any follow-up questions, I would be glad to try and answer them, whether via PM or on the forum.

Respectfully,

StormKing

P.S. - subject of ARS didnt come up.