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Date Posted: 05/19/01

Patriot Scientific Corporation (OTC BB/PTSC)

Here's the second half of my coverage on PTSC -- the first half is in my Weekly Stock Pick column, also posted today (5/19/2001). Sorry for the inconvenience -- we're updating WallStreetCorner to accommodate longer text in these columns when needed.


If you have been following my articles, you know there's a clear trend to rapidly expanded wireless device applications & usage. PTSC's technology will accelerate this trend.

PTSC is at the right place at the right time with this technology.

On 5/3/2001, PTSC engaged AirGen Partners to launch its JUICEtechnology. AirGen is a highly qualified group of wireless & mobile information product marketing specialists. Each member of this group has held senior positions in new business development programs for such companies as Motorola, Nokia, QUALCOMM, IBM Microelectronics, Texas Instruments, Panasonic, & Hitachi.

AirGen president Dan Beach says: "As the performance demands continue to escalate, JUICEtechnology enables developers to optimize their respective solutions while still meeting the competitive cost & time-to-market challenges resident in their business today. We are excited to have the opportunity to work with PTSC in what we feel represents a technology breakthrough for both existing markets as well as those emerging in the wireless Internet."

Regarding AirGen, PTSC CEO Blum says: "We feel confident that this new addition to our marketing activities will accelerate our successful entry into this exploding market place, greatly expanding the quality & sheer volume of information services, now available through JUICEtechnology. This new product line opens the door to additional incremental & enhanced revenue streams from existing & totally new groups of customers, for companies ranging from equipment manufacturers through wireless service providers to content suppliers."

JUICEtechnology is just one of PTSC's intellectual products. I highlighted it because it's new, it's available right now, & it serves a fast growing market.

The fact is, PTSC has other technology that has even greater potential. It's a new patented microprocessor chip design called "IGNITE I(TM)." This technology results in a chip that is half the size of current chip designs of the same capability, uses only half the power, & can be manufactured at a lower cost.

The technology is ready -- it too is here now. In order to reach meaningful cash flow, the technology has to be incorporated into products made by other companies. PTSC will receive license fees & royalties in each case.

The marketing thrust began last October. PTSC began at that time to supply several major manufacturers with prototypes of the chip in the form of boards containing the chip & appropriate proprietary software. The major corporations' engineers are using them in developing new applications for products in the automotive, industrial process, consumer, service gateway, wireless, & many other areas.

The types of applications that can substantially benefit from this new technology are almost limitless -- the market is huge. According to the Semiconductor Industry Association, the market for semiconductor products on a worldwide basis is now about $250 billion. The embedded systems market that PTSC addresses was estimated to be about $27 billion in 2000 -- & that's without considering how much greater growth may well occur when PTSC's technology begins to be used in future products.

From my experience as an engineer, the average time it takes to develop an application is in the 10- to 18-month range, so this new technology will probably not result in positive cash flow until some time in 2002. My opinion is that the potential is so great that having the patience to wait may well pay off for you.

There's another aspect of this situation that I like. A company can have great technology that major corporations would give their eye teeth for, but it may not be able to achieve success if it is not adequately capitalized. PTSC handled its capitalization requirements in a unique way. On 5/2/2000, it signed an investment agreement with Swartz Private Equity, LLC. PTSC can issue its common stock for up to $30 million when it chooses, during a three-year period beginning 6/23/2000.

This is an innovative financing arrangement. It is called a "put right." When PTSC needs cash, it notifies Swartz of the number of shares it intends to sell to Swartz, & may designate a maximum dollar amount (up to $3 million per tranche) it will sell during the put, or it may designate a minimum purchase price per share at which Swartz may purchase shares during the put. The number of shares sold to Swartz may not exceed 20% of the aggregate daily reported trading volume during 20 days after the put right is invoked. Swartz will pay PTSC 90% of the market price during the 20-day period if it is less than $2.00, & 93% if it is higher than $2.00. There's more detail; if you're interested, it's covered in PTSC's 10QSB for the Q ended 11/30/2000.

There are other reasons I like PTSC -- for example, it joined OSGi (Open System Gateway Initiative), a prestigious industry organization comprised of over 90 worldwide leading technology companies. That will help it to more effectively introduce its new technology. For information on OSGi, go to www.osgi.com. PTSC also expanded its working relationship with Sun Microsystems.

I believe PTSC's strong management team will be successful in getting the company's intellectual property licensed to sufficient companies to result in rapid revenue growth beginning in 2002. Because these revenues will primarily be in the form of royalties, a large percentage will go to the bottom line. I see huge appreciation potential here. PTSC closed last evening (5/18/2001) at $0.555 -- I predict a move to $10.00 by the end of 2002.

Call David Pohl @ 858-674-5000, ext. 223, fax 858-674-5005, e-mail dpohl@ptsc.com, or write 10989 Via Frontera, San Diego, CA 92127.
www.ptsc.com

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