PATRIOT SCIENTIFIC CORP

NASDAQ:

PTSC

March 2, 2007

BUY HOLD SELL

HOLD RATING SINCE 10/27/2005

A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F

Annual Dividend Rate

$0.06

Annual Dividend Yield

8.59%

Beta

3.16

Market Capitalization

$266.1 Million

52-Week Range

$0.43-$2.25

Price as of 3/1/2007

$0.70

Source:

Information Technology Sub-Industry: Semiconductors Source: GICS

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet.com Ratings nor any other party guarantees its

accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet.com Ratings, Inc. Copyright(c) 2006. All

rights reserved.

Report Date: March 2, 2007

PAGE 1

PTSC BUSINESS DESCRIPTION

Develops, markets and sells microprocessors, its

technology behind the microprocessors, and

complementary products that enable computers

and other data processing devices to

communicate. These products can be used to

connect to the Internet or other telecommunication

networks.

STOCK PERFORMANCE (%)

3 Mo. 1 Yr. 3 Yr (Ann)

Price Change 11.68 -41.59 85.70

GROWTH (%)

Last Qtr 12 Mo. 3 Yr CAGR

Revenues 90.00 -97.42 33.12

Net Income -1,763.36 2,156.48 104.24

EPS NA 700.00 51.83

RETURN ON EQUITY (%)

PTSC Ind Avg S&P 500

Q2 2006 198.52 15.63 16.38

Q2 2005 -51.29 15.46 15.25

Q2 2004 NM 15.31 14.38

P/E COMPARISON

11.63

PTSC

36.45

Ind Avg

17.87

S&P 500

EPS ANALYSIS¹ ($)

2006

Q2 0.00

Q1 0.01

2005

Q4 -0.01

Q3 0.06

Q2 0.00

Q1 0.02

2004

Q4 0.01

Q3 -0.04

Q2 -0.02

Q1 0.01

NA = not available NM = not meaningful

1 Compustat fiscal year convention is used for all fundamental

data items.

Weekly Price: (US$) SMA (50) SMA (100)

1 Year 2 Years

2006 2007

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

Rating History

SELL HOLD

0

100

200

Volume in Millions

COMPUSTAT for Price and Volume, TheStreet.com Ratings, Inc. for Rating History

RECOMMENDATION

We rate PATRIOT SCIENTIFIC CORP (PTSC) a HOLD. The primary factors that have impacted our rating are

mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of

either a positive or negative performance for this stock relative to most other stocks. The company's

strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with

reasonable debt levels by most measures and notable return on equity. However, as a counter to these

strengths, we find that the growth in the company's net income has been quite unimpressive.

HIGHLIGHTS

PTSC's very impressive revenue growth greatly exceeded the industry average of 14.1%. Since the same

quarter one year prior, revenues leaped by 90.0%. This growth in revenue does not appear to have trickled

down to the company's bottom line, displaying stagnant earnings per share.

PTSC has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a

relatively favorable sign. Along with the favorable debt-to-equity ratio, the company maintains an adequate

quick ratio of 1.41, which illustrates the ability to avoid short-term cash problems.

PATRIOT SCIENTIFIC CORP has shown no change in earnings for its most recently reported quarter when

compared with the same quarter a year earlier. This company has not demonstrated a clear trend in earnings

over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past

fiscal year, PATRIOT SCIENTIFIC CORP turned its bottom line around by earning $0.07 versus -$0.04 in the

prior year.

This stock's share value has moved by only 41.59% over the past year. Naturally, the overall market trend is

bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for

future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in

its industry. But due to other concerns, we feel the stock is still not a good buy right now.

The company, on the basis of change in net income from the same quarter one year ago, has significantly

underperformed when compared to that of the S&P 500 and the Semiconductors & Semiconductor Equipment

industry. The net income has significantly decreased by 1763.4% when compared to the same quarter one

year ago, falling from -$0.10 million to -$1.88 million.

PATRIOT SCIENTIFIC CORP

NASDAQ:

PTSC

March 2, 2007

Sector: Information Technology Sub-Industry: Semiconductors Source: GICS

Annual Dividend Rate

$0.06

Annual Dividend Yield

8.59%

Beta

3.16

Market Capitalization

$266.1 Million

52-Week Range

$0.43-$2.25

Price as of 3/1/2007

$0.70

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet.com Ratings nor any other party guarantees its

accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet.com Ratings, Inc. Copyright(c) 2006. All

rights reserved.

Report Date: March 2, 2007

PAGE 2

PEER GROUP ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*

EBITDA Margin (TTM)

Revenue Growth (TTM)

-100%

75%

-9000%

1000%

FAVORABLE

UNFAVORABLE

IIXYS

GNSS

PSEM

MSPD

ZZLL

PTSC

Companies with higher EBITDA margins and

revenue growth rates are outperforming companies

with lower EBITDA margins and revenue growth

rates. Companies for this scatter plot have a market

capitalization between $242.3 Million and $331.7

Million. Companies with NA or NM values do not

appear.

*EBITDA – Earnings Before Interest, Taxes, Depreciation and

Amortization.

REVENUE GROWTH AND EARNINGS YIELD

Earnings Yield (TTM)

Revenue Growth (TTM)

-100%

75%

-50%

20%

FAVORABLE

UNFAVORABLE

VLLTR

IIXYS

GNSS

PLLXT

AATII

PSEM

MSPD

ZZLL

MOSY

IIKAN

PTSC

Companies that exhibit both a high earnings yield

and high revenue growth are generally more

attractive than companies with low revenue growth

and low earnings yield. Companies for this scatter

plot have revenue growth rates between -97.4% and

60.1%. Companies with NA or NM values do not

appear.

INDUSTRY ANALYSIS

The Semiconductors & Semiconductor Equipment industry is founded on innovation. The same fast and

furious evolution that brought the industry from transistor radios to modern electronics continues to be one of

its predominant characteristics. Chipmakers are under constant pressure to develop the latest in

technological advancements. In the world of integrated circuits, for example, enhanced performance and

more favorable wafer dimensions are primary objectives. Perpetuating this momentum is expensive. Not only

are these new technologies very costly to develop, but also to implement. Manufacturing semiconductors

requires enormous capital. On top of this, expensive fabrication facilities and equipment are all outfitted for

components that may quickly become obsolete in the wake of unrelenting innovation. Many chipmakers have

turned to outsourced manufacturing, such as the use of foundries, as a result of these very high cost barriers.

Demand for chip manufacturing equipment has close ties to demand for the components and end-product

electronics themselves, as well as to the adaptation of new technologies, as these factors tend to influence

the level of expenditures by companies within the industry.

After experiencing outstanding growth for much of 2000, the industry was subsequently marked by a sharp

downturn amidst weak market conditions for technology and the economy as a whole. Improvements in the

overall health of this backdrop bode well for the industry in late 2003.

These ups and downs are nothing new for the Semiconductors & Semiconductor Equipment industry, which

is highly cyclical in nature. This factor, as well as ever intensifying competition, contributes to the often

volatile environment of the industry. Inventory levels and production capacity in the industry have received a

lot of attention in 2004, and continue to be closely monitored in relation to the health of its latest cycle.

Staying attuned to these conditions, while remaining efficient yet flexible, continues to be one of the many

business challenges faced by companies in the industry.

PEER GROUP: Semiconductors & Semiconductor Equipment

Recent Market Price/ Net Sales Net Income

Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M)

PTSC PATRIOT SCIENTIFIC CORP 0.70 266 11.63 0.34 25.38

VLTR VOLTERRA SEMICONDUCTOR COR 13.65 332 50.56 74.59 6.91

IXYS IXYS CORP 10.02 330 6.11 276.32 58.28

GNSS GENESIS MICROCHIP INC 8.03 297 NM 236.89 -129.21

PLXT PLX TECHNOLOGY INC 9.87 283 89.73 81.43 3.01

AATI ADVANCED ANALOGIC TECH 6.31 277 NM 81.16 -2.08

PSEM PERICOM SEMICONDUCTOR CORP 10.12 266 34.90 118.80 7.82

MSPD MINDSPEED TECHNOLOGIES INC 2.28 258 NM 132.87 -30.33

ZL ZARLINK SEMICONDUCTOR INC 2.01 256 12.56 149.80 20.40

MOSY MOSYS INC 7.92 249 NM 14.91 -5.34

IKAN IKANOS COMMUNICATIONS INC 8.77 242 NM 136.19 -21.30

The peer group comparison is based on Major Semiconductors companies of comparable size.

PATRIOT SCIENTIFIC CORP

NASDAQ:

PTSC

March 2, 2007

Sector: Information Technology Sub-Industry: Semiconductors Source: GICS

Annual Dividend Rate

$0.06

Annual Dividend Yield

8.59%

Beta

3.16

Market Capitalization

$266.1 Million

52-Week Range

$0.43-$2.25

Price as of 3/1/2007

$0.70

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet.com Ratings nor any other party guarantees its

accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet.com Ratings, Inc. Copyright(c) 2006. All

rights reserved.

Report Date: March 2, 2007

PAGE 3

COMPANY DESCRIPTION

Patriot Scientific Corp. develops, markets, and sells

microprocessors, its technology behind the

microprocessors, and complementary products that

enable computers and other data processing devices to

communicate. These products can be used to connect to

the Internet or other telecommunication networks. The

company also has a patent for special radar technology,

which, if fully developed, may allow a potential licensee

to penetrate the ground or structures to find various

objects. Previously, Patriot Scientific also owned gas

plasma antenna technology, which it sold for $250,000 in

1999 and received a final royalty payment of $75,500 in

2003. The company's strategy is to exploit its

microprocessor technologies through product sales,

licensing, strategic alliances and to litigate against those

who may be infringing on its patents. Patriot Scientific's

business involves the following technologies: Ignite

microprocessor technology; and high-speed data

communications technology. Ignite microprocessor

technology generated minor amounts of revenue in FY 04

(May) from the sale of development boards,

microprocessors and initial license fees related to the

microprocessor application, but in FY 05 it generated

revenues of apx. $1,200,000 in connection with the sale

of a license to Advanced Micro Devices, Inc (AMD). The

company runs the technology on a 0.18-micron

microprocessor, which is in production. Patriot Scientific

has ported the WindRiver VxWorks operating system and

the Sun Microsystems personalJava virtual machine to

the microprocessor. In addition, the technology is

available for sale as intellectual property, which enables

the prospective customer to incorporate the

microprocessor functions with other parties' applications

to arrive at a system on a chip solution. Revenue from

high-speed data communications technology was phased

out during FY 02 as a result of the products reaching the

end of their life cycles. During FY 02, the company

initiated a last time buy program and, except for minor

repeat orders, has discontinued this product line. Patriot

Scientific will be focusing its efforts on the Ignite

microprocessor technology in addition to the patent

portfolio licensing efforts being conducted on its behalf

by the TPL Group. Although the communications product

line accounted for apx. 82% of FY 04 revenue, the

company anticipates that the Ignite microprocessor will

be its main product line in the future. The Ignite

technology is targeted for the embedded controller and

Java language processor marketplaces.

PATRIOT SCIENTIFIC CORP

6183 Paseo Del Norte Ste 180

Carlsbad, CA 92011-1153

USA

Phone: 760-547-2700

http://www.ptsc.com

STOCK-AT-A-GLANCE

Below is a summary of the major fundamental and technical factors we consider when determining our

overall recommendation of PTSC shares. It is provided in order to give you a deeper understanding of our

rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is

important to note, however, that these factors only tell part of the story. To gain an even more comprehensive

understanding of our stance on the stock, these factors must be assessed in combination with the stock’s

valuation. Please refer to our Valuation section on page 5 for further information.

FACTOR SCORE

Growth

2.0 out of 5 stars

Measures the growth of both the company's income statement and

cash flow. On this factor, PTSC has a growth score better than 30% of

the stocks we rate.

weak strong

Total Return

3.5 out of 5 stars

Measures the historical price movement of the stock. The stock

performance of this company has beaten 60% of the companies we

cover.

weak strong

Efficiency

1.5 out of 5 stars

Measures the strength and historic growth of a company's return on

invested capital. The company has generated more income per dollar of

capital than 20% of the companies we review.

weak strong

Price volatility

0.5 out of 5 stars

Measures the volatility of the company's stock price historically. The

stock is more volatile than nearly all of the stocks we monitor.

weak strong

Solvency

4.0 out of 5 stars

Measures the solvency of the company based on several ratios. The

company is more solvent than 70% of the companies we analyze.

weak strong

Income

5.0 out of 5 stars

Measures dividend yield and payouts to shareholders. The company's

dividend is higher than 90% of the companies we track.

weak strong

THESTREET.COM RATINGS RESEARCH METHODOLOGY

TheStreet.com Ratings' stock model projects a stock's total return potential over a 12-month period including

both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to

perform against a general benchmark of the equities market and interest rates. While our model is

quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include

expected equities market returns, future interest rates, implied industry outlook and forecasted company

earnings. Objective elements include volatility of past operating revenues, financial strength, and company

cash flows.

Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown

as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of

acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings

growth; and the financial strength of the underlying company as compared to its stock's valuation as

compared to projected earnings growth; and the financial strength of the underlying company as compared

to its stock's performance. These and many more derived observations are then combined, ranked, weighted,

and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of

selecting stocks.

PATRIOT SCIENTIFIC CORP

NASDAQ:

PTSC

March 2, 2007

Sector: Information Technology Sub-Industry: Semiconductors Source: GICS

Annual Dividend Rate

$0.06

Annual Dividend Yield

8.59%

Beta

3.16

Market Capitalization

$266.1 Million

52-Week Range

$0.43-$2.25

Price as of 3/1/2007

$0.70

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet.com Ratings nor any other party guarantees its

accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet.com Ratings, Inc. Copyright(c) 2006. All

rights reserved.

Report Date: March 2, 2007

PAGE 4

Consensus EPS Estimates² ($)

IBES consensus estimates are provided by Thomson Financial

NA

NA

NA

NA

NA

NA

INCOME STATEMENT

Q2 FY06 Q2 FY05

Net Sales ($mil) 0.02 0.01

EBITDA ($mil) -1.71 -0.74

EBIT ($mil) -1.72 -0.76

Net Income ($mil) -1.88 -0.10

BALANCE SHEET

Q2 FY06 Q2 FY05

Cash & Equiv. ($mil) 15.47 6.74

Total Assets ($mil) 23.75 8.84

Total Debt ($mil) 0.00 0.72

Equity ($mil) 12.78 2.41

PROFITABILITY

Q2 FY06 Q2 FY05

Gross Profit Margin -8,984.21% -7,430.00%

EBITDA Margin -8,984.21% -7,430.00%

Operating Margin -9,036.84% -7,570.00%

Sales Turnover 0.01 1.47

Return on Assets 106.85% -13.96%

Return on Equity 198.52% -51.29%

DEBT

Q2 FY06 Q2 FY05

Current Ratio 1.43 4.54

Debt/Capital 0.00 0.23

Interest Expense 0.00 0.11

Interest Coverage NA -6.82

SHARE DATA

Q2 FY06 Q2 FY05

Shares outstanding (mil) 384 305

Div / share 0.00 0.00

EPS 0.00 0.00

Book value / share 0.03 0.01

Institutional Own % NA NA

Avg Daily Volume 1,633,079 1,915,558

2 Sum of quarterly figures may not match annual estimates due to

use of median consensus estimates.

FINANCIAL ANALYSIS

PATRIOT SCIENTIFIC CORP's gross profit margin for the second quarter of its fiscal year 2006 has significantly

increased when compared to the same period a year ago. Even though sales increased, the net income has

decreased, representing a decrease to the bottom line. PATRIOT SCIENTIFIC CORP has average liquidity.

Currently, the Quick Ratio is 1.41 which shows that technically this company has the ability to cover

short-term cash needs. The company's liquidity has decreased from the same period last year.

At the same time, stockholders' equity ("net worth") has greatly increased by 431.29% from the same quarter

last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will

face financial difficulties in the near future.

PATRIOT SCIENTIFIC CORP

NASDAQ:

PTSC

March 2, 2007

Sector: Information Technology Sub-Industry: Semiconductors Source: GICS

Annual Dividend Rate

$0.06

Annual Dividend Yield

8.59%

Beta

3.16

Market Capitalization

$266.1 Million

52-Week Range

$0.43-$2.25

Price as of 3/1/2007

$0.70

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet.com Ratings nor any other party guarantees its

accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet.com Ratings, Inc. Copyright(c) 2006. All

rights reserved.

Report Date: March 2, 2007

PAGE 5

RATINGS HISTORY

Our rating for PATRIOT SCIENTIFIC CORP has not

changed since 10/27/2005. As of 3/1/2007, the stock

was trading at a price of $0.70 which is 69.0% below

its 52-week high of $2.25 and 62.3% above its

52-week low of $0.43.

2 Year Chart

2005 2006

$0.50

$1.00

$1.50

$2.00

HOLD: $0.11

SELL: $0.18

MOST RECENT RATINGS CHANGES

Date Price Action From To

10/27/05 $0.11 Upgrade

Sell Hold

3/1/05 $0.18 No Change

Sell Sell

Price reflects the closing price as of the date listed, if available

RATINGS DEFINITIONS &

DISTRIBUTION OF THESTREET.COM RATINGS

(as of 3/1/2007)

40.26% Buy

- We believe that this stock has the

opportunity to appreciate and produce a total return of

more than 10% over the next 12 months.

29.94% Hold

- We do not believe this stock offers

conclusive evidence to warrant the purchase or sale of

shares at this time and that its likelihood of positive total

return is roughly in balance with the risk of loss.

29.80% Sell

- We believe that this stock is likely to

decline by more than 10% over the next 12 months, with

the risk involved too great to compensate for any

possible returns.

TheStreet.com Ratings, Inc.

15430 Endeavour Drive

Jupiter, FL 33478

www.thestreet.com/ratings

Research Contact: 617-273-8320

Sales Contact: 800-377-3370

VALUATION

HOLD. The current P/E ratio indicates a significant discount compared to an average of 36.45 for the

Semiconductors & Semiconductor Equipment industry and a discount compared to the S&P 500 average of

17.87. For additional comparison, its price-to-book ratio of 21.02 indicates a significant premium versus the

S&P 500 average of 2.83 and a significant premium versus the industry average of 3.41. The price-to-sales

ratio is well above both the S&P 500 average and the industry average, indicating a premium.

Price/Earnings

1 2 3 4 5

premium discount

PTSC 11.63 Peers 36.45

• Discount. A lower P/E ratio than its peers can

signify a less expensive stock or lower growth

expectations.

• PTSC is trading at a significant discount to its

peers.

Price/CashFlow

1 2 3 4 5

premium discount

PTSC 7.20 Peers 16.11

• Discount. The P/CF ratio, a stock’s price divided by

the company's cash flow from operations, is useful

for comparing companies with different capital

requirements or financing structures.

• PTSC is trading at a significant discount to its

peers.

Price/Projected Earnings

1 2 3 4 5

premium discount

PTSC NA Peers 20.83

• Neutral. A lower price-to-projected earnings ratio

than its peers can signify a less expensive stock or

lower future growth potential.

• Ratio not available.

Price to Earnings/Growth

1 2 3 4 5

premium discount

PTSC NA Peers 2.05

• Neutral. The PEG ratio is the stock’s P/E divided by

the consensus estimate of long-term earnings

growth. Faster growth can justify higher price

multiples.

• Ratio not available.

Price/Book

1 2 3 4 5

premium discount

PTSC 21.02 Peers 3.41

• Premium. A higher price-to-book ratio makes a

stock less attractive to investors seeking stocks

with lower market values per dollar of equity on the

balance sheet.

• PTSC is trading at a significant premium to its

peers.

Earnings Growth

1 2 3 4 5

lower higher

PTSC 700.00 Peers 65.41

• Higher. Elevated earnings growth rates can lead to

capital appreciation and justify higher

price-to-earnings ratios.

• PTSC is expected to have an earnings growth rate

that significantly exceeds its peers.

Price/Sales

1 2 3 4 5

premium discount

PTSC 872.50 Peers 4.03

• Premium. In the absence of P/E and P/B multiples,

the price-to-sales ratio can display the value

investors are placing on each dollar of sales.

• PTSC is trading at a significant premium to its

industry.

Sales Growth

1 2 3 4 5

lower higher

PTSC -97.42 Peers 17.42

• Lower. A sales growth rate that trails the industry

implies that a company is losing market share.

• PTSC significantly trails its peers on the basis of

sales growth

DISCLAIMER:

The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but

TheStreet.com Ratings, Inc. can not guarantee its accuracy and completeness, and that of the opinions based thereon. Data is

provided via the COMPUSTAT® Xpressfeed product from Standard &Poor’s, a division of The McGraw-Hill Companies, Inc., as

well as other third-party data providers.

TheStreet.com Ratings, Inc. is a wholly owned subsidiary of TheStreet.com, Inc. which is a publisher and has registered as an

investment adviser with the U.S. Securities and Exchange Commission. This research report contains opinions and is provided

for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or

other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a

qualified securities professional, before you make any investment. None of the information contained in this report constitutes,

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determination by TheStreet.com Ratings, Inc. that any security or trading strategy is suitable for any specific person. To the

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