Seems to me every one in TPL, PDS and Alliacense is getting $$$ but us. I heard from Cliff today who referred me to 10Q but one section in particular where TPL falls to BK... Sounds to good to be true but I would venture to guess TPL would never let this happen...

Patriot Scientific Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

Investment in Affiliated Company (continued)

During January 2013, TPL and Moore settled their litigation. Terms of the settlement include the payment by PDS to Moore of a consulting fee of $250,000 for four years or until the completion of all outstanding MMP litigation whichever comes first. Per terms of the agreement PDS paid Moore $150,000 on the settlement date and paid Moore $16,667 per month from August 2013 through January 2014 and will pay $20,833 per month beginning February 2014 through January 2017. During the three months ended February 28, 2014 and 2013, PDS expensed $54,167 and $150,000, respectively, pursuant to this commitment. During the nine months ended February 28, 2014 and 2013, PDS expensed $120,835 and $150,000, respectively, pursuant to this commitment. These expenses are recorded in the accompanying PDS statements of operations presented below.

Based on our analysis of current authoritative accounting guidance with respect to our investment in PDS, we continue to account for our investment in PDS under the equity method of accounting, and accordingly have recorded our share of PDS’ net loss during the three months ended February 28, 2014 and 2013 of $29,889 and $601,929, respectively, as a decrease in our investment. We received distributions of $375,000 and $1,150,000 from PDS during the nine months ended February 28, 2014 and 2013, respectively, and we have recorded these distributions as a decrease in our investment. Our share of PDS’ net income during the nine months ended February 28, 2014 and 2013 was $356,930 and $75,666, respectively, which we have recorded as an increase in our investment.

We have recorded our share of PDS’ net income and loss for the three and nine months ended February 28, 2014 and 2013 as “Equity in earnings (loss) of affiliated company” in the accompanying condensed consolidated statements of operations.

During the three and nine months ended February 28, 2014, PDS entered into licensing agreements with third parties, pursuant to which PDS received aggregate proceeds of $0 and $5,022,000, respectively.

During the three and nine months ended February 28, 2013, PDS entered into licensing agreements with third parties, pursuant to which PDS received aggregate proceeds of $1,500,000 and $6,320,000, respectively.

At February 28, 2014, PDS had accounts payable balances of approximately $577,000, $25,000, and $81,000 to TPL, Alliacense, and PTSC, respectively.

At May 31, 2013, PDS had a prepaid balance to Alliacense of approximately $456,000 for advance payment of the June 1, 2013 quarterly payment less license fees earned. At May 31, 2013, PDS had accounts payable balances of approximately $1,494,000, $34,000, and $17,000 to TPL, Alliacense, and PTSC, respectively.

PDS’ balance sheets at February 28, 2014 and May 31, 2013 and statements of operations for the three and nine months ended February 28, 2014 and 2013 are as follows: