In weighing the risk reward ratio of any investment, the events of today must be weighed against the historic events and future

events. We understand that Patriot Scientific patents have created over $100.0 million in license fees from 14 microprocessor

manufacturers, however, in similar patent litigations, the courts have ignored the monies paid in the past for licenses and the

litigation has gone against the owner of the patent. We understand that requests for reexamination had been filed with the

USPTO, before the request by PUBPAT. We are not making a decision on the validity of the patents nor the outcome of the

USPTO review, if it does indeed take place, but this new involvement by PUBPAT raises the specter of dragging out the litigation

and causing future possible licensees to delay taking licenses, and in the worst case, invalidating the patent.

At the present time, Patriot Scientific's sole source of revenue is the net royalties passed on from TPL license fees, since the

acquisition process is just beginning to unfold. Therefore, we are lowering our rating to Neutral and will closely monitor this

situation as the USPTO renders its decision to review or not review the patent. We will review our rating after the ruling from the

upcoming Markman Hearing.