performance when he worked for PTSC? He should have been fined, penalized, drawn and quartered for his terrible performance over the years. AND now he wants more money. Oh, sweet mother of justice, how does that play. Would a judge listen to countless shareholders who were entirely dissatisfied with his work ethic, his decisions, ...

On September 23, 2005, Lowell Giffhorn, a former executive officer and a current director of Patriot Scientific Corporation (the ``Company``), submitted a demand for arbitration with the American Arbitration Association related to the termination of Mr. Giffhorn`s employment with the Company. Mr. Giffhorn asserts that the termination of his employment with the Company was unlawful, retaliatory, wrongful, violated public policy, violated the covenant of good faith and fair dealing and violated securities laws. Mr. Giffhorn demands damages of $1,500,000, which amount constitutes approximately 25% of the Company`s current cash reserves. The Company intends to vigorously defend itself with regard to these claims. The parties are currently in the process of selecting arbitrators. The amount, if any, of ultimate liability with respect to the foregoing cannot be determined. Despite the inherent uncertainties of litigation, the Company at this time does not believe that the foregoing will have a material adverse impact on its financial condition, results of operations, or cash flows.