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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For quarterly period ended November 30, 2002
OR
[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____________ to _______________
	Commission File Number 0-22182

PATRIOT SCIENTIFIC CORPORATION
(Exact name of registrant as specified in its charter)

Delaware	84-1070278
(State or other jurisdiction of	(I.R.S. Empl. Ident. No.)
incorporation or organization)

10989 Via Frontera, San Diego, California 92127

(Address of principal executive offices, ZIP Code)

(858) 674-5000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES  [X]   NO [   ]

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

Common Stock, $.00001 par value	92,832,273
(Class)	(Outstanding at January 22, 2003)

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PATRIOT SCIENTIFIC CORPORATION
INDEX

			Page
PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements:
		Consolidated Balance Sheets as of November 30, 2002 (unaudited) and May 31, 2002	3
		Consolidated Statements of Operations for the three and six months ended November 30, 2002 and 2001 (unaudited)	4
		Consolidated Statements of Cash Flows for the six months ended November 30, 2002 and 2001 (unaudited)	5
		Notes to Unaudited Consolidated Financial Statements	6-17
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		18-25
	Item 3. Quantitative and Qualitative Disclosure About Market Risk		25
PART II. OTHER INFORMATION			25
	Item 1. Legal Proceedings		25
	Item 2. Changes in Securities		25
	Item 3. Defaults upon Senior Securities		*
	Item 4. Submission of Matters to a Vote of Security Holders		*
	Item 5. Other Information		*
	Item 6. Exhibits and Reports on Form 8-K		26
SIGNATURES			26
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002			27-28
	*       No information provided due to inapplicability of the item.

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		November 30, 2002				May 31, 2002
		(Unaudited)
ASSETS (Notes 4 and 5)
Current assets:
Cash and cash equivalents		$	2,210			$	88,108
Accounts receivable, net of allowance of $6,000 and $6,000 for uncollectible accounts			4,235				4,797
Prepaid expenses			140,803				35,749
Total current assets			147,248				128,654
Property and equipment, net			219,508				285,488
Other assets, net			107,621				330,863
Patents and trademarks, net			188,602				189,521
		$	662,979			$	934,526
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Note payable, net of unamortized debt discount of $0 and $189,516 (Notes 3 and 4)		$	635,276			$	445,760
Notes payable to a related party			150,000				—
Accounts payable			429,167				385,255
Accrued liabilities			195,016				211,291
Current portion of capital lease obligation			5,724				5,116
Total current liabilities			1,415,183				1,047,422
8% Convertible debentures, net of debt discount of $1,015,086 and $192,802 (Notes 3 and 5)			264,914				315,198
Long term portion of capital lease obligation			13,708				16,731
Commitments and contingencies (Notes 3, 6, 7 and 9)
Stockholders' deficit: (Note 7)
Preferred stock, $.00001 par value; 5,000,000 shares authorized none outstanding			—				—
Common stock, $.00001 par value; 200,000,000 shares authorized; issued and outstanding 87,489,354 and 81,465,757			875				815
Additional paid-in capital			42,874,769				41,440,101
Accumulated deficit			(43,826,470	)			(41,805,741	)
Note receivable			(80,000	)			(80,000	)
Total stockholders' deficit			(1,030,826	)			(444,825	)
		$	662,979			$	934,526

See accompanying summary of accounting policies and notes to unaudited consolidated financial statements.

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PATRIOT SCIENTIFIC CORPORATION

		Three Months Ended								Six Months Ended
		November 30, 2002				November 30, 2001				November 30, 2002				November 30, 2001
Net sales		$	5,160			$	7,389			$	45,049			$	321,889
Cost of sales:
Product costs			7,080				36,409				11,989				240,578
Inventory obsolescence			—				149,433				—				149,433
Cost of sales			7,080				185,842				11,989				390,011
Gross profit (loss)			(1,920	)			(178,453	)			33,060				(68,122	)
Operating expenses:
Research and development			164,218				375,439				373,505				871,247
Selling, general and administrative			577,133				738,672				1,064,234				1,392,412
			741,351				1,114,111				1,437,739				2,263,659
Operating loss			(743,271	)			(1,292,564	)			(1,404,679	)			(2,331,781	)
Other income (expenses):
Interest income			10				58				185				363
Interest expense			(334,027	)			(266,096	)			(616,235	)			(274,154	)
			(334,017	)			(266,038	)			(616,050	)			(273,791	)
Net loss		$	(1,077,288	)		$	(1,558,602	)		$	(2,020,729	)		$	(2,605,572	)
Basic and diluted loss per common share		$	(0.01	)		$	(0.02	)		$	(0.02	)		$	(0.04	)
Weighted average number of common shares outstanding during the period (Note 1)			84,054,186				62,761,554				82,752,899				60,741,712

See accompanying summary of accounting policies and notes to unaudited consolidated financial statements.

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PATRIOT SCIENTIFIC CORPORATION

		Six Months Ended
		November 30, 2002				November 30, 2001
Decrease in Cash and Cash Equivalents
Operating activities:
Net loss		$	(2,020,729	)		$	(2,605,572	)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization and depreciation			105,306				121,464
Provision for doubtful accounts			—				70,600
Provision for inventory obsolescense			—				149,433
Non-cash interest expense related to convertible debentures, notes payable and warrants			550,566				261,068
Common stock issued for services and litigation settlements Changes in:			126,000				—
Accounts receivable			(11,315	)			(43,248	)
Inventories			—				73,960
Prepaid expenses and other assets			114,021				(53,190	)
Accounts payable and accrued liabilities			28,031				(48,327	)
Net cash used in operating activities			(1,108,120	)			(2,073,812	)
Investing activities:
Purchase of property, equipment and patents			(34,240	)			(51,348	)
Financing activities:
Proceeds from the issuance of short term notes payable			150,000				665,000
Proceeds from the issuance of convertible debentures			847,000				—
Proceeds from the issuance of common stock			50,000				811,604
Principal payments for capital lease obligations			(2,415	)			(992	)
Proceeds from sales of accounts receivable			11,877				154,158
Proceeds from exercise of common stock warrants and options			—				73,833
Net cash provided by financing activities			1,056,462				1,703,603
Net decrease in cash and cash equivalents			(85,898	)			(421,557	)
Cash and cash equivalents, beginning of period			88,108				464,350
Cash and cash equivalents, end of period		$	2,210			$	42,793
Supplemental Disclosure of Cash Flow Information:
Cash payments for interest		$	8,223			$	11,656
Warrants and options issued for prepaid services		$	—			$	57,500
Capital lease obligation		$	—			$	24,996
Cancellation of options issued for prepaid services		$	—			$	10,574
Common stock issued on conversion of debentures, notes payable and accrued interest		$	75,394			$	227,800
Debt discount		$	1,240,622			$	351,000

See accompanying summary of accounting policies and notes to unaudited consolidated financial statements.

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PATRIOT SCIENTIFIC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.     BASIS OF PRESENTATION

The consolidated financial statements of Patriot Scientific Corporation (“Patriot”) presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended May 31, 2002.

In the opinion of management, the interim consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. Operating results for the three and six month periods are not necessarily indicative of the results that may be expected for the year.

Loss Per Share

We follow Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings per Share.” Under SFAS No. 128, basic loss per share is calculated as loss available to common stockholders divided by the weighted average number of common shares outstanding. Diluted loss per share is calculated as net loss divided by the diluted weighted average number of common shares. The diluted weighted average number of common shares is calculated using the treasury stock method for common stock issuable pursuant to outstanding stock options and common stock warrants. Common stock options and warrants of 48,744,320 and 13,450,923 for the three and six months ended November 30, 2002 and 2001, respectively, were not included in diluted loss per share for the periods as the effect was antidilutive due to our recording losses in each of those periods. See Notes 5 and 7 for discussion of commitments to issue additional shares of common stock and warrants.

Sale of Accounts Receivable

We follow SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” a replacement of SFAS No. 125. SFAS No. 140 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. A $400,000 factoring line we established with a bank enables us to sell selected accounts receivable invoices to the bank with full recourse against us. These transactions qualify for a sale of assets since (1) we have transferred all of our rights, title and interest in the selected accounts receivable invoices to the bank, (2) the bank may pledge, sell or transfer the selected accounts receivable invoices, and (3) we have no effective control over the selected accounts receivable invoices since we are not entitled to or obligated to repurchase or redeem the invoices before their maturity and we do not have the ability to unilaterally cause the bank to return the invoices. Under SFAS No.140, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. During the first six months of fiscal 2003, we sold $14,846 of our accounts receivable to a bank under the factoring agreement for $11,877. Pursuant to the provisions of SFAS No. 140, we reflected the transactions as sales of assets and established a receivable from the bank for the retained amount less the costs of the transactions and less any anticipated future loss in the value of the retained asset. The retained amount was equal to 20% of the total accounts receivable invoices sold to the bank less 1% of the total invoices as an administrative fee and 1.75% per month of the total outstanding accounts receivable invoices as a finance fee. The estimated future loss reserve for each receivable included in the estimated value of the retained asset was based on the payment history of the accounts receivable customer. As of November 30, 2002, there were no qualifying accounts receivable invoices available to factor resulting in no balance outstanding under the factoring line and $400,000 remaining available for future factoring of accounts receivable invoices.

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Patriot Scientific Corporation
Notes to Consolidated Financial Statements (Continued)

Reclassifications

Certain items in the unaudited November 30, 2001 consolidated financial statements have been reclassified to conform to the current presentation.

2.     RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board (“FASB”) issued SFAS No.133, “Accounting for Derivative Instruments and Hedging Activities,” amended by SFAS No. 137, “Accounting for Derivative Instruments and Hedging Activities- Deferral of the Effective Date of FASB No. 133,” and SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities” which requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair market value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. SFAS No. 133 was effective for us on June 1, 2001. The adoption of this statement had no material impact on our consolidated financial statements.

In June 2001, the FASB issued SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 141 requires the use of the purchase method of accounting and prohibits the use of the pooling-of-interests method of accounting for business combinations initiated after June 30, 2001. SFAS No. 141 also requires that companies recognize acquired intangible assets apart from goodwill if the acquired intangible assets meet certain criteria. SFAS No. 141 applies to all business combinations initiated after June 30, 2001 and for purchase business combinations completed on or after July 1, 2001. It also requires, upon adoption of SFAS No. 142, that companies reclassify the carrying amounts of intangible assets and goodwill based on the criteria in SFAS No. 141.

SFAS No. 142 requires, among other things, that companies no longer amortize goodwill, but instead test goodwill for impairment at least annually. In addition, SFAS No. 142 requires that companies identify reporting units for the purposes of assessing potential future impairments of goodwill, reassess the useful lives of other existing recognized intangible assets, and cease amortization of intangible assets with an indefinite useful life. An intangible asset with an indefinite useful life should be tested for impairment in accordance with the guidance in SFAS No. 142. SFAS No.142 is required to be applied in fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized at that date, regardless of when those assets were initially recognized. SFAS No. 142 requires companies to complete a transitional goodwill impairment test six months from the date of adoption. Companies are also required to reassess the useful lives of other intangible assets within the first interim quarter after adoption of SFAS No. 142. The adoption of this statement had no material impact on our consolidated financial statements.

Our previous business combinations were accounted for using the pooling-of-interests method. The pooling-of-interests method does not result in the recognition of acquired goodwill or other intangible assets. As a result, the adoption of SFAS No. 141 and No. 142 will not affect the results of past acquisition transactions. However, all future business combinations will