<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended November 30, 1995.
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)
12875 Brookprinter Place, Suite 300, Poway, California, 92064
(Address of principal executive offices)
(619) 679-4428
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
----- -----
State 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 28,337,226
- ------------------------------- ----------
(Class) (Outstanding at December 27, 1995)
1
<PAGE> 2
PATRIOT SCIENTIFIC CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets as of November 30, 1995 and
May 31, 1995 (unaudited) 3
Statements of Operations for the three and six months ended
November 30, 1995 and 1994 and cumulative from
inception to November 30, 1995 (unaudited) 4
Statements of Cash Flows for the six months ended
November 30, 1995 and 1994 and cumulative from
inception to November 30, 1995 (unaudited) 5
Notes to Interim Financial Statements 6
Item 2. Plan of Operation 7
PART II. OTHER INFORMATION 8
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
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 8
SIGNATURES 8
</TABLE>
* No information provided due to inapplicability of the item.
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PATRIOT SCIENTIFIC CORPORATION
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
November 30, May 31,
1995 1995
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 668,206 $1,105,641
Prepaid expenses and other 13,870 62,500
----------- ----------
682,076 1,168,141
Property and Equipment - net 295,183 213,535
Purchased Technology - net 918,500 1,224,667
Other Assets 44,843 44,843
---------- ----------
Total Assets $1,940,602 $2,651,186
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 87,070 $ 56,369
Stockholders' Equity
Common stock $.00001 par value; authorized
40,000,000 shares; 28,337,226 and 27,762,226
shares issued and outstanding respectively 283 278
Additional paid-in capital 8,291,835 8,019,340
(Deficit) accumulated during the
development stage (6,438,586) (5,424,801)
---------- ----------
1,853,532 2,594,817
---------- ----------
Total Liabilities and Stockholders' Equity $1,940,602 $2,651,186
========== ==========
</TABLE>
See notes to interim financial statements.
3
<PAGE> 4
PATRIOT SCIENTIFIC CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Inception
Three Months Ended Six Months Ended (June 10, 1987)
November 30, November 30, to November 30,
1995 1994 1995 1994 1995
<S> <C> <C> <C> <C> <C>
Revenues
Interest $ 5,110 $ 27,820 $ 17,739 $ 43,710 $ 182,320
Expenses
Research and development 274,990 222,364 466,601 489,204 2,558,556
Sales and marketing 38,456 20,271 55,460 31,740 258,089
General and administrative 91,748 103,467 203,296 208,471 2,885,761
Amortization 153,084 153,083 306,167 306,166 918,500
----------- ----------- ----------- ----------- -----------
558,278 499,185 1,031,524 1,035,581 6,620,906
----------- ----------- ----------- ----------- -----------
Net loss $ (553,168) $ (471,365) $(1,013,785) $ (991,871) $(6,438,586)
=========== =========== =========== =========== ===========
Loss per share $ (0.02) $ (0.02) $ (0.04) $ (0.04)
=========== =========== =========== ===========
Weighted average number of
common shares outstanding
during the period (Note 4) 22,827,336 22,762,226 22,794,603 22,762,226
=========== =========== =========== ===========
</TABLE>
See notes to interim financial statements.
4
<PAGE> 5
PATRIOT SCIENTIFIC CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Inception
Six Months Ended (June 10, 1987)
November 30, to November 30,
1995 1994 1995
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net (loss) $(1,013,785) $ (991,871) $(6,438,586)
Adjustments to reconcile net (loss)
to cash used in operating activities:
Amortization and depreciation 367,640 345,700 1,116,296
Common stock issued for services 22,500 - 51,430
Stock compensation cost - - 1,875,000
Changes in prepaids and other 48,630 2,100 (13,787)
Changes in accounts payable
and accrued expenses 30,701 38,194 87,070
----------- ---------- -----------
Net cash used in operating
activities (544,314) (605,877) (3,322,577)
Cash Flows from Investing Activities
Purchase of property and equipment (143,121) (54,999) (453,123)
Organization costs paid - (1,939)
Patent costs paid - (44,843)
----------- ---------- -----------
Net cash used in investing activities (143,121) (54,999) (499,905)
----------- ---------- -----------
Cash Flows from Financing Activities
Proceeds from issuance of common stock
and exercise of warrants 250,000 - 4,490,688
----------- ---------- -----------
Net Increase (Decrease) in Cash (437,435) (660,876) 668,206
Cash and cash equivalents at
beginning of period 1,105,641 2,433,034 -
----------- ---------- -----------
Cash and cash equivalents at
end of period $ 668,206 $1,772,158 $ 668,206
=========== ========== ===========
</TABLE>
See notes to interim financial statements.
5
<PAGE> 6
PATRIOT SCIENTIFIC CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
(Unaudited)
1. OPERATIONS
Patriot Scientific Corporation (the "Company"), is a development stage company
engaged in the development of sensing and computer processing technology ("GPR"
technology), semiconductor microprocessor technology ("ShBoom(TM)
Microprocessor") and Integrated Services Digital Network ("ISDN") technology.
2. STATEMENT PRESENTATION
The accompanying unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information. They do not include all information and footnotes required by
generally accepted accounting principles. The interim financial statements and
notes thereto should be read in conjunction with the Company's audited financial
statements and notes thereto for the year ended May 31, 1995.
In the opinion of management, the interim 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.
3. PURCHASED TECHNOLOGY
Purchased technology at a cost of $1,837,000 relating to the Company's ShBoom
Microprocessor technology is being amortized over its estimated useful life of
three years. Amortization expense of $306,167 was recorded for the six months
ended November 30, 1995. (See Note 4).
4. STOCKHOLDERS' EQUITY
The following table summarizes equity transactions during the six months ended
November 30, 1995:
<TABLE>
<CAPTION>
Shares Dollars
<S> <C> <C>
Balance June 1, 1995 27,762,226 $8,019,618
Common stock issued for services @ $.35 per share 75,000 22,500
Sale of common stock for cash @ $.50 per share 500,000 250,000
---------- ----------
Balance November 30, 1995 28,337,226 $8,292,118
========== ==========
</TABLE>
A total of 5,000,000 shares of the Company's outstanding common stock was issued
as a contingent cost of the Company's acquisition of its ShBoom Microprocessor
technology and such shares are subject to an escrow arrangement. The shares are
releasable from escrow at the rate of 500,000 shares for each $500,000 of
revenues earned by the Company and upon the occurrence of certain defined major
corporate events. The shares are issued and outstanding and carry all
shareholder rights. Any of the escrowed shares not released prior to May 31,
1999 are to be returned to the Company and canceled. These shares are excluded
from the calculation of weighted average number of common shares outstanding for
the computation of (loss) per share until the release conditions are met.
At November 30, 1995 the Company had 425,000 options outstanding pursuant to its
1992 ISO Stock Option Plan exercisable at prices ranging from $0.50 to $0.875
per share expiring during 1997. The Company also had 745,000 options outstanding
pursuant to its 1992 NSO Stock Option Plan exercisable at prices ranging from
$0.30 to $0.875 per share expiring beginning 1997 through 2002.
In connection with a private placement the Company has granted a nontransferable
warrant for the purchase of 500,000 common shares at $0.50 per share through
February 1, 1996.
As of October 1, 1995 the Board of Directors adopted the 1995 Employee Stock
Compensation Plan providing for the issuance of up to 250,000 common shares to
Employees, as defined. Executive officers and directors are not eligible under
the Plan. As of November 30, 1995, no shares had been issued pursuant to the
plan, however the Plan Committee had agreements providing for the issuance of up
to 125,000 shares upon certain conditions.
6
<PAGE> 7
ITEM 2. PLAN OF OPERATION
During the fiscal year ended May 31, 1995 and the six months ended November 30,
1995, the Company's operations consisted primarily of research and development
activities towards the development of the ShBoom Microprocessor, the GPR and
ISDN technology and administrative activities related towards financing and
administrative operations and marketing expenditures incurred in initial phases
of marketing.
The Company expended a total of $466,601 as research and development costs
during the six months ended November 30, 1995, primarily consisting of personnel
and consultancy costs. This is a decrease of $22,603 from the amount incurred
during the comparable period of the previous year of $489,204, the decrease
resulting primarily from a $70,000 reduction of research personnel and
consultants offset in part by chip fabrication costs. General and administrative
costs were $203,296 during the six months ended November 30, 1995 comparable to
the $208,471 for the comparable period of the prior fiscal year. The Company
incurred $55,460 of marketing expenditures during the six months ended November
30, 1995 compared to $31,470 for the comparable period of the prior year. The
increase resulted primarily from initial marketing activities on the Company's
ShBoom Microprocessor and ISDN product. The Company expensed $306,167 as
amortization expense for the six months ended November 30, 1995 and 1994.
During the six months ended November 30, 1995 the Company used cash of $544,314
in operating activities and $143,121 in investing activities for the purchase of
equipment and software. The Company's emphasis on research and development
activities is expected to account for a majority of expenditures during the next
twelve months.
PLAN OF OPERATION FOR NEXT TWELVE MONTHS
Since late 1989, the Company has been engaged in developing its technologies.
The Company has not generated any operating revenues to date. The Company's plan
of operation for the next twelve months is to introduce ISDN products, introduce
to market the current generation of the ShBoom Microprocessor, design future
generations of the ShBoom and ISDN technologies and exploit the sensing and
computer processing technology. There can be no assurance the Company will be
successful in exploiting its technologies.
At November 30, 1995, the Company had working capital of $595,006 compared to
working capital of $1,111,772 at May 31, 1995. Cash on hand at November 30, 1995
was $668,206. Other than its obligation pursuant to the remaining term on a
three year lease obligation aggregating $38,500 and an obligation for $50,000
upon a GPR prototype demonstration meeting specific criteria, the Company has no
material commitments for capital or other expenditures. The Company has no other
material sources of liquidity at this time. Based on the current fiscal year's
rate of operating expenditures and current plans, management anticipates a base
level of cash operating expenditures aggregating approximately $1,000,000 during
the next twelve months. However, the Company believes it will incur additional
minimal expenditures of approximately $100,000 on the ShBoom Microprocessor and
$50,000 on the ISDN technology. Should revenues commence, the Company may
require additional personnel and expenditures not currently estimable by
management.
In addition to the part-time services of two executive officers, the Company
presently has five full-time research and development employees and one
full-time administrative persons. Management has no current plans to hire
additional personnel during the next twelve months except in response to
specific new development opportunities or as required to support contract or
commercialization activities, if any. The Company has in the past and may also
in the future engage outside consultants for specific development or marketing
tasks. If any of the current technologies prove successful, then during the next
twelve months the Company may require additional development, marketing and
manufacturing personnel, the number dependent upon a variety of factors not
presently determinable by management.
The Company anticipates that it may require additional equipment, fabrication,
components and supplies during the next twelve months, not included in the
commitments outlined above, to continue development for the Company's
technologies. Product introductions such as those contemplated for ISDN products
and the ShBoom chip may require significant inventory and other expenditures not
presently estimable by management. Further, if expanded development is commenced
or new generations of chips or radar accelerated beyond current plans additional
expenditures, not currently estimatable by management, may be required.
It is possible therefore, that higher levels of expenditures may be required
than currently contemplated by management resulting from changes in development
plans or as required to support new developments or commercialization activities
or otherwise.
Based on the above factors, the Company does not have sufficient funds for the
next twelve months and will require funds from the sale of products or
technology or from other sources within the next twelve months. Potential
sources of future funds may include the sale of additional Company equity
securities, some form of debt financing or the sale or
7
<PAGE> 8
licensing of certain of the Company's technologies. Should the warrants
outstanding expiring on February 1, 1996 be exercised in full the Company would
realize $250,000 of gross proceeds. There can be no assurance that any funds
required during the next twelve months or thereafter can be generated from
operations or that such required funds will be available from the aforementioned
or other potential sources. The lack of additional capital could force the
Company to substantially curtail or cease operations and would therefore have a
material adverse effect on the Company's business. Further there can be no
assurance that any such required funds, if available, will be available on
attractive terms or that they will not have a significantly dilutive effect on
existing shareholders of the Company.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.5 1995 Employee Stock Compensation Plan of the registrant.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the fiscal
quarter ended November 30, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PATRIOT SCIENTIFIC CORPORATION
Date: December 28, 1995 By: Signature
----------------------------
Robert Putnam, Secretary
Treasurer and Director
(Principal Financial and
Accounting Officer and duly
authorized to sign on behalf
of the Registrant)
8
<PAGE> 1
FORM 10-QSB
PATRIOT SCIENTIFIC CORPORATION
EXHIBIT 10.5
1995 Employee Stock Compensation Plan
9
<PAGE> 2
1995 EMPLOYEE STOCK COMPENSATION PLAN
PATRIOT SCIENTIFIC CORPORATION
1. Purpose of the Plan.
This 1995 Employee Stock Compensation Plan ("Plan") is intended to further the
growth and advance the best interests of PATRIOT SCIENTIFIC CORPORATION, a
Delaware corporation (the "Company"), and Affiliated Corporations, by supporting
and increasing the Company's ability to attract, retain and compensate persons
of experience and ability and whose services are considered valuable, to
encourage the sense of proprietorship in such persons, and to stimulate the
active interest of such persons in the development and success of the Company
and Affiliate Corporations. This Plan provides for stock compensation through
the award of the Company's Common Stock.
2. Definitions.
Whenever used in this Plan, except where the context might clearly indicate
otherwise, the following terms shall have the meanings set forth in this
section:
a. "Act" means the U.S. Securities Act of 1933, as amended.
b. "Affiliated Corporation" means any Parent or Subsidiary of the Company.
c. "Award" or "grant" means any grant or sale of Common Stock made under this
Plan.
d. "Board of Directors" means the Board of Directors of the Company. The term
"Committee" is defined in Section 4 of this Plan.
e. "Code" means the Internal Revenue Code of 1986, as amended.
f. "Common Stock" or "Common Shares" means the common stock, $.00001 par value
per share, of the Company, or in the event that the outstanding Common Shares
are hereafter changed into or exchanged for different shares of securities of
the Company, such other shares or securities.
g. "Date of Grant" means the day the Committee authorizes the grant of Common
Stock or such later date as may be specified by the Committee as the date a
particular award will become effective.
h. "Employee" means any person or entity that renders bona fide services to the
Company, including, without limitation, (i) a person employed by the Company or
an affiliated Corporation; (ii) a person or company engaged by the Company or an
Affiliated Corporation as a consultant, advisor or agent; and (iii) a lawyer,
law firm, accountant or accounting firm, or other professional or professional
firm engaged by the Company or an Affiliated Corporation; but specifically
excluding persons who are directors or executive officers of the Company or any
Affiliated Corporation.
i. "Parent" means any corporation owning 50% or more of the total combined
voting stock of all classes of the Company or of another corporation qualifying
as a Parent within this definition.
j. "Participant" means an Employee to whom an Award of Plan Shares has been
made.
k. "Plan Shares" means shares of Common Stock from time to time subject to this
Plan
l. "Subsidiary" means a corporation more than 50% of whose total combined
capital stock of all classes is held by the Company or by another corporation
qualifying as a Subsidiary within this definition.
3. Effective Date of the Plan.
The effective date of this Plan is October 1, 1995. No Plan shares may be issued
after September 30, 1988.
4. Administration of the Plan.
The ESC Compensation Committee of the Board of Directors ("Committee"), and in
default of the appointment or continued existence of such Committee the Board of
Directors, will be responsible for the administration of this Plan, and will
have sole power to award Common Shares under this Plan. Subject to the express
provisions of this Plan, the Committee shall have full authority and sole and
absolute discretion to interpret this Plan, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other determinations which
it believes to be necessary or advisable in administering this Plan. The
determination of those eligible to receive an award of Plan Shares shall rest in
the sole discretion of the Committee, subject to the provisions of this Plan.
Awards of Plan Shares may be made as compensation for services rendered,
directly or in lieu of other compensation payable, as a bonus in recognition of
past service or performance or may be sold to an Employee as herein provided.
The Committee may correct any defect, supply any omission or reconcile any
inconsistency in this Plan in such manner and to such extent it shall deem
necessary to carry it into effect. Any decision made, or action taken, by the
Committee arising out of or in connection with the interpretation and
administration of this Plan shall be final and conclusive.
5. Stock Subject to the Plan.
The maximum number of Plan Shares which may be awarded under this Plan is
250,000 shares.
6. Persons Eligible to Receive Awards.
Awards may be granted only to Employees (as herein defined).
10
<PAGE> 3
7. Grants or Awards of Plan Shares.
Except as otherwise provided herein, the Committee shall have complete
discretion to determine when and to which Employees Plan Shares are to be
granted, and the number of Plan Shares to be awarded to each Employee. A grant
to an Employee may be made for cash, property, services rendered or other form
of payment constituting lawful consideration under applicable law; Plan Shares
awarded other than for services rendered shall be sold at not less than the fair
value thereof on the date of grant. No grant will be made if, in the judgment of
the Committee, such a grant would constitute a public distribution with the
meaning of the Act or the rules and regulations promulgated thereunder.
8. Delivery of Stock Certificates.
As promptly as practicable after authorizing an award of Plan Shares, the
Company shall deliver to the person who is the recipient of the award, a
certificate or certificates registered in that person's name, representing the
number of Plan Shares that were granted. Unless the Plan Shares have been
registered under the Act, each certificate evidencing Plan Shares shall bear a
legend to indicate that such shares represented by the certificate were issued
in a transaction which was not registered under the Act, and may only be sold or
transferred in a transaction that is registered under the Act or is exempt from
the registration requirements of the Act. In the absence of registration under
the Act, any person awarded Plan Shares may be required to execute and deliver
to the Company an investment letter, satisfactory in form and substance to the
Company, prior to issuance and delivery of the shares. An award may be made
under this Plan wherein the Plan Shares may be issued only after registration
under the Act.
9. Assignability.
An award of Plan Shares may not be assigned. Plan Shares themselves may be
assigned only after such shares have been awarded, issued and delivered, and
only in accordance with law and any transfer restrictions imposed at the time of
award.
10. Employment not Conferred.
Nothing in this Plan or in the award of Plan Shares shall confer upon any
Employee the right to continue in the employ of the Company or Affiliated
Corporation nor shall it interfere with or restrict in any way the lawful rights
of the Company or any Affiliated Corporation to discharge any Employee at any
time for any reason whatsoever, with or without cause.
11. Laws and Regulations.
The obligation of the Company to issue and deliver Plan Shares following an
award under this Plan shall be subject to the condition that the Company be
satisfied that the sale and delivery thereof will not violate the Act or any
other applicable laws, rules or regulations.
12. Withholding of Taxes.
If subject to withholding tax, the Company or any Affiliated Corporation may
require that the Employee concurrently pay to the Company the entire amount or a
portion of any taxes which the Company or Affiliated Corporation is required to
withhold by reason of granting Plan Shares, in such amount as the Company or
Affiliated Corporation in its discretion may determine. In lieu of part or all
of any such payment, the Employee may elect to have the Company or Affiliated
Corporation withhold from the Plan Shares issued hereunder a sufficient number
of shares to satisfy withholding obligations. If the Company or Affiliated
Corporation becomes required to pay withholding taxes to any federal, state or
other taxing authority as a result of the granting of Plan Shares, and the
Employee fails to provide the Company or Affiliated Corporation with the funds
with which to pay that withholding tax, the Company or Affiliated Corporation
may withhold up to 50% of each payment of salary or bonus to the Employee (which
will be in addition to any required or permitted withholding), until the Company
or Affiliated Corporation has been reimbursed for the entire withholding tax it
was required to pay in respect of the award of Plan Shares.
13. Reservation of Shares.
The stock subject to this Plan shall at all times, consist of authorized but
unissued Common Shares, or previously issued shares of Common Stock reacquired
or held by the Company or an Affiliated Corporation equal to the maximum number
of shares the Company may be required to issue as stated in Section 5 of this
Plan, and such number of Common Shares hereby is reserved for such purpose. The
Committee may decrease the number of shares subject to this Plan, but only the
Board of Directors my increase such number, except as a consequence of a stock
split or other reorganization or recapitalization affecting all Common Shares.
14. Amendment and Termination of the Plan.
The Committee may suspend or terminate this Plan at any time or from time to
time but no such action shall adversely affect the rights of a person granted
an Award under this Plan prior to that date. Otherwise, this Plan shall
terminate on the earlier of the terminal date stated in Section 3 of this Plan
or the date when all Plan Shares have been issued. The Committee shall have
absolute discretion to amend this Plan, subject only to those limitations
expressly set forth herein; however, the Committee shall have no authority to
extend the term of this Plan, to increase the number of Plan Shares
11
<PAGE> 4
subject to award under this Plan or to amend the definition of "Employee" to
include executive officers or directors of the Company or any Affiliated
Corporation.
15. Delivery of Plan.
A copy or synopsis (for which copy the prospectus will serve) or description of
this Plan shall be delivered to every person to whom an award of Plan Shares is
made. The Secretary of the Company may, but is not required to, also deliver a
copy of the resolution or resolutions of the Committee authorizing the award.
16. Liability.
No member of the Board of Directors, the Committee or any other committee of
directors, or officers, employees or agents of the Company or any Affiliated
Corporation shall be personally liable for any action, omission or
determination made in good faith in connection with this Plan.
17. Miscellaneous Provisions.
The place of administration of this Plan shall be in the State of California
(or subsequently, wherever the Company's principal executive offices are
located), and the validity, construction, interpretation and effect of this
Plan and of its rules, regulations and rights relating to it, shall be
determined solely in accordance with the laws of the State of Delaware. Without
amending this Plan, the Committee may issue Plan Shares to employees of the
Company who are foreign nationals or employed outside the United States, or
both, on such terms and conditions different from those specified in this Plan
but consistent with the purpose of this Plan, as it deems necessary and
desirable to create equitable opportunities given differences in tax laws in
other countries. All expenses of administering this Plan and issuing Plan
Shares shall be borne by the Company.
18. Reorganizations and Recapitalizations of the Company.
(a) The shares of Common Stock subject to this Plan are shares of the Common
Stock of the Company as currently constituted. If, and whenever, the Company
shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a Common Stock dividend, a stock split,
combination of shares (reverse stock split) or recapitalization or other
increase or reduction of the number of shares of the Common Stock outstanding
without receiving compensation therefor in money, services or property, then
the number of shares of Common Stock subject to this Plan shall (i) in the
event of an increase in the number of outstanding shares, be proportionately
increased; and (ii) in the event of a reduction in the number of outstanding
shares, be proportionately reduced.
(b) Except as expressly provided above, the Company's issuance of shares of
Common Stock of any class, or securities convertible into shares of Common
Stock of any class, for cash or property, or for labor or services either upon
direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares or obligations of the Company convertible into or
exchangeable for shares of Common Stock or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Common Stock subject to this Plan.
By signature below, the undersigned officers of the Company hereby certify that
the foregoing is a true and correct copy of the 1995 Employee Stock
Compensation Plan of the Company.
DATED: October 1, 1995
PATRIOT SCIENTIFIC CORPORATION
By Signature
---------
Elwood G. Norris
Authorized Officer
ATTEST:
By Signature
---------
Robert Putnam
Secretary
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
INTERIM STATEMENTS FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM-10QSB FOR THE
QUARTERLY PERIOD ENDED NOVEMBER 30, 1995.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1995
<PERIOD-END> NOV-30-1995
<CASH> 668,206
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 682,076
<PP&E> 295,183
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,940,602
<CURRENT-LIABILITIES> 87,070
<BONDS> 0
283
0
<COMMON> 0
<OTHER-SE> 8,291,835
<TOTAL-LIABILITY-AND-EQUITY> 1,940,602
<SALES> 0
<TOTAL-REVENUES> 17,739
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,031,524
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,013,785)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,013,785)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,013,785)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
