THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. CALCULATION OF REGISTRATION FEE | Title of Each Class of Securities to be Registered | | Amount to be Registered | | Proposed Maximum Offering Price Per Unit (3) | | Proposed Maximum Aggregate Offering Price | | Amount of Registration Fee | | Common Stock, $0.00001 par value (1) | | 17,204,442 | | $0.84 | | $14,451,731.28 | | $1546.34 | | Common Stock, $0.00001 par value (2) | | 4,980,000 | | $0.84 | | $4,183,200.00 | | $447.60 | | TOTAL | | 22,184,442 | | | | $18,634,931.28 | | $1,993.94 |
| (1) | Shares of the Registrant’s common stock, $.00001 par value per share, are being registered for resale on behalf of certain selling security holders. The common stock being registered was issued to the selling security holders between February 3, 2004 and March 23, 2006. |
| (2) | Shares of the Registrant’s common stock, $.00001 par value per share, are being registered for resale on behalf of certain selling security holders. The common stock being registered is issuable to the selling security holders on their exercise of warrants which were issued from April 26, 2004 through March 1, 2006. |
| (3) | Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(c) under the Securities Act of 1933, as amended (the “Act”), based on the average of the closing bid and asked prices for the Registrant’s Common Stock (the “Common Stock”) as reported on the OTC Electronic Bulletin Board on May 12, 2006. |
The information in this preliminary Prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission (SEC) is effective. This preliminary Prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. SUBJECT TO COMPLETION; AS FILED WITH THE SECURITIES ANDEXCHANGE COMMISSION ON MAY 19, 2006
P R O S P E C T U S
PATRIOT SCIENTIFIC CORPORATION
THE OFFERING
The resale of up to 22,184,442 shares of common stock in the over-the-counter market at the prevailing market price or in negotiated transactions. We will receive no proceeds from the sale of the shares by the Selling Shareholders. TRADING SYMBOLPTSC (Over-the-counter Electronic Bulletin Board)
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.Please refer to Risk Factors Beginning on Page 1
THE SECURITIES AND EXCHANGE COMMISSION (SEC) AND STATE SECURITIES REGULATORS HAVE NOT APPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, NOR IS IT THE SOLICITATION OF AN OFFER TO BUY THESE SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE OF THESE SECURITIES IS NOT PERMITTED. Please read this Prospectus carefully. It describes our company, finances and products. Federal and state securities laws require that we include in this Prospectus all the material information that you will need to make an investment decision. We have not authorized anyone to provide you with information that is different from that which is contained in this Prospectus. PROSPECTUS SUMMARY About our Company Patriot Scientific Corporation was organized under Delaware law on March 24, 1992, and is the successor by merger to Patriot Financial Corporation, a Colorado corporation, incorporated on June 10, 1987. Our address is Carlsbad Corporate Plaza, 6183 Paseo Del Norte, Suite 180, Carlsbad, CA 92011, and our telephone number is (760) 547-2700. Our home page can be located on the Internet at http://www.ptsc.com. We develop, market, and sell microprocessors, our technology upon which the microprocessors are based, and complementary products which enable computers and other data processing devices to communicate. These products can be used to connect to the Internet or other telecommunication networks. We also have a patent for technology which, if fully developed, may allow radar to be used to penetrate the ground or structures to find various objects. Our strategy is to exploit our microprocessor technologies through product sales, licensing, and strategic alliances and to litigate against those who may be infringing on our patents. We believe our financial resources are sufficient to support our operations during at least the next twelve months. Warrant Shares We Are Registering We are registering 4,980,000 shares issuable on the exercise of warrants issued between April 26, 2004 and March 1, 2006. Additional Shares We Are Registering We are also registering 17,204,442 shares that are issued and outstanding. Key Facts | Shares being offered | | 22,184,442 (6.13 % of our shares currently outstanding as of April 17, 2006) | | Total shares outstanding prior to the offering as of February 28, 2006 | | 349,336,560 | | Total shares outstanding assuming completion of the offering | | 354,316,560 | | Total shares that would be outstanding assuming exercise of all outstanding options and warrants | | 423,829,628 | | Price per share to the public | | Market price at time of resale | | Total proceeds raised by offering | | None. | | Dividend policy | | Patriot declared its first dividend on February 14, 2006 and another dividend on March 9, 2006. The Board of Directors may declare additional dividends in the future with due regard for the financial resources of Patriot and alternative applications of those financial resources. |
RISK FACTORS Before purchasing any shares of our common stock, we urge you to carefully consider the following discussion of risks as well as other information contained in this Prospectus. The following are what we believe to be all our material risks. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. PLAN OF DISTRIBUTION After the effective date of the registration statement of which this Prospectus is a part, each Selling Shareholder will be free to offer and sell his or her common shares at such times, in such manner and at such prices as he or she may determine. The types of transactions in which the common shares are sold may include transactions in the over-the-counter market (including block transactions), negotiated transactions, the settlement of short sales of common shares, or a combination of such methods of sale. The sales will be at market prices prevailing at the time of sale or at negotiated prices. Such transactions may or may not involve brokers or dealers. The Selling Shareholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their securities. The Selling Shareholders do not have an underwriter or coordinating broker acting in connection with the proposed sale of the common shares. The Selling Shareholders may effect such transactions by selling common stock directly to purchasers or to or through broker-dealers, which may act as agents or principals. Such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders. They may also receive compensation from the purchasers of common shares for whom such broker-dealers may act as agents or to whom they sell as principals, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions). PATRIOT SCIENTIFIC CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) Number of Shares of Common Stock Into Which the Debentures May Be Converted. The debentures were initially convertible into shares of common stock at conversion prices that ranging from approximately $0.02 to $0.10 per share. The debentures contain provisions which allow for the conversion rate to be reset on a periodic basis based on a comparison of the market price of the Company’s common stock to the conversion price of the debentures. On those measurement dates where the market price is less than the conversion rate, a new conversion rate is set based on a weighted average of the market price for the ten days prior to the reset measurement date. As of May 31, 2005, the reset conversion rate on debentures outstanding range from $0.02 to $0.04. Warrants. Concurrent with the issuance of the convertible debentures, the Company issued to the debenture holders warrants to purchase shares of the Company’s common stock. These warrants are exercisable for five years from the date of issuance at either initial negotiated exercise prices or prices equal to 115% of the volume weighted average price for our common stock for the ten days previous to the debenture date. The warrant exercise price is generally subject to being reset on each six month anniversary of its issuance, however, if the warrant holder elects to have the warrant shares registered, then the exercise price is fixed at the price in effect on the date of the election. Options to Purchase Additional Debentures. Subject to the price of the Company’s common stock being equal to or greater than $0.20 per share and a two year limitation, the debenture holders may purchase additional debentures equal to the value of their initial debentures. The price at which the optional additional debentures may be converted would initially equal 115% of the volume weighted average price for the Company’s common stock for the ten days previous to the date on which the optional additional debentures were closed. The optional additional debentures would carry the same warrant amounts and reset privileges as the initial debentures. Shareholder Approval. The Company may currently issue more than 20% of our outstanding shares under the convertible debentures. If the Company were to become listed on the NASDAQ Small Cap Market or NASDAQ National Market, then it must get shareholder approval to issue more than 20% of our outstanding shares. Currently, shareholder approval is not required. Restrictive Covenants. For a period of 18 months from the date of issuance of the debentures, the Company is prohibited from entering into certain transactions. These include the issuance of any debt or equity securities in a private transaction which are convertible or exercisable into shares of common stock at a price based on the trading price of the common stock at any time after the initial issuance of such securities; the issuance of any debt or equity securities with a fixed conversion or exercise price subject to adjustment; and any private equity line type agreements without obtaining the debenture holders’ prior written approval. Additionally, so long as the debentures remain outstanding, the Company cannot declare or pay dividends without the debenture holders’ approval. Right of First Refusal. The debenture holders have a right of first refusal to purchase or participate in any equity securities offered by the Company in any private transaction which closes on or prior to the date that is two years after the issue date of each debenture. Registration Rights. Except for one debenture issued on March 23, 2004, the Company is responsible for registering the resale of the shares of its common stock which will be issued on the conversion of the debentures. As of May 31, 2005, there have been six registration statements (designated A through F). Security Interest. The convertible debentures are secured by substantially all assets of the Company. |
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