PATRIOT SCIENTIFIC CORP

The potential dilutive effect of unvested RSUs outstanding during the period are calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. The potential dilutive effect of our Series A Preferred and Series B Preferred outstanding during the period is calculated using the if-converted method assuming the conversion of Series A Preferred and Series B Preferred as of the earliest period reported or at the date of issuance, if later, but are excluded if their effect is anti-dilutive. For the three months ended March 31, 2021, the issuance of 802,786 shares of common stock upon the conversion of Series B Preferred were excluded in the calculation of diluted loss per share as the impact was anti-dilutive during periods of net loss. In addition, for the three months ended March 31, 2021, 336,328 outstanding RSUs were also excluded in the calculation of diluted loss per share as the impact was anti-dilutive during periods of net loss. Since the impact of potentially dilutive securities are anti-dilutive during periods of net loss, there was no difference between basic and diluted loss per common share for the three months ended March 31, 2021 and the period March 30, 2020 (date of inception) to March 31, 2020.

In addition, during April 2021, the Company entered into consulting agreements with each of the Related Parties for a period of two years commencing September 1, 2020. Pursuant to the agreements, Dr. Steinmetz will be paid $5,000 per month beginning September 1, 2020 as acting Chief Scientific Officer. In addition, Dr. Steinmetz’s spouse and Steve Fiering, Ph.D. will each be paid $2,500 per month commencing September 1, 2020. The Related Parties have each agreed to defer 85% of their respective consulting fees until the Company is able to secure at least $4 million in aggregate funding. In exchange for the deferral of consulting payments, the Company agreed to grant each of the Related Parties RSU’s with a fair market value equal to 20% of their deferred cash compensation as of the closing date of the financing. The number of RSU’s to be granted will be calculated based on the closing price of the Company’s common stock on the closing date of the financing and will vest one-year from the date of grant.

We are a preclinical, development-stage biotechnology company focused on developing and eventually commercializing our proprietary technology to activate the innate immune system.  Our lead product candidate, MIE-101, is based on a naturally occurring plant virus that is non-infectious in animals and humans but acts as strong adjuvant that activates multiple Toll-like receptors (“TLRs”) through its natural immune recognition. When injected into a tumor, MIE-101 naturally triggers the body’s innate immune system, thereby altering the tumor microenvironment and directing activated anti-tumor T cells to attack both the injected tumor as well as other tumors throughout the body.  Published preclinical data in leading scientific journals from our co-founders’ studies and ongoing research support the anti-tumor activity of MIE-101 as a monotherapy and have demonstrated its ability to improve anti-tumor effects when combined with standard cancer treatments including chemotherapy, radiation and immunotherapy. These studies include data from multiple preclinical tumor models, veterinary studies in companion animals with naturally occurring cancer, as well as showing the potential to activate human immune effector cells in vitro.  Our goal is to advance MIE-101 into human and veterinary studies in 2022 as sufficient funding becomes available.

We are also employing this same natural adjuvant to produce modular vaccines under our Modular Vaccine Platform (“MVP”) that can prevent diseases by linking the virus directly to target antigens of interest.  In preclinical studies, vaccination with these agents has been able to protect animals from both cancer and infectious diseases and has shown significant promise against SARS-CoV-2.  Our MVP platform is designed to facilitate the rapid development of vaccine candidates due to its modular nature. The adjuvant and linking chemistry can be stockpiled and ready for the rapid identification of targets of interest which can be linked for testing in a short time. These vaccines also have a superior cold-chain profile that would potentially allow distribution to vaccination centers without refrigeration or freezing.  The MVP platform combined with our proprietary trans-dermal delivery system could potentially allow for self-administration and shipment of materials at room temperature, which makes the platform ideal for rapid response situations.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with our unaudited condensed consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q (this “Quarterly Report”) before making a decision to invest in our securities. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us, or that we currently believe are not material, also may become important factors that affect us and impair our business operations. The occurrence of any of the events or developments discussed in the risk factors below could have a material and adverse impact on our business, financial condition, results of operations and cash flows and, in such case, our future prospects would likely be materially and adversely affected.