United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended September 30, 1997.
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 0-24030
THE PANDA PROJECT, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0323354
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 YAMATO ROAD
BOCA RATON, FLORIDA 33431
(Address of principal executive offices)
(561) 994-2300
(Registrant's telephone number)
(Former name, former address and former fiscal year,
if changed since last report.)
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 .
--- ---
Applicable Only to Issuers Involved In Bankruptcy
Proceedings During The Preceding Five Years
Indicate by check mark whether the registrant filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. Yes No .
---- ----
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.01 Par Value - 12,194,332 shares as of October 31, 1997
THE PANDA PROJECT, INC.
Index
Page
Part I - Financial Information
Item 1 - Financial Statements (unaudited)
Condensed Balance Sheets - September 30, 1997 and
March 31, 1997 3
Condensed Statements of Operations - Three and six months
ended September 30, 1997 and September 30, 1996 4
Condensed Statements of Cash Flows - Six months ended
September 30, 1997 and September 30, 1996 5
Notes to Condensed Financial Statements - September 30, 1997 6-8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
Part II - Other Information
Item 1 - Legal Proceedings 13
Item 2 - Changes in Securities
Item 3 - Defaults Upon Senior Securities 13
Item 4 - Submission of Matters to Vote of Security Holders 13-14
Item 5 - Other Information 14-15
Item 6 - Exhibits and Reports on Form 8-K 15
Signature 16
Exhibit Index 17
<PAGE>
Page 3
The Panda Project, Inc.
Condensed Balance Sheets
September 30, March 31,
1997 1997
(Unaudited)
(Restated)
ASSETS
Current Assets:
Cash and cash equivalents $2,178,214 $ 3,243,505
Accounts receivable-trade (net of allowance
of $161,742 at September 30, 1997 and
$110,962 at March 31, 1997) 458,145 165,093
Inventory 968,820 822,309
Other receivables 404,288 18,905
Prepaid expenses and other current assets 307,729 98,963
------------ ------------
Total current assets 4,317,196 4,348,775
------------ ------------
Property and equipment, net 2,723,661 2,823,798
Restricted cash 260,000 150,000
Other assets 9,969 14,747
------------ ------------
Total assets $ 7,310,826 $ 7,337,320
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,679,798 $ 852,388
Accrued compensation and employee benefits 88,049 60,934
Accrued expenses and other current liabilities 1,323,013 1,611,123
------------ ------------
Total current liabilities 3,090,860 2,524,445
Stockholders' Equity:
Common Stock, $.01 par value, 50,000,000
shares authorized 12,179,701 shares at
September 30, 1997 and 10,124,643 shares
at March 31, 1997 issued and outstanding 121,798 101,247
Additional paid-in capital 64,245,861 58,627,529
Accumulated deficit (60,147,693) (53,915,901)
------------ ------------
Total stockholders' equity 4,219,966 4,812,875
------------ ------------
Total liabilities and stockholders' equity $ 7,310,826 $ 7,337,320
============ ============
The Balance Sheet at March 31, 1997 has been derived from the audited
financial statements of the Company at that date.
See Notes to Condensed Financial Statements.
<PAGE>
Page 4
<TABLE>
The Panda Project, Inc.
Condensed Statements of Operations (Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1997 1996 1997 1996
(Restated)
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 392,485 $ 837,359 $ 701,015 $ 1,433,929
Licensing fees 250,000 250,000 -
Contract research and
development revenues 441,470 835,724 -
Less returns and
allowances - (19,746) - (183,204)
------------ ------------ ------------ ------------
Net revenues $ 1,083,955 817,613 $ 1,786,739 $ 1,250,725
Costs and expenses:
Cost of sales 435,138 1,398,674 778,960 2,188,780
Research and development 1,050,581 1,923,880 2,202,821 3,460,948
Selling, general and
administrative 2,308,715 3,690,933 4,255,089 8,243,769
Costs associated with
asset impairments - - - 1,471,026
------------ ------------ ------------ ------------
Total costs and expenses 3,794,434 7,013,487 7,236,870 15,364,523
------------ ------------ ------------ ------------
Operating loss (2,710,479) (6,195,874) (5,450,131) (14,113,798)
Interest expense - - (907,317) -
Interest income 49,021 140,452 125,957 267,858
Other income (expense) (580) 5,402 (301) 7,807
------------ ------------ ------------ ------------
Net loss $(2,662,038)$ (6,050,020) $(6,231,792)$(13,838,133)
============ ============ ============ ============
Net loss per common share $ (.22)$ (0.61)$ (.56) $ (1.48)
============ ============ ============ ============
Weighted average number of
shares of common stock and
common stock equivalents
outstanding 12,076,161 9,898,465 11,212,390 9,364,640
============ ============ ============ ============
See Notes to Condensed Financial Statements.
</TABLE>
<PAGE>
Page 5
The Panda Project, Inc.
Condensed Statements of Cash Flows (Unaudited)
Six Months Ended
September 30,
1997 1996
Net cash used by operating activities $ (5,308,659) $(12,698,354)
Cash flows from investing activities:
Additions to property and equipment (609,978) (571,056)
------------ ------------
Net cash used by investing activities (609,978) (571,056)
Cash flows from financing activities:
Payment of stock issuance costs - (596,784)
Proceeds from issuance of debentures 4,800,000 -
Proceeds from issuance of stock 53,346 11,123,245
------------ ------------
Net cash provided by financing activities 4,853,346 10,526,461
------------ ------------
Net decrease in cash and cash
equivalents (1,065,291) (2,742,949)
Cash and cash equivalents at beginning,
of period 3,243,505 10,731,540
------------ ------------
Cash and cash equivalents at end of period $ 2,178,214 $ 7,988,591
============ ============
During the six months ended September 30, 1997, $4,800,000 of the Company's
4% subordinated convertible debentures were converted into 1,996,825 shares
of the Company's common stock.
See Notes to Condensed Financial Statements.
<PAGE>
Page 6
The Panda Project, Inc.
Notes to Condensed Financial Statements (Unaudited)
September 30, 1997
1. Basis of Presentation
Subsequent to the issuance of the Company's Form 10-Q for the quarter
ended September 30, 1997, and in connection with the review of a
Registration Statement on Form S-3 filed by the Company, the Securities &
Exchange Commission ("SEC") requested that the Company apply the accounting
treatment suggested in an announcement made by the SEC related to the
issuance of convertible debt securities. The Company determined that it was
necessary to restate the accompanying condensed financial statements from
those previously filed with the SEC to recognize the effect of the
beneficial conversion feature of the subordinated convertible debentures
issued by the Company in April 1997 (Note 3).
The accompanying condensed financial statements of The Panda Project, Inc.
("the Company") have been prepared in accordance with generally accepted
accounting principles on a basis consistent in all material respects with
those applied in the Annual Report on Form 10-K for the year ended March 31,
1997. The interim financial information is unaudited, but reflects all
normal and recurring adjustments which are, in the opinion of management,
necessary to provide a fair statement of results of operations for the
interim periods presented. The interim financial statements should be read
in connection with the financial statements in the Company's Annual Report
on Form 10-K for the year ended March 31, 1997.
2. Inventory
September 30, 1997 March 31, 1997
---------------------------------------
Raw materials $ 907,880 $ 434,569
Work in process - 43,341
Finished goods 60,940 344,399
---------------------------------------
$ 968,820 $ 822,309
=======================================
Inventory is valued at net realizable value, which is net of obsolescence
reserves of approximately $450,000 at September 30, 1997 and $250,000 at
March 31, 1997.
3. Subordinated Convertible Debentures
During April 1997, the Company completed a private placement of $4.8 million
of 4% subordinated convertible debentures. The debentures were due two
years from the date of issuance and were convertible into shares of common
stock at the lower of $5.625 per share or 82% of the average closing bid
<PAGE>
Page 7
price of the Company's common stock for the five consecutive trading days
immediately preceding the date of conversion. During June and July 1997,
all of such debentures were converted into an aggregate of 1,996,825 shares
of the Company's common stock. Total deferred issuance costs related to
the debentures, including placement fees of $384,000 and the value of
warrants of $163,000, are amortized as interest expense. However, upon
conversion of the debentures, the pro rata portion of any remaining deferred
issuance costs was charged to Additional Paid-in Capital.
At a meeting of the Emerging Issues Task Force held on March 13, 1997,
the staff of the SEC announced its position on the accounting treatment for
the issuance of convertible debt securities with a beneficial conversion
feature such as that contained in the subordinated convertible debentures
issued by the Company. As required by this announcement, the beneficial
conversion feature has been recognized and allocated to additional paid-in
capital. The amount of the beneficial conversion feature was calculated to
be $907,317 at the date of issuance of the subordinated convertible
debentures, measured as the difference between the conversion price and the
fair market value of the Company's common stock into which the debentures
are convertible, multiplied by the number of shares into which the
debentures are convertible. The debentures were fully convertible into
shares of the Company's common stock prior to June 30, 1997 and as such, the
entire amount of the beneficial conversion feature was charged to interest
expense during the three months ended June 30, 1997. The accounting for
this transaction has no effect on cash or total stockholders' equity.
4. Commitments and Contingent Matters
During the quarter ended September 30, 1997, the Company issued purchase
orders to two suppliers to provide materials for the production of the
Company's VSPA semiconductor package. The aggregate commitment under these
purchase orders is approximately $400,000. During October 1997, the Company
issued additional purchase orders to one of these suppliers in the aggregate
amount of approximately $480,000.
During November 1997, the Company and William J. Sarubbi, the Company's
former Vice President of Sales, agreed to dismiss the lawsuit filed against
the Company by William Sarubbi in April 1996 with no obligation owed by the
Company.
There are various legal proceedings and claims pending against the Company,
including disputes with a former director of the Company. While it is not
possible to determine the ultimate outcome of these matters, it is the
opinion of management, based on advice from counsel, that the resolution of
such matters will not have a material adverse effect on the Company's
financial position.
5. Equity
During the annual meeting of shareholders held on August 12, 1997, an
amendment to the Company's Articles of Incorporation was approved which
<PAGE>
Page 8
allows the Company to issue up to 2,000,000 shares of preferred stock.
6. Licensing Fees
In July, 1997, the Company entered into a licensing agreement with LG Cable
& Machinery Ltd. ("LG") whereby LG was granted a license, for a term that
continues until the expiration of the last to expire of the patents covered
by the agreement, with respect to a semiconductor package product owned by
the Company. The license granted to LG is non-exclusive except for certain
limited exclusive manufacturing rights with respect to specified Asian
countries. In connection with this agreement, the Company is entitled to a
non-refundable license fee of $250,000 which was received and recognized as
revenue during the quarter ended September 30, 1997. In addition, the
Company is entitled to receive royalties on sales of the semiconductor
package products by LG or its affiliates.
<PAGE>
Page 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
The Company was incorporated in April 1992 to design, develop, and
manufacture products incorporating the Company's proprietary semiconductor
packaging and interconnect technology (the "Technology Products") and to
develop, manufacture and market a line of powerful, modular computers (the
"Archistrat Computers"). The Company's fiscal year previously ended on March
31. However, the Company has changed its fiscal year from April 1 through
March 31 to January 1 through December 31, effective December 31, 1997. The
Company will file an annual report on Form 10-K with the Securities and
Exchange Commission with audited financial statements for the transition
period (April 1, 1997 through December 31, 1997).
This Report on Form 10-Q contains forward-looking statements. For this
purpose any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes", "anticipates", "plans",
"expects" and similar expressions are intended to identify forward-looking
statements. There are a number of important factors that could cause the
Company's actual results to differ materially from those indicated by such
forward-looking statements. These factors, include, without limitation,
delays in product development, potential claims and possible litigation
relating to the ownership of intellectual property, competitive pressures,
manufacturing risks, general economic conditions and the risk factors
detailed from time to time in the Company's periodic reports and
registration statements filed with the Securities and Exchange Commission.
Results of Operations - Quarter and Six Months Ended September 30, 1997 and
1996
Total net revenues increased approximately $266,000 or 33% to $1,083,955 for
the quarter ended September 30, 1997 compared to the same period of the
preceding year. For the six months ended September 30, 1997, net revenues
increased approximately $536,000 or 43% compared to the six months ended
September 30, 1996.
For the quarter and six months ended September 30, 1997, the Company
recognized revenue related to its agreement with the Defense Advanced
Research Projects Agency, which commenced in October 1996, of $441,470 and
$835,724, respectively. The Company recognizes revenue and is entitled to
receive payments based on the achievement of specific milestones set forth
in the agreement.
Net revenues from the sale of Archistrat Computers amounted to $392,485 and
$701,015 during the quarter and six months ended September 30, 1997,
<PAGE>
Page 10
respectively, compared to net revenues of $817,613 and $1,250,725 during the
same periods of the prior year, respectively. Revenues of approximately
$326,000 and $874,000 were recognized during the three and six months ended
September 30, 1996 in connection with a barter transaction with a software
developer. The Company will continue to actively market and sell the
workstation configuration of the Archistrat computer, primarily through its
own sales force, for animation, video, and high performance CAD/CAM
applications. In addition, in October 1997, the Company introduced a new
lower cost version workstation using the Company's proprietary architecture
and technology in a basic chassis.
Cost of sales related to the sale of Archistrat Computers decreased to
$435,138 from $1,398,674 during the quarter ended September 30, 1997
compared to the same period of the previous year, and decreased to $778,960
from $2,188,780 during the six months ended September 30, 1997 compared to
the same period of the previous year. The decreases relate to the lower
amount of product sales and a significant reduction in the amount of charges
recognized related to inventory write downs, scrap and rework during the
prior year.
Research and development (R&D) expenses decreased approximately 45% during
the quarter ended September 30, 1997 as compared to the quarter ended
September 30, 1996 and decreased 36% during the six months ended September
30, 1997 compared to the prior year. The reduction in R&D spending is
reflective of the Company's progress in moving from a development stage
enterprise to one seeking to commercialize its core technologies. The
Company believes that its level of R&D spending is appropriate to support
current operations and to continue to maintain efforts to enhance
development of VSPA, Compass Connectors, Compass PGA, and the Archistrat
Computers and related technologies. During the quarter and six months ended
September 30, 1997, research and development activities primarily included
continued testing and qualification of VSPA as well as the design and
development of high-speed manufacturing equipment for VSPA.
Selling, general and administrative (SG&A) expenses for the quarter and six
months ended September 30, 1997 decreased 37% and 48%, respectively, as
compared to the same periods of the prior year. The net decrease in SG&A
expenses for the quarterly periods is due principally to a reduction in work
force. The average number of full-time employees decreased from 121 for the
quarter ended September 30, 1996 to 62 for the quarter ended September 30,
1997. Employee compensation and benefit costs also substantially
contributed to the overall reduction in SG&A expenses for the six months
ended September 30, 1997 compared to the same period of the prior year. The
average number of full-time employees decreased from 133 to 60 for the six
months ended September 30, 1996 and 1997, respectively. In addition,
selling and marketing expenses decreased during this period as a result of
focusing on specific niche markets for the Company's Archistrat Computers as
well as utilizing independent manufacturing sales representatives to
<PAGE>
Page 11
supplement the Company's sales force regarding the sale of the Company's
technology products.
Interest expense in the amount of $907,317 was recognized during the
quarter ended June 30, 1997 related to the issuance of the subordinated
convertible debentures representing the beneficial conversion feature
associated with the debentures. The amount was measured at the date of
issuance of the subordinated convertible debentures as the difference
between the conversion price and the fair of the Company's common stock into
which the debentures are convertible, multiplied by the number of shares
into which the debentures are convertible. The accounting for this
transaction has no effect on cash or on total stockholders' equity.
During the quarter ended June 30, 1996, the Company determined that, due to
various events and changes in circumstances (including efforts to streamline
operations and to increase the use of strategic alliances to manufacture and
market the Company's products), certain long-lived assets were impaired. As
a result, in the quarter ended June 30, 1996, the Company recorded a charge
of approximately $1.5 million.
The Company anticipates that it will be dependent on third parties for the
manufacture and/or assembly of printed circuit boards, frame, exterior, base
fabrication and other subassemblies, as well as for the supply of various of
the components, incorporated into the Archistrat Computers, and for
performing the final assembly configuration, certain quality control testing
and delivery of such computers. Although the Company has an arrangement
with a contract manufacturer to manufacturer certain subassemblies and has
identified an alternative manufacturer for such components, there can be no
assurance that such manufacturers will dedicate sufficient production
capacity to satisfy the Company's requirements within scheduled delivery
times or at all.
Liquidity and Capital Resources
During April 1997, the Company completed a private placement of $4.8 million
of 4% subordinated convertible debentures and received net proceeds of
approximately $4.5 million. The debentures were convertible into shares of
common stock at the lower of $5.625 per share or 82% of the average closing
bid price of the Company's common stock for the five consecutive trading
days immediately preceding the date of conversion. During June and July
1997, all of the debentures were converted into an aggregate of 1,996,825
shares of the Company's common stock.
The Company's capital requirements in connection with its operations and
development activities have been and may continue to be significant. During
the remainder of the current year, the Company expects to continue its
development efforts related to certain of its Technology Products, complete
the construction of several high-speed production machines for its VSPA
<PAGE>
Page 12
product which are expected to be utilized within the Company to manufacture
product for direct sales and/or to be sold to licensees of VSPA, and
continue to transition its current modular workstations and server products
into higher volume production.
In October 1997, the Company announced that it had completed construction of
the first automated machine for the production of the VSPA product. In
addition, the Company also announced that it had received a prototype order
from a manufacturer of data communications circuits based in Taiwan. The
Company anticipates, based on its discussions with certain customers, that
it will commence the production and shipment of modest quantities of VSPA
semiconductor packages during the quarter ending December 31, 1997. The
Company anticipates that it will also realize royalty revenue during such
quarter related to its Technology Products from the arrangements announced
during the past year, including, but not limited to, license agreements with
LG Cable & Machinery. The Company also expects to continue to earn revenues
related to the cooperative development agreement entered into with the U.S.
Government during the prior year. However, there can be no assurance that
revenues from any or all of these sources will in fact be realized on the
timetable anticipated by the Company or that the Company will become
profitable in the foreseeable future.
The Company has been dependent upon the proceeds of sales of its securities
to fund its activities since inception. The Company expects that sales of
VSPA, licensing and royalty revenue related to its Technology Products,
increased shipments of Archistrat Computers and the related revenue, and
revenue associated with the cooperative development agreement, noted above
will provide additional resources to at least partially fund its activities
during the remainder of the current year.
Primarily through its cost reduction efforts, the Company has been able to
significantly decrease the amount of average monthly cash consumption. Cash
flows used by operating activities decreased $7.4 million from $12.7 million
during the six months ended September 30, 1996 to $5.3 million during six
months ended September 30, 1997.
The Company is dependent upon the success of the efforts discussed above to
expand its marketing activities in order to obtain additional orders for its
Technology Products and Archistrat Computers, to continue efforts that may
lead to the commercialization of additional products and technologies and to
finance other working capital requirements. The Company may need to seek
additional sources of funding during the current year in order to achieve
its goals.
<PAGE>
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Part II - Other Information
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
At the Annual Meeting of Shareholders held on August 12, 1997,
an amendment to the Company's Articles of Incorporation was approved
which allows the Company to issue up to 2,000,000 shares of
Preferred Stock. The Board of Directors may, without action by the
shareholders, designate and issue such Preferred Stock in one or
more series, and may designate the dividend rate, voting rights and
other rights, preferences and restrictions of each series, all
or any of which may be greater than the rights of holders of Common
Stock of the Company.
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to Vote of Security Holders
(a) The annual meeting of shareholders was held on August 12, 1997.
(b) The following directors were elected at the meeting to serve the
term noted:
Stanford W. Crane, Jr. Three year term
James T.A. Wooder Three year term
Claud L. Gingrich One year term
Rao R. Tummala Two year term
(c) The matters voted upon at the meeting and results of the voting
with respect to those matters were as follows:
1) Election of Directors: For Against
Stanford W. Crane, Jr. 7,681,119 87,442
James T.A. Wooder 7,726,344 42,217
Claud L. Gingrich 7,725,544 43,017
Rao R. Tummala 7,726,544 42,017
2) Amend the Company's
Amended and Restated
Articles of Incorpor-
ation to establish
a class of Preferred
Stock consisting of
2,000,000 shares:
Broker Held
For Against Abstained Non-Voted
4,623,314 156,055 34,022 2,955,170
<PAGE>
Page 14
3) Amend the Company's
Amended and Restated
Articles of Incorpor-
ation and By-Laws
to establish a class-
ified Board of Directors
consisting of three
classes serving staggered
terms, and to provide
for amended procedures
for changing the number
of directors, removing
directors, filling
vacancies on the Board
and other related matters:
Broker Held
For Against Abstained Non-Voted
4,607,578 171,074 34,739 2,955,170
4) Amend the Company's
Nonemployee Directors
Stock Option Plan:
For Against Abstained
7,626,490 111,147 30,924
5) Ratification of Price
Waterhouse LLP as the
Company's independent
auditors for 1998:
For Against Abstained
7,558,248 19,141 12,057
The foregoing matters are described in detail in the Registrant's definitive
proxy statement dated August 12, 1997, for the Annual Meeting of
Shareholders held on August 12, 1997.
Item 5. Other Information
In September 1997, the Company announced it had reached agreement
with Grand Traverse Stamping, a division of Alcoa Fujikura, Ltd.(a
joint venture between Alcoa and Fujikura) under which Grand Traverse
Stamping will supply interconnect pins for the Company's VSPA
semiconductor package. The Company also announced it had entered
into an agreement with Confederate Plastics, Inc. under which
Confederate Plastics will supply the molded frame made of liquid
crystal polymer for the VSPA semiconductor package.
<PAGE>
Page 15
In October 1997, the Company announced it had completed construction
of the first automated machine for the production of the VSPA
product. The Company also announced that it had received a
prototype order from Tamarack Microelectronics, Inc., a privately
owned-manufacturer of data communications circuits based in Taiwan.
In September 1997, William E.Ahearn, formerly Vice President of
Technology of the Company, was named Vice President and Chief
Scientist of the Company. In July 1997, Babar Hamirani resigned as
Senior Vice President of Systems Operations of the Company. In
November 1997, Robert Toda resigned as Vice President of Sales and
Marketing. The Company does not expect to fill that position at
this time.
In August 1997, the Company hired Melissa Crane, wife of Stanford
W. Crane, Jr., as Director of Strategic Business at an annual
salary of $100,000 per year. In September 1997, Ms. Crane was
granted an option to purchase 50,000 shares of Common Stock of the
Company at an exercise price of $6.13 per share. Such options
expire on September 19, 2007. Options to purchase 10,000 of these
shares of Common Stock are exercisable six months from the date of
grant and the remainder become exercisable in equal annual
installments on the first, second, third and fourth anniversaries of
grant. In October 1997, the Board of Directors approved the payment
of a bonus of $25,000 to Ms. Crane in connection with the
achievement of certain marketing objectives. In November 1997, the
Board of Directors elected Ms. Crane Vice President of Strategic
Business and authorized an increase in her annual salary to $125,000
per year.
Item 6. Exhibits and Reports on Form 8-K.
(a) See the Exhibit Index included immediately preceding the Exhibits
to this report, which is incorporated herein by reference.
(b) Reports on Form 8-K:
A current report on Form 8-K dated September 30, 1997 was filed on
October 6, 1997, reporting a change in fiscal year, an event
reported under Item 8. In addition, the Company also reported that
it had issued shares of Common Stock to a third-party for services
rendered. Such shares were issued pursuant to an exemption from
registration under Regulation S under the Securities Act of 1933;
such issuance was made solely to non-U.S. persons in an offshore
transaction and resale of such securities is restricted in the
manner provided in Regulation S. This transaction was an event
reported under Item 9.
<PAGE>
Page 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE PANDA PROJECT, INC.
Date: January 16, 1998
By: /s/ C. DARYL HOLLIS
---------------------------------------
C. Daryl Hollis, Chief Financial Officer
(On behalf of the Registrant and as
Principal Financial and Accounting
Officer)
<PAGE>
Page 17
EXHIBIT INDEX
Exhibit Description of Exhibit Page
- ------- ---------------------- -----
4.1 Amended and Restated Articles of
Incorporation of the Company,
as amended (filed as Exhibit 3.1
to the Company's Registration
Statement on Form S-3 filed with
the Securities and Exchange
Commission on November 3, 1997) *
3.2 Amended and Restated By-Laws of
the Company (filed as Exhibit 3.2
to the Company's Registration
Statement on Form S-3 filed with
the Securities and Exchange
Commission on November 3, 1997) *
27 Financial Data Schedule
99.1 Amended and Restated Nonemployee
Director Stock Option Plan #
- -----------------
* Incorporated herein by reference.
# Previously filed.
<PAGE>
[ARTICLE] 5
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] MAR-31-1998
[PERIOD-END] SEP-30-1997
[CASH] 2,178,214
[SECURITIES] 0
[RECEIVABLES] 619,887
[ALLOWANCES] (161,742)
[INVENTORY] 968,820
[CURRENT-ASSETS] 4,317,196
[PP&E] 5,573,735
[DEPRECIATION] (2,850,074)
[TOTAL-ASSETS] 7,310,826
[CURRENT-LIABILITIES] 3,090,860
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 121,798
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 7,310,826
[SALES] 1,786,739
[TOTAL-REVENUES] 1,786,739
[CGS] 778,960
[TOTAL-COSTS] 778,960
[OTHER-EXPENSES] 6,457,910
[LOSS-PROVISION] 50,826
[INTEREST-EXPENSE] 907,317
[INCOME-PRETAX] (6,231,792)
[INCOME-TAX] 0
[INCOME-CONTINUING] (6,231,792)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (6,231,792)
[EPS-PRIMARY] (.56)
[EPS-DILUTED] (.56)
