United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2000.
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.)
BOX 174 Mills Road
PURDYS, NEW YORK 10578
(Address of principal executive offices)
(561) 338-3933
(Registrant's telephone number)
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 59,102,835 shares as of November 4, 2000.
<PAGE>
THE PANDA PROJECT, INC.
Index
Page
Part I - Financial Information
Item 1 - Financial Statements (unaudited)
Condensed Balance Sheets September 30, 2000
and December 31, 1999
Condensed Statements of Operations - Nine
months ended September 30, 2000 and September 30, 1999
Condensed Statements of Cash Flows - Nine months
ended September 30, 2000 and September 30, 1999
Notes to Condensed Financial Statements -
September 30, 2000
Item 2 -Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 3 -Quantitative and Qualitative Disclosures About
Market Risk
Part II -Other Information
Item 1 -Legal Proceedings
Item 2 -Changes in Securities
Item 3 -Defaults Upon Senior Securities
Item 4 -Submission of Matters to Vote of Security Holders
Item 5 -Other Information
Item 6 -Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
<PAGE>
The Panda Project, Inc.
Condensed Balance Sheets
September 30, December 31,
2000 1999
------------- -------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 9,580 $ 180,388
Accounts receivable-trade 29,757 68,856
Inventory, net - 16,007
Other receivables 86,440 15,999
Prepaid expenses and other current
assets 0 85,249
------------- -------------
Total current assets 125,777 366,499
------------- -------------
Property and equipment, net - 442,401
Restricted cash 80,000 80,000
Other assets 0 84,934
Investment in Silicon Bandwidth, Inc. 600,000 -
------------- -------------
Total assets $ 805,777 $ 973,834
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 969,740 $ 1,242,775
Notes payable 2,395,000 3,575,000
Accrued expenses and other
current liabilities 1,566,225 1,602,512
------------- -------------
Total current liabilities 4,930,965 6,420,287
------------- -------------
Stockholders' Deficit:
Preferred stock, $.01 par value,
2,000,000 shares authorized;
no shares issued and outstanding
at September 30, 2000 and 528 shares
issued and outstanding at December 31, 1999 - 4,864,137
Common Stock, $.01 par value, 100,000,000
shares authorized: 59,102,835 shares
issued and outstanding at September 30,
2000. 50,000,000 shares authorized and
29,698,426 shares issued and outstanding
at December 31, 1999 591,028 296,986
Additional paid-in capital 83,073,314 77,751,972
Accumulated deficit (87,789,531) (88,359,548)
------------ ------------
Total stockholders' deficit (4,125,188) (5,446,453)
------------- -------------
Total liabilities and stockholders'
deficit $ 805,777 $ 973,834
============= =============
See Notes to Condensed Financial Statements.
<TABLE>
The Panda Project, Inc.
Condensed Statements of Operations (Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
Sept 30, Sept 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 0 $ 101 $ 52,024 $ 403,841
Licensing fees 125,000 250,000 125,000 750,000
Less returns 0 (3239) 0 (3239)
----------- ----------- ----------- -----------
Net revenues $125,000 $ 250,101 $ 177,024 $ 1,153,841
Costs and expenses:
Cost of sales 0 11,933 55,888 206,060
Research and
development 0 182,988 - 54,652
Selling, general
and administrative 228,399 648,127 1,625,973 3,372,071
Amortization of debt
issuance costs/
accrued penalties 255,192 1,246,000 609,192 2,695,500
Cost associated with
Asset impairments 0 167,223 0 167,223
----------- ----------- ----------- -----------
Total costs and
expenses 483,591 1,187,271 2,291,053 7,195,506
----------- ----------- ----------- -----------
Operating loss (358,591) (937,170) (2,114,029) (6,041,665)
Interest (expense) 0 (599) (62,553) (302,938)
Other income 0 105,287 5,274 111,059
Gain on sale of assets 0 - 2,441,249 -
----------- ----------- ----------- -----------
Net income (loss) $(358,591) $ (828,787) $ 269,941 $(6,175,176)
============ =========== =========== ===========
Dividends and amortization
of beneficial conversion
feature related to
convertible preferred
stock - - - (689,713)
============ =========== =========== ===========
Net income (loss) applicable
to common stock $ (358,591)$ (828,787) $ 269,941 (6,229,243)
============ =========== =========== ===========
Basic and diluted earnings
(loss) per common share $ (.01) $ (.03) $ .01 $ (.25)
=========== =========== =========== ===========
Weighted average shares
outstanding- Basic 59,102,835 29,683,980 54,086,097 24,582,521
=========== =========== =========== ===========
Weighted average shares
outstanding- Basic 59,102,835 29,683,980 54,086,097 24,582,521
=========== =========== =========== ===========
See Notes to Condensed Financial Statements.
</TABLE>
The Panda Project, Inc.
Condensed Statements of Cash Flows (Unaudited)
Nine Months Ended
Sept 30,
2000 1999
------------- -------------
Net cash used in operating activities (671,989) (1,925,453)
Cash flows from investing activities:
Additions to property and equipment - -
Dispositions of property and equipment - 80,200
------------- -------------
Net cash provided by (used in)
investing activities - 80,200
Cash flows from financing activities:
Proceeds from issuance of
convertible preferred stock - -
Proceeds from issuance of common stock - 915,173
Proceeds from issuance of notes payable 820,000 950,000
Repayment of notes payable - -
Payments of convertible preferred stock - -
issuance costs - -
------------- -------------
Net cash provided by financing
activities 820,000 1,865,175
------------- -------------
Net increase (decrease) in cash
and cash equivalents 148,011 19,922
------------- -------------
Cash and cash equivalents at
beginning of period 0 60,613
------------- -------------
Cash and cash equivalents at end
of period $ 9580 $ 80,535
============= =============
See Notes to Condensed Financial Statements.
<PAGE>
The Panda Project, Inc.
Notes to Condensed Financial Statements
September 30, 2000
1. Basis of Presentation
The accompanying condensed financial statements of The Panda Project,
Inc. ("Panda" or 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-KSB for the twelve months ended December 31, 1999. 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 Annual Report
on Form 10-KSB for the twelve months ended December 31, 1999.
2. Inventory
As of September 30, 2000, the company had no inventory as these assets
were sold to Silicon Bandwidth, Inc. ("SBI") on February 18, 2000 as
part of the Asset Purchase Agreement. Inventory as of December 31,
1999 is comprised of the Company's VSPA raw materials and finished
goods of $16,007.
3. Property and Equipment
As of September 30, 2000 the Company had no property and equipment, certain
fixed assets were sold to Silicon Bandwidth, Inc. on February 18, 2000.
The remaining property and equipment which was fully depreciated
was sold on July 1, 2000.
4. Notes Payable
As of February 18, 2000, the Helix loans in the aggregate principal
amount of $2,000,000 were transferred to SBI and the Helix warrants
were repriced to $.20 per share and the expiration date was extended
to February 18, 2005.
In January and February 2000, the Company entered into an agreement
with SBI pursuant to which SBI has loaned the Company an additional
$720,000, with borrowed amounts totaling $2,295,000. As part of the
Liberty settlement, SBI loaned the Company an additional $100,000 in
July bringing the total to $2,395,000. In connection with these loans, the
Company has granted to SBI a security interest in substantially all of the
assets of the Company pursuant to the Security Agreement. The loans bear
interest at a rate of 6% per annum and were due and payable on February 24,
2000. As of November 14, 2000, the notes in the aggregate of $2,395,000 have
not been repaid to SBI.
5. SERIES A CONVERTIBLE PREFERRED STOCK
On January 19, 2000, the remaining 528 shares of Series A Preferred
outstanding were converted into 20,262,681 shares of the Company's
common stock.
6. COMMON STOCK
On February 22, 2000, the Company issued an additional 5,246,727
shares of the Company's common stock related to the twelve month
anniversary date (August 15, 1999) of the August 1998 Private
Placement.
On February 22, 2000 the additional 3,750,000 share of the Company's
common stock were issued to Mr. Sarubbi pursuant an amendment dated
June 24, 1999 to the original settlement agreement between the Company
and Mr. Sarubbi dated December 11, 1998.
7. Earning Per Share
The Company's earnings per share is computed in accordance with FAS
No. 128 " Earnings Per Share". FAS 128 requires the presentation of
both basic and diluted earnings per share. As of June 30, 2000,
included in diluted earnings per share are 750,000 common stock
equivalents related to warrants. Due to losses from continuing
operations for the quarter ended June 30, 2000 and in 1999, the
effect of stock options and warrants is antidilutive. Accordingly,
in 1999 the Company's presentation of diluted earnings per share
is the same as that of basic earnings per share.
8. SBI Asset Purchase Agreement
On February 18, 2000 the Shareholders of Panda approved the Asset
Purchase Agreement which sold substantially all of Panda's operating
assets. All of the originally contemplated assets were transferred to
SBI except for those assets, the real property located in Florida,
that were levied by Mr. Sarubbi in January 2000 as part of the Writ of
Execution that was filed in Palm Beach County Court. On March 15,
2000, the Helix loans in the aggregate amount of $2,000,000 were
transferred to SBI. On March 11, 2000 the Stockholder's Agreement by
and between, Panda, SBI, VantagePoint Venture Partners LLC, Archimedes
Capital LLC and the Management Stockholder's was executed. Since the
closing of the transaction with SBI in February 2000, the purpose
of the Company changed from a technology manufacturing company to a technology
holding company with its first investment the ownership of SBI common shares.
As a result of the sale the Company has recorded a gain of $2,441,249 which is
included in the statement of operations as part of Gain on Sale of
Assets.
9. Commitments and Contingent Matters
On October 16, 1998, a complaint was filed against Panda in the United
States District Court for the Southern District of New York by
Promethean Investment Group, L.L.C. The complaint alleges breach of
contract by Panda for failing to proceed with a financing transaction
and seeks damages in an unspecified amount in excess of $270,000 or a
declaration that Panda is required to proceed with the financing
transaction. Panda has filed an answer to the complaint. At the
present time, the outcome of this litigation is both immeasurable and
undeterminable. A court date has been set for August 20, 2001. There can be
no assurance that Panda will be successful in defending this litigation.
On December 11, 1998, Panda and Joseph A. Sarubbi ("Sarubbi")
entered into a settlement agreement (the "Settlement Agreement")
relating to litigation in which Sarubbi has obtained a judgment
against Panda in the amount of $1,227,041. Sarubbi entered into a
consulting agreement with Panda in 1992. Sarubbi also later served as
a director and general manager of Panda. Under this consulting
arrangement, Sarubbi received 91,000 options to purchase shares of
Panda Common Stock. Sarubbi also served as a director of Panda in
1995 and 1996. In 1996, Sarubbi notified Panda of his desire to
exercise all of his options and to sell all of the Panda Common Stock
received upon the exercise of such options. A Florida district court
held Panda liable for certain losses Sarubbi alleged he incurred in
connection with the sale of his Panda Common Stock and for fees for
his previous service as director. The court granted a judgment of
$1,227,041 in favor of Sarubbi. Under the Settlement Agreement, Panda
has agreed to pay Sarubbi total consideration worth $1,000,000 of
which $240,000 has been paid in cash in December 1998 and the
remainder is to be satisfied upon the sale of shares of Panda's Common
Stock which have been delivered to Sarubbi by Panda. Panda has
registered 1,775,000 shares for Sarubbi pursuant to a registration
statement, declared effective on February 5, 1999. The parties have
agreed to petition the Florida Court of Appeals for the Fourth
District to dismiss the litigation within five business days after
Panda's obligations in the Settlement Agreement have been completed.
If such obligations are not completed, the judgment will remain in
effect. This settlement amount was recorded as a charge against
Company earnings for the quarter ended December 31, 1998. On April
14, 1999, Panda received a Notice of Default on the Settlement
Agreement. Sarubbi claimed that his inability to sell the stock that
he received in the settlement creates a breach under the Settlement
Agreement. Panda believes that it is in full compliance with the
Settlement Agreement and that no breach exists. On June 25, 1999, the
Settlement Agreement was amended to allow Panda to extend its time to
satisfy its obligations under the Settlement Agreement (the "Amended
Settlement Agreement"). Under the Amended Settlement Agreement, the
Company issued Sarubbi 2,100,000 shares of Panda Common Stock in the
second quarter of 1999 and such shares were recorded as an expense to
SG&A at the closing price of $0.156 totaling $327,600. Panda also
agreed to issue Sarubbi an additional 3,750,000 shares upon the
increase in the number of shares of Panda Common Stock authorized
under Panda's Articles of Incorporation. Panda will have 90 days to
register such shares of Panda Common Stock with the Securities and
Exchange Commission after the approval of the authorization of such
shares. $750,000 has been recorded in Panda's financial statements
for the additional 3,750,000 shares of Panda Common Stock which were
issued in February 2000. The Amended Settlement Agreement imposed a
deadline of September 1, 1999 for satisfaction of Panda's obligation
to register the 2,100,000 shares of Panda Common Stock with the
Securities and Exchange Commission. Panda has not satisfied its
obligations under the Amended Settlement Agreement and has received a
notice of default. Any further legal action taken by Sarubbi may be
material to the Company. On November 2, 1999, as stated in Panda's
Form 8-K dated November 9, 1999, Sarubbi alleged that the Company was
in default under the Letter Agreement dated June 24, 1999. Sarubbi
demanded payment within 10 days of approximately $505,000 in exchange
for the 2,100,000 shares previously issued as well as the 3,750,000
shares which would be issued upon shareholder approval. In February
2000, the 3,750,000 of the Company's common stock were issued. As a
result, Sarubbi may assert remedies that he feels are available to him
under Florida law which may include a writ of execution as well as
levying on real property of Panda. In January 2000, Mr. Sarubbi filed
a writ of execution on real property held in Florida. These assets
have not been transferred to SBI. On February 4, 2000, Mr. Sarubbi
filed a writ of garnishment on the company's funds held at SunTrust
Bank and he garnished $43,989.19. Efforts continue on to resolve the issues
with Mr. Sarubbi but at the present time, the outcome of this litigation is
both immeasurable and undeterminable.
On July 18, 1999, a complaint was filed against the Company in
Palm Beach County, Florida by Liberty Property Limited Partnership
("Liberty"). The complaint alleges breach of contract by the Company
for non-monetary default of its lease agreement for the premises at
951 Broken Sound Parkway, Boca Raton, Florida. Liberty seeks
acceleration of future rent payments in the amount of approximately
$809,000. In July 2000, the Company vacated the premises at 951 Broken Sound
Parkway NW, Boca Raton, Florida 33487 and settled with Liberty for $375,000 to
be paid in a combination of cash and the Company's common stock.
Panda from time to time is involved in disputes that may lead to
litigation in the future. Panda cannot determine the impact of those
potential lawsuits at the current time. The disputes are not expected
to be material.
10. Subsequent Events
On July 1, 2000, Panda vacated the premises of its executive offices at 951
Broken Sound Parkway NW, Boca Raton, FL 33487, the Company currently has no
principal location.
On July 31, 2000, the Company went to mediation regarding the Liberty
complaint, the final outcome was for Panda to pay $375,000 in a combination
of cash and the Company's common stock.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview:
Statements in this Report on Form 10-QSB, that are not statements of
historical fact, are to be regarded as forward-looking statements
which are based on information available to the Company as of the date
thereof and involve a number of risks and uncertainties. Among the
important factors that could cause actual results to differ materially
from those indicated by such forward-looking statements are delays in
product development, competitive pressures, general economic
conditions, risks of intellectual property and other litigation, and
the factors detailed below under "Certain Factors That May Affect
Future Results" or elsewhere herein or set forth from time to time in
the Company's periodic reports and registration statements filed with
the Securities and Exchange Commission.
The Panda Project, Inc. ("Panda" or the "Company") a Florida
Corporation, was incorporated in 1992. From that time until February, 2000,
Panda was a technology company engaged in the design, development,
manufacture, licensing and sale of interconnect solutions to generate greater
throughput from silicon to board to system.
In 1999, Panda focused all of its efforts on the VSPA and Compass
technology products collectively the ("Technology Products"). These
technologies are embodied in VSPA, a three-dimensional semiconductor
package, and the Compass Connector, a board-to-board interconnect
solution VSPA has received JEDEC JC-11 Committee designation and has
passed Mil Std. 883. The JEDEC JC-11 Committee is responsible for
setting standards for semiconductor packages. The Company obtained
JEDEC designation in 1997. The JEDEC designation for VSPA is PQFP-B.
Semiconductor manufacturers can obtain relevant mechanical data and
specifications regarding the VSPA product. Military standard 883D is
the reliability standard for electrical and mechanical testing
parameters which indicate the level of future durability and
performance for components. In order for VSPA to be commercially
viable, it was necessary to prove its performance by achieving
industry standard levels. In addition, in September 1998, the Compass
Connector received Bellcore approval. Bellcore approval is an
important series of reliability, mechanical and electrical tests for
the telecommunications industry. In order for an interconnect to be
used in commercial applications for the telecommunications industries,
most potential end users will require that the connector be Bellcore
approved.
Since November 1998, Panda elected to exit its Systems business
entirely, when Panda announced a streamlining of operations that
included a significant reduction of operations related to the
development of the Archistrat line of computers and the Rock City line
of desktop computers (collectively the "Systems") and any upgradable
mother board development related to the Systems, Panda has focused
solely on the Technology Products.
On February 18, 2000 the Shareholders of Panda approved the Sale of
Assets to SBI as well as all other items put before them as described
in the Company's 14A dated January 28, 2000. On February 28, 2000,
Panda filed an 8-K announcing that the asset sale to SBI was closed
subject to the Stockholder's Agreement being finalized and the Helix
Loan being transferred. The Asset Purchase Agreement contemplated the
sale of substantially all of Panda's operating assets. All of the
originally contemplated assets were transferred to SBI except for
those assets, the real property located in Florida, that were levied
by Mr. Sarubbi in January 2000 as part of the Writ of Execution that
was filed in Palm Beach County Court. On March 15, 2000, the Helix
loans in the aggregate amount of $2,000,000 were transferred to SBI.
On March 11, 2000 the Stockholder's Agreement by and between, Panda,
SBI, VantagePoint Venture Partners LLC, Archimedes Capital LLC and the
Management Stockholder's was executed. Since the closing of the
transaction with SBI in February 2000, the purpose of the Company
is now a technology holding company with its first investment the ownership of
SBI common shares.
Results of Operations -Quarter and Nine Months Ended September 30, 2000 and
1999
Revenues from product continued at zero during the quarter ended September 30,
2000 ("Third Quarter of 2000"). There was licensing revenue of $125,000 for a
net revenue of $125,000 as compared to approximately $250,000 for the quarter
ended September 30, 1999("Third Quarter of 1999"). Revenues for the nine
months ended September 30, 2000, decreased to approximately $177,000 as
compared to approximately $1,154,000 for the nine months ended September 30,
1999. The net revenue decrease for the quarter and nine months ended
September 30, 2000 was attributable the closing of the Asset Purchase
agreement with SBI and transforming the Company from a technology
manufacturing company to a technology holding company.
Cost of goods sold for the quarter and nine months ended September 30, 2000
and 1999 of approximately zero and $55,000 and $12,000 and $206,000,
respectively, is comprised of raw material purchases related to VSPA sales.
Research and development ("R&D") expenses decreased to zero for the
quarter and nine months ended September 30, 2000 as compared to approximately
$183,000 and $755,000 for the quarter and nine months ended September 30,
1999. The Company ceased all R&D effort upon closing of the Asset Purchase
agreement with SBI. R&D for the quarter and nine months ended September 30,
1999, was attributable to new custom VSPA designs for specific
customer applications and the refinement of the existing VSPA Flex
automation machines.
Consistent with management's focus on decreasing fixed costs,
selling, general and administrative ("SG&A") expenses decreased for
the quarter and nine months ended September 30, 2000 to approximately $228,000
and $1,626,000 compared to approximately $648,000 and $3,372,000 for the same
period in the prior year, respectively. The average number of employees
has decreased from 20 at September 30, 1999 to 1 part-time employee and 2
contract employees as of September 30, 2000.
Total debt issuance costs associated with short-term borrowings from
Helix, including the value of the warrants issued in connection with
such borrowings, charged to amortization expense during the quarter and nine
months ended September 30, 1999, amounted to $525,000. During the quarter and
nine months ended September 30, 2000 there was no such amortization expense as
the warrants were fully amortized.
The valuation of the warrants and related amortization expense
represents a non-cash transaction.
In the quarter and nine months ended September 30, 2000, $192,000 and
$1,408,000 of liquidating damages are recorded in accrued penalties related to
the 1998 common stock private placement. For the quarter and nine months
ended September 30, 1999 accrued penalties totaling $177,00 and $2,695,500
related to the Series A Preferred Convertible transaction and the 1998 common
stock private placement were accrued.
Interest expense accrued for the quarter and nine months ended September 30,
2000 were approximately $65,000 and $163,000. Approximately $1,000 and
$303,000, were accrued respectively, for the same period last year. The
accrued interest expense in 2000 represents the interest related to the SBI
and other potential Notes Payable.
Gain on sale of assets for the nine months ending September 30, 2000, includes
approximately $2,441,000 related to the closing of the SBI Asset Purchase
Agreement
YEAR 2000 COMPLIANCE
The Company experienced no disruptions in the operation of its
internal information systems or in the availability of its facilities
during its transition to year 2000. The Company is not aware that any
of its vendors experienced any disruptions during their transitions to
year 2000 or that there have been any year 2000 problems with its
material held for sale. The Company will continue to monitor the
transition to year 2000 and will act promptly to resolve any problems
that occur.
Liquidity and Capital Resources
- ---------------------------------
During February 1998, the Company completed a private placement of
$6.0 million of Series A Preferred Stock and received net proceeds of
approximately $5.8 million. The shares of preferred stock are
convertible into common stock at the lower of $3.50 per share (in
accordance with the revised terms effective July 2, 1998) or a
floating conversion price. Through September 30, 2000, 801 shares of
preferred stock were converted into an aggregate of 24,914,698 shares
of Panda Common Stock. As of March 31, 2000, there are no preferred
shares are outstanding.
The terms of the Series A Preferred Stock, as revised on July 2, 1998,
provide that upon the occurrence of certain Triggering Events, as
defined in the Panda Articles, the Company may be required to pay the
holders $100,000 per month until such time that the Triggering Event
has been remedied. Any requirement that the Company pay such amounts
could have a material adverse impact on the Company in the event the
Triggering Event causing such payment is not remedied on a timely
basis. On December 16, 1998, a triggering event occurred related to
the delisting of Panda Common Stock from the Nasdaq National Market to
the OTC Bulletin Board. On May 14, 1999, the Company entered into an
Exchange Agreement with the Series A Preferred shareholders to
exchange their preferred shares for shares of Panda Common Stock at an
exchange rate of $.261. In connection with this agreement, the
Company issued an additional 171 shares of Series A Preferred stock to
the Series A Preferred shareholders in payment for penalties owed to
such shareholders. The Series A Preferred shareholders agreed to
waive all penalties owed by the Company. Additionally, in
consideration of the Exchange Agreement, the Series A Preferred
shareholders agreed to enter into a voting agreement in favor of the
Company's sale of its intellectual property portfolio and certain
fixed assets related to the interconnect and semiconductor business.
On August 14, 1998, the Company completed the sale of 2,254,602
shares of the Company's Common Stock and warrants in a private
placement to accredited investors with gross proceeds of $3.675
million. Upon exercise of certain warrants, the investors may elect
to receive a reduced number of shares of common stock in lieu of
tendering the warrant exercise price in cash. The warrants have a
term of five years. In May 1999, the Company issued approximately
4,400,000 additional shares associated with the fill-up provision.
Additionally in February 2000, the Company issued approximately
5,200,000 additional shares of in accordance with the Fill-up
provisions.
During May, June and July 1998, the Company borrowed an aggregate
of $2 million from Helix PEI Inc. ("Helix"). The loans were secured
by the Company's intellectual property and were due August 7, 1998.
During August 1998, Helix agreed to extend the maturity date of all
the outstanding loans payable to February 15, 1999, from their
original due date in August 1998, in exchange for the issuance of a
warrant to purchase up to 2,000,000 shares of Panda Common Stock at an
exercise price equal to the fair market value of Panda Common Stock at
the date of issuance ($2.125). The loans bear interest at the Royal
Bank of Canada prime rate plus 2 percentage points per annum (9.40% at
June 30, 1999) payable monthly. The interest due under the loans in
1999 was paid with stock in lieu of cash. In May 1999, the Company
issued Helix 1,000,000 shares of the Company's common stock. In
February 2000, the exercise price of the warrant was reduced to $.20
and the maturity date was extended to February 2005.
On May 14, 1999, the Company, Helix and SBI entered into an
agreement whereas upon the closing of the acquisition of certain
assets of the Company by SBI, SBI will pay $1,000,000 to Helix. In
consideration of such payment, and the issuance of 1,000,000 shares of
Panda Common Stock to Helix, Helix released Panda from payment on all
accrued interest on the notes remaining unpaid as of the date of such
payment of $1,000,000. The remaining $1,000,000 and accrued interest
will be paid in eleven payments by SBI to Helix. On July 19, 1999,
the Company entered into the Asset Purchase Agreement with SBI,
subject to shareholder approval. On March 15, 2000 the Company, as
part of the asset sale to SBI, transferred the Helix loans to SBI.
The Company has been able to obtain short-term financing from SBI
through secured promissory notes totaling $2,395,000 through September,
2000. These funds have allowed the Company to fund certain monthly
obligations as well as certain payables. Additionally, the Company
has settled certain obligations through the issuance of Panda Common
Stock. Since the Company's current working capital is insufficient to
operate the Company, in the event that the Company cannot seek
additional financing, it will be forced to cease operations.
In June, July, August, October and November 1999, and January,
February and July 2000, the Company entered into agreements with SBI pursuant
to which SBI has loaned the Company $2,395,000. In connection with
the loans, the Company has granted to SBI a security interest in
substantially all of the assets of the Company pursuant to the
Security Agreement, dated October 1, 1999, by and between the Company
and SBI. The loan bears an interest rate of 6% per annum and is due
and payable on February 24, 2000, pursuant to Amendment 2 to the Asset
Purchase Agreement. As of November 14, 2000 the principal has not been
repaid to SBI.
The Company had entered into an agreement in July 1999 with SBI
to sell its intellectual property portfolio as well as certain fixed
assets related to its interconnect and semiconductor business. As
part of the sale, the Company has restructured its outstanding loans
with Helix that have been in default since February 15, 1999. SBI
assumed such Helix loans on March 15, 2000. Additionally, the Company
had entered into an agreement with the Series A Preferred shareholders
for the exchange and conversion of the outstanding preferred shares
into 20,262,681 common shares at a fixed price of $.261. The Company
has received a 10% ownership interest in SBI which will initially be
capitalized with $6,000,000. In January 2000, all the Series A
Preferred shares have been converted into shares of the Company's
common stock pursuant to the exchange agreement.
On February 18, 2000, the Shareholders of Panda approved the
transaction as well as all other items put before them as described in
the Company's 14A dated January 28, 2000. On February 28, 2000, Panda
filed an 8-K announcing that the asset sale to SBI was closed subject
to the Stockholder's Agreement being finalized and the Helix Loan
being transferred the Asset Purchase Agreement contemplated the sale
of substantially all of Panda's operating assets. All of the
originally contemplated assets were transferred to SBI except for
those assets, the real property located in Florida, that were levied
by Mr. Sarubbi in January 2000 as part of the Writ of Execution that
was filed in Palm Beach County Court. On March 15, 2000, the Helix
loans in the aggregate amount of $2,000,000 were transferred to SBI.
On March 13, 2000 the Stockholder's Agreement by and between, Panda,
SBI, VantagePoint Venture Partners LLC, Archimedes Capital LLC and the
Management Stockholders was executed. (see Exhibit 10.28)
On December 15, 1998, the Company reduced the exercise price of
certain common stock purchase warrants. If the warrant holders chose
to accelerate the expiration date of their warrants from July 11, 2001
to January 5, 1999. The exercise price was reduced from $11.00 to
$0.75 per share. In January 1999, warrants representing 553,333 shares
were exercised at this reduced price, and the Company received net
proceeds of $415,000 upon such exercise. In February 1999, the
Company received $1,000,000 from Samtec, Inc. which includes a
non-refundable up-front license fee related to VSPA and a purchase of
666,667 shares of Panda Common Stock. In September 1999, the Company
issued a license to AJU EXIM for its VSPA product. AJU EXIM paid a
non-refundable upfront licensing fee of $250,000.
For the quarter ended September 30, 2000 and 1999, the Company's
payables were segmented into the following categories: operational,
professional, Systems and Technology. Payables for the quarter ended
2000 of approximately $795,000 as compared to the quarter ended 1999
of approximately $1,400,000 increased or decreased as follows:
Operations 6% versus 15%, professional fees 93% versus 67%, Systems 0%
versus 11% and Technology 1% versus 7%, respectively. Payables
related to operations decreased slightly as a result of negotiated
settlement payments to vendors. Professional fees increased as a
result of increasing legal fees that were not current due to
liquidity. The decrease in technology payables is a result of vendors
requiring payments on a COD basis. Accounts receivables
related to the quarters ended September 30, 2000 and 1999 of approximately
$50,000 and $45,000, respectively, represent Technology related
receivables.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
HISTORY OF LOSSES AND EXPECTATION OF FUTURE LOSSES
RISK ASSOCIATED WITH OUR FINANCIAL POSITION.
WE ARE DEPENDENT UPON THE SUCCESS OF SBI AND SUFFICIENT CASH TO
MAINTAIN OPERATIONS.
We require approximately $20,000 monthly to fund the Company's current
operations. The Company is dependent upon receivables being paid in
order to fund operations. If the Company does not receive these funds, the
Company could be forced to cease operations and file bankruptcy.
WE HAVE BEEN UNABLE TO RESOLVE THE SARUBBI-PANDA LITIGATION
On December 11, 1998, Panda and Joseph A. Sarubbi ("Sarubbi")
entered into a settlement agreement (the "Settlement Agreement")
relating to litigation in which Sarubbi has obtained a judgment
against Panda in the amount of $1,227,041. Sarubbi entered into a
consulting agreement with Panda in 1992. Sarubbi also later served as
a director and general manager of Panda. Under this consulting
arrangement, Sarubbi received 91,000 options to purchase shares of
Panda Common Stock. Sarubbi also served as a director of Panda in 1995
and 1996. In 1996, Sarubbi notified Panda of his desire to exercise
all of his options and to sell all of the Panda Common Stock received
upon the exercise of such options. A Florida district court held
Panda liable for certain losses Sarubbi alleged he incurred in
connection with the sale of his Panda Common Stock and for fees for
his previous service as director. The court granted a judgment of
$1,227,041 in favor of Sarubbi. Under the Settlement Agreement, Panda
has agreed to pay Sarubbi total consideration worth $1,000,000 of
which $240,000 has been paid in cash in December 1998 and the
remainder is to be satisfied upon the sale of shares of Panda's Common
Stock which have been delivered to Sarubbi by Panda. Panda has
registered 1,775,000 shares for Sarubbi pursuant to a registration
statement, declared effective on February 5, 1999. The parties have
agreed to petition the Florida Court of Appeals for the Fourth
District to dismiss the litigation within five business days after
Panda's obligations in the Settlement Agreement have been completed.
If such obligations are not completed, the judgment will remain in
effect. This settlement amount was recorded as a charge against
Company earnings for the quarter ended December 31, 1998. On April
14, 1999, Panda received a Notice of Default on the Settlement
Agreement. Sarubbi claimed that his inability to sell the stock that
he received in the settlement creates a breach under the Settlement
Agreement. Panda believes that it is in full compliance with the
Settlement Agreement and that no breach exists. On June 25, 1999, the
Settlement Agreement was amended to allow Panda to extend its time to
satisfy its obligations under the Settlement Agreement (the "Amended
Settlement Agreement"). Under the Amended Settlement Agreement, the
Company issued Sarubbi 2,100,000 shares of Panda Common Stock in the
second quarter of 1999 and such shares were recorded as an expense to
S,G&A at the closing price of $0.156 totaling $327,600. Panda also
agreed to issue Sarubbi an additional 3,750,000 shares upon the
increase in the number of shares of Panda Common Stock authorized
under Panda's Articles of Incorporation. Panda will have 90 days to
register such shares of Panda Common Stock with the Securities and
Exchange Commission after the approval of the authorization of such
shares. $750,000 has been recorded in Panda's financial statements for
the additional 3,750,000 shares of Panda Common Stock. The Amended
Settlement Agreement imposed a deadline of September 1, 1999 for
satisfaction of Panda's obligation to register the 2,100,000 shares of
Panda Common Stock with the Securities and Exchange Commission. Panda
has not satisfied its obligations under the Amended Settlement
Agreement. On November 2,1999, as stated in form 8-K dated November
9,1999 Mr. Sarubbi alleged that the Company was in default of the
Letter Agreement dated June 24, 1999. Mr. Sarubbi demanded payment
within 10 days of approximately $505,000 in exchange for the 2,100,000
shares previously issued as well as, the 3,750,000 shares which would
be issued upon shareholder approval. In February 2000, the 3,750,000
shares of the Company's common stock ere issued. As a result, Mr.
Sarubbi may assert remedies that he feels are available to him under
Florida law which may include a writ of execution as well as levying
on real property of the Company. In January 2000, Mr. Sarubbi filed a
writ of execution on real property held in Florida. Those assets have
not been transferred to SBI. On February 4, 2000, Mr. Sarubbi filed a
writ of garnishment on the company's funds held at SunTrust Bank and
he garnished $43,989.19.
WE CANNOT REPAY OUTSTANDING INDEBTEDNESS:
In June, July, August, October and November 1999, and January, February and
July 2000, the Company entered into agreements with SBI pursuant
to which SBI has loaned the Company $2,395,000. In connection with
the loan, the Company has granted to SBI a security interest in
substantially all of the assets of the Company pursuant to the
Security Agreement, dated October 1, 1999, by and between the Company
and SBI. The loan bears an interest rate of 6% per annum and is due
and payable on February 24, 2000 pursuant to Amendment 2 to The Asset
Purchase Agreement. (See Exhibits 4.9-4.15) As of November 14, 2000 the
principle has not been repaid to SBI.
BUSINESS FACTORS THAT MAY ADVERSELY AFFECT OUR OPERATIONS AND THE
CLOSING OF THE SBI TRANSACTION.
In February 2000, we sold our intellectual property and certain fixed
assets to SBI. We are dependent upon SBI's successful management of
the commercialization of the products in a competitive industry, as
well as the management of the intellectual property portfolio acquired
on behalf of its stockholders, including but not limited to the Panda
Project Inc.
OTHER FACTORS THAT MAY ADVERSELY AFFECT OUR RESULTS
OTHER PENDING LITIGATION MATTERS
WE HAVE ONE OTHER PENDING LITIGATION MATTERS THAT IS NOT RESOLVED
On October 16, 1998, a complaint was filed against Panda in the United
States District Court for the Southern District of New York by
Promethean Investment Group, L.L.C. The complaint alleges breach of
contract by Panda for failing to proceed with a financing transaction
and seeks damages in an unspecified amount in excess of $270,000 or a
declaration that Panda is required to proceed with the financing
transaction. Panda has filed an answer to the complaint. At the
present time, the outcome of this litigation is both immeasurable and
undeterminable. There can be no assurance that Panda will be
successful in defending this litigation.
Panda from time to time is involved in disputes that may lead to
litigation in the future. Panda cannot determine the impact of those
potential lawsuits at the current time. The disputes are not expected
to be material.
OTHER FACTORS THAT MAY ADVERSELY AFFECT OUR COMMON STOCK
WE HAVE BEEN DELISTED FROM NASDAQ NATIONAL MARKET.
Panda was delisted from the NASDAQ National Market, effective December
16, 1998, due to its inability to meet the requirements necessary to
be listed on that exchange. On December 17, 1998, Panda began trading
on the NASD OTC Electronic Bulletin Board system or in what is
commonly referred to as the "pink sheets." As a result, an investor
may find it more difficult to dispose of Panda's securities or to
obtain accurate quotations as to the price of, such securities. In
addition, delisting may affect our ability to issue additional
securities or to secure additional financing.
WE HAVE EXISTING OBLIGATIONS TO SOME PANDA SECURITYHOLDERS.
Holders of Common Stock received in the August 1998 private placement
have the right to receive $1,850,000 through September 30, 2000, in
penalty payments from Panda due to unfulfilled obligations. Some of
the holders have agreed to waive this penalty.
GENERAL
Because of factors discussed above and other factors, past financial
performance should not be considered an indicator of future
performance. Investors should not use historical trends to anticipate
future results and should be aware that the Company's financial
condition may be subject to wide fluctuations in response to
quarter-to-quarter variations in operating results, general conditions
in the semiconductor packaging and computer industries, changes in
earnings estimates and recommendations by analysts and other events.
Item 3 -Quantitative and Qualitative Disclosures About Market Risk
The Company has market risk exposure related to notes payable.
Part II -Other Information
Item 1. Legal Proceedings
On October 16, 1998, a complaint was filed against Panda in the United
States District Court for the Southern District of New York by
Promethean Investment Group, L.L.C. The complaint alleges breach of
contract by Panda for failing to proceed with a financing transaction
and seeks damages in an unspecified amount in excess of $270,000 or a
declaration that Panda is required to proceed with the financing
transaction. Panda has filed an answer to the complaint. At the
present time, the outcome of this litigation is both immeasurable and
undeterminable. There can be no assurance that Panda will be
successful in defending this litigation.
On December 11, 1998, Panda and Joseph A. Sarubbi ("Sarubbi")
entered into a settlement agreement (the "Settlement Agreement")
relating to litigation in which Sarubbi has obtained a judgment
against Panda in the amount of $1,227,041. Sarubbi entered into a
consulting agreement with Panda in 1992. Sarubbi also later served as
a director and general manager of Panda. Under this consulting
arrangement, Sarubbi received 91,000 options to purchase shares of
Panda Common Stock. Sarubbi also served as a director of Panda in
1995 and 1996. In 1996, Sarubbi notified Panda of his desire to
exercise all of his options and to sell all of the Panda Common Stock
received upon the exercise of such options. A Florida district court
held Panda liable for certain losses Sarubbi alleged he incurred in
connection with the sale of his Panda Common Stock and for fees for
his previous service as director. The court granted a judgment of
$1,227,041 in favor of Sarubbi. Under the Settlement Agreement, Panda
has agreed to pay Sarubbi total consideration worth $1,000,000 of
which $240,000 has been paid in cash in December 1998 and the
remainder is to be satisfied upon the sale of shares of Panda's Common
Stock which have been delivered to Sarubbi by Panda. Panda has
registered 1,775,000 shares for Sarubbi pursuant to a registration
statement, declared effective on February 5, 1999. The parties have
agreed to petition the Florida Court of Appeals for the Fourth
District to dismiss the litigation within five business days after
Panda's obligations in the Settlement Agreement have been completed.
If such obligations are not completed, the judgment will remain in
effect. This settlement amount was recorded as a charge against
Company earnings for the quarter ended December 31, 1998. On April
14, 1999, Panda received a Notice of Default on the Settlement
Agreement. Sarubbi claimed that his inability to sell the stock that
he received in the settlement creates a breach under the Settlement
Agreement. Panda believes that it is in full compliance with the
Settlement Agreement and that no breach exists. On June 25, 1999, the
Settlement Agreement was amended to allow Panda to extend its time to
satisfy its obligations under the Settlement Agreement (the "Amended
Settlement Agreement"). Under the Amended Settlement Agreement, the
Company issued Sarubbi 2,100,000 shares of Panda Common Stock in the
second quarter of 1999 and such shares were recorded as an expense to
SG&A at the closing price of $0.156 totaling $327,600. Panda also
agreed to issue Sarubbi an additional 3,750,000 shares upon the
increase in the number of shares of Panda Common Stock authorized
under Panda's Articles of Incorporation. In February 2000, the
Company issued Mr. Sarubbi the 3,750,000 shares of the Company's
common stock pursuant to the Amended Settlement Agreement. Panda will
have 90 days to register such shares of Panda Common Stock with the
Securities and Exchange Commission after the approval of the
authorization of such shares. $750,000 has been recorded in Panda's
financial statements for the additional 3,750,000 shares of Panda
Common Stock. In the event that the increase in the number of
authorized shares of Panda Common Stock is not approved pursuant to
Proposal 2, Panda will be obligated to pay Sarubbi $1,502,041, which
is equal to the amount of the judgment entered in favor of Sarubbi
plus attorneys' fees, less the value of any cash or stock received by
Sarubbi pursuant to the Settlement Agreement or the Amended Settlement
Agreement. The Amended Settlement Agreement imposed a deadline of
September 1, 1999 for satisfaction of Panda's obligation to register
the 2,100,000 shares of Panda Common Stock with the Securities and
Exchange Commission. Panda has not satisfied its obligations under
the Amended Settlement Agreement and has received a notice of default.
Any further legal action taken by Sarubbi may be material to the
Company. On November 2, 1999, as stated in Panda's Form 8-K dated
November 9, 1999, Sarubbi alleged that the Company was in default
under the Letter Agreement dated June 24, 1999. Sarubbi demanded
payment within 10 days of approximately $505,000 in exchange for the
2,100,000 shares previously issued as well as the 3,750,000 shares
which would be issued upon shareholder approval. As a result, Sarubbi
may assert remedies that he feels are available to him under Florida
law which may include a writ of execution as well as levying on real
property of Panda held in Florida. In January 2000, Mr. Sarubbi filed
a writ of execution on real property held in Florida. Those assets
have not been transferred to SBI. On February 4, 2000, Mr. Sarubbi
filed a writ of garnishment on the company's funds held at SunTrust
Bank and he garnished $43,989.19.
On July 18, 1999, a complaint was filed against the Company in
Palm Beach County, Florida by Liberty Property Limited Partnership
("Liberty"). The complaint alleges breach of contract by the Company
for non-monetary default of its lease agreement for the premises at
951 Broken Sound Parkway, Boca Raton, Florida. Liberty seeks
acceleration of future rent payments in the amount of approximately
$809,000. In July 2000, the Company vacated the premises at 951 Broken Sound
Parkway NW, Boca Raton, Florida 33487 and settled with Liberty for $375,000 to
be paid in a combination of cash and the Company's common stock.
Panda from time to time is involved in disputes that may lead to
litigation in the future. Panda cannot determine the impact of those
potential lawsuits at the current time.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
The Company has outstanding loans from SBI in the aggregate
principal amount of $2,395,000. In connection with these loans, the
Company has granted to SBI a security interest in substantially all of
the assets of the Company pursuant to the Security Agreement. The
loans bear interest at a rate of 6% per annum and were due and payable
on February 24, 2000. As of November 14, 2000, the notes in the aggregate
of $2,295,000 have not been repaid to SBI.
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
Not Applicable
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:
The Company has filed the no reports on Form 8-K `since
July 1, 2000:
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: November 14, 2000 By: /s/ JOHN FRIEDLINE
-------------------------------
John Friedline
Chief Financial Officer
(On behalf of the Registrant and
as Principal Financial and
Accounting Officer)
EXHIBIT INDEX
Exhibit Description of Exhibit
- --------- ----------------------
2.1 Letter of Intent by Silicon Bandwidth, Inc. dated May 18,
1999. (Incorporated herein by reference to exhibit 2.1 to the
Company's 8-K filed on May 18, 1999).
2.2 Voting Agreement. (Incorporated herein by reference to exhibit
2.2 to the Company's 8-K filed on May 18, 1999).
2.3 Agreement between Helix (PEI), Inc., The Panda Project, Inc.
and Silicon Bandwidth, Inc. (Incorporated herein by reference to
exhibit 2.3 to the Company's 8-K filed on May 18, 1999).
2.4 The Exchange Agreement between Panda Project inc. and the
Convertible Preferred A Holders. (Incorporated herein by
reference to exhibit 2.4 to the Company's 8-K filed on May 18,
1999).
3.1 Amended and Restated Articles of Incorporation of the
Company, as amended (incorporated herein by reference to
Exhibit 3.1 to the Company's Registration Statement on Form
S-3 filed November 3, 1997 (File No. 333-39287) (the "Form
S-3, File No. 333-39287")).
3.2 Amended and Restated By-Laws of the Company (incorporated
herein by reference to Exhibit 3.2 to the Form S-3, File No.
333-39287).
3.3 Fourth Articles of Amendment of Amended Restated Articles of
Incorporation (incorporated herein by reference to Exhibit
4.1 to the Company's Current Report on Form 8-K filed
February 23, 1998).
3.4 Fifth Articles of Amendment of Amended Restated Articles of
Incorporation (incorporated herein by reference to Exhibit 3.1 to
the Company's Quarterly Report of Form 10-Q for the period ended
March 31, 1998).
3.5 Sixth Articles of Amendment of Amended Restated Articles of
Incorporation (incorporated herein by reference to Exhibit 3.2 to
the Company's amended Quarterly Report of Form 10-Q for the
period ended March 31, 1998 filed July 2, 1998).
3.6 Seventh Articles of Amendment of Amended Restated Articles of
Incorporation (incorporated herein by reference to Exhibit 3.5 to
the Registrant's Quarterly Report of Form 10-Q for the period
ended June 30, 1998).
4.1 Warrant Agreement dated May 16, 1994 between the Company and
Whale Securities Co., L.P. (incorporated herein by reference
to Exhibit 4.4 to Amendment No. 1 to the Company's
Registration Statement on Form SB-2 (File No. 33-76694-A)
(the "Form SB-2")).
4.2 Form of Warrant issued in Private Placement Financing
(incorporated herein by reference to Exhibit 99.3, filed as
part of the Company's Registration Statement on Form S-3
(File No. 333-14931) (the "Form S-3, File No. 333-14931")).
4.3 Form of SRP Warrant (incorporated herein by reference to
Exhibit 99.4, filed as part of the Form S-3, File No.
333-14931).
4.4 Form of 4% Subordinated Convertible Debentures of the Company
(incorporated herein by reference to Exhibit 4.1, filed as part
of the Registrant's Form 8-K filed April 21, 1997).
4.5 Form of Common Stock Purchase Warrant Issued to Dusseldorf
Securities LTD (incorporated herein by reference to Exhibit
4.2, filed as part of the Registrant's Form 8-K filed April
21, 1997).
4.6 Form of Common Stock Purchase Warrant (incorporated herein
by reference to Exhibit 99.2, filed as part of the
Registrants Form 8-K filed February 11, 1998).
4.7 Form of Common Stock Purchase Securities Agreement
(incorporated herein by reference to Exhibit 10.1 as part of the
Company's quarterly report on Form 10-Q for the quarter ended
June 30, 1998).
4.8 Form of Common Stock Purchase Warrant (incorporated herein by
reference to Exhibit 4.1 as part of the Company's quarterly
report on Form 10-Q for the quarter ended June 30, 1998).
4.9 Promissory Note dated June 11, 1999 by and between The
Panda Project, Inc. (the "Company") and Silicon Bandwidth,
Inc. ("SBI"). (incorporated herein by reference to Exhibit 10.1
to the Company's 8-K filed on June 18, 1999).
4.10 Promissory Note dated July 15, 1999 by and between The
Panda Project, Inc. (the "Company") and Silicon Bandwidth,
Inc. ("SBI"). (incorporated herein by reference to Exhibit 2.1
to the Company's 8-K filed on August 11, 1999.
4.11 Promissory Note dated August 17, 1999 by and between The
Panda Project, Inc. (the "Company") and Silcon Bandwidth,
Inc. ("SBI") (incorporated herein by reference to Exhibit 4.11
as part of the Registrant's Quarterly Report on Form 10-Q filed
for the quarter ended September 30, 1999).
4.12 Promissory Note dated October 1, 1999 by and between The
Panda Project, Inc. (the "Company") and Silcon Bandwidth,
Inc. ("SBI") (incorporated herein by reference to Exhibit 4.12
as part of the Registrant's Quarterly Report on Form 8-K
dated October 28, 1999).
4.13 Promissory Note dated November 29, 1999 by and between The
Panda Project, Inc. (the "Company") and Silcon Bandwidth,
Inc. ("SBI"). (incorporated herein by reference to Exhibit 4.13
as part of the Registrant's Annual Report on Form 10-KSB for
the year ended December 31, 1999)
4.14 Promissory Note dated January 10, 2000 by and between The
Panda Project, Inc. (the "Company") and Silcon Bandwidth,
Inc. ("SBI") (incorporated herein by reference to Exhibit 4.14
as part of the Registrant's Annual Report on Form 10-KSB for the
year ended December 31, 1999)
4.15 Promissory Note dated February 8, 2000 by and between The
Panda Project, Inc. (the "Company") and Silcon Bandwidth,
Inc. ("SBI") (incorporated herein by reference to Exhibit 4.15
as part of the Registrant's Annual Report on Form 10-KSB for the
year ended December 31, 1999)
10.1 Amended and Restated Employment Agreement between the
Company and Stanford W. Crane, Jr., dated February 22, 1994
(incorporated herein by reference to Exhibit 10.1 filed as
part of the Form SB-2).@
10.2 1993 Performance Incentive Plan, dated December 29, 1993
(incorporated herein by reference to Exhibit 10.6 filed as
part of the Form SB-2).@
10.3 Amended and Restated Nonemployee Director Stock Option
Plan (incorporated herein by reference to Exhibit 99.1
filed as part of the Registrant's Quarterly Report on Form
10-Q filed for the quarter ended September 30, 1997).@
10.4 1995 Employee Stock Incentive Plan, dated November 2, 1995
(incorporated herein by reference to Exhibit 4.4 filed as
part of the Company's Registration Statement on Form S-8
filed with the Securities and Exchange Commission on
November 7, 1995 (Registration No. 33-99058)).@
10.5(a)Lease Agreement between the Company and Fairfax Boca '92
L.P., dated March 2, 1994 (incorporated herein by
reference to Exhibit 10.9(a) filed as part of the Form
SB-2).
10.5(b) Amendment dated April 1, 1995, to Lease Agreement dated
March 2, 1994, between the Company and Fairfax Boca '92,
L.P. (incorporated herein by reference to Exhibit 10.5(b)
filed as part of the Registrant's Form 10-K for the year
ended March 31, 1996).
10.5(c) Amendment dated as of July 1, 1995, to Lease Agreement dated
March 2, 1994, between the Company and Fairfax Boca '92, L.P.
(incorporated herein by reference to Exhibit 10.98 filed as
part of the Registrant's Form 10-KSB for the year ended March
31, 1995 (Commission File No. 0-24030)).
10.5(d) Lease Agreement dated October 24, 1995, between the Company
and Fairfax Boca '92, L.P. (incorporated herein by reference
to Exhibit 10.5(d) filed as part of the Registrant's Annual
Report on Form 10-K for the year ended March 31, 1996 filed on
June 27, 1996).
10.5(e) Fourth Amendment dated as of November 27, 1996, to Lease
Agreement dated October 24, 1995, between the Company and
Fairfax Boca '92, L.P. (incorporated herein by reference to
Exhibit 10.5(e) filed as part of the Registrant's Annual
Report on Form 10-K for the year ended March 31, 1997).
10.5(f) Fifth Amendment dated as of March 13, 1997, to Lease Agreement
dated October 24, 1995, between the Company and Fairfax Boca
'92, L.P. (incorporated herein by reference to Exhibit 10.5(f)
filed as part of the Registrant's Annual Report on Form 10-K
for the year ended March 31, 1997).
10.6 Form of Indemnification Agreement between the Company and its
directors, dated December 29, 1993 (incorporated herein by
reference to Exhibit 10.10 filed as part of the Form SB-2).
10.7 Offshore Securities Subscription Agreement dated April 2, 1997
(incorporated herein by reference to Exhibit 99.1, filed as
part of the Registrant's Form 8-K filed April 21, 1997).
10.8 License Agreement, dated as of August 17, 1996, among Stanford
W. Crane, Jr., the Company and Sun Precision Works, Pvt. Ltd.
(incorporated herein by reference to Exhibit 99.5 filed as
part of the Form S-3, File No. 333-14931).
10.9 Registration Rights Agreement dated February 11, 1998
(incorporated herein by reference to Exhibit 99.2, filed as
part of the Registrant's Form 8-K filed February 11, 1998).
10.10 Warrant dated September 10, 1996 issued by the Company to
Mallory Factor (incorporated herein by reference to Exhibit
99.7 filed as part of the Form S-3, File No. 333-14931).
10.11 License Agreement, dated as of August 18, 1996, between the
Company and Pantronix Corporation (incorporated herein by
reference to Exhibit 99.8 filed as part of the Form S-3, File
No. 333-14931).
10.12 License Agreement, dated as of September 30, 1996, among
Stanford W. Crane, Jr., the Company and LG Cable & Machinery
Ltd. (incorporated herein by reference to Exhibit 99.9 filed
as part of the Form S-3, File No. 333-14931).
10.13 Registration Rights Agreement, dated as of July, 1996, among
the Company and the Purchasers named therein (incorporated
herein by reference to Exhibit 10.1 filed as part of the
Registrant's Quarterly Report on Form 10-Q filed for the
quarter ended June 30, 1996).
10.14 License Agreement dated January 19, 1996 between the Company
and Stanford W. Crane, Jr. (incorporated herein by reference
to Exhibit 10.1 filed as part of the Registrant's Quarterly
Report on Form 10-Q filed on February 14, 1996).
10.15 Agreement dated March 25, 1996, between the Company and
Parametric Technology Corporation. (incorporated herein by
reference to Exhibit 10.15 filed as part of the Registrant's
Annual Report on Form 10-K filed for the fiscal year ended
March 31, 1997).
10.16 License Agreement dated June 7, 1996 among the Company, AMP
Incorporated, The Whitaker Corporation and Connectware Inc.
(incorporated herein by reference to Exhibit 10.16 filed as
part of the Registrant's Annual Report on Form 10-K filed for
the fiscal year ended March 31, 1997).
10.17 Cooperative Agreement, dated October 22, 1996, between the
Company and the United States of America, U.S. Air Force, Air
Force Material Command (incorporated herein by reference to
Exhibit 99.10 filed as part of the Form S-3).
10.18 Reseller Agreement, dated November 1996, between the Company
and Siemens Nixdorf Information Systems, Inc. (incorporated
herein by reference to Exhibit 99.11 filed as part of the Form
S-3).
10.19 License Agreement, executed as of July 15, 1997, between the
Company and LG Cable & Machinery Ltd. (incorporated herein by
reference to Exhibit 10.1 filed as part of the Registrant's
Quarterly Report on Form 10-Q filed for the quarter ended June
30, 1997).
10.20 Standard Industrial Lease Agreement, dated as of July 16,
1997, between the Company and IBG Huntwood Associates
(incorporated herein by reference to Exhibit 10.2 filed as
part of the Registrant's Quarterly Report on Form 10-Q filed
for the quarter ended June 30, 1997).
10.21 Secured Promissory Note dated December 19, 1997 issued to
Helix (PEI) Inc. (incorporated herein by reference to Exhibit
10.1, filed as part of the Registrant's Form 8-K filed January
14, 1998).
10.22 Secured Promissory Note dated January 12, 1998 issued to Helix
(PEI) Inc. (incorporated herein by reference to Exhibit 10.1,
filed as part of the Registrant's Form 8-K filed January 14,
1998).
10.23 Subscription Agreement dated February 11, 1998 with purchasers
of Series A Preferred (incorporated herein by reference to
Exhibit 99.1, filed as part of the Registrant's Form 8-K filed
February 11, 1998).
10.24 Secured Promissory note dated May 28, 1998 issued to Helix
(incorporated herein by reference to Exhibit 10.1 filed as
part of the Registrant's quarterly report on amended Form
10-Q/A for the quarter ended June 30, 1998).
10.25 Registration Rights Agreement, dated as of February 6, 1998
(incorporated herein by reference to Exhibit 99.2 to the
Company's 8-K filed on February 23, 1998).
10.26 Secured Promissory note dated June 28, 1998 issued to Helix
(incorporated herein by reference to Exhibit 10.2 filed as
part of the Registrant's quarterly report on amended Form 10-
Q/A for the quarter ended June 30, 1998).
10.27 Secured Promissory note dated July 17, 1998 issued to Helix
(incorporated herein by reference filed as part of the
Company's 8-K filed on July 30, 1999.)
10.28 Stockholders Agreement dated February 18, 2000 by and among he
Panda Project, Inc., Silicon Bandwidth, Inc., Vantage Point
Venture Partners 1996 L.P., Archimedes Capital LLC and the
Management stockholders. (incorporated herein by reference to
Exhibit 10.28 as part of the Registrant's Annual Report on
Form 10-KSB for the year ended December 31, 1999)
21 Subsidiaries of the Company.
27 Financial Data Schedule.
________________
@ -Management contracts and compensatory plans and arrangements
<TABLE>
<S> <C>
[ARTICLE] 5
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-END] Sep-30-2000
[CASH] 9580
[SECURITIES] 0
[RECEIVABLES] 116,197
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 125,777
[PP&E] 0
[DEPRECIATION] 34,463
[TOTAL-ASSETS] 805,777
[CURRENT-LIABILITIES] 4,930,965
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 591,028
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 805,777
[SALES] 52,024
[TOTAL-REVENUES] 177,024
[CGS] 55,888
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 2,114,029
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 62,553
[INCOME-PRETAX] 269,941
[INCOME-TAX] 0
[INCOME-CONTINUING] 269,941
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 269,941
[EPS-BASIC] .01
[EPS-DILUTED] .01
</TABLE>
