SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

     [X]  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE  SECURITIES
             EXCHANGE ACT OF 1934

                For the quarterly period ended December 29, 1997

                                                   OR

     [ ]  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(D) OF THE  SECURITIES
             EXCHANGE ACT OF 1934

                                     Commission file number: 0-27016

                                          ROSS Technology, Inc.
                         (Exact Name of Registrant as Specified in Its Charter)

            Delaware                                             74-2507960
(State or Other Jurisdiction of                            (I.R.S. Employer
 Incorporation or Organization)                             Identification No.)

                                    5316 Highway 290 West, Suite 500
                                        Austin, Texas 78735-8930
                                             (512) 436-2000
          (Address and Telephone Number of Principal Executive Offices)


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.

                                            [X] Yes   [ ] No


Number of shares  outstanding  of each of the  issuer's  classes of common stock
$.001 par value, as of January 1, 1998: 23,474,846 shares.




                                       

<PAGE>
                                       2






                              ROSS TECHNOLOGY, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                      THREE MONTHS ENDED DECEMBER 29, 1997

                                      INDEX
<TABLE>
<CAPTION>


                                                                                                         Page
<S>                                                                                                       <C>
Title Page .............................................................................................. 1

Index ................................................................................................... 2

PART I - FINANCIAL INFORMATION

   ITEM 1.  Financial Statements

            Condensed Consolidated Balance Sheets - December 29,
            1997, and March 31, 1997 .................................................................... 3

            Condensed Consolidated Statements of Operations for the
            Three and Nine Months Ended December 29, 1997, and December 30, 1996......................... 4

            Condensed Consolidated Statements of Cash Flows for the
            Nine Months Ended December 29, 1997, and December 30, 1996................................... 5

            Notes to Condensed Consolidated Financial Statements ........................................ 6

   ITEM 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations ......................................................... 8

PART II - OTHER INFORMATION

   ITEM 1.       Legal Proceedings ......................................................................17

   ITEM 2.       Changes in Securities ................................................................. 18

   ITEM 3.       Defaults Upon Senior Securities  ...................................................... 18

   ITEM 4.       Submission of Matters to a Vote of Security-Holders ....................................18

   ITEM 5.       Other Information ..................................................................... 18

   ITEM 6.       Exhibits and Reports on Form 8-K ...................................................... 19

SIGNATURES  ............................................................................................ 20
</TABLE>





<PAGE>
                                       3




PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

                              ROSS TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                 December 29,  March 31,
                                                                                    1997          1997
                                                                                 ------------  ---------
<S>                                                                              <C>           <C>
ASSETS
Current assets
  Cash and cash equivalents .................................................    $     395     $   2,811
  Trade accounts receivable, net allowance of $1,820 and $1,555, respectively        6,695        11,297
  Receivable from Fujitsu ...................................................        6,781         3,320
  Inventory .................................................................       15,150        16,308
  Prepaid expenses and other assets .........................................        2,631         3,331
                                                                                 ---------     ---------

          Total current assets ..............................................       31,652        37,067

Property and equipment, net .................................................       16,426        17,752
                                                                                 ---------     ---------

Total assets ................................................................    $  48,078     $  54,819
                                                                                 =========     =========


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable ....................................................    $   8,434     $  19,194
  Accrued liabilities .......................................................        4,145         8,307
  Payable to Fujitsu ........................................................        4,020         4,043
  Notes payable .............................................................       10,000        43,500
                                                                                 ---------     ---------

          Total current liabilities .........................................       26,599        75,044

Stockholders' equity:
  Preferred stock ...........................................................       49,508          --
  Common stock ..............................................................           23            23
  Additional paid-in capital ................................................       82,575        82,564
  Accumulated deficit .......................................................     (109,376)     (101,561)
                                                                                 ---------     ---------

                                                                                    22,730       (18,974)

Less treasury stock .........................................................       (1,251)       (1,251)
                                                                                 ---------     ---------

          Total stockholders' equity ........................................       21,479       (20,225)
                                                                                 ---------     ---------
Total liabilities and stockholders' equity....................................   $  48,078     $  54,819
                                                                                 =========     =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.



                                       

<PAGE>
                                       4



                              ROSS TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (Unaudited)

<TABLE>
<CAPTION>



                                                   Three       Three           Nine         Nine
                                                   Months      Months         Months       Months
                                                   Ended       Ended          Ended        Ended
                                                 December 29,  December 30, December 29,  December 30,
                                                    1997         1996         1997           1996
                                                   ------      ------         ------       ------
<S>                                               <C>          <C>          <C>          <C>     
Net sales ...................................     $ 14,269     $ 19,440     $ 37,554     $ 71,549
Cost of sales ...............................        8,679       52,175       29,917       83,001
                                                  --------     --------     --------     --------

  Gross profit (loss) .......................       5,590      (32,735)        7,637      (11,452)

Operating expenses:
  Research and development, net .............        1,490        6,938        2,884       20,427
  Selling, general and administrative .......        3,633       12,040       10,768       23,014
  Amortization of goodwill ..................         --            272         --            816

      Total operating expenses ..............        5,123       19,250       13,652       44,257

Income (loss) from operations .........               467       (51,985)      (6,015)     (55,709)

Interest expense,net.........................        (216)         (622)      (1,800)        (515)
                                                  --------     --------     --------     --------


      Income (loss) before income taxes .....          251      (52,607)      (7,815)     (56,224)
Income tax (benefit) ........................         --        (17,364)        --        (18,630)
                                                  --------     --------     --------     --------


      Net income (loss) .....................     $    251     $(35,243)    $ (7,815)    $(37,594)
                                                  ========     ========     ========     ========


Net income (loss) applicable to
      common shareholders ...................     $    251     $(35,243)    $ (7,815)    $(37,594)
                                                  ========     ========     ========     ========

Net income (loss) per share:
      Basic .................................     $    .01     $  (1.51)    $  (0.33)   $   (1.62)
                                                  ========     ========     ========     ========
      Diluted ...............................     $    .01     $  (1.51)    $  (0.33)   $   (1.62)
                                                  ========     ========     ========     ========

Weighted average common shares outstanding:

      Basic .................................       23,471       23,389       23,456       23,262
                                                  ========     ========     ========     ========
      Diluted ...............................       43,582       23,389       23,456       23,262
                                                  ========     ========     ========     ========
</TABLE>



     See accompanying notes to condensed consolidated financial statements.




                                       

<PAGE>
                                       5




                              ROSS TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                  Nine Months    Nine Months
                                                                                     Ended          Ended
                                                                                  December 29,   December 30,
                                                                                       1997          1996
                                                                                  -----------    -----------   
<S>                                                                                 <C>          <C>   
Cash flows from operating activities:
  Net (loss) ..................................................................     $ (7,815)    $(37,594)
  Adjustments to reconcile net (loss) to
    cash used in operating activities:
    Depreciation and amortization .............................................        4,291        4,652
    Change in assets and liabilities:
      Trade accounts receivable ...............................................        4,602       (3,027)
      Receivable from Fujitsu .................................................       (3,461)       2,753
      Inventory ...............................................................        1,158       13,968
      Deferred tax asset ......................................................           --      (16,832)
      Prepaid expenses ........................................................        1,352       (6,513)
      Trade accounts payable ..................................................      (10,760)      10,940
      Payable to Fujitsu ......................................................          (23)     (13,670)
      Accrued liabilities .....................................................       (4,162)        (711)
                                                                                    --------     --------
        Net cash used in operating activities .................................      (14,818)     (46,034)
                                                                                    --------     --------

Cash flows from investing activities:
  Capital expenditures ........................................................       (3,617)      (3,658)
                                                                                    --------     --------

Cash flows from financing activities:
  Proceeds from issuance of common stock ......................................           11          136
  Proceeds from issuance of Series B preferred stock, net .....................       49,508           --
  Proceeds from borrowings on notes payable ...................................      (33,500)      31,772
                                                                                     -------     --------

      Net cash provided by financing activities ...............................       16,019       31,908
                                                                                    --------     --------

      Net decrease in cash and cash equivalents ...............................       (2,416)     (17,784)

Cash and cash equivalents at beginning of period ..............................        2,811       17,941
                                                                                    --------     --------

Cash and cash equivalents at end of period ....................................     $    395     $    157
                                                                                    ========     ========
</TABLE>



         See accompanying notes to condensed consolidated financial statements 




                                       

<PAGE>
                                       6



                              ROSS TECHNOLOGY, INC.
                                 AND SUBSIDIARY

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) FINANCIAL STATEMENT PRESENTATION

         The financial  statements of ROSS Technology,  Inc. and subsidiary (the
"Company")  included  herein have been prepared  without  audit  pursuant to the
rules and regulations of the Securities and Exchange Commission (the "SEC") and,
in  the  opinion  of  management,   reflect  all  adjustments  necessary,   such
adjustments  being of a normal recurring nature, to present fairly the financial
condition  and the  results of  operations  for such  interim  periods.  Certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance with generally accepted  accounting  principles have been
condensed or omitted pursuant to such rules and regulations; however, management
believes that the disclosures are adequate to make the information presented not
misleading.  It  is  suggested  that  these  financial  statements  be  read  in
conjunction with the audited financial  statements and notes thereto included in
the  Company's  filing with the SEC on Form 10-K for the fiscal year ended March
31, 1997. The results for interim periods are not necessarily  indicative of the
results for the respective fiscal years.

(2)      INVENTORIES

                                December 29,                        March 31,
                                      1997                             1997
                                      ----                             ----

Die bank                          $   2,772                        $   4,496
Work-in-process                       9,842                            6,236
Finished goods                        2,536                            5,576
                                      -----                            -----
                                  $  15,150                        $  16,308
                                  =========                        =========

         Die bank  inventory,  consisting  of silicon  wafers and cut and tested
die, is comparable to raw material inventory in other manufacturing  industries.
Work-in-process  inventory  includes  work in process  as well as the  Company's
inventories of multi-die  packages  (MDPs) and components and  sub-systems to be
incorporated  into module,  board and system products.  Finished goods inventory
includes  finished  module,  board and system products as well as MDPs and ASICs
offered for sale to OEM customers.

<PAGE>
                                       7


(3) NOTES PAYABLE

         In November 1996, the Company  established a credit  facility (the "DKB
Facility") with The Dai-Ichi Kangyo Bank, Limited ("DKB").  The DKB Facility has
been modified and currently  provides a $20 million  maximum  unsecured  line of
credit.  The  Company's  majority  stockholder,   Fujitsu  Limited  ("Fujitsu"),
provided a guaranty,  through March 31, 1998, to DKB with respect to $20 million
of the DKB  Facility.  The interest rate payable on the DKB Facility is at DKB's
stated rate,  which at December 29, 1997, was 6.2375%.  As of December 29, 1997,
the Company's  outstanding  unpaid principal  balance under the DKB Facility was
$10 million.

(4)       INCOME (LOSS)  PER SHARE

      For the three and nine month  periods  ended  December 30,  1996,  options
totaling  963,271 were excluded from the  computation of diluted  "Income (loss)
per  share"  because  they  would  have been  antidilutive  for  those  periods.
Similarly, for the three and nine month periods ended December 29, 1997, options
totaling  1,527,892  and  1,899,049,   respectively,   were  excluded  from  the
computation  of diluted  "Income  (loss) per share" because they would have been
antidilutive  for those  periods.  Certain  reclassifications  have been made to
prior financial statements reflecting the adoption of FAS 128.

         The following  tables provide a  reconciliation  of basic income (loss)
per share and diluted EPS (in thousands, except per share data):

<TABLE>
<CAPTION>


                                                For the Three Months                        For the Three Months
                                               Ended December 29, 1997                     Ended December 30,1996
                                               -----------------------                     ----------------------
                                                                       Per                                         Per
                                          Income        Shares        Share           Income        Shares        Share
                                         (Numerator)  (Denominator)   Amount         (Numerator)  (Denominator)   Amount
                                         -----------  -------------   ------         -----------  -------------   ------
<S>                                           <C>      <C>           <C>             <C>              <C>       <C>    
Net income (loss) ...................    $    251                                    $  (35,243)
Basic EPS ...........................         251      23,471        $   .01         $  (35,243)      23,389    $  (1.51)
                                                                     =======                                    ========

       Effect of Dilutive Securities:
Preferred stock .....................          --      20,000                                --           --
Options .............................          --         111                                --           --
                                         --------    --------                        ----------     --------
Diluted EPS .........................    $    251      43,582        $   .01         $  (35,243)      23,389    $  (1.51)
                                         ========    ========        =======         ==========     ========    ========
</TABLE>

<PAGE>
                                       8

<TABLE>
<CAPTION>

                                                For the Nine Months                        For the Nine Months
                                               Ended December 29, 1997                     Ended December 30,1996
                                               -----------------------                     ----------------------
                                                                       Per                                         Per
                                          Income        Shares        Share           Income        Shares        Share
                                         (Numerator)  (Denominator)   Amount         (Numerator)  (Denominator)   Amount
                                         -----------  -------------   ------         -----------  -------------   ------
<S>                                        <C>         <C>           <C>                <C>           <C>       <C>      
Net loss                                 $ (7,815)                                   $  (37,594)
Basic EPS                                  (7,815)     23,456        $  (.33)           (37,594)      23,262    $  (1.62)
                                                                     =======                                    ========

Effect of Dilutive Securities:
Preferred stock                                --          --                                --          --
Options                                        --          --                                --          --
                                         --------    --------                        ----------     --------
Diluted EPS                              $ (7,815)     23,456        $  (.33)        $  (37,594)      23,262    $  (1.62)
                                         ========    ========        =======         ==========     ========    ========
</TABLE>




ITEM 2.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION AND
         RESULTS OF OPERATIONS

Cautionary Statement

     This  Quarterly  Report  contains  forward-looking  statements,  within the
meaning of the Private Securities Litigation Reform Act of 1995, with respect to
the financial condition,  results of operations and business of ROSS Technology,
Inc. and its subsidiary  (collectively,  unless the context otherwise  requires,
"ROSS",  the "Company",  or the  "Registrant").  Such  statements are subject to
certain  risks and  uncertainties  that  could  cause  actual  results to differ
materially and adversely from those set forth in the forward-looking statements,
including without  limitation,  the availability of financial resources adequate
to the Company's short-,  medium- and long-term needs,  including renewal of its
present loan and loan guaranty  arrangements;  the  Company's  dependence on the
timely development, pre-production qualification,  manufacture, introduction and
customer acceptance of new higher speed,  higher-margin products,  including its
'Colorado  5' and 'Viper'  microprocessor  product;  the ability to identify and
access  the  32-bit  upgrade  market;  and the impact on  revenue,  margins  and
inventories of rapidly changing  technology.  Additional risks and uncertainties
include the ability of the Company to  successfully  implement  its  strategy of
diversifying  into the system  products  business  and the business of supplying
Java-related products; the various effects on revenue, margins,  inventories and
operating  expenses of  repositioning  the  Company's  product lines and overall
business;  the effects of building and  maintaining  product  inventories in the
Company's  hands and in its  distribution  channels;  product  return and credit
risks with distributors, resellers and other customers; the Company's dependence
on   distributors   and  resellers  for  certain  product  sales  to  end-users;
competition,  downward  pricing  pressures  and  allocations  of  product  among
different distribution channels; the effects of routine price

<PAGE>
                                       9



degradation  over  time in each of the  Company's  product  lines;  varying
customer demand for the Company's products; supply and manufacturing constraints
and costs; the Company's  dependence on outside  suppliers for wafer fabrication
and raw materials,  components and certain  manufacturing  services;  changes in
plans, programs or expenses for research,  development,  sales or marketing; the
Company's  ability to build and maintain adequate staff  infrastructures  in the
areas of microprocessor design,  product engineering and development,  sales and
marketing, finance, accounting, and administration;  supplier disputes; customer
warranty  claims;   general  economic  conditions;   and  the  other  risks  and
uncertainties  described from time to time in the Company's public announcements
and Securities and Exchange Commission filings, including without limitation the
Company's Current,  Quarterly,  and Annual Reports on Forms 8-K, 10-Q, and 10-K,
respectively.  The Company cautions that the foregoing list of important factors
is not  exclusive.  The Company does not undertake to update any written or oral
forward-looking  statement that may be made from time to time by or on behalf of
the Company.

         The  information  contained in this Quarterly  Report is not a complete
description  of the  Company's  business  or of the  risks  associated  with  an
investment  in the  Company.  More  complete  discussions  can be  found  in the
Company's  Annual  Report on Form 10-K for the fiscal year ended March 31, 1997,
as supplemented by the information  contained in subsequent Quarterly Reports on
Forms 10-Q,  the Current  Report on Form 8-K dated  September 30, 1997, and this
Quarterly Report.

RESULTS OF OPERATIONS

         Net Sales. Net sales in the three-month period ended December 29, 1997,
of the fiscal year ending  March 30, 1998  ("fiscal  1998")  decreased  26.6% to
$14.3 million from $19.4 million in the corresponding  period of the fiscal year
ended March 31, 1997  ("fiscal  1997").  This was due  primarily to a decline in
sales to the Company's  upgrade and system  customers  reflecting a migration by
those customers to 64-bit products sold by the Company's  competitors.  Original
equipment  manufacturer ("OEM") sales increased slightly during the third fiscal
quarter of 1998 over the same period in 1997.

         Net sales for the nine months ended December 29, 1997,  decreased 47.5%
to $37.6 million from $71.5 million in the corresponding  period in fiscal 1997.
This was due  primarily  to a  significant  decline  in  sales to the  Company's
primary OEM  microprocessor  chip customers,  including Sun  Microsystems,  Inc.
("Sun"),  historically the Company's largest customer,  reflecting a movement by
those  customers to  competitors'  64-bit  products as compared to the Company's
32-bit products.

         Gross Profit. Gross profit as a percentage of net sales for the quarter
ended  December 29, 1997,  increased to 39% from a negative  (168%) of net sales
for the comparable  period in fiscal 1997.  Improvement  relative to comparative
1997 figures  resulted  primarily from a $37 million charge in the third quarter
of  fiscal  1997  for  the  writedown  of  certain  inventory   necessitated  by
significantly lower than expected demand for a number of the Company's 

<PAGE>
                                       10
   
     products.  In addition,  gross profit was  positively  impacted  during the
third fiscal quarter of 1998 by the Company's pricing strategy and its continued
focus on cost  improvement  as well as cost control  measures.  Likewise,  gross
profit as a percentage of net sales for the nine months ended December 29, 1997,
increased to 20% from a negative  (16%) for the  corresponding  period in fiscal
1997.





         Research and Development  Expense. Net research and development ("R&D")
expenses  were  10.4% of net sales for the  quarter  ended  December  29,  1997,
compared with 35.7% of net sales for the comparable  period in fiscal 1997. This
decrease was primarily  attributable to a net  reimbursement  by Fujitsu of $3.5
million in  expenses  relating  to the  Company's  64-bit  Viper  microprocessor
development project, pursuant to a Development Agreement between Fujitsu and the
Company  (the  "Viper  Development  Agreement"),  as well as  application  of $1
million of payments from Fujitsu against R&D expenses  pursuant to an additional
development  agreement  between  Fujitsu  and the  Company  to  produce a 32-bit
processor  "core".  The Company will actually  receive $4.4 million from Fujitsu
for its design  efforts  during  the third  fiscal  quarter of 1998,  but due to
delays in its design  schedule may be subject to a $.9 million  penalty and such
penalty is reflected in the Company's  financial  statements  (see discussion of
Viper  Development  Agreement  under "Future  Operating  Results").  To a lesser
degree,  this  decrease  also  reflects  the decrease in expenses in fiscal 1998
related to the Company's  fiscal 1997 entrance into the systems  business.  This
decrease was partially  offset by increases due to the addition of new personnel
and related overhead and outside contractor expenses in the areas of new product
design and new product  development related to the Company's 32-bit `Colorado 4'
and  `Colorado 5'  hyperSPARC(TM)  and 64-bit  `Viper'  microprocessor  designs.
Reflecting the same trends,  R&D expenses for the nine months ended December 29,
1997, decreased to 7.7% from 28.5% in the corresponding period in fiscal 1997.

         Selling,  General  and  Administrative  Expense.  Selling,  general and
administrative  ("SG&A")  expenses were 25.5% of net sales for the quarter ended
December 29, 1997, compared with 61.9% of net sales for the comparable period in
fiscal 1997.  This decrease in SG&A expense is primarily  attributable to a $5.8
million  writeoff of doubtful  accounts  recorded  in the  comparable  period in
fiscal 1997.  Similarly,  for the nine months ended December 29, 1997,  absolute
SG&A   expenses   decreased  to  $10.8   million  from  $23.0  million  for  the
corresponding period in fiscal 1997. In addition to the $5.8 million writeoff of
doubtful  accounts  recorded in the third  fiscal  quarter of 1997,  the Company
recorded a $3.4 million  writeoff of doubtful  accounts in the second quarter of
fiscal 1997.  As a percentage  of net sales,  SG&A  expenses for the nine months
ended  December  29, 1997,  remained  flat  relative to the prior fiscal  period
reflecting a decrease in sales.

         Net Interest Expense.  The Company incurred net interest expense of $.2
million for the quarter  ended  December  29,  1997,  versus $.6 million for the
quarter ended  December 30, 1996,  reflecting  the  retirement of $50 million of
debt on September 30, 1997.  The Company  incurred net interest  expense of $1.8
million for the nine months ended December 29, 1997,  versus $.5 million for the
nine months ended December 30, 1996, reflecting a higher average 
<PAGE>
                                       11

     daily  borrowing  level  during the first nine months of fiscal 1998 versus
the corresponding period in fiscal 1997. See "Liquidity and Capital Resources."

         Income Tax Benefit.  The Company has established a 100% reserve against
its deferred  income tax asset and will not record income tax expense or benefit
until such time as the Company achieves sustained profitability.

         Future   Operating   Results.   The   Company's   financial   condition
deteriorated significantly during fiscal 1997 and the first half of fiscal 1998;
however the third  quarter of fiscal  1998 was the  Company's  first  profitable
quarter in the last five  quarters.  Subsequent  to the end of fiscal 1997,  the
Company made  significant  changes to the senior  management  team to assess the
Company's  business and to implement changes necessary to restore the Company to
a sound financial condition. Notwithstanding such changes, there is no assurance
that the Company's improved profitability can be maintained. As indicated below,
the  Company's  management  believes  that it is doubtful  that the Company will
achieve an operating profit during the fourth fiscal quarter.

     The Company  depends  solely upon its majority  stockholder,  Fujitsu,  for
additions  to capital  necessary to continue its  operations.  On September  30,
1997, the Company concluded a recapitalization  transaction with Fujitsu whereby
the Company issued 500,000 shares of a new Series B Convertible  Preferred Stock
to Fujitsu  and  Fujitsu  paid $50  million  on behalf of the  Company to DKB in
partial  payment  of  the  Company's  outstanding  indebtedness  to  DKB  and in
satisfaction  of  Fujitsu's  obligation  pursuant  to  certain  loan  guaranties
provided by Fujitsu to DKB. In connection with the recapitalization transaction,
Fujitsu  provided a guaranty  for a $20  million  line of credit  from DKB.  $10
million of such line of credit had been  borrowed  by the Company as of December
29,  1997;  since that date the Company has  borrowed an  additional  $3 million
under the line of credit.  The Company is pursuing the extension of the guaranty
and  renewal of the line of credit,  which will  expire on March 31,  1998,  and
there is no  assurance  that DKB will  renew the line of credit or that  Fujitsu
will agree to extend or renew the guaranty on their existing terms or otherwise.
In absence of a renewal or  extension  of the  guaranty,  the Company may not be
able to secure an adequate level of debt  financing.  See "Liquidity and Capital
Resources."

         During the nine months ended  December 29, 1997,  the Company failed to
timely  meet  certain  of the  milestones  set  forth in the  Viper  Development
Agreement.  Fujitsu  and the Company  amended  such  Agreement  to provide for a
redefinition of the deliverables  associated with such milestones.  Given delays
to date and the  overall  risks  inherent in complex  developments  such as that
undertaken by the Company pursuant to the Viper Development Agreement, there can
be no  assurance  that the Company will achieve  future  milestones  in a timely
manner or that, if such milestones are not achieved, Fujitsu will agree to waive
or postpone them. The Company is pursuing  amendment of the Agreement to reflect
a change in definition of the next milestone.

<PAGE>
                                       12


         The  Company  believes  that the  development  of the Viper  product is
approximately  90 days behind the  schedule  provided  in the Viper  Development
Agreement.  If Fujitsu accepts any milestone set forth in the Viper  Development
Agreement  more  than  thirty  days  later  than the due date set  forth in that
Agreement,  the Company must accrue a penalty of 10% of the payment from Fujitsu
to the Company for milestone achievement,  subject to modification under certain
circumstances.  Should the Company  achieve  First  Customer  Ship ("FCS") on or
before the date set forth in the Agreement,  all penalties are waived. Since the
Company  does not  currently  anticipate  achieving  FCS on or before the agreed
date, it has accrued  penalties  aggregating  $.9 million for late deliveries in
the months  ended  December 29, 1997,  which are  reflected in the  accompanying
financial statements.  Penalties for later milestones may also be accrued if the
Company cannot accelerate its development activities.

         Pursuant to the Viper Development Agreement,  Fujitsu may terminate the
Agreement if its acceptance of a milestone (as defined in the Agreement) is more
than 120 days later than specified in the Agreement.

         Because the  Company  anticipates  that sales in the fourth  quarter of
fiscal 1998 may be below sales in the third quarter primarily due to anticipated
decreases in sales to OEM customers,  including Fujitsu;  because the Company is
still  ascertaining  the size and  accessibility  of the 32-bit upgrade  market;
because R&D expenses,  net, will increase due to the  approaching  completion of
the 32-bit  development  project  with  Fujitsu;  and  because of  uncertainties
associated  with the  timely  achievement  of Viper  milestones  and  associated
payments from Fujitsu,  the Company believes it is doubtful that it will achieve
profitability from operations during that quarter.  Consistent  profitability in
future  quarters  will be  difficult  to achieve  prior to the  delivery  of the
Company's Java and Viper offerings,  the timing of which is uncertain and in any
event is not assured.

     The Company's operating results have in the past and may in the future vary
due to a number of factors,  including availability and market acceptance of new
or enhanced versions of the Company's products (including Colorado 5 and Viper),
the Company's success in servicing existing markets and in entering new markets,
the  timing  and  extent of  product  development  costs,  changes in the mix of
products  sold  and in the mix of  sales by  distribution  channel,  competitive
pricing pressures,  anticipated  decreases in unit average selling prices of the
Company's  products,  availability  and cost of products  (particularly  silicon
wafers) from the Company's suppliers,  fluctuations in manufacturing yields, the
gain or loss of significant customers,  new product introductions by the Company
or the Company's competitors,  the competitiveness of the SPARC architecture and
the timing of significant orders,  order  cancellations or rescheduling,  all as
more fully described in the Company's SEC reports,  including without limitation
the Annual Report on Form 10-K for fiscal 1997.  Any  unfavorable  change in the
foregoing or other factors could have a material adverse effect on the Company's
business, operating results and financial condition.

         The  Company  operates  in  an  industry  characterized  by  increasing
competition,  rapidly changing technology,  and increasingly aggressive pricing.
As  a  result,   the  Company's  future  

<PAGE>
                                       13

     operating  results will depend to a  considerable  extent on its ability to
rapidly and continuously  develop and introduce new microprocessor  technologies
that  offer its  customers  enhanced  performance  at  competitive  prices.  The
development of new high-performance computer products is a complex and uncertain
process  requiring  high levels of innovation  from the Company's  designers and
suppliers,  as well as accurate  anticipation  of  customers'  requirements  and
technological trends. The Company is also increasingly  dependent on the ability
of its  suppliers  to  design,  manufacture,  and  deliver  advanced  components
required  for the timely  introduction  of new  products.  The failure of any of
these suppliers to deliver  components on time or in sufficient  quantities,  or
the failure of any of the  Company's  designers to develop  advanced  innovative
products on a timely basis,  could result in  significant  adverse impact on the
Company's business, operating results and financial condition.

         Once a hardware product is developed, the Company must rapidly bring it
to volume  manufacturing,  a process that requires accurate  forecasting of both
volumes and configurations,  among other things, in order to achieve competitive
yields and costs.  Upon  introduction  of new  products,  the Company  must also
manage the transition from older,  displaced products to minimize disruptions in
customer ordering  patterns,  reduce levels of existing product  inventory,  and
ensure that adequate  supplies of new products can be delivered to meet customer
demand.

         Historically,  average selling prices for  microprocessors  in general,
and for the  Company's  products in the time period  during which they have been
commercially  available,  have decreased over the life of each specific product.
Although the Company has recently  announced  price increases for several of its
products,  it expects  that the  average  selling  prices of its  products  will
continue to be subject to significant  downward  pressure in the future.  If the
Company is unable to introduce and gain market acceptance of new products in new
markets with higher average  selling prices or reduce its costs  sufficiently to
offset decreases in prices of existing products, the Company's gross profits and
operating results would be adversely affected. In addition,  because the Company
is continuing to increase its operating expenses for new product development and
for increased  sales and marketing  staff in  anticipation  of increasing  sales
levels, the Company's business and operating results would be adversely affected
if such sales levels were not achieved.

     The Company intends to continue to emphasize its upgrade business, in which
the Company's modules and motherboards are used to provide enhanced  performance
for existing  systems,  although such business  opportunities are limited in the
32-bit market because of customer  migration to 64-bit  technology.  In addition
the  Company  will  focus on  sales  to OEM  customers,  which  incorporate  the
Company's  products  into their  products.  The  Company  intends to continue to
explore  the  systems  business  in selling  workstation  and server  components
together with  SPARCplug(TM)  systems which provide customers with a unique form
factor solution to their systems' requirements.

         The Company, pursuant to a  development  agreement  with  Fujitsu,  has
taped-out a 200 MHz SPARC 32-bit  microprocessor  "core"  optimized for embedded
control  based on its  Colorado  4 product.  The  Company  anticipates  pursuing
markets for Java virtual machines and 
<PAGE>
                                       14

     embedded applications with this product. However, there can be no assurance
that such markets can be successfully or profitably penetrated by the Company.

         As noted above, the Company continues to experience lower than expected
demand for a number of its products,  especially its lower speed  microprocessor
chips and associated  semiconductors and MBus modules,  as well as routine price
degradation on older  products.  These trends are continuing and are expected to
continue for the foreseeable future.

         In addition,  operating results could be adversely  affected by general
economic  and other  conditions  affecting  the  timing of  customer  orders and
capital  spending  or  a  downturn  in  the  markets  for   microprocessors   or
high-performance computer workstations.

         Sales to Sun,  historically  the Company's  largest OEM customer,  have
varied  substantially  on a year-to-year and  quarter-to-quarter  basis over the
periods since fiscal 1991 and have decreased  substantially in the recent fiscal
quarters,  as  Sun  has  transitioned  its  business   predominantly  to  64-bit
microprocessor  products.  As previously  advised,  the Company anticipates that
sales to Sun will continue to fluctuate significantly in the future. The Company
continues  to  pursue  sales to Sun of its  current  and  future  microprocessor
products and has several proposals  pending,  but there can be no assurance that
the Company will achieve any future design wins with Sun.

         Similarly,  sales to Fujitsu have historically  comprised a significant
portion of the Company's revenue. For the near future, the Company anticipates a
significant  decline in the level of sales to Fujitsu.  As with Sun, the Company
continues  to pursue  sales to Fujitsu of its current and future  microprocessor
products, but there can be no assurance that the Company will achieve any future
design wins with Fujitsu.

         Although the Company is taking specific actions to improve gross profit
margins,  it is  anticipated  that gross  profit will  continue to remain  under
pressure  for the  foreseeable  future  due to a variety of  factors,  including
continued industry-wide pricing pressures, relatively low unit volumes processed
by the Company's test and assembly facilities, and the inability to purchase raw
materials in sufficient volume to obtain favorable pricing from vendors.

         R&D  expenses  are  expected  to  increase,  reflecting  pre-production
qualification of the Colorado 5 hyperSPARC microprocessor and designs based upon
the new Colorado 4 "core" as well as new product design and development  related
to the Viper generation of microprocessors that the Company expects to introduce
in 1999. The Company expects that the level of SG&A expenses will vary depending
upon  the  overall  sales  effort  undertaken  and  the  Company's  distribution
strategies.  Although  R&D and SG&A  expenses  can be  reduced  over time if the
Company's  revenues are less than  anticipated,  the Company believes that it is
building an infrastructure  that is critical to the Company's future success and
represents a long-term investment in the Company's future. Therefore, as in the 
recent  past,  the Company may

<PAGE>
                                       15

     decide to undertake  such  expenses even if the result would be an increase
in such  categories  of expense as a  percentage  of net sales in a given fiscal
quarter or for a fiscal year as a whole.

     The  Company  expects  interest  expense  to be  substantially  lower  on a
quarterly  basis  for the  foreseeable  future  (as  compared  to  recent  prior
quarters) as a consequence  of the  Company's  recapitalization  and  associated
reduction in debt. See "Liquidity and Capital Resources."

         The Company has lost a number of  employees  due to  resignations.  The
loss of key employees has negatively  affected the overall  quality and depth of
the  Company's  staff  infrastructure.  The  Company is seeking to remedy  these
shortcomings  as a priority matter through new hiring and the use of consultants
and outside  contractors.  Given the Company's recent  performance and financial
condition,  and the availability of other attractive employment opportunities in
the Austin area, hiring staff remains difficult.

         The Company anticipates  implementing additional incentive compensation
programs in order to attract and retain key employees and to motivate employees.
Such incentive compensation will further increase SG&A in the short run.

LIQUIDITY AND CAPITAL RESOURCES

     The Company  experienced  negative  cash flows during the nine months ended
December  29, 1997.  As  previously  discussed,  the Company is dependent on its
parent  company,  Fujitsu,  for its capital  requirements.  In November 1996 the
Company  established a "New Credit  Facility"  with DKB for a maximum  principal
amount of $25 million;  in February 1997 such New Credit  Facility was increased
to a maximum of $50 million.  The New Credit Facility expires on March 31, 1998,
and is guaranteed by Fujitsu until that date. In September  1997, a separate $10
million  "Additional  Credit Facility" was established with DKB. This Additional
Credit  Facility  expired on September  30, 1997.  At  September  29, 1997,  the
principal  amount  outstanding  under both credit  facilities was $56.0 million,
with $50 million due on December 31, 1997,  and $6 million due on September  30,
1997.  On  September  30,  1997,  the  Company   concluded  a   recapitalization
transaction  with Fujitsu,  whereby the Company  issued  500,000 shares of a new
Series B Convertible  Preferred Stock to Fujitsu and Fujitsu paid $50 million on
behalf of the Company to DKB and in partial payment of the Company's outstanding
indebtedness to DKB in satisfaction of Fujitsu's  obligation pursuant to certain
loan   guaranties   provided  by  Fujitsu  to  DKB.  In   connection   with  the
recapitalization, Fujitsu provided a guarantee for a replacement credit facility
with DKB for a maximum  principal  amount of $20  million  (which  replaces  the
previous  "New  Credit  Facility").  As  noted  above  under  "Future  Operating
Results",  the line of credit and guaranty expire on March 31, 1998. The Company
is pursuing the extension of the guaranty and renewal of the line of credit, but
there is no  assurance  that DKB will  renew the line of credit or that  Fujitsu
will  agree to  extend  or  renew  the  guaranty,  on  their  existing  terms or
otherwise.  Accordingly, the Company believes that it will have adequate capital
for its business  through April 1, 1998, but remains  dependent upon meeting the
milestones requisite to receiving the R&D reimbursements  contained in the Viper
Development Agreement.  Nevertheless, there can be no assurance that the Company
will not  experience  negative cash flow from  operations and the Company may in
the future be required to seek additional  external sources of financing for its
operating  needs.There  can be no assurance that additional  capital,  including
capital from bank borrowings, will be available on terms
<PAGE>
                                       16


     favorable  to the Company,  if at all, or that Fujitsu  would be willing to
provide  additional  loan  guarantees,   equity  infusions  or  other  financial
assistance to the Company in the future.  To the extent that additional  capital
is raised through the sale of additional  equity or convertible debt securities,
the issuance of such securities  would likely result in substantial  dilution to
the  Company's  then  existing  stockholders.  In  view of its  position  as the
Company's  controlling  stockholder,  Fujitsu's concurrence is necessary for the
issuance  of any  additional  debt  or  equity  financing  by the  Company.  The
Company's  failure  to obtain  sufficient  additional  financing  could  make it
impossible for it to continue  operations,  force the Company to seek protection
under Federal  bankruptcy law and/or affect the Company's  listing on the Nasdaq
National Market.

         The  Company's  principal  source of liquidity as of December 29, 1997,
consisted of $.4 million of cash and $10 million of borrowing availability under
its DKB credit facility.  Subsequent to the end of the third fiscal quarter, the
Company borrowed an additional $3 million under the DKB credit facility.

         During fiscal 1997 and during the first six months of fiscal 1998,  the
Company  extended  payment  terms with many  suppliers  in order to increase the
availability of on-hand cash. As a result, the Company experienced difficulty in
procuring inventory and subcontract  manufacturing services from some suppliers.
Although  relations  with some  suppliers  have improved given the more standard
payment terms adhered to by the Company during the third quarter of fiscal 1998,
there can be no assurance that the Company's  various suppliers will continue to
ship  supplies to the Company or that if they will ship supplies to the Company,
that the associated purchase terms will be favorable to the Company.

         During the first nine months of fiscal 1998,  operating activities used
cash of $14.8  million,  compared  with using  $46.0  million of cash during the
corresponding  period in fiscal 1997.  This  improvement is due primarily to the
$37 million writeoff of certain inventory in the third fiscal quarter of 1997.

         Cash  generated by financing  activities  decreased by $15.9 million in
the first nine months of fiscal 1998 over the same period in 1997 reflecting the
retirement  of $50.0  million of debt by the  Company  during  the third  fiscal
quarter of 1998.

         The  Company's  payment  terms with  Fujitsu for  purchases  of silicon
wafers and MDPs are longer than those generally  available from other suppliers.
Although the Company  believes  that such  payment  terms will not change in the
near future, there can be no assurance that Fujitsu will continue to extend such
favorable payment terms to the Company. Shorter payment terms would increase the
Company's cash requirements.

         The  Company  intends  to  incur  additional  capital  expenditures  of
approximately  $6 million  during the next 12 months,  principally  for computer
hardware  and  software,   lab  equipment  and  general  office   equipment  and
furnishings.
<PAGE>
                                       17

         Because  the  Company  must  order raw  materials,  silicon  wafers and
components  and build  finished  goods  inventory  substantially  in  advance of
product  shipments,  there is  continued  risk that the  Company  will  forecast
quantity  and  product  mix  incorrectly  and,  therefore,   produce  excess  or
insufficient inventories.  Because the markets for the Company's microprocessor,
module and system products are subject to rapid technological and price changes,
inventory may be subject to rapid obsolescence. The inventory risk is heightened
because the Company's  customers  usually place orders with short lead times. If
the  Company  forecasts  incorrectly  and  produces  insufficient  inventory  of
particular  products,  the Company may face order  cancellations from or loss of
customers, who may seek to satisfy their needs from other suppliers. In general,
the Company's  customers may change delivery  schedules or cancel orders without
penalty.  To the  extent  that  the  Company  produces  excess  or  insufficient
inventories of particular products, or inventory becomes obsolete, the Company's
results of operations and financial  condition could be materially and adversely
affected.

     Based on the Company's current operating plan, including continued payments
from Fujitsu  pursuant to the Viper  Development  Agreement  that are contingent
upon the Company attaining the development milestones defined in such agreement,
the Company  believes  that its cash  requirements  will be met through April 1,
1998.  Beyond  that time,  the Company  may  require  additional  equity or debt
financing.  As previously  stated,  the Company believes that any debt financing
beyond  March 31, 1998 is  dependent  upon renewal of the DKB line of credit and
the Fujitsu  debt  guaranty,  and there is no  assurance  of such  renewals.  In
addition,  credit  difficulties  which have been and may be incurred by Japanese
banks such as DKB may adversely  affect the  Company's  and Fujitsu's  access to
credit.  There can be no assurance that additional  capital,  including  capital
from bank borrowings, will be available on terms favorable to the Company, if at
all.  Moreover,  the Company's cash  requirements may vary materially from those
now planned because of changes in the Company's business or capital  expenditure
plans,  product plans or technology  roadmap,  changes in the Company's level of
product and  manufacturing  integration,  results of research  and  development,
relationships  with suppliers and customers,  changes in the focus and direction
of  the  Company's   research  and   development   programs,   competitive   and
technological advances, the level of working capital required to sustain planned
growth,  operating  results  (including  the extent and  duration  of  operating
losses), facilities, employment matters, and other factors.

PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

     There are no material new developments with respect to  previously-reported
litigation.  In addition,  the Company is involved in routine litigation arising
in the ordinary  course of business,  and, while the results of the  proceedings
cannot be predicted with certainty,  the Company believes that the final outcome
of such proceedings will not be material.

<PAGE>
                                       18


ITEM 2. Changes in Securities

                  None

ITEM 3.  Defaults Upon Senior Securities

                  None

ITEM 4.  Submission of Matters to a Vote of Security-Holders

                  None

ITEM 5.  Other Information

     On December 10, 1997, subject to shareholder approval,  the Company's Board
of  Directors  approved  an  increase of  2,500,000  shares to the Common  Stock
reserved for issuance  under the  Company's  Stock Option and  Restricted  Stock
Purchase Plan 3.0.

     On December 5, 1997, the Company  entered into a Separation  Agreement with
its founder and former  President and Chief  Executive  Officer,  Roger D. Ross,
pursuant to which,  among other things,  the Company  agreed to pay Mr. Ross $.7
million for  consulting  services  over a period of  approximately  two and half
years,  subject to reduction  under certain  circumstances.  The Company accrued
amounts  anticipated  in such  settlement  in its financial  statements  for the
period  ended  March 31,  1997,  and  accordingly,  the Company  anticipates  no
material impact to its income statement in subsequent periods.

<PAGE>
                                       19


ITEM 6.  Exhibits and Reports on Form 8-K

    (a)  Exhibits

    Exhibit
      No.                              Description

    10.1      Agreement  between  Fujitsu  Limited and the Company  dated as of
              December 26, 1997;  relating to the Viper  Development  Agreement
              dated June 25, 1997*

    10.2      Separation  Agreement between Roger D. Ross and the Company dated
              as of December 5, 1997*

    10.3      Master Promissory Note, dated October 29,1997, By and between 
              Registrant and The Dai-Ichi Kangyo Bank, Limited, New York Branch

    27        Financial Data Schedule
-----------------
    *         Certain portions of this Exhibit have been omitted and
              filed separately under an application for confidential treatment

(b)       Reports on Form 8-K

     A  Current  Report on Form 8-K dated  September  30,  1997 was filed by the
Company  reporting  consummation of a  Recapitalization  Transaction (as therein
defined)  with Fujitsu as well as certain other  agreements  between the Company
and Fujitsu.



<PAGE>
                                       20


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Company  has duly  caused  this  report to be  signed on its  behalf by the
undersigned thereunto duly authorized.

                             ROSS TECHNOLOGY, INC.,
                             a Delaware corporation



Date:  January  22, 1997            /S/ F. S. (KIT) WEBSTER III
                                    ---------------------------
                                    F. S. (KIT) WEBSTER III
                                    Chief Financial Officer