FORM 10-K
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                Annual Report
                                -------------
(Mark One)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 
      1934 (FEE REQUIRED)
For the fiscal year ended  March 31, 1997
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND 
     EXCHANGE ACT OF 1934

For the transition period from        to 
Commission file number  0-24030

                            THE PANDA PROJECT, INC.
            (Exact name of registrant as specified in its charter)

             Florida                                   65-0323354
(State or other jurisdiction of                    (I.R.S. Employer  
 incorporation or organization)                    Identification No.)

           901 Yamato Road
         Boca Raton, Florida                             33431
(Address of principal executive offices)              (Zip Code)

                                (561) 994-2300
            (Registrant's telephone number, including area code)
                           -----------------------
         Securities registered pursuant to Section 12(b) of the Act:
                                     NONE
          Securities registered pursuant to Section 12(g) of the Act:
                        COMMON STOCK, $.01 PAR VALUE

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference to Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]

Aggregate market value of the voting stock held by nonaffiliates of the
Registrant based on the last sale price for such stock at June 16, 1997

                                 $18,268,354

Number of shares of Common Stock, $.01 par value, outstanding at June 16,
1997.
                                  10,588,666

                      Documents Incorporated by Reference

The information called for by Part III is incorporated by reference to the
Company's definitive Proxy Statement for its 1997 Annual Meeting of
Shareholders which will be filed pursuant to Regulation 14A not later than
July 29, 1997.
<PAGE>
Page 2

                           The Panda Project, Inc.
                                  Form 10-K
                                    Index


                                    Part I
                                                                        Page

Item 1.  Business                                                        1
Item 2.  Properties                                                     12
Item 3.  Legal Proceedings                                              12
Item 4.  Submission of Matters to a Vote of Security Holders            13

                                   Part II

Item 5.  Market for Registrant's Common Equity and Related Stockholder
         Matters                                                        14
Item 6.  Selected Financial Data                                        14
Item 7.  Management's Discussion and Analysis of Financial Condition 
         and Results of Operations                                      15
Item 8.  Financial Statements and Supplementary Data                    26
Item 9.  Changes in and Disagreements With Accountants on Accounting 
         and Financial Disclosures                                      26

                                  Part III

Item 10. Directors and Executive Officers of the Registrant             27
Item 11. Executive Compensation                                         28
Item 12. Security Ownership of Certain Beneficial Owners and
         Management                                                     28
Item 13. Certain Relationships and Related Transactions                 28

                                  Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 
         8-K                                                            28

         Signatures                                                     32
<PAGE>
Page 3
                                    PART I
Item 1.  Business

The Panda Project, Inc. (the  Company ) is a technology company engaged in the
development, manufacture and sale of products incorporating the Company s
proprietary semiconductor packaging and interconnect devices (the  Technology
Products ) and a line of powerful, modular computer workstations and computer
subsystems (the  Archistrat Computers ).  The features and design of the
Technology Products and the Archistrat Computers, many of which are covered by
United States and foreign patents or patent applications, are intended to
address the need for greater bandwidth in electronics products.  According to
Fleck Research, a leading market research and consulting firm, the next ten
years could be described as the  decade of bandwidth  due to the need for
products and components that will accommodate the increased operating speeds
of more powerful and complex microprocessors.   The Company believes that its
products will satisfy the market s demand for increased bandwidth in computer,
telecommunications, automotive and other electronics industries by
facilitating the use of new generations of  these advanced microprocessors.

TECHNOLOGY PRODUCTS

The proliferation of increasingly comprehensive and sophisticated computer
operating systems and applications software, along with the explosive growth
in Internet usage, have created the need for substantially more bandwidth in
computer and other electronic devices.  Bandwidth refers to the capacity for
transmitting data inside the electronic device as well as between two or more
devices.  In recent years, improvements in the speed at which microprocessors
can process data have far outpaced the data transmission capacity of other
electronic components and of the connectors and lines which link the devices.
The resulting bandwidth bottlenecks have effectively negated some of the
improvement in processing speed attributable to the enhanced microprocessors.  

The Company s Technology Products include semiconductor packages and
interconnect devices which incorporate designs which the Company believes
enable these products to effectively address the bandwidth bottlenecks.  In
addition, these products, which are protected by a variety of patents which
have either been issued or for which applications are currently pending, have
significant advantages over currently available products, including:

     HIGHER DENSITY OF ELECTRICAL CONNECTIONS.  The Technology Products embody
proprietary geometrics that allow the placement of a greater number of
conductive leads than is possible with conventional designs.  This permits the
access and transport of an increased volume of data.

     REDUCED SIZE.  Due to their higher contact density, the Technology
Products require less surface area than is required by conventional
semiconductor packages and interconnect devices to accommodate the same number
of leads.  This improves the performance and portability of computers and
other electronic equipment that use such products.

     SUPERIOR ELECTRICAL AND THERMAL CHARACTERISTICS.  The Technology Products
are designed to provide faster electrical connections while minimizing the
interference (inductance) which can occur in a high density electrical
environment.  The products are also constructed of materials which dissipate
heat better than conventional designs and, the Company believes, will
withstand the rigors of automotive and other high-heat applications.

     COMPATIBILITY; REDUCED COST OF MANUFACTURE.  The Technology Products are
intended to be compatible with existing industry standards.  Thus, for 
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example, while one of the Company s semiconductor packages (VSPA) incorporates
a proprietary array of electrical leads, the space (pitch) between the leads,
which is of critical importance in the computer manufacturing process, is no
smaller than that of conventional packages such as Plastic Quad Flat Pack and
Ball Grid Array packages.  In addition, use of VSPA in the manufacture of
microprocessors is compatible with standard die bonding and wire bonding
equipment and procedures.  Further, because the integration of VSPA with
microprocessors and other peripherals requires fewer steps than conventional
technologies, the Company believes manufacturers utilizing the Technology
Products will experience reduced production cost.

Semiconductor Packages
----------------------

Semiconductor packages are plastic or ceramic packages that house and protect
the small silicon components (each referred to as a  die ) which are
responsible for a computer s functions, such as the microprocessor, memory,
graphics or other devices that perform specialized tasks.  They also provide
conductive leads through which electric signals containing data processed by
the die can be accessed at various contact points on the die.  Generally, the
leads in traditional semiconductor packages emerge from the package s
perimeter in a single layer ("peripherally-leaded packages") or they emerge
and extend perpendicularly from the bottom of the package in several rows
("pin-grid-array packages" or "PGAs").  The leads extending from peripherally-
leaded packages are usually mounted directly to the surface layer of a printed
circuit board ("PCB") using surface mounted technology or "SMT".  The leads
extending from PGA packages are either plugged into a base mounted on the PCB
or inserted directly into holes drilled through each of the PCB's layers.

The Company has developed and patented two semiconductor packages: VSPA, which
is a form of peripherally-leaded package, and Compass PGA, a pin-grid-array
package.

VSPA is a high-density package designed for SMT use to extend the capability
of the Plastic Quad Flat Pack ( PQFP ) family of packages to higher pin
counts.  PQFPs are currently the most widely used type of peripherally-leaded
package.  Based on the most recently-available data compiled by Tech Search
International, PQFPs represent approximately 83% of the semiconductor package
market which is currently estimated to exceed $30 billion and to be
experiencing a compound annual growth rate of more than 20%.   Generally, PQFP
packages are available with a total number of leads (or  pin count ) of less
than 304.  VSPA, on the other hand,  is designed to accommodate a wide range
of pin counts.

VSPA s higher pin counts are derived from its three-dimensional design in
which two or more rows of pins emerge from the perimeter.  This patented
design not only permits the package to house a significantly higher number of
leads which can be wire-bonded to the die, it also allows for a more relaxed
pitch (increased space between the leads) providing increased performance and
more efficient mounting to the PCB.  By stacking the leads (providing for
additional rows of leads stacked and staggered above each other), the VSPA
package can significantly reduce the amount of space required on the PCB.  

The Company believes VSPA offers the best features of PQFPs and substrate
Plastic Ball Grid Array ( PBGA ) with none of the penalties.  It increases the
package I/O and uses less space, yet still maintains superior electrical and
thermal performance.  The technology is scaleable both in I/O and thermal
management, thus offering a wider range of solutions to the chip designer 
<PAGE>
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seeking optimum integrated chip performance. 

In January 1997, the VSPA package received registered outline approval from
the Electronic Industries Association s  JEDEC JC-11 Committee, thereby
establishing VSPA (or PQFP-B, as it is called in JEDEC documents) as an
industry standard outline to facilitate uniform application on a worldwide
basis.  JEDEC is the semiconductor engineering standardization body of the
Electronic Industries Association, a national trade association that
represents all areas of the electronics industry.

Compass PGA is a high-density PGA semiconductor package primarily designed to
package expensive microprocessing units in single or multichip modules.  The
Compass PGA employs multiple leads and requires less surface area of a PCB to
accommodate the same number of leads than conventional PGA packages. 
Additional design and development work is required to commercialize this
product.  If successfully commercialized, it will significantly reduce the
size and weight of the traditional PGA package, increase the efficiency of the
chip and free additional PCB space on which other chips and devices can be
mounted.  The Company believes that one of the Compass PGA versions being
designed can provide up to 680 die contacts per square inch, as compared to
the 400 die contacts provided by the PGA package used in the Intel Pentium Pro
package.  In July 1996, the United States Patent Office granted the Company a
patent covering the Compass PGA product.

Interconnect Products
---------------------

The Company s interconnect product, the Compass Connector, is the enabling
technology of the Company s Archistrat Computers, leading to their higher
performance levels and permitting their modularity and scalability.   Compass
consists of insulator posts constructed of a highly stable liquid crystal
polymer surrounded by four leads which are mated with related sockets mounted
on a PCB.  This configuration allows multiple leads to be connected in one
area, thereby enabling the design and construction of smaller electronic
devices.

While providing a strong electrical contact, the patented Compass design is
pluggable and  compatible with SMT processes.  The Company believes this will
provide numerous benefits, such as ease of manufacture and servicing,
flexibility in configuring computer systems and upgradeability.

The version of the Compass Connector in use in the Archistrat Computers
provides for 132 contacts per linear inch.  This compares with less than 80
contacts per linear inch for traditional connectors.  The most recent version
of Compass, which has been produced in prototype and early production samples
by one of the Company s licensees of the Compass technology, provides 146
contacts per linear inch.  The Company believes that the Compass design is
capable of providing up to 368 contacts per linear inch, several times the
capabilities of connectors currently available.

ARCHISTRAT COMPUTERS

The Company seeks to accelerate the market acceptance of its Technology
Products by demonstrating their value in its Archistrat Computers.  Currently,
the Company incorporates the Compass Connector into these products and expects
to incorporate the VSPA semiconductor package within the next 12 months.  The
first commercially available Archistrat Computer, the 4s server, was launched
in late 1995 and a graphics workstation incorporating the DEC Alpha 
<PAGE>
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microprocessor was added to the line in mid 1996.  

The Archistrat Computers have several design features which differentiate them
from competing products. The computers utilize a patented 256-bit passive
backplane (as opposed to the less powerful 64-bit and 128-bit designs
available in competing products) and modular architecture.  By incorporating
the high density Compass Connector with its increased capacity to access and
transport increased volumes of data, the Archistrat Computers are able to
exploit the more powerful 256-bit backplane architecture to achieve high
performance levels.  In addition, the pluggable nature of the Compass
Connector combined with its high density makes possible the unique modular
design of the Archistrat Computers, thereby permitting the separation of the 
traditional computer s  motherboard  into individual components containing the
microprocessor, the memory chips and peripheral devices while allowing for
quicker and more efficient transmission of data signals.  Because these
systems are capable of accommodating a variety of microprocessors, peripheral
devices and operating systems, a user can choose a microprocessor produced,
for example, by Intel or DEC, and select from among the Windows 95, Windows
NT, O/S 2, Sun Solaris, Linux or SCO Unix operating systems.

While the Company continues to produce and market the Archistrat 4s servers,
it is of the opinion that the CAD and animation workstation markets are the
most promising areas for utilizing the high performance features of the
Archistrat Computers.  The Company believes, based on the results of
independent tests of workstations using comparable processors and operating
systems, that the Archistrat Computers achieve higher performance levels than
those of competing suppliers. 

The workstation market is currently estimated by Aberdeen Group to approximate
$20 billion and to be among the fastest growing markets for computer systems. 
According to Aberdeen Group, the animation workstation market alone is
estimated to approximate $20 billion by the year 2000. 

In order to exploit these markets, the Company has expanded its line to
include an Archistrat 5r for use as a rack-mounted system in applications that
would require multiple servers or workstations and a Archistrat 5s server with
a more conventionally-shaped exterior than the designer shape of the 4s
server.  In addition, the Company has recently completed the redesign of the
processor and memory boards of its workstations to accommodate newer versions
of the Alpha microprocessors manufactured by DEC in order to take advantage of
their higher processing speeds and to further improve the reliability of the
Archistrat Computers.  The Company began shipment of computers with the
redesigned boards and latest available versions of the Alpha processors in mid
June 1997.

MANUFACTURING

The Company has developed the ability to manufacture the VSPA semiconductor
package in limited quantities in its own facility in Boca Raton, Florida.  The
machinery used in the manufacturing process has been designed and built by the
Company, primarily for the purpose of demonstrating the principles of
manufacturing VSPA in high volumes.  The Company has designed and is currently
building its first automated machine to produce VSPA parts in volumes based on
anticipated customer demand.  The machine has a wide range of flexibility in
terms of the pin count of the VSPA packages it will produce, and its
production capacity ranges from 200,000 parts per month to 235,000 parts per
month, depending upon the pin count of the package (i.e., the higher the pin
count, the lower the monthly production capacity).  This machine is expected 
<PAGE>
Page 7

to be fully operational by September 1997 in a facility to be leased in
Hayward, California, and can be readily replicated to increase manufacturing
capacity as demand for VSPA increases.  In addition, the Company is in the
early design stage for a machine that will produce VSPA packages of a fixed
pin count in monthly volumes of 300,000 or more, again depending on the pin
count of the package being produced.  The Company does not expect to build
this machine until such time as demand for specific pin count packages reaches
a level that warrants investing in the additional production capacity.  If the
Company is successful in commercializing VSPA, such commercialization will
require the Company to expand its manufacturing capacity for VSPA parts or
enter into additional licensing arrangements, joint ventures or strategic
alliances with respect to the manufacture of VSPA parts.  See "Business---
Marketing and Strategic Relationships". 

The Company has also developed the capacity to manufacture the Compass
Connectors required for its Archistrat Computers in its own facility in Boca
Raton, Florida.  In addition, the Company has contracted with Sun Precision
Co., an assembly company located in Bangalore, India, for production of the
male component used in the Compass Connector.  The Company believes that these
sources of supply are sufficient to meet the demand for Compass Connectors
used in the Archistrat Computers for the foreseeable future.  Such capacity
would also be sufficient to provide limited quantities of Compass Connectors
as discrete parts to customers, although the Company currently has no
customers for such discrete parts.  If the Company is successful in
commercializing the Compass Connector for use by third parties, such
commercialization will require the Company to expand its manufacturing
capacity for Compass Connectors or enter into additional licensing
arrangements, joint ventures or strategic alliances with respect to the
manufacture of Compass Connectors.  See "Business---Marketing and Strategic
Relationships". 

The Company previously was a party to an agreement with a contract
manufacturer to manufacture certain subassemblies and perform final assembly
of the Archistrat Computers.  The agreement expired in September 1996, and in
November 1996, the Company assumed the assembly responsibilities.  In the
opinion of the Company, it has the capability to assemble sufficient
quantities of Archistrat Computers to meet current orders and the anticipated
demand for the foreseeable future.

The Company has identified suppliers for its subassemblies and component needs
related to the manufacture of the Archistrat Computers and is currently able
to procure sufficient supply of these parts to meet its manufacturing needs. 
The Company believes it will be able to negotiate satisfactory additional
supply contracts, as necessary, to meet its future manufacturing needs. 
However, the failure to do so could have a material adverse effect on the
Company.  While the Company believes that the components for the Archistrat
Computers are available from multiple sources, the Company anticipates that it
will obtain certain of them from a single or limited number of sources of
supply.  In the event that certain of such suppliers are unable or unwilling
to provide the Company with components to be used in the Archistrat Computers
on commercially reasonable terms, or at all, delays in securing alternative
sources of supply would result and would have a material adverse effect on the
Company s operations.

MARKETING AND STRATEGIC RELATIONSHIPS

In June 1996, the Company licensed the VSPA semiconductor packaging technology
to AMP, Incorporated.  Under the terms of the licensing agreement, AMP has 
<PAGE>
Page 8

been granted world-wide rights to manufacture VSPA for its own use and for
sale to third parties.  In addition, the agreement permits AMP to have
exclusive rights to use VSPA technology in ATM and Fast Ethernet applications
for a limited period of time.  The agreement provides for the payment to the
Company of a royalty based on an amount per pin which increases based on the
size of the package in accordance with a schedule in the agreement.  The
Company believes that AMP is currently developing applications related to the
areas in which it was granted exclusive rights.  The Company also believes
that it may manufacture the initial quantities of any VSPA packages adopted by
AMP for its use in applications currently being considered.  However, at this
time, the Company has received no revenue under this arrangement and is unable
to predict the amount of sales revenue or royalty revenue, if any, that may be
earned by the Company under the AMP arrangement, or when, if ever, such
revenue might be earned.

In September 1996, the Company licensed the VSPA technology to  Pantronix
Corporation of San Jose, California.  Under the terms of the licensing
agreement, Pantronix has been granted world wide rights to manufacture VSPA
for its own use and for sale to third parties.  The agreement provides for the
payment to the Company of a royalty based on an amount per pin which increases
based on the size of the package in accordance with a schedule in the
agreement.  Pantronix, which is a full service semiconductor technology
supplier for more than 140 military and commercial customers, has made a
number of its customers aware of the availability of VSPA, particularly for
high pin count applications.  The Company is currently working on specific
application designs with several customers of  Pantronix and believes the
Company may manufacture the initial quantities of any VSPA packages adopted
for use in applications currently being considered by these customers. 
Although the Company believes that one or more of these proposed designs will
be approved for production by the customers, the Company has received no
revenue under this arrangement and is unable to predict the amount of sales
revenue or royalty revenue, if any, that may be earned by the Company under
the Pantronix arrangement, or when, if ever, such revenue might be earned.

In October 1996, the Company and Stanford W. Crane, Jr., the Company s
President and Chairman, entered into an agreement with LG Cable & Machinery
Ltd., a unit of Korean based LG Group, under which LG Cable was granted a
license to the Compass technology.  The license granted to LG Cable is non-
exclusive except for certain limited exclusive manufacturing rights with
respect to specified Asian countries.  LG Cable has built a production
facility in Korea and has begun production of an enhanced version of the
Compass Connector.  Based on information supplied to the Company by LG Cable,
monthly production is expected to reach 300,000 parts by July 1997.  Under the
terms of the agreement, LG Cable is to pay the Company and Mr. Crane a royalty
based on the sales price of each Compass Connector produced and sold.  See
 Patents; Proprietary Information .  Such royalties are to be divided equally
between the Company and Mr. Crane.  Although the Company expects to be
entitled to receive royalties under this agreement with respect to sales made
by LG Cable during the month of July 1997, the Company has not yet received
any such revenue.

In May 1997, the Company entered into a letter of intent to license the VSPA
technology to LG Cable.  Under the terms of the proposed licensing agreement,
LG Cable will be granted world wide rights to manufacture VSPA for its own use
and for sale to third parties.  The agreement would also provide for the
payment to the Company of a royalty based on an amount per pin which increases
based on the size of the package in accordance with a schedule in the
agreement.
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The Company intends to market its Technology Products through a combination of
direct sales personnel and independent manufacturer s representatives.  At the
present time, the Company has 5 employees directly engaged in the sales and
marketing of its Technology Products and is engaged in recruiting additional
personnel to supplement the activities of these employees.  In addition, the
Company has entered into sales representation agreements with 5 separate
independent sales organizations to market the Company s Technology Products in
certain specific regions of the United States and in Taiwan and has a letter
of intent with a company which is expected to lead to a sales representation
arrangement in Japan.  The Company is also seeking additional independent
manufacturer s representatives in other identified regions of the United
States.

The Company markets its Archistrat Computers through its own sales force,
which currently is comprised of 8 persons including 3 field systems engineers,
and through value added resellers ( VAR ) and system integrators.  The Company
currently has four active VARs and expects to enter into additional reseller
agreements during the next 12 months.

RESEARCH AND DEVELOPMENT

The Company s principal research and development efforts to date have been
devoted to the design and development of VSPA, Compass PGA and the Archistrat
Computers and related technologies.  During the fiscal years ended March 31,
1995, 1996 and 1997, the Company spent $3,494,000, $7,955,000 and $5,723,000,
respectively, on research and development.

In October 1996, the Company entered into a cooperative development agreement
with the Defense Advanced Research Projects Agency (DARPA) to develop the
Company s VSPA electronic package whereby the government will contribute
approximately $1.8 million to the project over a period of 12 months.  The
agreement requires the Company to match the $1.8 million with $2.2 million of
development costs associated with the project.  During the year ended March
31, 1997, the Company incurred development costs associated with this project
of approximately $1.2 million, including approximately $610,000 included in
the research and development amount for fiscal year 1997 set forth in the
preceding paragraph.

The Company currently anticipates that its research and development activities
over the next year will focus on completing the current and higher volume
versions of the automated machine for producing VSPA, developing specific
applications of VSPA and Compass PGA and developing new versions of the
Archistrat Computers.  The Company believes that its spending on research and
development in the current fiscal year will not exceed the amount spent during
the fiscal year ended March 31, 1997.

PATENTS; PROPRIETARY INFORMATION

As of May 31, 1997, the Company had obtained seven United States patents and
an aggregate of 33 foreign patents.  In addition, the Company had pending a
total of 18 United States and 33 foreign patent applications.  These patents
and pending applications relate to VSPA, Compass PGA, the Archistrat Computers
design, the use of the Compass Connector in Compass PGA and in the Archistrat
Computers, and a PCB manufacturing technology known as  Well Tech PCB .  The
Company s foreign patent filings have been made in selected countries,
including the Republic of China (Taiwan), Germany, the United Kingdom, Ireland
and France.  The Company will continue to file applications in certain foreign
jurisdictions to secure protection in those jurisdictions in accordance with 
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Page 10

the Patent Cooperation Treaty and the Paris Convention for the Production of
Industrial Property (which allows such filings to relate back to the original
filing date in the United States) covering the Company s technology and
proposed products.  To the extent possible, the Company also intends to file
patent applications with respect to products and technology that it may
develop in the future.  The failure of the Company to obtain any patents for
which applications are pending could have a material adverse effect on the
Company s ability to successfully commercialize its technology and proposed
products.

Pursuant to a license agreement entered into in January 1996 between the
Company and Mr. Crane (the "Crane-Panda License"), Mr. Crane has granted the
Company the nonexclusive right to utilize the Compass Connector, a key
component in the commercialization of the Company's Archistrat Computers and
the development and commercialization of Compass PGA. The Crane-Panda License
was executed in connection with the conversion to a nonexclusive license of
the 3M License described below and supersedes an earlier license agreement
between Mr. Crane and the Company relating to the Compass Connector.  See
 Management s Discussion and Analysis of Financial Condition and Results of
Operations - Certain Factors That May Affect Future Results - Dependence On
The Crane-Panda License Agreement; Potential Conflicts Of Interest . Under the
Crane-Panda License, the Company is required to pay Mr. Crane a royalty on any
sales of Compass Connectors as discrete parts in the amount of 5% of the net
sales price for the first five years of the term of the agreement, 2.5% of the
net sales price for the next five years of the term of the agreement and 2% of
the net sales price thereafter, provided that no royalty is payable until
aggregate net sales of the Compass Connector as discrete parts exceed
$100,000. The royalty rate will be reduced after the fifth anniversary of the
agreement if no patent remains in effect with respect to the Compass
Connector. No royalty is payable on sales of the Compass Connector as
incorporated in the Archistrat Computers or other computer system or assembly.
The Company may grant sublicenses under the Crane-Panda License, but only for
the use of products as incorporated in the Archistrat Computers or other
computer system or assembly. To date, there have been no sales requiring the
payment of royalties to Mr. Crane under the Crane-Panda License. The Crane-
Panda License obligates the Company to maintain proprietary information
relating to the Compass Connector on a confidential basis, notify Mr. Crane of
any evidence of infringement with respect to the Compass Connector and related
technology, and cooperate with Mr. Crane to contest any such infringement. In
the event that the Company becomes bankrupt or insolvent or defaults in any of
its material obligations under the Crane-Panda License and fails to cure any
such defaults within specified cure periods, Mr. Crane may terminate the
Crane-Panda License. The Company is substantially dependent upon the Crane-
Panda License. The termination of the agreement under any circumstances would
have a material adverse effect on the Company. There can be no assurance that
conflicts of interest will not arise with respect to the Crane-Panda License
or that such conflicts will be resolved in a manner favorable to the Company.
In addition, Mr. Crane retains ownership of the Compass Connector technology,
and has the right to grant licenses to or otherwise transfer rights to the
Compass Connector technology to third parties.

The Company relies on confidentiality and nondisclosure arrangements with its
employees, consultants and others involved with the Company s product and
technological development efforts.  There can be no assurance that these
agreements will provide meaningful protection to the Company or that other
companies will not acquire information which the Company considers
proprietary.  Moreover, there can be no assurance that other companies will
not independently develop know-how comparable or superior to that of the 
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Page 11

Company.

The Company has registered the Archistrat and VSPA trademarks with the U.S.
Patent and Trademark Office and has applied for appropriate trademark,
copyright and other legal protection for its product names, logos and other
identifications.  There can be no assurance that the Company will not be
precluded by others from using any of such identifications or creating
proprietary rights with respect to them.

COMPETITION

The markets that the Company has entered and intends to enter with its
Technology Products and its Archistrat Computers are characterized by intense
competition.  In marketing these products, the Company is and will be
competing with many well established companies with substantially greater
resources than the Company.

Many of the Company s competitors for its Technology Products design,
manufacture and/or market semiconductor packages, interconnect devices and
other related components.  Some of these competitors offer semiconductor
packages, including peripherally-leaded SMT packages, pin grid arrays and ball
grid arrays which can be used as alternatives to VSPA and Compass PGA. 
Although the Company believes that VSPA (and Compass PGA, when fully
developed) offer significant performance advantages over currently available
semiconductor packages, no assurance can be given that the advantages
anticipated by VSPA and Compass PGA will be realized or, if realized, gain
market acceptance.

The Archistrat Computers compete with various products produced and marketed
by a large number of companies.  The CAD and animation workstation
configuration of the Archistrat Computers, which the Company believes to be
the most promising area for utilizing the high performance features of the
Archistrat Computers, compete with products offered by companies such as
Silicon Graphics, Inc., Sun Microsystems, Inc., Digital Equipment Corp.,
Hewlett-Packard Co. and Intergraph Corporation.

All of these companies have substantially greater financial, technical,
personnel and other resources than the Company and have established
reputations for success in the development, licensing, sale and servicing of
their products and technology.  Certain of these competitors dominate their
industries and have the financial resources necessary to enable them to
withstand substantial price competition and downturns in the market for
semiconductor packages, interconnect devices and computers.  In addition,
certain companies may be developing technologies or products of which the
Company is unaware which may be functionally similar, or superior, to some or
all of those being developed by the Company.  The markets for technology and
products currently available from and being developed by the Company are
characterized by rapid changes and evolving industry standards often resulting
in product obsolescence or short product life cycles.  Accordingly, the
ability of the Company to compete will depend on its ability to successfully
market its existing products in a timely and cost-competitive manner, to
complete the development and successfully introduce to the marketplace those
products that are current under development, to continually enhance and
improve all its current and future products and technology and to successfully
develop and market new products and technology.  There can be no assurance
that the Company will be able to compete successfully, that its competitors or
future competitors will not develop technologies or products that render the
Company s products and technology obsolete or less marketable or that the 
<PAGE>
Page 12
 
Company will be able to successfully enhance its existing and proposed
products or technology or adapt them satisfactorily.

EMPLOYEES

At May 31, 1997, the Company had 49 full-time employees and two part-time
employees.  Mr. Crane divides his time between product research, development
and testing and general management.  The Company considers it relations with
its employees to be good.  None of the Company s employees is represented by
labor unions.

ITEM 2.  PROPERTIES

The Company leases its principal offices in Boca Raton, Florida, totaling
approximately 27,500 square feet which were used to house substantially all of
the Company's operations, including research and development, product testing
and other operations during fiscal year 1997.  Under the terms of the lease,
as amended, the Company is required to make monthly rental payments of
approximately $34,000 during fiscal year 1998, increasing to approximately
$37,000 during the last year of the lease (fiscal year 2001). During the year
ended March 31, 1997, the Company entered into certain agreements with the
landlord of this facility whereby the Company was released from portions of
the leased space.  As consideration for the release, the Company agreed to
make certain lump-sum payments to the landlord and agreed to make additional
payments for the unused space.

The Company also leases three nearby facilities totaling approximately 11,000
square feet, which house the Company's machining operations and the product
assembly operations related to the Technology Products.  The leases with
respect to these facilities require total monthly rental payments of
approximately $7,300.  

The Company also leases a facility in San Jose, California, which is currently
used to house the Company s Advanced Design Group, manufacturing
administrative personnel and certain sales personnel. The lease term is
through December 1999 and calls for monthly lease payments of $4,394,
increasing to $4,746 during the last year of the lease. 

The Company is currently considering the lease of a facility in Hayward,
California, that would house the Company s Archistrat Computer assembly
operation, manufacturing equipment for VSPA and certain office space.  The
facility under consideration is approximately 50,000 square feet.  The
proposed lease agreement is for a term of five years with monthly rental fees
of approximately $18,000.  The Company believes the proposed facility would be
adequate for the Company s needs for the foreseeable future.  If a lease for
this facility is executed, the Company will seek to terminate the lease for
its San Jose facility or attempt to sub-lease the space.

The Company considers that its properties are generally in good condition, are
well maintained and are generally suitable and adequate to carry on the
Company's current business. 

ITEM 3.  LEGAL PROCEEDINGS

In April 1996, William J. Sarubbi, the Company's former Vice President of
Sales, filed a suit against the Company and Melissa Crane (Mr. Crane's wife)
in the Circuit Court of the 15th Judicial Circuit in Palm Beach County,
Florida.  The suit alleges that Mr. Sarubbi is entitled to certain sales 
<PAGE>
Page 13
 
commissions from the Company and that certain misrepresentations were made to
Mr. Sarubbi by Ms. Crane which prevented him from selling stock of the
Company.  The Company believes Mr. Sarubbi's claims are without merit and
intends to defend the suit vigorously.  

In August 1996, Joseph Sarubbi, a former director of the Company, filed a suit
against the Company in the Circuit Court of the 15th Judicial Circuit in Palm
Beach County, Florida.  The suit alleges that the Company breached an oral
agreement to waive the exercise price on certain options granted to Mr.
Sarubbi during 1993 and 1994 and that it failed to cause the Company s counsel
to timely issue a Rule 144 letter which would have allowed him to sell the
stock in a timely manner.  The Company believes Mr. Sarubbi s claims are
without merit and intends to defend the suit vigorously.

During February 1997, the Company settled a lawsuit filed by Direct Target
Marketing, Inc., an entity that was engaged to act as the Company s financing
agent in its capital raising efforts during 1993 and 1994.  In conjunction
with the settlement, the Company made a cash payment of $40,000 and issued
17,500 shares of its common stock.  The settlement agreement required the
Company to file a registration statement with the Securities and Exchange
Commission for the common shares issued and the Company has done so.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   No matters were submitted to a vote of the Company's security holders
             during the fourth quarter of fiscal 1997.
<PAGE>
Page 14


                               PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's Common Stock has been traded since May 1994 on the Nasdaq Stock
Market under the symbol "PNDA."  Prior to that time, there was no public
market for the Common Stock.  The following table sets forth the range of high
and low closing sale prices for the Common Stock as reported on the Nasdaq
Stock Market during each of the quarters presented.  The quotations set forth
below are inter-dealer quotations, without retail mark-ups, mark-downs or
commissions and do not necessarily represent actual transactions.


                                                 Common Stock
                                                 ------------
Quarterly Period Ended                         High          Low
----------------------                        -------      -------     

1997
----

March 31, 1997                                $ 9.00       $ 3.63

1996
----

December 31, 1996                             $ 8.50       $ 3.38
September 30, 1996                            $13.50       $ 7.13
June 30, 1996                                 $20.88       $11.75
March 31, 1996                                $23.50       $15.75

1995
----

December 31, 1995                             $35.50       $19.79
September 30, 1995                            $49.00       $28.00
June 30, 1995                                 $30.75       $20.00
March 31, 1995                                $24.25       $11.25

As of June 16, 1997, there were approximately 275 holders of record of the
Company's Common Stock.  This number does not include beneficial owners of the
Common Stock whose shares are held in the names of various dealers, clearing
agencies, banks, brokers and other fiduciaries.

The Company has never declared or paid any cash dividends. The Company
currently intends to retain any future earnings to finance the growth and
development of its business and future operations, and therefore does not
anticipate paying any cash dividends in the foreseeable future. 

ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth selected financial data as of and for each of
the years in the five year period ended March 31, 1997.  This information is
qualified in its entirety by, and should be read in conjunction with, the
financial statements and the notes thereto and  Management s Discussion and
Analysis of Financial Condition and Results of Operations  which are included 
<PAGE>
Page 15

elsewhere in this report.  The following data insofar as it relates to each of
the years presented has been derived from annual financial statements,
including the balance sheets at March 31, 1997 and 1996 and the related
statements of operations and cash flows for the three years ended March 31,
1997 and notes thereto appearing elsewhere herein.

<TABLE>
STATEMENT OF OPERATIONS DATA:
<CAPTION>
                                            Fiscal Year Ended March 31,
                             1997         1996         1995          1994          1993
<S>                      <C>          <C>          <C>           <C>           <C>
Net revenues             $ 2,382,019  $   870,658  $      -      $      -      $      -   
Research and development 
  costs                    5,722,717    7,954,924    3,494,260       887,318       193,869
Selling, general and 
  administrative expenses 13,142,099   15,810,701    3,744,914       934,487       221,954
Costs associated with
  asset impairments        2,056,025         -            -             -             -
Other income                    -          43,680       14,216        21,465           135
Interest income              427,657      953,962      293,612          -             -
Net loss                 (20,874,101) (23,894,426)  (6,931,346)   (1,800,340)     (415,688)
Net loss per 
  common share                ($2.15)      ($3.07)      ($1.25)       ($0.54)       ($0.14)
Weighted average number
  of shares outstanding    9,723,801    7,786,426    5,531,941     3,306,535     2,958,127
</TABLE>
<TABLE>
BALANCE SHEET DATA:
<CAPTION>
                                                   As of March 31,
                             1997         1996         1995          1994          1993
<S>                      <C>          <C>          <C>          <C>            <C>
Working capital          $ 1,824,330  $ 9,704,345  $ 7,893,071 ($  801,165)   ($   143,858)
Total assets               7,337,320   18,557,681   10,245,133   1,471,840          32,865
Total liabilities          2,524,445    3,690,090    1,069,810   1,709,735         144,244
Accumulated (deficit)    (53,915,901) (33,041,800)  (9,147,374) (2,216,028)       (415,688)
Stockholders' equity
  (deficit)              $ 4,812,875  $14,867,591  $ 9,175,323 ($  237,895)   ($   111,379)
</TABLE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

The Panda Project, Inc. (the "Company") was incorporated in April 1992 to
design, develop and license products incorporating the Company's proprietary
semiconductor packaging and interconnect technology and to develop,
manufacture and market a line of powerful, modular computers.  The Company's
fiscal year ends on March 31. 

This Annual Report on Form 10-K contains forward-looking statements.  For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements.  Without limiting the
foregoing, the words "believes", "anticipates", "plans", "expects" and similar
expressions are intended to identify forward-looking statements.  Such
statements are made only as to the date of this report.  There are a number of
important factors that could cause the Company's actual results to differ
materially from those indicated by such forward looking statements.  These
factors include, without limitation, those set forth below under the caption
"Certain Factors That May Affect Future Results."
<PAGE>
Page 16

RESULTS OF OPERATIONS

FISCAL YEAR 1997 VERSUS FISCAL YEAR 1996

During the year ended March 31, 1997, the Company recognized net revenues of
approximately $2,382,000, including approximately $1,548,000 of net sales of
Archistrat Computers, $100,000 of licensing fees, and approximately $734,000
of revenue associated with a cooperative development agreement with the U.S.
government.  In comparison, net revenues during fiscal year 1996 amounted to
approximately $871,000 which was entirely comprised of sales of Archistrat
Computers. 

In October 1996, the Company and Stanford W. Crane, Jr., the Company's Chief
Executive Officer and founder, entered into a license agreement with LG Cable
& Machinery Ltd. ("LG") whereby LG was granted a license with respect to the
Compass Connector Technology owned by Mr. Crane and certain enhanced Compass
Connector Technology owned by the Company.  The license granted to LG is non-
exclusive except for certain limited exclusive manufacturing rights with
respect to specified Asian countries.  The Company and Mr. Crane have agree
that payments under the agreement will be split equally between the Company
and Mr. Crane.  In connection with this agreement, the Company s portion of
the license fee ($500,000) was immediately vested upon signing the agreement
and is payable as follows: $100,000 within 15 days after execution of the
agreement and $100,000 on each of the first four anniversaries of the
agreement. Licensing fee revenue of $100,000 was recorded during the year
ended March 31, 1997 representing the first payment received.  The remaining
$400,000 will be recognized as payments are received.  In addition, the
Company is entitled to receive royalties on sales of the Compass Connector
products by LG or its affiliates.

In October 1996, the Company entered into a cooperative development agreement
with the Defense Advanced Research Projects Agency (DARPA) to develop the
Company s VSPA electronic package whereby the government has agreed to
contribute approximately $1.8 million to the project over a period of 12
months.  The agreement requires the Company to match the $1.8 million with
$2.2 million of development costs associated with the project.  Revenue is
recognized over the term of the cooperative development agreement based on the
achievement of stated milestones. 

During the year ended March 31, 1997, the Company sold certain products to a
software developer in exchange for certain licenses to use the developer s
software for internal purposes; consulting and training; and services
associated with the certification of the Company s 4s server to use the
software developer s CAD program and porting the software onto the 4s product. 
Revenues of approximately $923,000 were recorded during the year ended March
31, 1997 as a result of this transaction.

During the year ended March 31, 1997, research and development expenses
decreased from approximately $8.0 million to $5.7 million.  The decrease is
primarily associated with a lower level of spending related to the design and
development of VSPA as compared with the prior year, including a lower amount
of compensation and benefits resulting from a reduced workforce (including
engineering personnel).  

Selling, general and administrative expenses decreased approximately $2.7
million or 17% during fiscal year 1997 to $13.1 million as compared to $15.8
million during fiscal year 1996.  The most significant changes were in the
following categories:  compensation and benefits decreased approximately $1.3 
<PAGE>
Page 17

million resulting from the execution of management s restructuring plans
(employee head count decreased from approximately 150 as of March 31, 1996 to
approximately 61 as of March 31, 1997); consulting and contracted services
decreased approximately $1.6 million primarily as a result of the Company s
cost reduction efforts, including the elimination of essentially all temporary
personnel;  and a reduction of sales and marketing expenses of approximately
$1.1 million related primarily to trade shows and advertising.  

Depreciation expense increased approximately $1.0 million to $1.6 million in
fiscal year 1997 compared to approximately $560,000 in fiscal year 1996.  This
increase is primarily due to the acquisition of $3.6 million of assets during
fiscal year 1996 that were not depreciated over the entire prior year, but did
include a full year of depreciation in fiscal year 1997.  Further, additional
assets were acquired during fiscal year 1997, including leasehold improvements
made to the Company s main facility.

During the year ended March 31, 1997, the Company determined that, due to
various events and changes in circumstances (including efforts to streamline
operations and to increase the use of strategic alliances to manufacture and
market the Company s products), certain long-lived assets were impaired.  As a
result, the Company recorded a charge of approximately $2.1 million, the
majority of which relates to assets which will continue to be held and used in
continuing operations.  Of this total, approximately $1,040,000 relates to
computer equipment and software, approximately $467,000 relates to
demonstration and promotional equipment and approximately $520,000 relates to
production equipment and tooling.

Other one-time charges that were recognized during fiscal year 1997 included
costs associated with the reduction of leased office space at the Company s
main facility in the amount of $480,000 and a charge of $145,000 associated
with the settlement of certain litigation.  

FISCAL YEAR 1996 VERSUS FISCAL YEAR 1995

The Company began recognizing revenue from the shipment of production units of
its first commercially available product, the Archistrat Computer in its
server configuration, during fiscal year 1996.  As a result, net sales for
fiscal year 1996 amounted to approximately $871,000.  Because the Company was
in the development stage in fiscal year 1995, no revenues from operations were
realized during that year. 

Selling, general and administrative expenses for fiscal year 1996 increased
approximately $13.4 million to $15.8 million, as compared to $3.7 million for
fiscal year 1995.  The significant increase in selling, general and
administrative expenses for fiscal year 1996 is due principally to the costs
incurred in connection with the introduction of the Archistrat 4s server, the
creation and expansion of distribution channels including agreements with
several resellers, continued efforts to expand geographic markets, including
the Latin American market, and greater emphasis on establishing comprehensive
programs for advertising, customer service, and technical support.  In
addition, the Company significantly increased the number of employees from 43
at March 31, 1995 to 150 at March 31, 1996.  As a result, employee
compensation and related expenses, such as state and federal unemployment
taxes, health insurance  premiums and other fringe benefits, amounted to $5.6
million for fiscal year 1996, as compared with $1.1 million for fiscal year
1995.  In addition, selling, general and administrative expenses in fiscal
year 1996 reflect the cost of continued preparation and filing of patent
applications with respect to proposed products and technologies.
<PAGE>
Page 18

Research and development expenses totaled approximately $8.0 million for
fiscal year 1996, representing an increase of 128% as compared to $3.5 million
for fiscal year 1995.  The increase is due principally to the Company's
continuing efforts to design and develop VSPA, Compass PGA and the Archistrat
Computers and related technologies.  During fiscal year 1996, research and
development activities included testing and qualification of VSPA; development
of initial production tooling for VSPA; conceptual development of Compass PGA;
assembly of working prototypes of the Archistrat workstation and the
initiation of the beta testing of such prototypes; and the development of a
new processor board utilizing DEC's Alpha microprocessor.

Depreciation expense increased to $560,717 in fiscal year 1996 from $54,882 in
fiscal year 1995.  This increase is primarily due to the acquisition of office
furniture and equipment resulting from the hiring of additional full-time
personnel, and the acquisition of machinery and equipment necessary to develop
the capability and capacity to manufacture VSPA as well as the Compass
Connectors.

Interest and other income for fiscal year 1996 increased to $997,642 from
$307,828 in fiscal year 1995.  Average outstanding balances in cash and cash
equivalents increased significantly following the July 1995 private placement
in which the Company received net proceeds of approximately $28.4 million from
the sale of 1,197,627 shares of common stock and the issuance of warrants to
purchase 399,209 shares of common stock.

LIQUIDITY AND CAPITAL RESOURCES 

The Company's capital requirements in connection with its operations and
development activities have been and may continue to be significant.  During
the year ending March 31, 1998, the Company expects to continue development of
its Technology Products and transition its current modular workstations and
server products into full scale commercialization.  In addition, the Company
expects to realize royalty revenue during fiscal year 1998 related to its
Technology Products from the arrangements announced throughout the year ended
March 31, 1997, including, but not limited to, license agreements with LG
Cable & Machinery, Pantronix Corporation and AMP Incorporated.  The Company
also expects to continue to earn revenues related to the cooperative
development agreement entered into with the U.S. Government during fiscal year
1997.  Further, the Company anticipates entering into additional licensing
agreements during fiscal year 1998 that will generate licensing fees for the
Company.  However,  there can be no assurance that revenues from any or all of
these sources will in fact be realized on the timetable anticipated by the
Company or that the Company will become profitable in the foreseeable future.

The Company has been dependent upon the proceeds of sales of its securities to
fund its activities since inception.  The Company expects that the increased
shipments of Archistrat Computers and the related revenue, as well as
licensing and royalty revenue, and revenue associated with the cooperative
development agreement, noted above will provide additional resources to at
least partially fund its activities during fiscal year 1998.  

During fiscal year 1997, the Company successfully implemented a cost reduction
plan and was able to significantly decrease the amount of average monthly cash
consumption.  Cash flows used by operating activities decreased $7.7 million
from $23.7 million during fiscal year 1996 to $16 million during fiscal year
1997.  The Company will continue to focus on cost controls during fiscal year
1998 and will take further cost reduction actions as deemed necessary.
However, there can be no assurances that such efforts will be successful or  
<PAGE>
Page 19

that such plans will result in adequate cost reductions.  

The Company is dependent upon the success of the efforts discussed above to
expand its marketing activities in order to obtain additional orders for its
Archistrat Computers, to continue efforts that may lead to the
commercialization of additional products and technologies and to finance other
working capital requirements.  The Company may need to seek additional sources
of funding during fiscal year 1998 in order to achieve its goals.

As of March 31, 1997, the Company had working capital of approximately $2
million.  In addition, during April 1997, the Company issued $4.8 million of
4% convertible subordinated debentures to private investors in a transaction
pursuant to Regulation S under the Securities Act of 1933 and received net
proceeds of approximately $4.6 million. Through June 23, 1997, $2,520,000 of
such debentures had been converted into an aggregate of 975,453 shares of the
Company s common stock.  The Company has agreed to effect the registration of
the shares issuable upon conversion of the debentures in the event of certain
amendments to Regulation S.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

The following factors, among others, could cause actual results to differ
materially from those contained in forward looking statements made in this
Annual Report on Form 10-K and presented elsewhere by management from time to
time.

1. LIMITED PRODUCT DEVELOPMENT AND OPERATING HISTORY. Although the Company has
recently begun commercialization of certain products, other products and
technologies are undergoing additional testing and certification which may
ultimately lead to their commercialization. The Company's viability,
profitability and growth will depend in part upon successful commercialization
of these other products and technologies. There can be no assurance that these
efforts will be successful or that any of the proposed additional products
will be developed successfully. Further, the Company has a limited operating
history upon which an evaluation of its prospects can be made. Such prospects
must be considered in light of the risks, expenses and difficulties frequently
encountered in the establishment of a new business in the evolving electronics
industry, which is characterized by an increasing number of market entrants
and intense competition, as well as those encountered in the shift from
development to commercialization of new products based on innovative
technologies. 

2. LIMITED REVENUES; HISTORY OF SIGNIFICANT LOSSES; ACCUMULATED DEFICIT;
ANTICIPATED FUTURE LOSSES. To date, the Company has generated limited revenues
from the sale of its Archistrat Computers; the Company does not anticipate
deriving larger revenues from operations until such time, if ever, that
greater numbers of its Archistrat Computers and other computers are sold and
its semiconductor packaging and connector products can be manufactured and
licensed or successfully commercialized, as to which there can be no
assurance. Further, of the $2.4 million of revenues recognized in the year
ended March 31, 1997, $923,000 related to a barter transaction with a software
developer wherein the Company accepted software licenses, consulting and
training services, and services associated with the certification of one model
of the Archistrat Computers to use the software developer's CAD program and
porting the software onto the product, in exchange for 53 of its Archistrat
Computers. Management believes the amount of revenue recognized reflects the
fair value of the licenses and other services received and approximated the
normal selling price of the servers. Since inception (April 8, 1992), the 
<PAGE>
Page 20

Company has incurred significant net losses, including losses of $1,800,340,
$6,931,346, $23,894,426 and $20,874,101 during the fiscal years ended March
31, 1994, 1995, 1996 and 1997, respectively, resulting in an accumulated
deficit of $53,915,901 as of March 31, 1997. In addition, the Company
anticipates substantial losses to continue in the foreseeable future. Inasmuch
as the Company will continue to have a high level of operating expenses and
will be required to make significant expenditures in connection with its
research and development and manufacturing and marketing activities (including
salaries of executive, technical and research and development personnel), the
Company anticipates that such losses will continue until such time, if ever,
as the Company is able to generate sufficient revenues to support its
operations. There can be no assurance that the Company will ever be able to
generate sufficient revenues to achieve profitable operations. 

3. SIGNIFICANT CAPITAL REQUIREMENTS; POSSIBLE NEED FOR ADDITIONAL FINANCING.
The Company's capital requirements in connection with its operations and
development activities have been and may continue to be significant. The
Company has been dependent primarily upon the proceeds of sales of its
securities to fund its activities since inception. During the period from
inception through March 31, 1997, the Company raised capital of approximately
$58,000,000 (after deduction of underwriting discounts, commissions and other
selling costs) through the sale of Common Stock and warrants, and from the
exercise of stock options and warrants. Since June 1996, the Company has
entered into five agreements to license its VSPA and Compass Connector
technologies and began to receive revenues under one of these agreements
during the year end March 31, 1997. The Company anticipates receiving revenues
under one or more of the other agreements by the end of the first quarter of
the Company's fiscal year which begins on April 1, 1997. In addition, the
Company has taken actions to significantly reduce its expenses in all areas
including compensation and benefits, research and development and selling and
administrative expenses. 

In the event the Company's working capital, as augmented by proceeds from any
sales revenue prove to be insufficient to fund operations (due to
unanticipated expenses, delays, problems, or otherwise), the Company would be
required to seek additional financing. Furthermore, depending upon the
Company's progress in the development of its products and technology and
manufacturing capabilities, acceptance of its products and technology by third
parties, and the state of the capital markets, the Company may also determine
that it is advisable to raise additional equity capital. In addition, in the
event that the Company receives a larger than anticipated number of purchase
orders for its Archistrat Computers or VSPA semiconductor package, it may
require resources substantially greater than it currently has or than are
otherwise available to the Company, and the Company may be required to raise
additional capital or engage third parties (as to which engagement there can
be no assurance) to assist the Company in meeting such orders. The Company has
no current arrangements with respect to, or sources of, additional financing,
and there can be no assurance that additional financing will be available to
the Company when needed on commercially reasonable terms or at all. The
inability of the Company to obtain additional financing when needed would have
a material adverse effect on the Company, including possibly requiring the
Company to significantly curtail or cease its operations. To the extent that
any future financing involves the sale of the Company's equity securities, the
Company's then existing stockholders may be substantially diluted. 

4. UNCERTAINTY OF MARKET ACCEPTANCE. The products and technologies currently
being sold or developed by the Company utilize newly developed designs.
Although the Company believes that its existing and proposed technology and 
<PAGE>
Page 21

products represent significant advancements in semiconductor packaging and
computer technology, demand for the Company's existing and proposed products
is subject to a high degree of uncertainty, as is typical in the case of
newly-developed products. Achieving marketing acceptance for the Company's
technology and existing and proposed products will require substantial
marketing efforts and expenditure of significant funds to educate key original
equipment manufacturers ("OEMs") and value-added resellers ("VARs") and end
users as to the distinctive characteristics and anticipated benefits of the
Company's proposed products and technologies. Many OEMs and VARs manufacture
and/or sell components and computers competitive with those being developed by
the Company and have achieved significant market acceptance for their
products. Accordingly, due to their commitment to their own products, such
entities may be inhibited from doing business with the Company. In addition,
many OEMs and VARs may be reluctant to use or sell the Company's products and
technologies until a sufficient number of other OEMs and VARs have already
committed to do so. The Company currently has limited marketing experience and
limited financial, personnel and other resources to undertake the extensive
marketing activities that will be necessary to market its products and
technologies as their development is completed. The Company's ability to
generate revenue from the sale of Archistrat Computers or the licensing or
sale of Technology Products will be dependent upon, among other things, its
ability to build an effective sales organization. There can be no assurance
that the Company will be able to formalize any marketing arrangements or that
its marketing efforts will be successful. 

5. UNCERTAINTY OF PRODUCT AND TECHNOLOGY DEVELOPMENT; TECHNOLOGICAL FACTORS;
DEPENDENCE ON THIRD-PARTY PRODUCT DESIGN CHANGES. Although Archistrat
Computers have been sold in limited quantities, the Company's Technology
Products have not been fully commercialized and some remain in various stages
of development. The Company's development efforts are subject to all of the
risks inherent in the development of new products and technology (including
unanticipated delays, expenses or technical or other problems, as well as the
possible insufficiency of funding to complete development). The Company's
success will depend in part upon its products and technology meeting
acceptable cost and performance criteria, and upon their timely introduction
into the marketplace. There can be no assurance that the Company's products
and technology which have not yet been commercialized will ever be
successfully developed, and even if developed, that they will satisfactorily
perform the functions for which they are designed, that they will meet
applicable price or performance objectives or that unanticipated technical or
other problems will not occur which would result in increased costs or
material delays in their development or commercialization. In addition,
technology as complex as that which will be incorporated into the Company's
proposed products may contain errors which become apparent subsequent to
widespread commercial use. Remedying such errors could delay the Company's
plans and cause it to incur additional costs which would have a material
adverse effect on the Company. The Company's success will also be dependent
upon the Company's ability to adapt its products to be compatible with the
products of third-party manufacturers of computer products. In addition, the
Company will be dependent on certain potential customers redesigning or
otherwise modifying their products to fully utilize the Company's proposed
products and technology. Although the Company believes that potential
customers will undertake such modifications to take advantage of the
anticipated performance advantages of the Company's proposed products, the
costs of making such adaptations could prevent them from doing so on a timely
basis, or at all. The failure of the Company to adapt its products and
technology to be compatible with products of third-party manufacturers or the
failure of potential customers to make necessary modifications or to redesign 
<PAGE>
Page 22

their products to accommodate the Company's products could have a material
adverse effect on the Company's ability to sell or license its proposed
products or technology. 

6. COMPETITION; TECHNOLOGICAL OBSOLESCENCE. The markets that the Company
intends to enter are characterized by intense competition. The Company's
Archistrat Computers compete with computers offered by such companies as
Silicon Graphics, Inc., Digital Equipment Corp., Hewlett-Packard Co., and
Compaq Computer Corporation. The Company's Technology Products compete with
semiconductor packages and connectors offered by numerous manufacturers. Many
of these companies have substantially greater financial, technical, personnel
and other resources than the Company and have established reputations for
success in the development, licensing, sale and servicing of their products
and technology. Certain of these competitors dominate their industries and
have the financial resources necessary to enable them to withstand substantial
price competition or downturns in the market for semiconductor packages,
related technologies and/or computers. In addition, certain companies may be
developing technologies or products of which the Company is unaware, which may
be functionally similar, or superior, to some or all of those being developed
by the Company. The markets for the technology and products being developed by
the Company are characterized by rapid changes and evolving industry standards
often resulting in product obsolescence or short product life cycles.
Accordingly, the ability of the Company to compete will depend on its ability
to complete development and introduce to the marketplace in a timely and cost-
competitive manner additional products and technology, to continually enhance
and improve its existing and proposed products and technology, to adapt its
proposed products to be compatible with specific products manufactured by
others, and to successfully develop and market new products and technology.
There can be no assurance that the Company will be able to compete
successfully, that its competitors or future competitors will not develop
technologies or products that render the Company's proposed products and
technology obsolete or less marketable or that the Company will be able to
successfully enhance its proposed products or technology or adapt them
satisfactorily. 

7. DEPENDENCE ON MANUFACTURERS AND SUPPLIERS; LACK OF MANUFACTURING EXPERIENCE
AND CAPABILITY. The Company has developed the ability to manufacture the VSPA
semiconductor package in limited quantities in its own facility in Boca Raton,
Florida.  The machinery used in the manufacturing process has been designed
and built by the Company, primarily for the purpose of demonstrating the
principles of manufacturing VSPA in high volumes.  The Company has designed
and is currently building its first automated machine to produce VSPA parts in
volumes based on anticipated customer demand.  The machine has been designed
to have a wide range of flexibility in terms of the pin count of the VSPA
packages it will produce, and its expected production capacity ranges from
200,000 parts per month to 235,000 parts per month, depending upon the pin
count of the package.  However, there can be no assurance that the Company
will be able to complete the build of the machine within the a reasonable
period of time, or that, if completed, it will function as designed and be
capable of producing the quantities of VSPA that are anticipated.  In the
event the Company is unable to build a machine that can produce VSPA in high
volumes within a reasonable period of time, or at all, delays in securing
alternative manufacturing sources would result and would have a material
adverse effect on the Company s operations.

The Company has developed the capability to manufacture the Compass Connector
products required for its Archistrat Computers in its own facility in Boca
Raton, Florida. The Company has also entered into an agreement with Sun 
<PAGE>
Page 23

Precision Works, Pvt. Ltd. for the production of the male connector component
of the Compass Connector. Although the Company's supply of this component is
currently adequate to meet its needs, no assurance can be given that such
supplier can produce such component in sufficient quantities in the future, or
that the Company will be able to develop an alternative source of supply
within its projected development schedules, or at all. 

The Company expects that significant commercialization of the Technology
Products will require it to enter into direct licensing arrangements, joint
ventures or strategic alliances with respect to the manufacture of certain of
its Technology Products. If the Company is unsuccessful in developing such
manufacturing capabilities or in licensing certain products and technology
being developed or in developing relationships with manufacturers and
suppliers, its lack of manufacturing capabilities could limit its ability to
otherwise commercialize such products. 

The Company anticipates that it will be dependent on third parties for the
manufacture and/or assembly of printed circuit boards, chassis and other
subassemblies, as well as for the supply of various of the components,
incorporated into the Archistrat Computers, and for performing the final
assembly configuration, certain quality control testing and delivery of such
computers. Although the Company's agreement with Group Technologies
Corporation has expired, the Company has identified certain other potential
manufacturers and suppliers for its subassembly and component needs, however,
the Company has not yet entered into any additional manufacturing or supply
arrangements. The Company believes it will be able to negotiate satisfactory
manufacturing and supply contracts; however, the failure to do so could have a
material adverse effect on the Company. Even if the Company were able to enter
into suitable manufacturing arrangements for necessary subassemblies, there
can be no assurance that such manufacturers will dedicate sufficient
production capacity to satisfy the Company's requirements within scheduled
delivery times or at all. In addition, the failure or delay by the Company's
suppliers in fulfilling its anticipated component needs would adversely affect
the Company's ability to develop and market its products and technology. While
the Company believes that these components are available from multiple
sources, the Company anticipates that it will obtain certain of them from a
single or limited number of sources of supply. In the event that certain of
such suppliers are unable or unwilling to provide the Company with components
to be used in the Archistrat Computers on commercially reasonable terms, or at
all, delays in securing alternative sources of supply could result in a
material adverse effect on the Company's operations. 

At a future date, the Company may determine that the development of
manufacturing capabilities with respect to the Archistrat Computers (and/or
their subassemblies or components) is necessary or appropriate. To date, the
Company has manufactured limited commercial quantities of such computers. The
Company does not currently have the staff or the facilities necessary to
manufacture, assemble and/or configure its proposed computers internally in
large commercial quantities. The establishment of manufacturing and/or
assembly capabilities may result in significant expense and is subject to
numerous risks, including unanticipated technological problems and delays. The
failure of the Company to successfully manufacture its Archistrat Computers
would have a material adverse effect on the Company. 

8. DEPENDENCE ON KEY PERSONNEL. The success of the Company will be dependent
on the continued personal efforts of Stanford W. Crane, Jr., its Chairman and
Chief Executive Officer and the principal inventor of its proprietary products
and technologies, and certain other key personnel. Although Mr. Crane has 
<PAGE>
Page 24

entered into a five-year employment agreement with the Company, the agreement
provides that he may resign by giving six months' notice at any time. The loss
of his services would have a material adverse effect on the Company. The
Company has obtained key-man insurance on Mr. Crane's life in the amount of
$2,000,000. The success of the Company also is dependent upon its ability to
hire and retain additional qualified executive, scientific, production and
marketing personnel. Although the Company has been able to hire qualified
personnel, there can be no assurance that the Company will be able to hire
additional qualified personnel or retain such necessary personnel. 

9. PATENTS AND PROPRIETARY INFORMATION. The Company's success will depend on
its ability to obtain patents, protect trade secrets, and operate without
infringing on the proprietary rights of others. As of May 31, 1997, the
Company had obtained seven United States patents and an aggregate of 33
foreign patents.  In addition, the Company had pending a total of 18 United
States and 33 foreign patent applications.  These patents and pending
applications relate to VSPA, Compass PGA, the Archistrat Computers design, the
use of the Compass Connector in Compass PGA and in the Archistrat Computers,
and a PCB manufacturing technology known as  Well Tech PCB .  The Company s
foreign patent filings have been made in selected countries, including the
Republic of China (Taiwan), Germany, the United Kingdom, Ireland and France. 
The Company will continue to file applications in certain foreign
jurisdictions to secure protection in those jurisdictions in accordance with
the Patent Cooperation Treaty and the Paris Convention for the Production of
Industrial Property (which allows such filings to relate back to the original
filing date in the United States) covering the Company s technology and
proposed products.  To the extent possible, the Company also intends to file
patent applications with respect to products and technology that it may
develop in the future.

There can be no assurance that any of the Company's pending patent
applications will ultimately result in an issued patent. Moreover, the patent
laws of other countries may differ from those of the United States as to the
patentability of the Company's products or technology, and the degree of
protection afforded by foreign patents may be different from that in the
United States. The failure by the Company to obtain patents for which
applications are currently pending could have a material adverse effect on the
Company's ability to commercialize successfully its proposed technology and
products. Even if the Company is able to obtain such patents, there can be no
assurance that any such patents will afford the Company commercially
significant protection for its technology or products. In addition, other
companies may independently develop equivalent or superior technologies or
products and may obtain patent or similar rights with respect to them.
Although the Company believes that its technology has been independently
developed and that its technology does not infringe on the patents or violate
the proprietary rights of others, there can be no assurance that any of the
Company's technology or products, will not be determined to infringe upon the
patents or proprietary rights of others, or that patents or proprietary rights
of others will not have an adverse effect on the ability of the Company to do
business. If the Company's technology or products were determined to infringe
on the patents, trademarks or proprietary rights of others, the Company could,
under certain circumstances, become liable for damages, which also could have
a material adverse effect on the Company. Moreover, in the event that the
Company's technology or proposed products were deemed to infringe upon the
rights of others, the Company would be required to obtain licenses to utilize
such technology. There can be no assurance that the Company would be able to
obtain such licenses in a timely manner or on acceptable terms and conditions,
and the failure to do so could have a material adverse effect on the Company. 
<PAGE>
Page 25

If the Company were unable to obtain such licenses, it could encounter
significant delays in product market introductions while it attempted to
design around the infringed upon patents or rights, or could find the
development, manufacture or sale of products requiring such licenses to be
foreclosed. In addition, patent disputes are common in the computer industry
and there can be no assurance that the Company will have the financial
resources to enforce or defend a patent infringement or proprietary rights
action. 

The Company relies on confidentiality and nondisclosure arrangements with its
employees, consultants and others involved with the Company s product and
technological development efforts.  There can be no assurance that these
agreements will provide meaningful protection to the Company or that other
companies will not acquire information which the Company considers
proprietary.  Moreover, there can be no assurance that other companies will
not independently develop know-how comparable or superior to that of the
Company.

The Company has registered the Archistrat and VSPA trademarks with the U.S.
Patent and Trademark Office and has applied for appropriate trademark,
copyright and other legal protection for its product names, logos and other
identifications.  There can be no assurance that the Company will not be
precluded by others from using any of such identifications or creating
proprietary rights with respect to them.

10. DEPENDENCE ON THE CRANE-PANDA LICENSING AGREEMENT; POTENTIAL CONFLICTS OF
INTEREST. Pursuant to a license agreement entered into in January 1996 between
the Company and Mr. Crane (the "Crane-Panda License"), Mr. Crane has granted
the Company the nonexclusive right to utilize the Compass Connector, a key
component in the commercialization of the Company's Archistrat Computers and
the development and commercialization of Compass PGA. The Crane-Panda License
was executed in connection with the conversion to a nonexclusive license of
the 3M License described below and supersedes an earlier license agreement
between Mr. Crane and the Company relating to the Compass Connector. Under the
Crane-Panda License, the Company is required to pay Mr. Crane a royalty on any
sales of Compass Connectors as discrete parts in the amount of 5% of the net
sales price for the first five years of the term of the agreement, 2.5% of the
net sales price for the next five years of the term of the agreement and 2% of
the net sales price thereafter, provided that no royalty is payable until
aggregate net sales of the Compass Connector as discrete parts exceed
$100,000. The royalty rate will be reduced after the fifth anniversary of the
agreement if no patent remains in effect with respect to the Compass
Connector. No royalty is payable on sales of the Compass Connector as
incorporated in the Archistrat Computers or other computer system or assembly.
The Company may grant sublicenses under the Crane-Panda License, but only for
the use of products as incorporated in the Archistrat Computers or other
computer system or assembly. To date, there have been no sales requiring the
payment of royalties to Mr. Crane under the Crane-Panda License. The Crane-
Panda License obligates the Company to maintain proprietary information
relating to the Compass Connector on a confidential basis, notify Mr. Crane of
any evidence of infringement with respect to the Compass Connector and related
technology, and cooperate with Mr. Crane to contest any such infringement. In
the event that the Company becomes bankrupt or insolvent or defaults in any of
its material obligations under the Crane-Panda License and fails to cure any
such defaults within specified cure periods, Mr. Crane may terminate the
Crane-Panda License. The Company is substantially dependent upon the Crane-
Panda License. The termination of the agreement under any circumstances would
have a material adverse effect on the Company. There can be no assurance that 
<PAGE>
Page 26

conflicts of interest will not arise with respect to the Crane-Panda License
or that such conflicts will be resolved in a manner favorable to the Company.
In addition, Mr. Crane retains ownership of the Compass Connector technology,
and has the right to grant licenses to or otherwise transfer rights to the
Compass Connector technology to third parties. 

In September 1992, Mr. Crane granted an exclusive license (the "3M License")
to Minnesota Mining and Manufacturing Co. ("3M") to develop, manufacture, use
and sell the Compass Connector other than as part of a computer system. In
February 1996, Mr. Crane and 3M agreed to convert the 3M License to a
nonexclusive license. The 3M License provides in certain circumstances for the
payment of a royalty to Mr. Crane. As of the date of this Prospectus, Mr.
Crane had received no such payments. 

11. SUBSTANTIAL CONTROL BY MANAGEMENT. As of the date of this report, officers
and directors of the Company own of record and beneficially approximately 39%
of the issued and outstanding shares of Common Stock and are thus able to
exert substantial influence over the policies and affairs of the Company. 

12. RISKS RELATING TO POTENTIAL INTERNATIONAL OPERATIONS. Although the Company
currently prices all of its international sales in U.S. dollars, future sales
or licensing of its products or technologies outside the U.S., may be subject
to the risks associated with fluctuations in currency exchange rates. The
Company may also be subject to other risks associated with international
operations, including tariff regulations and requirements for export licenses,
particularly with respect to the export of certain technologies (which
licenses may on occasion be delayed or difficult to obtain), unexpected
changes in regulatory requirements, longer accounts receivable requirements,
difficulties in managing international operations, potentially adverse tax
consequences, economic and political instability, restrictions on repatriation
of earnings, and the burdens of complying with a wide variety of foreign laws.
In addition, the laws of certain countries do not protect the Company's
products and intellectual property rights to the same extent as do the laws of
the United States. There can be no assurance that such factors will not have a
material adverse effect on the Company's future international sales or
licenses and, consequently, on the Company's business and operations as a
whole. 

13. 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 trading price of the Company's Common
Stock 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 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information required by this item is incorporated by reference from
pages F-1 through F-23 of this Annual Report on Form 10-K.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

                                     None
<PAGE>
Page 27

                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this item regarding directors of the Company
is incorporated by reference from the Registrant's definitive Proxy Statement
for its 1997 Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission not later than July 29, 1997.

     Set forth below are the names, ages as of June 1, 1997 and business
experience of the executive officers of the Company:

Name  Age  Position
----  ---  --------

Stanford W. Crane, Jr.   46   President, Chief Executive Officer 
                              and Chairman of the Board of Directors
William E. Ahearn        59   Vice President of Technology
Daryl Hollis             53   Chief Financial Officer and Secretary
Robert Toda              48   Vice President of Sales and Marketing
Babar Hamirani           30   Senior Vice President of Systems Operations

     STANFORD W. CRANE, JR. has served as President, Chief Executive Officer
and Chairman of the Board of Directors of the Company since its inception in
April 1992 and, since November 1993, as Senior Vice President - Product Design
and Development.  From May 1990 to April 1992, Mr. Crane was self-employed,
principally engaged in the development of the Compass Connector.  From 1984 to
April 1990, Mr. Crane was president of Crane Electronics, Inc., which supplied
advanced interconnection technology for military and commercial products. 
From 1980 until 1984, Mr. Crane was an executive at Molex Corporation, a
publicly-held corporation manufacturing and selling electronic interconnect
devices, and served from 1982 to 1984 on the Chairman's staff for the Advanced
Development Committee and assisted in marketing and strategic planning for
domestic and international operations.  From 1976 to 1980, Mr. Crane served as
a sales executive for AMP Incorporated, a manufacturer of electronic
components. 

     WILLIAM E. AHEARN joined the Company in March 1996 and served as
President of the Company's Archistrat Systems Division from April 1996 through
December 1996.  Since January  1997, he served as Vice President of
Technology.  From 1993 to 1996, he was Director of Multimedia Products at AMP
Incorporated.  From 1964 to 1993, Mr. Ahearn served in a variety of positions
at International Business Machines Corporation ("IBM"), including Product
Manager for Digital Video Interactive and Collaborative Work Products IBM
Europe, Product and Project Manager for Input/Output Technology Entry Systems
and Electro-Optical Technologies at IBM Corporate Headquarters, and as staff
member of IBM's T.J. Watson Research Center.  From 1984 to 1989, Mr. Ahearn
was a visiting scholar at the MIT Media Lab.

     C. DARYL HOLLIS has served as Chief Financial Officer of the Company
since June 1996.  From March 1993 through March 1996, Mr. Hollis was Senior
Vice President, Secretary and Treasurer of Pointe Financial Corporation, a
privately-held bank holding company.  From 1991 through February 1993, Mr.
Hollis was an independent business consultant. For more than 10 years prior to
1991, Mr. Hollis was a partner with Ernst & Young.
<PAGE>
Page 28

     ROBERT TODA has served as Vice President of Sales and Marketing of the
Company since July 1996.  From March 1995 to November 1995, Mr. Toda served as
Vice President of Channel Sales for Diamond Multimedia.  From June 1992 to
February 1995, Mr. Toda was President and Chief Executive Officer of LazerByte
Corporation, and from June 1987 through May 1992 he served in various sales
and marketing positions at Conner Peripherals including Vice President of
Worldwide Sales.  From 1983 to 1987, he served in sales management positions
with Seagate Technology and Sony Corporation of America.  Early in his career
Mr. Toda held positions at Apple Computer, Hewlett-Packard - HP Labs, APD HP
Labs, HP Advanced Products Division and Mobility Systems.  Mr. Toda graduated
from Stanford University with a BSME and MSME in Product Design and later
received his MBA from the same university.

     BABAR HAMIRANI has served as Senior Vice President of Systems Operation
of the Company since April 1997.  From 1995 to 1997, Mr. Hamirani was
President and Chief Technical Officer for Nexar Technologies, Inc., a company
he co-founded that is engaged in the development, manufacture and sale of
upgradable personal computers using proprietary designs developed by Mr.
Hamirani.  Earlier, Mr. Hamirani founded Intelligent Computers/Intellesys and
served as its President and Chief Executive Officer from 1993 to 1995.  Mr.
Hamirani also served in various executive capacities at Vertos/APAQ,
Synergistic Computer, and several mail order computer companies from 1984 to
1993.

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this item is incorporated by reference from
the Registrant's definitive Proxy Statement for its 1997 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission not later
than July 29, 1997.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is incorporated by reference from
the Registrant's definitive Proxy Statement for its 1997 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission not later
than July 29, 1997.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is incorporated by reference from
the Registrant's definitive Proxy Statement for its 1997 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission not later
than July 29, 1997.

                                   PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

      (A)     THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
             (1)  FINANCIAL STATEMENTS

                  The financial statements filed as part of this report are
listed on the Index to Financial Statements on page F-1 of this report.
<PAGE>
Page 29

             (2)  FINANCIAL STATEMENT SCHEDULES

                  Schedule II--Valuation and Qualifying Accounts on page F-23.

                  All other schedules are omitted as the information required
is inapplicable or the information is presented in the financial statements or
related notes.

             (3)  EXHIBITS

EXHIBIT
NUMBER   DESCRIPTION                                                      
------   -----------                                                      
3.1      Amended and Restated Articles of Incorporation of the Company
         (incorporated herein by reference to Exhibit 3.1, filed as part
         of the Company's Registration Statement on Form S-3 (File No. 333-
         14931) (the "Form S-3")).

3.2      Amended and Restated By-Laws of the Company (incorporated herein by
         reference to Exhibit 3.2 to the Company Registration Statement on
         Form SB-2 (File No. 33-76694-A) (the  Registration Statement )).

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 Registration Statement)

4.2      Form of Warrant issued in Private Placement Financing (incorporated
         herein by reference to Exhibit 99.3, filed as part of the Form S-3).

4.3      Form of SRP Warrant (incorporated herein by reference to Exhibit
         99.4, filed as part of the Form S-3).

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
         (incorporated herein by reference to Exhibit 4.2, filed as part of
         the Registrant s Form 8-K filed April 21, 1997).

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 Registration
         Statement).@

10.2     1993 Performance Incentive Plan, dated December 29, 1993
         (incorporated herein by reference to Exhibit 10.6 filed as part of
         the Registration Statement).@

10.3     Nonemployee Director Stock Option Plan, dated December 29, 1993, as
         amended on January 19, 1995 (incorporated herein by reference to
         Exhibit 4.6 filed as part of the Registrant's Registration Statement
         on Form S-8 filed with the Securities and Exchange Commission on
         April 5, 1995 (Registration No. 33-86948)).@

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
<PAGE>
Page 30

         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 Registration Statement).

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 10.9(c) 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.

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.

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 Registration Statement).

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).

10.9     Letter Agreement dated as of September 10, 1996 between the Company
         and Mallory Factor Inc. (incorporated herein by reference to Exhibit
         99.6 filed as part of the Form S-3).

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).

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).

10.12    License Agreement, dated as of September 30, 1996, among Stanford W.
<PAGE>
Page 31

         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).

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 with the Securities and Exchange Commission on February 14,
         1996).@

10.15    Agreement dated March 25, 1996, between the Company and Parametric
         Technology Corporation.

10.16    License Agreement dated June 7, 1996 among the Company, AMP
         Incorporated, The Whitaker Corporation and Connectware Inc.

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).

21       Subsidiaries of the Company.

23.1     Consent of Price Waterhouse LLP.

27       Financial Data Schedule.

---------------
@Management contracts and compensatory plans and arrangements.

      (b)     REPORTS ON FORM 8-K:

              None.
<PAGE>
Page 32

                               SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) 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.
                                            (Registrant)

Date:  June 27, 1997                        By:  /s/ Stanford W. Crane, Jr.
                                                 --------------------------
                                                 Stanford W. Crane, Jr.
                                                 Chairman of the Board
                                                 President and Chief 
                                                 Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Signature    Title     Date
---------    -----     ----

/s/ Stanford W. Crane, Jr.   President, Chief Executive   June 27, 1997
--------------------------   Officer and Chairman of the 
Stanford W. Crane, Jr.       Board (Principal Executive
                             Officer)

/s/ C. Daryl Hollis          Chief Financial              June 27, 1997
--------------------------   Officer and Secretary
C. Daryl Hollis              (Principal Financial and
                             Accounting Officer)

/s/ James T.A. Wooder        Director                     June 27, 1997
--------------------------
James T.A. Wooder

/s/ Claud L. Gingrich        Director                     June 27, 1997
--------------------------
Claud L. Gingrich

/s/ Rao R. Tummala           Director                     June 27, 1997
--------------------------
Dr. Rao R. Tummala
<PAGE>
Page F-1

The Panda Project, Inc.
Index to the Financial Statements
-----------------------------------------------------------------------------

                                                                       Page
                                                                       ----

Report of Independent Certified Public Accountants.................    F-2

Balance Sheets as of March 31, 1997 and 1996.......................    F-3

Statements of Operations for the three years ended March 31, 1997..    F-4

Statements of Changes in Stockholders' Equity 
for the three years ended March 31, 1997...........................    F-5

Statements of Cash Flows for the three years ended March 31, 1997..    F-6

Notes to Financial Statements...................................... F-7 - F-21

Report of Independent Certified Public Accountants on 
Financial Statement Schedule.......................................    F-22

Schedule II - Valuation and Qualifying Accounts....................    F-23
<PAGE>
Page F-2


              Report of Independent Certified Public Accountants


To the Board of Directors and Stockholders of
The Panda Project, Inc.

In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in stockholders' equity and of cash flows present
fairly, in all material respects, the financial position of The Panda Project,
Inc. at March 31, 1997 and 1996, and the results of its operations and its
cash flows for each of the three years in the period ended March 31, 1997 in
conformity with generally accepted accounting principles.  These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits.  We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable basis for the
opinion expressed above.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 2 to the
financial statements, the Company s recurring losses from operations and
limited capital resources  raise substantial doubt about the Company s ability
to continue as a going concern.  Management s plans in regard to these matters
are also described in Note 2.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



/s/Price Waterhouse LLP
-----------------------
PRICE WATERHOUSE LLP

Fort Lauderdale, Florida
May 22, 1997, except as to Note 16
    which is as of June 23, 1997
<PAGE>
Page F-3

The Panda Project, Inc.
Balance Sheets
As of March 31
----------------------------------------------------------------------------
                                                    1997            1996
ASSETS

Current Assets:
  Cash and cash equivalents                   $   3,243,505    $  10,731,540
  Accounts receivable (net of allowance of 
   $110,962 in 1997 and $171,943 in 1996)           165,093          311,375
  Inventory                                         822,309        1,616,022
  Other receivables                                  18,905          488,556
  Prepaid expenses and other current assets          98,963          246,942
                                              -------------    -------------
    Total current assets                          4,348,775       13,394,435
                                              -------------    -------------
Property and equipment, net                       2,823,798        4,315,199
Restricted cash                                     150,000          750,000
Other assets                                         14,747           98,047
                                              -------------    -------------
      Total assets                            $   7,337,320    $  18,557,681
                                              =============    =============
LIABILITIES AND STOCKHOLDERS' EQUITY 

Current Liabilities:
  Accounts payable                            $     852,388    $   2,904,690
  Accrued compensation and employee benefits         60,934          266,148
  Other current liabilities                       1,611,123          519,252
                                              -------------    -------------
    Total current liabilities                     2,524,445        3,690,090
                                              -------------    -------------

COMMITMENTS AND CONTINGENCIES -- NOTE 15

STOCKHOLDERS' EQUITY
  Common Stock, $.01 par value, 50,000,000
    shares authorized; 10,124,643 and 
    8,680,488 shares issued and outstanding 
    at March 31, 1997 and March 31, 1996,
    respectively                                    101,247           86,805
  Additional paid-in capital                     58,627,529       47,822,586
  Accumulated deficit                           (53,915,901)     (33,041,800)
                                              -------------    -------------
    Total stockholders' equity                    4,812,875       14,867,591
                                              -------------    -------------
      Total liabilities and 
       stockholders' equity                   $   7,337,320    $  18,557,681
                                              =============    =============
  The accompanying notes are an integral part of these financial statements.
<PAGE>
Page F-4

The Panda Project, Inc.
Statements of Operations
For the Years Ended on March 31
----------------------------------------------------------------------------

                                       1997           1996          1995

Revenues:
 Product sales                     $  1,758,138  $    881,518   $       -   
 Licensing fees                         100,000          -              -
 Contract research and development
   revenues                             734,123          -              -
 Less returns and allowances           (210,242)      (10,860)          -
                                   ------------  ------------   ------------
    Net revenues                      2,382,019       870,658           -

Operating expenses:
 Cost of sales                        2,762,936     1,997,101           -
 Research and development             5,722,717     7,954,924      3,494,260
 Selling, general and 
  administrative                     13,142,099    15,810,701      3,744,914
 Costs associated with asset
  impairments                         2,056,025          -              -
                                   ------------  ------------   ------------
   Total operating expenses          23,683,777    25,762,726      7,239,174
                                   ------------  ------------   ------------
Operating loss                      (21,301,758)  (24,892,068)    (7,239,174)

Interest income                         427,657       953,962        293,612
Other income                               -           43,680         14,216
                                   ------------  ------------   ------------
Net loss                           $(20,874,101) $(23,894,426)  $( 6,931,346)
                                   ============  ============   ============
Net loss per common share          $      (2.15) $      (3.07)  $      (1.25)
                                   ============  ============   ============
Weighted average number of shares
 of common stock and common stock 
 equivalents outstanding              9,723,801     7,786,426      5,531,941
                                   ============  ============   ============
  The accompanying notes are an integral part of these financial statements.
<PAGE>
Page F-5
<TABLE>

The Panda Project, Inc.
Statements of Changes in Stockholders  Equity
----------------------------------------------------------------------------------------------
<CAPTION>
                               Common Stock         Additional                      Total
                           ---------------------     Paid-in       Accumulated   Stockholders'
                             Shares    Par Value     Capital         Deficit    Equity (Deficit)
                           ----------  ---------  -------------  -------------  ---------------
<S>                         <C>        <C>        <C>            <C>            <C>
Balance at March 31, 1994   3,157,988  $  31,580  $   1,946,553  $  (2,216,028) $    (237,895)

Issuance of common stock    2,300,000     23,000      9,256,361           -          9,279,361
Issuance of common stock
pursuant to exercise of 
outstanding redeemable
warrants to purchase 
common stock                1,149,735     11,497      6,828,701           -          6,840,198

Issuance of common stock 
upon conversion of 
outstanding warrants           59,168        592        224,413           -            225,005

Net loss                         -          -              -        (6,931,346)     (6,931,346)
                           ----------  ---------  -------------  -------------  --------------
Balance at March 31, 1995   6,666,891     66,669     18,256,028     (9,147,374)      9,175,323
                           ----------  ---------  -------------  -------------  --------------

Exercise of warrants           27,917        279        107,222           -            107,501
Exercise of  stock options    788,053      7,881      1,039,201           -          1,047,082
Issuance of common stock    1,197,627     11,976     28,351,385           -         28,363,361
Issuance of options below
fair market value                -          -            68,750           -             68,750

Net loss                         -          -              -       (23,894,426)    (23,894,426)
                           ----------  ---------  -------------  -------------  --------------
Balance at March 31, 1996   8,680,488     86,805     47,822,586    (33,041,800)     14,867,591
                           ----------  ---------  -------------  -------------  --------------

Issuance of common stock    1,087,833     10,878      9,163,252           -          9,174,130
Exercise of stock options     305,487      3,056      1,373,193           -          1,376,249
Exercise of warrants           33,335        333        124,673           -            125,006
Warrants issued for
services received                -          -            39,000           -             39,000
Issuance of common stock in
connection with legal
settlement                     17,500        175        104,825           -            105,000

Net loss                         -          -              -       (20,874,101)    (20,874,101)
                           ----------  ---------  -------------  -------------  --------------
Balance at March 31, 1997  10,124,643  $ 101,247  $  58,627,529  $ (53,915,901) $    4,812,875
                           ==========  =========  =============  =============  ==============

           The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Page F-6
<TABLE>

The Panda Project, Inc.
Statements of Cash Flows
For the Years Ended on March 31
--------------------------------------------------------------------------------------
<CAPTION>
                                              1997            1996            1995
<S>                                       <C>             <C>             <C>
Cash flows from operating activities:
  Net loss                               $(20,874,101)   $(23,894,426)   $ (6,931,346)
Adjustments to reconcile net
 loss to net cash used 
 by operating activities:
   Depreciation                             1,595,549         560,717          54,882
   Provision for doubtful accounts            236,303         171,943            -
   Cost associated with asset impairments   2,056,025            -               -
   Other noncash charges                      144,000            -               -
   Stock option compensation                     -             68,750            -
Changes in operating assets 
 and liabilities:
   Increase in accounts receivable            (90,021)       (483,318)           -
   Decrease (increase) in 
    other receivables                         469,651        (488,556)           -    
   Decrease (increase) in prepaid 
    expenses and other current assets         147,979          60,981        (226,000)
   Decrease (increase) in inventory           793,713      (1,442,362)       (173,660)
   Decrease (increase) in restricted cash     600,000        (750,000)           -
   Decrease (increase) in other assets         83,300         (98,047)       (114,683)
   (Decrease) increase in accounts 
     payable, accrued compensation and 
     employee benefits, and other 
     current liabilities                   (1,165,645)      2,620,280         331,575
                                         ------------    ------------    ------------
NET CASH USED BY OPERATING ACTIVITIES     (16,003,247)    (23,674,038)     (7,059,232)
                                         ------------    ------------    ------------
Cash flows from investing activities:
   Additions to property and equipment     (2,160,173)     (3,593,664)     (1,263,407)
                                         ------------    ------------    ------------
NET CASH USED BY INVESTING ACTIVITY        (2,160,173)     (3,593,664)     (1,263,407)
                                         ------------    ------------    ------------

Cash flows from financing activities:
   Proceeds from issuance of stock         11,291,752      30,536,362      18,738,415
   Payment of stock issuance costs           (616,367)     (1,018,420)     (1,789,623)
   Repayments of notes payable                   -               -           (971,500)
                                         ------------    ------------    ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES  10,675,385      29,517,942      15,977,292
                                         ------------    ------------    ------------
NET (DECREASE) INCREASE IN CASH 
AND CASH EQUIVALENTS                       (7,488,035)      2,250,240       7,654,653

CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD                                  10,731,540       8,481,300         826,647
                                         ------------    ------------    ------------
CASH AND CASH EQUIVALENTS AT END 
OF PERIOD                                $  3,243,505    $ 10,731,540    $  8,481,300
                                         ============    ============    ============

Supplemental disclosures of cash flow information:
-------------------------------------------------
Interest paid                            $       -       $      -        $     30,924
                                         ============    ============    ============

        The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Page F-7 
The Panda Project, Inc.
Notes to Financial Statements
March 31, 1997
---------------------------------------------------------------------------

1.  DESCRIPTION OF BUSINESS:

    The Panda Project, Inc. (the "Company") designs, develops, and licenses
    various products incorporating the Company s proprietary semiconductor
    packaging and interconnect technology, and designs, develops,
    manufactures, markets, services and supports powerful, modular, universal
    platform computers, including servers and workstations. The Company
    markets its products and services under the Archistrat brand name through
    value-added resellers and directly to its customers. These customers
    include corporate, government, and educational institution accounts. 
    Based in Boca Raton, Florida, the Company conducts operations worldwide
    and has an inactive wholly-owned subsidiary, Archistrat Corporation, a
    Delaware corporation.

2.  LIQUIDITY AND CAPITAL RESOURCES:

    The Company's capital requirements in connection with its operations and
    development activities have been and will continue to be significant. 
    During the year ending March 31, 1998, the Company expects to continue
    development of its Technology Products and transition its current modular
    workstations and server products into full scale commercialization.  In
    addition, the Company expects to realize royalty revenue during fiscal
    year 1998 related to its Technology Products from the arrangements
    announced throughout the year ended March 31, 1997, including, but not
    limited to, license agreements with LG Cable & Machinery, Ltd., Pantronix
    Corporation and AMP Inc.  The Company also expects to continue to earn
    revenues during fiscal year 1998 related to its cooperative development
    agreement entered into with the U.S. Government (see Note 12).  Further,
    the Company anticipates entering into additional licensing agreements
    during fiscal year 1998 that will generate licensing fees for the Company. 
    However,  there can be no assurance that revenues from any or all of these
    sources will in fact be realized on the timetable anticipated by the
    Company.

    The Company has been dependent upon the proceeds of sales of its
    securities to fund its activities since inception.  The Company expects
    that the increased shipments of Archistrat Computers and the related
    revenue, as well as licensing and royalty revenue, and revenue associated
    with the cooperative development agreement, noted above will provide
    additional resources to at least partially fund its activities during
    fiscal year 1998.

    During fiscal year 1997, the Company successfully implemented a cost
    reduction plan and was able to significantly decrease the amount of
    average monthly cash consumption.  Cash flows used by operating activities
    decreased $7.7 million from $23.7 million used during fiscal year 1996 to
    $16 million used during fiscal year 1997. The Company will continue to
    focus on cost controls during fiscal year 1998 and will take further cost
    reduction actions as deemed necessary.  However, there can be no
    assurances that such efforts will be successful or that such plans will
    result in adequate cost reductions.

    The Company is dependent upon the success of the efforts discussed above
    to expand its marketing activities in order to obtain additional orders
<PAGE>
Page F-8

2.  LIQUIDITY AND CAPITAL RESOURCES: (CONT D)

    for its Archistrat Computers, to continue efforts that may lead to the
    commercialization of additional products and technologies and to finance
    other working capital requirements.  The Company may need to seek
    additional sources of funding during fiscal year 1998 in order to achieve
    its goals.

    As of March 31, 1997, the Company had working capital of approximately
    $1.8 million.  In addition, during April 1997, the Company issued $4.8
    million of 4% convertible subordinated debentures to private investors and
    received net proceeds of approximately $4.6 million (see Note 16).

3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

    Use of Estimates
    ----------------
    The preparation of financial statements in accordance with generally
    accepted accounting principles requires management to make estimates and
    assumptions that affect the reported amounts of assets and liabilities,
    the disclosure of contingent assets and liabilities at fiscal year end and
    the reported amounts of revenues and expenses during the fiscal year. 
    Actual results could differ from those estimates. 

    Cash and Cash Equivalents
    -------------------------
    The Company considers all highly liquid investments with an original
    maturity of three months or less to be cash equivalents.

    Accounts Receivable
    -------------------
    The Company has business activities with large corporate, and government
    customers as well as a variety of small end-users.  The Company has
    adopted credit policies and standards intended to accommodate industry
    growth and inherent risk.  Management believes that credit risks are
    moderated by the diversity of its customers and geographic sales areas. 
    The Company performs ongoing credit evaluations of its customers 
    financial condition and requires collateral as deemed necessary.  There
    can be no assurance that the credit quality of the customers with which
    the Company transacts business will be stable or that efforts to diversify
    receivables will prevent the Company from incurring material losses.

    Inventory
    ---------
    Inventory is stated at the lower of cost using a first-in, first-out
    basis, or market.  Reserves are provided for excess and obsolete
    inventory.

    Property and Equipment
    ----------------------
    Property and equipment are recorded at cost and depreciated using the
    straight-line method over their estimated useful lives, which range from
    three to ten years.  Maintenance and repair costs are expensed as
    incurred.  
<PAGE>
Page F-9
3.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONT D)

    Revenue Recognition
    -------------------
    The Company recognizes revenue from product sales generally at the time of
    shipment.  Licensing fees are recognized as received.  Contract research
    and development revenue are recorded upon the achievement of stated
    milestones.

    Loss Per Share
    --------------
    Net loss per common share has been computed on the basis of the weighted
    average number of common shares outstanding during the related period.
    Common stock equivalents, consisting of stock options and stock warrants,
    have been excluded from net loss per common share calculations because
    they are anti-dilutive in all periods presented.

    Income Taxes
    ------------
    The Company has adopted Statement of Financial Accounting Standards No.
    109 (FAS 109), Accounting for Income Taxes.  FAS 109 is an asset and
    liability approach that requires the recognition of deferred liabilities
    and assets for the expected future tax consequences of events that have
    been recognized in the Company's financial statements or tax returns. 
    Under FAS 109, the tax effects of future taxable temporary differences
    (liabilities) and future deductible temporary differences (assets) are
    separately calculated and recorded based upon differences between the
    carrying amounts and the tax bases of other assets and liabilities.

    Long-Lived Assets
    -----------------
    Effective April 1, 1996, the Company has adopted Financial Accounting
    Standard No. 121 (FAS 121), Accounting for the Impairment of Long-Lived
    Assets and for Long-Lived Assets to be Disposed Of.  FAS 121 requires that
    long-lived assets and certain identifiable intangibles to be held and used
    by an entity be reviewed for impairment whenever events or changes in
    circumstances indicate that the carrying amount of an asset may not be
    recoverable such that assets to be disposed of be reported at the lower of
    carrying amount or fair value less cost to sell. 

    Stock-Based Compensation
    ------------------------
    Effective April 1, 1996, the Company has adopted the disclosure provisions
    of Financial Accounting Standard No. 123 (FAS 123), Accounting for Stock-
    Based Compensation.  The Company will continue to measure compensation
    expense for its stock-based employee compensation plans using the
    intrinsic value method prescribed by APB No. 25, Accounting for Stock
    Issued to Employees, and will provide pro forma disclosures of operating
    results and related per share data as if the fair value-based method
    prescribed by FAS 123 had been applied in measuring compensation expense.  

    Reclassification
    ----------------
    Certain reclassifications have been made to the accompanying fiscal 1996
    financial statements to conform to the fiscal 1997 presentation.
<PAGE>
Page F-10
4.  FAIR VALUE OF FINANCIAL INSTRUMENTS:

    The carrying amount of cash, accounts receivable, accounts payable, and
    accrued compensation and employee benefits approximates fair value due to
    the relatively short-term maturity of these instruments.

5.  RESTRICTED CASH:

    Restricted cash at March 31, 1996 represented a certificate of deposit
    which had been pledged as collateral for a standby letter of credit issued
    by the Company used as security for payment for orders placed by the
    Company and for performance under a manufacturing agreement.  The standby
    letter of credit expired December 31, 1996.  Restricted cash as of March
    31, 1997 consists of cash  in a restricted account to serve as collateral
    for an automated clearing house agreement with the Company s bank.

6.  INVENTORY:

    Inventory, net of allowances for slow-moving and obsolete items, at March
    31 consists of the following:
                                              1997         1996

            Raw Materials                $   434,569   $   937,388
            Work in Process                   43,341       225,872
            Finished Goods                   344,399       452,762
                                         -----------   -----------
                                         $   822,309   $ 1,616,022
                                         ===========   ===========

    Inventory reserves totaled $250,000 and $128,000 at March 31, 1997 and
    1996, respectively. Given the rapid pace of technological development in
    the computer industry, these inventories are at risk of becoming
    technologically obsolete.

7.  PROPERTY AND EQUIPMENT:

    Property and equipment at March 31 consists of the following:

                                      Estimated
                                        Useful
                                        Lives        1997        1996

    Office furniture and equipment   3-10 years   $ 3,149,374  $ 3,135,605
    Machinery and equipment          3-5 years        850,945    1,253,562
    Trade show booth and exhibit      5 years         407,575      383,027
    Motor vehicles                    5 years          54,402       54,402
    Leasehold improvement             5 years         501,463         -
    Construction in progress                             -         139,345
    Less:  Accumulated depreciation                (2,139,961)    (650,742)
                                                  -----------  -----------
     Total property and equipment, net            $ 2,823,798  $ 4,315,199
                                                  ===========  ===========

Depreciation expense for the years ended March 31, 1997, 1996 and 1995 totaled
$1,595,549, $560,717 and $54,882, respectively.
<PAGE>
Page F-11
7.  PROPERTY AND EQUIPMENT: (CONT D)

    During the year ended March 31, 1997, the Company determined that, due to
    various events and changes in circumstances (including efforts to
    streamline operations and to increase the use of strategic alliances to
    manufacture and market the Company s products), certain long-lived assets
    were impaired.  As a result, the Company recorded charges totaling
    approximately $2,056,000.  Of this total, approximately $1,040,000 relates
    to computer equipment and software, approximately $467,000 relates to
    demonstration and promotional equipment and approximately $520,000 relates
    to production equipment and tooling.  The Company determined the amount of
    the asset impairment charge using various valuation techniques.

8.  OTHER CURRENT LIABILITIES:

    The components of other current liabilities as of March 31 are as follows:


                                      1997           1996

       Provision for warranties   $   200,000    $   158,852
       Accrual for lease costs        323,448           -
       Other                        1,087,675        360,400
                                  -----------    -----------
                                  $ 1,611,123    $   519,252
                                  ===========    ===========
9.  COMMON STOCK:

    On May 24, 1994, the Company completed an initial public offering of
    2,000,000 shares of the Company's common stock and redeemable warrants to
    purchase 1,150,000 shares of common stock.  On June 15, 1994, pursuant to
    the underwriter's over-allotment option, the Company sold an additional
    300,000 shares of common stock. Total proceeds received from the initial
    public offering and the exercise of the over-allotment option, net of
    $2,335,639 of issuance costs, amounted to $9,279,361.
  
    In December 1994, the Company exercised its right to call for redemption
    its publicly issued outstanding redeemable common stock purchase
    warrants.  Each warrant entitled the holder to purchase one share of the
    Company s common stock at an exercise price of $6.00 per share and
    remained exercisable until January 31, 1995.  Any warrants which were not
    exercised on or prior to January 31, 1995 were redeemed by the Company at
    a price of $.10 per warrant.  As of  March 31, 1995, 1,149,735 redeemable
    common stock warrants were exercised to purchase shares of the Company s
    common stock.  The remaining 265 redeemable common stock warrants were
    redeemed for an aggregate of $26.50. Total proceeds received from the
    exercise of redeemable common stock warrants, net of $58,212 of issuance
    costs, amounted to $6,840,198.

    In July 1995, the Company consummated a private placement to accredited
    investors of 399,209 units at a purchase price of $73.60 per unit.  Each
    unit consisted of three shares of common stock and one warrant to purchase
    one share of common stock at an exercise price of $40.00 per share,
    exercisable beginning in July 1996 and expiring in July 2001, resulting in
    the issuance by the Company of an aggregate of 1,197,627 shares and
    399,209 warrants.  The Company received proceeds of approximately $28.4
    million from the private placement, net of expenses of $1,018,420.

    In July 1996, the Company completed the sale of 1,087,833 shares of its
<PAGE>
Page F-12
9.  COMMON STOCK: (CONT D)

    common stock in a private placement to accredited investors.  The Company
    received proceeds of approximately $9.2 million, net of expenses of
    approximately $600,000.  In addition to the shares of common stock
    purchased by each investor in the placement, such investor received a
    warrant to purchase an equal number of shares of common stock at an
    exercise price of $11 per share.  The warrants expire in July 2001 and are
    callable by the Company when the Company s common stock trades at a price
    of $26 or more for thirty consecutive trading days.

    At the Company s annual meeting of shareholders held in August 1996, the
    shareholders approved an increase in the number of authorized shares of
    common stock from 20 million shares to 50 million shares.

10. STOCK OPTIONS PLANS:

    The Company maintains three stock option plans as follows: 1993
    Performance Incentive Plan ( 1993 Plan ), Non-Employee Director Stock
    Option Plan ("Director Plan"), and the 1995 Employee Stock Incentive Plan
    ("1995 Plan").  Under the 1993 Plan and the 1995 Plan both incentive
    options and nonqualified options may be granted.  In addition, stock
    appreciation rights and restricted stock may also be granted under the
    plans; however, no stock appreciation rights or restricted stock have been
    granted to date.

    The exercise price for incentive options under the 1993 Plan, the 1995
    Plan and nonqualified options under the Director Plan is the fair market
    value of the Company s common stock as of the date of grant.  Each stock
    option expires no more than ten years from the grant date under the 1993
    Plan and the 1995 Plan, and no more than five years under the Director
    Plan.  Options granted pursuant to the 1993 Plan cannot be exercised prior
    to the expiration of six months from the date of grant while vesting of
    options granted under the 1995 Plan is determined at the discretion of the
    Company s Stock Option Committee.   Options granted under the Director
    Plan vest 25% annually beginning on the first anniversary of the grant
    date.

    The maximum number of shares of common stock with respect to which options
    may be granted under the 1993 Plan is 5% of the outstanding shares, not to
    exceed 1,000,000 shares.  Under the 1995 Plan and the Director Plan,
    options to purchase up to 500,000 and 50,000 shares may be granted,
    respectively.  As of March 31, 1997, there were 149,357, 251,125 and
    34,000 shares available for grant under the 1993 Plan, the 1995 Plan and
    the Director Plan, respectively.

    Pro forma information regarding net income and earnings per share is
    required by FAS 123, and has been determined as if the Company had
    accounted for its employee stock options under the fair value method of
    that Statement.  The fair value for these options was estimated at the
    date of grant using a Black-Scholes option pricing model with the
    following weighted-average assumptions for the years ended March 31, 1997
    and 1996, respectively: risk-free interest rates of 6.3% and 5.9%;
    dividend yields of 0% in both years; volatility factors of the expected
    market price of the Company s common stock of 98% in both years; and a
    weighted-average expected life of the option of 4 years and 1.9 years.
<PAGE>
Page F-13
10. STOCK OPTIONS PLANS: (CONT D)

    The Black-Scholes option pricing model was developed for use in estimating
    the fair value of traded options which have no vesting restrictions and
    are fully transferable.  In addition, option pricing models require the
    input of highly subjective assumptions including the expected stock price
    volatility.  Because the Company s employee stock options have
    characteristics significantly different from those of traded options, and
    because changes in the subjective input assumptions can materially affect
    the fair value estimate, in management s opinion, the existing models do
    not necessarily provide a reliable single measure of the fair value of its
    employee stock options.

    For purposes of pro forma disclosures, the estimated fair value of the
    options is amortized to expense over the options  vesting period.  The
    Company s pro forma information for the years ended March 31 is as
    follows:

                                                1997             1996

      Pro forma net loss                   ($21,315,572)    ($24,043,171)
      Pro forma loss per share                   ($2.19)          ($3.09)

<PAGE>
Page F-14
10. STOCK OPTIONS PLANS: (CONT D)

    A summary of the Company s stock option activity and related information
    for the three years ended March 31, 1997 follows:

                               1997                      1996           1995
                   --------------------------- ----------------------- -------
                              Weighted-Average        Weighted-Average
                     Shares    Exercise Price  Shares  Exercise Price   Shares
                   -----------------------------------------------------------
    Outstanding, 
    beginning of
    year            906,338        $17.66    1,387,660    $ 3.40       971,660

    Granted         522,500          6.62      411,641     31.66       416,000
    Exercised      (305,487)         4.47     (788,053)     1.33           -
    Forfeited      (536,451)        23.22     (104,910)    10.99           -
                   --------        ------    ---------    ------     ---------
    Outstanding, 
    end of year     586,900        $ 8.83      906,338    $17.66     1,387,660
                   ========                  =========               =========
    Exercisable 
    at end of year  145,650
                   ========

    The following tables summarize information about outstanding stock options
    as of March 31, 1997:

    OUTSTANDING OPTIONS

                          Number        Weighted Average
                       Outstanding at       Remaining      Weighted Average
    Exercise Prices    March 31, 1997   Contractual Life    Exercise Price
    ------------------------------------------------------------------------

    $4.75 - $6.00         258,250          8.7 Years           $  5.03
    $7.38 - $11.13        256,650          9.3 Years           $  7.96
    $12.50 - $14.25        23,125          5.4 Years           $ 13.46
    $19.75 - $29.13        31,625          5.7 Years           $ 26.15
    $36.50 - $44.25        17,250          7.4 Years           $ 40.75
                          -------          
                          586,900          8.6 Years           $  8.83
                          =======

    OPTIONS EXERCISABLE

                                    Number
                                Exercisable at          Weighted Average
      Exercise Prices           March 31, 1997           Exercise Price
    ------------------------------------------------------------------------
      $5.00 - $6.00                 45,000                  $   5.22
      $7.88 - $11.13                52,150                  $   8.08
      $12.50 - $14.25               15,625                  $  13.52
      $19.75 - $29.13               23,000                  $  25.66
      $36.50 - $44.25                9,875                  $  40.64
                                  -------- 
                                   145,650
                                  ========
<PAGE>
Page F-15
10. STOCK OPTIONS PLANS: (CONT D)

    In February 1996, an employee was granted stock options pursuant to the
    1993 Plan at an exercise price below the fair market value at the date of
    grant.  Compensation expense associated with this grant in the amount of
    $68,750 was recorded.

    In September 1996, the Company entered into an agreement with a consulting
    firm, which will serve as an investor relations counsel to the Company. 
    The agreement provides for a minimum monthly fee of $3,500 plus payment of
    expenses for the term of one year.  In connection with this agreement, the
    Company granted the principal of the consulting firm, a warrant to
    purchase 400,000 shares of the Company s common stock at an exercise price
    of $8.00 per share.  The warrant has a term of 10 years and is exercisable
    (i) as to 100,000 shares at any time during the term of the warrant, and
    (ii) as to the remaining shares, upon attainment of certain milestones
    specified in the warrant, none of which have been achieved.

    As required by FAS 123, the issuance of these warrants has been accounted
    for based on the fair market value of the services to be received over the
    term of the agreement.  The Company has determined the value of these
    services to be $78,000 which is being expensed over the term of the
    agreement.

11. EMPLOYEE SAVINGS PLAN:

    During the year ended March 31, 1997, the Company established a defined
    contribution retirement plan ("Savings Plan") that qualifies as a deferred
    salary arrangement under Section 401(k) of the Internal Revenue Code.
    Eligibility for participation commences six months from the date of hire. 
    Under the Plan, participating  employees may defer a portion of their
    pretax earnings, up to the Internal Revenue Service annual contribution
    limit.  Through September 30, 1996, the Company matched 75% of employee
    contributions, up to a maximum of 6% of the employee s earnings. 
    Contributions are invested at the direction of the employee in one or more
    funds.  Employer contributions vest over five years.  The Company s
    matching contributions to the Savings Plan amounted to approximately
    $73,000 and $127,000 for the years ended March 31, 1997 and 1996,
    respectively.  The employer matching contribution was discontinued as of  
    October 1, 1996.

12. REVENUE:

    In October 1996, the Company and Stanford W. Crane, Jr., the Company s
    Chief Executive Officer and founder, entered into a licensing agreement
    with LG Cable & Machinery Ltd. ("LG") whereby LG was granted a license,
    for a term of ten years or until the expiration of the last to expire of
    the patents covered by the agreement, whichever is later, with respect to
    the Compass Connector Technology owned by Mr. Crane and certain enhanced
    Compass Connector Technology owned by the Company.  The license granted to
    LG is non-exclusive except for certain limited exclusive manufacturing
    rights with respect to specified Asian countries.  In connection with this
    agreement, the Company s portion of the license fee ($500,000) was
    immediately vested upon signing the agreement and is payable as follows:
    $100,000 within 15 days after execution of the agreement and $100,000 on
    each of the first four anniversaries of the agreement. Licensing fee
    revenue of $100,000 was recorded during the year ended March 31, 1997
    representing the first payment received.  The remaining $400,000 will be
    recognized as payments are received.  In addition, the Company is entitled
<PAGE>
Page F-16
12. REVENUE: (CONT D)
    to receive royalties on sales of the Compass Connector products by LG or
    its affiliates.

    In October 1996, the Company entered into a cooperative development
    agreement with the Defense Advanced Research Projects Agency (DARPA) to
    develop the Company s VSPA electronic package whereby the government will
    contribute approximately $1.8 million to the project over a period of 12
    months.  The agreement requires the Company to match the $1.8 million with
    $2.2 million of development costs associated with the project.  Failure of
    either party to provide its respective total contribution may result in a
    proportion reduction in funding for the other party.

    Revenue is recognized over the term of the cooperative development
    agreement based on the achievement of stated milestones.  For the year
    ended March 31, 1997, the Company recognized revenue related to the
    agreement of approximately $684,000. Costs from the commencement of the
    agreement, amounted to approximately $1.2 million.  In addition, during
    February 1997, the Company entered into a one year contract for $300,000
    with a research institution to perform certain tasks under the cooperative
    development agreement.  Costs associated with the cooperative agreement
    have not been separately disclosed on the face of the Statement of
    Operations as such costs would have been incurred by the Company
    regardless of the agreement.  Of the $1.2 million of costs incurred
    through March 31, 1997, approximately $610,000 are reflected in  research
    and development  and the balance is included in  selling, general and
    administrative  expenses in the Statement of Operations.  

    During the year ended March 31, 1997, the Company sold certain products to
    a software developer in a noncash exchange for certain licenses to use the
    developer s software for internal purposes valued at approximately
    $326,000 (recorded in property and equipment); consulting and training
    services valued at $100,000 (recorded in research and development
    expenses); and services associated with the certification of the Company s
    4s server to use the software developer s CAD program and porting the
    software onto the 4s product.  These services were valued at approximately
    $570,000 and are reflected equally between research and development
    expense and selling, general and administrative expenses.  Revenues of
    approximately $923,000 were recorded during the year ended March 31, 1997
    as a result of this transaction.

    Sales of computer systems for the year ended March 31, 1996 include sales
    to two customers which represented 26% and 13% of total revenues.  U.S.
    export sales of computer systems to a Brazilian reseller represented an
    additional 23% of total revenues for the year ended March 31, 1996.
<PAGE>
Page F-17
13. RELATED PARTY TRANSACTIONS:

    In January 1995, one of the Company s directors was paid $75,000 as
    consideration for management and consulting services rendered and to be
    rendered from January 1995 through December 1995, due to the director s
    increased involvement with the Company.  In May 1996, the director was
    paid an additional $175,000 for consulting services rendered.

    In January 1996,  Mr. Crane entered into a license agreement ( the
    Crane/Panda License ) with the Company with respect to the Compass
    Connector which supersedes the prior agreements between Mr. Crane and the
    Company with respect thereto.  Pursuant to the Crane/Panda License, the
    Company continues to have the right, on a nonexclusive and royalty-free
    basis, to use and/or sell the Compass Connector as a component in its
    computers or other higher level assemblies or systems.  The Company may
    also sublicense the Compass Connector technology as part of a license of
    the Company s proprietary technology provided that any royalty
    attributable to such sublicense is to be shared equally by the Company and
    Mr. Crane.

    In addition, Mr. Crane has granted the Company a nonexclusive license to
    sell, lease, or transfer the Compass Connector as loose or discrete
    components for specified royalties based on net sales of the Compass
    Connectors, commencing when the accumulated net sales of the Compass
    Connectors reaches $100,000 (the  Royalty Date ).  For the five year
    period following the Royalty Date, the Company is obligated to pay to Mr.
    Crane royalties equal to 5% of the net sales price of such Compass
    Connectors, including any such Compass Connectors sold prior to the
    Royalty Date.  The royalty decreases to 2.5% after five years and 2.0%
    after ten years.  The royalty decreases to 1.0% for any period during
    which no valid patent exists anywhere with respect to the Compass
    Connector.  The royalty is also subject to reduction if Mr. Crane grants a
    third party a license with respect to Compass Connectors as loose or
    discrete components at a lower royalty than that charged to the Company. 
    To date, Mr. Crane has received no royalties pursuant to the Crane/Panda
    License.
<PAGE>
Page F-18
14. INCOME TAXES:

    The deferred tax assets (liability) are comprised of the following as of
    March 31, 1997 and 1996:
                                                  1997             1996  
   Deferred tax assets:
     Net operating loss                      $   24,498,000   $   12,350,000
     Research and development credits               753,000          534,000
     Write down of property and equipment           794,000             -
     Inventory reserve                              328,000           50,000
     Other                                          346,000          180,000
                                             --------------   --------------
       Gross deferred tax asset                  26,719,000       13,114,000

       Deferred tax asset valuation allowance   (26,386,000)     (12,849,000)
                                             --------------   --------------
       Net deferred tax asset                $      333,000   $      265,000
                                             ==============   ==============
   Deferred tax liability:
     Property and equipment                        (312,000)        (265,000)
     Other                                          (21,000)            -
                                             --------------   --------------

        Deferred tax liability               $     (333,000)  $     (265,000)
                                             ==============   ==============
        Net deferred taxes                   $         -      $         -
                                             ==============   ==============

    Under FAS 109, a valuation allowance reducing the asset recognized must be
    recorded if it is determined that it is more likely than not that the
    asset will not be realized.  Because of the uncertainty surrounding
    realizability of future benefits due to cumulative losses, a valuation
    allowance in the full amount of the net deferred tax asset has been
    provided for financial reporting purposes.


    At March 31, 1997, the Company has available approximately $63.5 million
    in net operating loss ("NOL") carryforwards available to offset future
    taxable income, if any, for federal and state income tax purposes.  This
    includes approximately $13.9 million of tax deductions associated with the
    exercise of certain non-qualified stock options by employees of the
    Company.  Additional paid-in capital will be credited upon realization of
    these stock option tax deductions.  If unutilized, these NOL carryforwards
    will expire at various times beginning in the year 2009.

    At March 31, 1997, unused credit carryforwards for increasing research
    activities of approximately $753,000 are also available.  The credit
    carryovers will expire at various times beginning in the year 2010.

    Due to the change of control effected by the initial public offering of
    the Company s stock on May 24, 1994, as well as subsequent stock
    offerings, the amount of future taxable income that can be offset by the
    Company s net operating losses incurred prior to the dates of the stock
    offerings, as well as the amount of tax liability that can be offset by
    research and development credit, may be limited.
<PAGE>
Page F-19
15. COMMITMENTS AND CONTINGENCIES:

    Employment Agreements
    ---------------------
    Under the terms of an employment agreement with Mr. Crane entered into in
    November 1993, he serves as the Senior Vice President, Product Design and
    Development, and at the discretion of the Board of Directors, as the
    Chairman of the Board and the Company's President and Chief Executive
    Officer.  Mr. Crane's agreement has a base annual salary with salary
    increases and bonuses available to him based on the attainment of certain
    revenue levels by the Company, which have not been achieved.  The term of
    the agreement extends to January 1999. In December 1994, pursuant to his
    employment agreement, Mr. Crane received a bonus of $25,000 related to the
    completion of a prototype of the Archistrat 4 Computer and its
    installation in two beta test sites.

    Mr. Crane s employment is terminable at will by Mr. Crane upon six months 
    prior notice and is terminable by the Company for cause at any time or in
    the event that Mr. Crane becomes disabled and, as a result, is unable to
    perform his obligations under the agreement for three consecutive months. 
    In the event that the agreement is terminated other than as a result of
    Mr. Crane s death or disability or for cause, Mr. Crane will be entitled
    to receive an amount equal to the greater of $150,000 or his annual
    compensation for the preceding calendar year.  In addition, Mr. Crane has 
    agreed not to compete with the Company for a period of  two years after
    the termination of his employment provided he receives payments during
    that period equal to twice the greater of $150,000 or his salary at the
    time of such termination, calculated on an annualized basis.

    In connection with the private placement sale of units in January 1994,
    the Underwriter who acted as placement agent for the Company with respect
    to such sale requested that the terms of Mr. Crane's employment contract
    with the Company be modified to limit the Company's obligation to cause
    registration of his then existing share holdings to no more than 20%
    annually following the second anniversary of the Company's proposed
    initial public offering.

    Pursuant to the terms of the agreement, Mr. Crane has assigned to the
    Company the rights to all improvements or related discoveries or
    inventions developed or conceived by him during the term of the agreement
    which relate to the technology developed by him and previously assigned to
    the Company.  The employment agreement also provides that Mr. Crane may
    develop additional products or technologies unrelated to the products
    currently being developed by the Company.

    In January 1996, the Company entered into a two-year employment agreement
    with an individual who serves as an executive of the Company.  In addition
    to a base salary, the agreement provides a bonus attainable based on
    achieving periodic performance objectives.  The agreement also provided
    for the granting of 20,000 stock options to the executive on the first
    anniversary of employment.
<PAGE>
Page F-20
15. COMMITMENTS AND CONTINGENCIES: (CONT D)

    Operating Leases
    ----------------
    The Company leases various facilities and equipment under noncancelable
    operating lease arrangements which expire at various dates through year
    2001.  Rent expense under all operating leases was approximately
    $1,035,000, $383,000 and $167,000 for the years ended March 31, 1997, 1996
    and 1995, respectively.

    Minimum future rental payments under non-cancelable operating leases with
    remaining lease terms in excess of one year are as follows:


                      March 31,
                        1998                 $   437,983   
                        1999                     460,168
                        2000                     451,106
                        2001                     418,000                     
                                             -----------
                  Total minimum future   
                  rental payments            $ 1,767,257
                                             ===========


    During the year ended March 31, 1997, the Company entered into certain
    agreements with its landlord related to its primary facility whereby the
    Company was released from portions of the leased space.  As consideration
    for the release, the Company agreed to make certain lump-sum payments to
    the landlord and agreed to make additional payments for the unused space. 
    As a result, a charge of approximately $480,000 was recognized and is
    included under the caption,  Selling, general and administrative  expenses
    in the Statement of Operations for the year ended March 31, 1997.

    Contingencies
    -------------
    The agreement between the Company and a third-party for the manufacture
    and assembly of the Company s computer systems expired in September 1996. 
    The contract manufacturer has asserted that the Company is liable for
    certain inventory allegedly purchased on behalf of the Company.  The
    Company does not agree with this allegation.   While it is not possible to
    determine the ultimate outcome of this matter, it is the opinion of
    management that its resolution will not have a material adverse effect on
    the Company s financial position.

    Litigation
    ----------
    During February 1997, the Company settled a lawsuit filed by an entity
    that was engaged to act as the Company s financing agent in its capital
    raising efforts during 1993 and 1994.  In conjunction with the settlement,
    the Company made a cash payment of $40,000 and issued 17,500 shares of its
    common stock.  The settlement agreement requires the Company to file a
    registration statement with the Securities and Exchange Commission for the
    common shares issued and the Company has done so. As a result of this
    transaction, a charge of $145,000 is reflected under the caption  Selling,
    general and administrative  expenses in the accompanying Statement of
    Operation for the year ended March 31, 1997.
<PAGE>
Page F-21
15. COMMITMENTS AND CONTINGENCIES: (CONT D)

    There are various legal proceedings and claims pending against the
    Company, including disputes with former employees and a former director. 
    While it is not possible to determine the ultimate outcome of these
    matters, it is the opinion of management, based on advice from counsel,
    that the resolution of such matters will not have an aggregate material
    adverse effect on the Company s financial position.

16. SUBSEQUENT EVENTS:

    Subordinated Convertible Debentures
    -----------------------------------
    During April 1997, the Company completed a private placement of $4.8
    million of 4% subordinated convertible debentures.  The debentures are due
    two years from the date of issuance and are convertible into shares of
    common stock at the lower of $5.625 per share or 82% of the average
    closing bid price of the Company s common stock for the five consecutive
    trading days immediately preceding the date of conversion.  Holders may
    convert up to 50% of the principal amount of their holdings after May 29,
    1997 and up to 100% after June 13, 1997.  Through June 23, 1997,
    $2,520,000 of such debentures had been converted into an aggregate of
    975,453 shares of the Company s common stock.  The debentures are subject
    to redemption by the Company at 122% of face value plus accrued interest.

    In connection with the transaction, the Company paid placement fees of
    $384,000  of which $192,000 was paid in cash and the balance by issuance
    of 30,918 shares ( Placement Shares ) of the Company s common stock.  In
    addition to the placement fees, the Company issued warrants to two parties
    to purchase 70,096 shares of the Company s common stock.  Warrants to
    purchase 42,667 shares and 27,429 shares are exercisable through April
    2002 at an exercise price of $6.75 and $7.00 per share, respectively.  In
    addition, the Company has agreed to file and has filed a registration
    statement with the Securities and Exchange Commission to effect the
    registration of the Placement Shares.  The Company has also agreed to
    effect the registration of the shares issuable upon conversion of the
    debentures in the event of certain amendments to certain securities
    regulations and has granted certain piggyback registration rights to the
    holders of the warrants.

    Consulting Agreement
    --------------------
    During May 1997, the Company entered into a three year consulting
    agreement with a third-party to manage its information systems and
    computer network applications.  In consideration of the services to be
    provided by the consultant, the Company agreed to pay monthly fees
    calculated at the rate of $180,000 per annum during fiscal year 1998, and
    increasing to $200,000 and $220,000 in fiscal years 1999 and 2000,
    respectively.  The Company may terminate this agreement as of January 1,
    1998 without any penalty.
<PAGE>
Page F-22

     REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL
                           STATEMENT SCHEDULE




To the Board of Directors 
of The Panda Project, Inc.

     Our audits of the financial statements referred to in our report dated
May 22, 1997, except as to Note 16 which is as of June 23, 1997, appearing in
this Form 10-K of The Panda Project, Inc.  also included an audit of the
Financial Statement Schedule listed in Item 14 (a) of this Form 10-K.  In our
opinion, this Financial Statement Schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related financial statements.



/s/ Price Waterhouse LLP
------------------------
PRICE WATERHOUSE LLP


Fort Lauderdale, Florida
May 22, 1997
<PAGE>
Page F-23

THE PANDA PROJECT, INC.

Schedule II - Valuation and Qualifying Accounts

   Column A         Column B        Column C          Column D    Column E

                                    Additions
                               ---------------------
                    Balance at Charged to  Charged               Balance at
                    Beginning   Costs and  to Other                End of
  Description       of Period   Expenses   Accounts   Deductions   Period
-----------------------------------------------------------------------------
YEAR ENDED 
MARCH 31, 1995:

Deferred Tax Asset 
Valuation Allowance $   330,000 $ 3,400,716 $    -    $    -     $ 3,730,716  

YEAR ENDED 
MARCH 31, 1996:

Allowance for 
Doubtful Accounts          -        171,943      -         -         171,943

Inventory 
Obsolescence Reserve       -        128,412      -         -         128,412

Deferred Tax 
Asset Valuation 
Allowance             3,730,716   9,118,284      -         -      12,849,000

YEAR ENDED 
MARCH 31, 1997:

Allowance for
Doubtful Accounts       171,943     236,303      -     (297,284)(1)  110,962

Inventory 
Obsolescence 
Reserve                 128,412   1,030,335      -     (908,747)(2)  250,000

Deferred Tax
Asset Valuation 
Allowance           $12,849,000 $13,537,000      -         -     $26,386,000

(1) - Write off of bad debts.
(2) - Primarily relates to the revaluation of specific inventory items to net
      realizable value.


                             *     *     *     *
<PAGE>
Page 33
                         FOURTH LEASE AMENDMENT               EXHIBIT 10.5(e)


THIS FOURTH LEASE AMENDMENT (this  Amendment ), is made as of the 27 day of
November, 1996 between FAIRFAX BOCA  92, L.P., a Georgia limited partnership
( Landlord ), and THE PANDA PROJECT, INC., a Florida corporation ( Tenant );

                        W I T N E S S E T H;  That;
                        -------------------   ----

     WHEREAS, Landlord and Tenant have entered into that certain Lease
Agreement (the  Lease ), dated October 24, 1996, whereby Tenant leased from
Landlord certain premises located in Boca Raton, Florida (the  Premises ):

     WHEREAS, Landlord and Tenant desire to amend the Lease in certain
particulars.

     NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, the above premises, the sum of TEN AND NO/100 DOLLARS
($10.00), and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby agree as follows:

1. Definition.   Terms not otherwise defined herein and which are defined in
   the Lease shall have the meanings given them therein.

2. Lease amendments.   The Lease is hereby amended as follows:

   2.1  Effective as of November 27, 1996, the Premises shall be reduced by
   removing from  the definition of the Premises and the terms and conditions
   of the Lease, the portion of the Premises located on the second floor of
   Pod D composed of approximately 27,500 rentable square feet and more
   particularly described on Exhibit A attached hereto and incorporated herein
   by this reference.  From and after such date, the "Premises" shall mean and
   refer to approximately 42,500 rentable square feet:  27,500 rentable square
   feet of which is located on the second floor of Pod E and 15,000 rentable
   square feet of which is located on the first floor of Pod E and more
   particularly described on Exhibit B attached hereto and incorporated herein
   by this reference.

   2.2  Notwithstanding the reduction of the Premises as set forth in Section
   2.1 above or anything to the contrary contained in the Lease, neither the
   Base Rent nor the Additional Rent for the Premises shall be reduced until
   July 1, 1997 and Tenant shall pay Base Rent and Additional Rent (under
   Section 4 of the Lease) as follows:

               Month     Base Rent   Additional Rent
             --------    ---------   ---------------
             December     $23,450       $37,916.67
             January      $23,450       $37,916.67
             February     $23,450       $37,916.67
             March        $23,450       $37,916.67
             April        $42,175       $37,916.67
             May          $42,175       $37,916.67
             June         $42,175       $37,916.67

On July 1, 1997, the Base Rent and the Additional Rent shall be adjusted to
reflect the reduction of the square footage of the Premises to $42,500
rentable square feet.  Prior to such date Base Rent  and Additional Rent 
<PAGE>
Page 34

(under Section 4 of the Lease) shall continue to be due and payable from 
Tenant as set forth above as if the square footage of the Premises had not
been reduced.

   2.3 In consideration for Landlord reducing the square footage of the
   Premises as set forth above.  Tenant hereby agrees to pay to Landlord the
   sum of One Hundred Thirty-One Thousand and No/100 Dollars ($131,000.00) on
   or before November 30, 1996 (the  Termination Payment ).  In the event such
   Termination Payment is not made on or before November 30, 1996, the rent
   adjustment set forth in Section 2.2 above shall not be made.  

3. Ratification.   Except as expressly attended hereby, the terms and
   conditions of the Lease are hereby ratified and the Lease remains in full
   force and effect.

4. Binding Effect.   This Amendment shall be binding upon and shall inure to
   the benefit of the parties hereto, their respective heirs, successors,
   legal representative and assigns.

5. Counterparts.   This Amendment may be executed in any number of
   counterparts, each of which shall constitute an original and all of which
   taken together shall constitute one and the same agreement.

6. Governing Law.   This Amendment shall be construed under and governed by
   the laws of the State of Florida.

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the day and year first above written.

                        LANDLORD:
                        --------


                        FAIRFAX BOCA  92,  L.P., a Georgia limited partnership

                        By:   FAIRFAX PROPERTIES, INC.
                        Its:  General Partner

                        By:
                              --------------------------------
                        Its:

                        TENANT:
                        ------

                        THE PANDA PROJECT, INC.

                        By:  
                              -------------------------------- 
                        Its: 

                                    (CORPORATE SEAL)
<PAGE>
Page 35                                                        EXHIBIT 10.5(f)
                            FIFTH LEASE AMENDMENT

     THIS FIFTH LEASE AMENDMENT (this  Amendment ), is made as of the 13th day
of March 1997 between FAIRFAX BOCA 92, L.P., a Georgia limited partnership
( Landlord ), and THE PANDA PROJECT, INC., a Florida corporation ( Tenant );

                          W I T N E S S E T H: That;
                          -------------------  ----

     WHEREAS, Landlord and Tenant have entered into that certain Lease
Agreement (the  Lease ), dated October 24, 1995, whereby Tenant leased from
Landlord certain premises located in Boca Raton, Florida (the  Premises );

     WHEREAS, Landlord and Tenant desire to amend the Lease in certain
particulars.

     NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, the above premises, the sum of TEN AND NO/100 DOLLARS
($10.00), and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby agree as follows:

1.  Definitions.   Terms not otherwise defined herein and which are defined in
the Lease shall have the meanings given them therein.

2.  Lease Amendments.   The Lease is hereby amended as follows:

    2.1   Effective as of March 13, 1997, the Premises shall be reduced by
removing from the definition of the Premises and the terms and conditions of
the Lease, the portion of the Premises located on the first floor of Pod E
composed of approximately 15,000 rentable square feet and more particularly
described on Exhibit A attached hereto and incorporated herein by this
reference.  From and after such date, the  Premises  shall mean and refer to
approximately 27,500 rentable square feet which is located on the second floor
of Pod E and more particularly described on Exhibit B attached hereto and
incorporated herein by this reference.

    2.2   Notwithstanding the reduction of the Premises as set forth in
Section 2.1 above or anything to the contrary contained in the Lease, neither
the Base Rent nor the Additional Rent for the Premises shall be reduced until
April 15, 1997 and Tenant shall pay Base Rent and Additional Rent (under
Section 4 of the Lease) as follows:

          Month                       Base Rent     *Additional Rent
          -----                       ---------     ----------------
        March 1997                   $23,450.00        $37,916.67
        April 1997                   $39,463.75        $35,479.17
        May 1997 - June 1997         $36,752.50        $33,041.67
        July 1997 - September 1997   $20,183.75        $18,145.83
        October 1997 - March 1998    $18,376.25        $16,520.83

        * Additional rent subject to change based on actual annual operating
          expenses.

On April 1, 1998, the Base Rent and the Additional Rent shall be adjusted to
reflect the reduction of the square footage of the Premises to 27,500 rentable
square feet.  Prior to such date Base Rent and Additional Rent (under Section
4 of the Lease) shall continue to be due and payable from Tenant as set forth
above as if the square footage of the Premises had not been reduced.
<PAGE>
Page 36

     2.3   In consideration for Landlord reducing the square footage of the
Premises as set forth above, Tenant hereby agrees to pay to Landlord the sum
of Seventy Five Thousand and No/100 Dollars ($75,000.00) (the  Termination
Payment ) based on the following schedule:

                  $45,000.00 on or before March 21, 1997
                  $15,000.00 on or before October 1, 1997
                  $15,000.00 on or before April 1, 1998

In the event such Termination Payment is not made in accordance with the above
schedule, the rent adjustment set forth in Section 2.2 above shall not be
made.

3.  Ratification.   Except as expressly amended hereby, the terms and
conditions of the Lease are hereby ratified and the Lease remains in full
force and effect.

4.  Binding Effect.   This Amendment shall be binding upon and shall inure to
the benefit of the parties hereto, their respective heirs, successors, legal
representatives and assigns.

5.  Counterparts.   This Amendment may be executed in any number of
counterparts, each of which shall constitute an original and all of which
taken together shall constitute one and the same agreement.

6.  Governing Law.   This Amendment shall be construed under and governed by
the laws of the State of Florida.

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the day and year first above written.

                                    LANDLORD:
                                    FAIRFAX BOCA 92, L.P., a Georgia limited
                                    partnership

                                    By:   Fairfax Properties, Inc.
                                    Its:  General Partner

                                    By:  
                                            ----------------------------
                                    Its: 
                                            ----------------------------

                                    TENANT:
                                    THE PANDA PROJECT, INC.

                                    By:
                                            ----------------------------

                                    Its: 
                                            ----------------------------

                                    [CORPORATE SEAL]
<PAGE>
Page 37
                                                               EXHIBIT 10.15

  CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
           EXCHANGE COMMISSION ASTERISKS DENOTE SUCH OMISSIONS AGREEMENT


Agreement made this 25th day of March, 1996, by and among Parametric
Technology Corporation, a Massachusetts corporation with its principal place
of business at 128 Technology Drive, Waltham, Massachusetts 02154 ("PTC"), and
Panda Project, a Florida corporation with its principal place of business at
5201 Congress Avenue, Boca Raton, Florida 33487-3630 ("PANDA").

WHEREAS, PTC owns a proprietary software package Pro/ENGINEER which currently
operates on a variety of industry standard workstations ("PTC Software").

WHEREAS, PANDA markets a line of workstations more specifically detailed in
Schedule A attached hereto and the system software to support these
workstations ("Computer Products").

WHEREAS, PANDA desires to have PTC Software operate on its Computer Products
in a manner substantially similar to the manner in which PTC Software operates
on other workstations.

WHEREAS, PTC is willing to port PTC Software to the Computer Products.

NOW THEREFORE, in consideration of the mutual covenants and By agreement
contained herein, PTC and PANDA agree as follows:

1.  Definitions.   As used in this Agreement, the following terms shall have
the following meanings:

    (a) "Party" means PTC, or PANDA; "Parties" means PTC, and PANDA.

    (b)  PTC Software" means Pro/ENGINEER and its options.

    (c)  (Intentionally left blank)

    (d)  "Proprietary Information" means (i) all information delivered in
         writing and designated as "proprietary," "confidential," "secret" or
         with similar key words, or, if disclosed other than in writing, 
         information as to which the person to whom such information is
         disclosed, prior to or essentially concurrent with such disclosure,
         is made aware that Proprietary Information may be or is being
         disclosed, and (ii) all manuals, documentation, codes, customer
         lists, copyrighted or patented materials, discoveries, inventions,   
         technical or business information, manufacturing techniques and
         software.  Information will not be deemed Proprietary Information if: 
         (A) it is previously well known and in the public domain through no
         fault of the receiving person; (B) it was previously received by the
         receiving person from a third person under circumstances permitting
         its disclosure to the receiving person; (C) it was previously and
         independently developed by the receiving person as shown by
         documentation sufficient to establish the fact of its previous and
         independent development; or (D) it becomes known to the receiving
         person from a source other than PTC and without breach of this
         Agreement by the receiving person and without breach of a similar
         agreement by the outside source as shown by documentation sufficient
         to establish the outside source of the information.
<PAGE>
Page 38

  CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
           EXCHANGE COMMISSION ASTERISKS DENOTE SUCH OMISSIONS AGREEMENT

    (e)  "Computer Products" means workstations marketed by PANDA including
         the Computer Products described in Schedule A hereto.

    (f)  "Distributors" means third party companies which have been or may be
         appointed by PTC to market, sell and support the products as defined
         herein.

2.  The Project.

    (a)  Subject to the terms and conditions in the Agreement, PANDA agrees,
         within thirty (30) days of signing this Agreement, to supply PTC with
         two Computer Products with mutually agreed configurations and related
         software as set forth in Schedule A, on an indefinite loan basis.
         PANDA agrees to maintain such loaned hardware and software at PTC's
         office at PANDA's expense.  PANDA further agrees to correct any
         hardware breakdowns within 7 days of being notified of such
         breakdown.  The loan will remain in effect for as long as PTC has
         support obligations to PTC customers who are running PTC Software on
         the Computer Products.

    (b)  Upon execution of this Agreement by the parties:

         (i)  PTC shall perform an evaluation of the loaned hardware and
              software for a period of up to 30 days to determine its
              suitability for porting Pro/ENGINEER.

         (ii) PANDA agrees to issue a noncancelable purchase order to PTC for
              fifty-two (52) Pro/ENGINEER Advanced Designer Package II seats
              as described in Schedule B ("Software"), which represents *****
              ************************************************.  The Software
              order will be in accordance with the following schedule:

              Immediate shipment of thirty two (32) seats of Software and/or
              modules as further defined in the attached PTC Product Schedule,
              on or before March 28, 1996.  In connection with this shipment
              and on or before September 1, 1996, PANDA may order up to fifty 
              thousand dollars ($50,000) in training and/or consulting
              services from PTC at PTC's then current applicable list price
              and subject to PTC's terms and conditions for such services;
              PANDA will pay all reasonable travel and living expenses PTC
              incurs in performance of such services.  Payment for services is
              due at the time the services are performed and, if payment is to
              be satisfied by barter, PANDA must purchase such services in
              increments equivalent to the value of each Computer Product to
              be bartered for the services.  The dollar amount of services
              ordered and paid for will be credited to the amount due for this
              shipment as set forth below.  If PANDA orders in excess of fifty
              thousand dollars ($50,000) in services during  this period, it
              agrees to pay the excess in cash.

              Shipment of twenty (20) seats of Software on or before
              September 28, 1997.  In connection with this shipment and on or
              before September 1, 1997, PANDA may order up to fifty thousand
              dollars ($50,000) in training and/or consulting services from
<PAGE>
Page 39

  CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
           EXCHANGE COMMISSION ASTERISKS DENOTE SUCH OMISSIONS AGREEMENT


              PTC at PTC's then current applicable list price and subject to
              PTC's terms and conditions for such services; PANDA will pay all
              reasonable travel and living expenses PTC incurs in performance
              of such services.  Payment for services is due at the time the
              services are performed and, if payment is to be satisfied by
              barter, PANDA must purchase such services in increments
              equivalent to the value of each Computer Product to be bartered
              for the services.  The dollar amount of services ordered and
              paid for will be credited to the amount due for this shipment as
              set forth below.  If PANDA orders in excess of fifty thousand
              dollars ($50,000) in during this period, it agrees to pay the
              excess in cash.


              Payment for the Software license fees shall be made as follows:

              -  First Shipment:  *****************************************
                 due on or before June 28, 1996 and ***********************
                 *********** due on or before September 28, 1996;

              -  Second Shipment:  ****************************************
                 due on or before September 28, 1997.

         At PANDA's option each such payment may be satisfied by (i) cash
         payment; (ii) barter, subject to the conditions set forth in the
         following sentence; or (iii) a combination of cash payment and
         barter.  If PANDA's payment obligations are to be satisfied, in whole
         or in part, by barter: (i) on the First Payment, PTC will accept in
         barter the appropriate number of the Computer Products as defined in
         Schedule A, up to a maximum of ten (10) with the balance, if any, in
         cash; (ii) on the Second and Third Payments, the parties will
         mutually agree on which PANDA Compute Products PTC may accept as
         payment.

         Customer may exchange Software from the First Shipment on the
         following conditions:  (i) all exchanges must be completed within
         twelve months of the date this Agreement is signed; (ii) exchanges
         must be completed prior to installation of the Software to be
         exchanged; (iii) there must be no re-shipment required to accomplish
         the exchange; (iv) no credits or refunds will be issued as a result
         of any exchange; (v) a Software package may be swapped for another
         one time only; (vi) the total value of all exchanges must be ********
         *****************************************.

         PTC agrees that PANDA may swap the PTC Software that is subject of
         the Third Payment, in whole or in part, for other PTC software
         products provided PANDA has notified PTC on or before September 1,
         1997.

         In the event that the port is not complete for the initial shipment,
         PTC will ship the Software on PANDA's choice of any one of PTC's
         currently supported platforms with the understanding that such
         Software will be transferred to the Computer Products upon completion
         of the port, free of charge.  The Software is subject to the terms
<PAGE>
Page 40

         and conditions of Customer Agreement for PTC Licensed Products
         No. 10672 between PANDA and PTC.

    (c)  On or before the completion of the 30-day hardware and software
         evaluation period, PTC agrees to report to PANDA, the results of its
         evaluation.  In the event that deficiencies are discovered by PTC in
         the PANDA hardware or software that would, in PTC's opinion,
         seriously impede the effort of porting the PTC Software to the
         Computer Products, PTC will suspend the project until such time as
         the deficiencies are corrected by PANDA.  In the event that PANDA is
         unable to provide corrections to the deficiencies reported by PTC
         within a mutually agreed time, PTC may, at its option, terminate this
         Agreement and return to PANDA the loaned Computer Products and have
         no further obligation under this Agreement.  Upon such termination,
         PANDA's obligations under the Second Shipment, as set forth in
         Section 2(b)(ii) above, shall also terminate.

    (d)  At the completion of the 30-day evaluation period or upon receipt and
         verification of all corrections to any deficiencies reported during
         the evaluation period, whichever is the later, PTC agrees to commence
         the porting of Pro/ENGINEER to the Computer Products.

    (e)  PTC agrees to complete the porting of Pro/ENGINEER to the mutually
         agreed Computer Products within 60 days after commencement.  PTC
         agrees to notify PANDA in writing that PTC considers PTC Software to
         be ready to be shipped to customers on the Computer Products. 

    (f)  Within fifteen (15) days of receipt of notification that the porting
         of PTC Software to the Computer Products has been completed, PANDA
         has the right to send its representative(s) to PTC's offices to
         confirm that Pro/ENGINEER has been properly ported to the Computer
         Products. In the event that PANDA discovers deficiencies in the
         implementation when compared to the implementation on comparable
         Computer Products, PANDA agrees to report any such deficiencies to
         PTC in writing within said fifteen (15) days.  PTC shall correct any
         such deficiencies in a mutually agreed schedule.

    (g)  At the completion of the fifteen (15) day verification period, or
         whenever PTC has completed making correction to any deficiencies
         reported by PANDA, whichever is the later, PTC agrees to make the
         Computer Products version of Pro/ENGINEER available for customer
         shipment.

3.  Support.   PTC shall continue to support the then-current version of
    Pro/ENGINEER on the Computer Products and mutually agreed upon future
    versions of the Computer Products until the earlier of (i) the termination
    of this Agreement, (ii) PANDA ceases to market, ship, or support the
    Computer Products, (iii) in the event that in one (1) year after the first
    customer shipment (not counting the shipment hereunder to PANDA) on the
    Computer Products, PTC has fewer than fifty (50) end-user licenses of
    Pro/ENGINEER under active and paid-up maintenance plans and running on the
    Computer Products.

4.  Confidentiality.  PTC and PANDA acknowledge that during the development of
    the Products, either party may disclose, make available or deliver to the
    other, Proprietary Information.  Each party shall keep confidential, and
    shall require its officers, directors, employees and agents to keep
    confidential, all Proprietary Information furnished or made known to it by 
<PAGE>
Page 41

    the other party. Neither party will disseminate or disclose Proprietary
    Information to any person or entity other than those officers, directors,
    employees and agents who are directly involved in the performance of
    obligations under this Agreement. Each party retains all rights to
    Proprietary Information disclosed to it, and, except as otherwise provided
    in this Agreement, each party is prohibited from copying any Proprietary
    Information for any purpose without the prior written authorization of an
    officer of the other party.  Each party will use the same degree of
    diligence and effort to protect the other's Proprietary Information from
    disclosure to third parties as it uses to protect its own confidential
    information, but in no event shall it use less than reasonable and
    customary diligence and effort in protecting Proprietary Information.

5.  Equitable Relief.   Both Parties' obligations under Section 4 of this
    Agreement are of a special and unique character which gives them a
    particular value to the Parties and each Party acknowledges that the other
    Party cannot be reasonably or adequately compensated in damages in an
    action at law in the event that either Party breaches such obligations. 
    Therefore, the Parties expressly agree that either Party shall be entitled
    to injunctive and other equitable relief in the event of such breach or
    threatened breach in addition to, and not in lieu of, any other rights or
    remedies in law or equity to which that Party may be entitled.

6.  Ownership.   For purposes of Section 117 of the Copyright Act of 1976, as
    amended, and for all other purposes, PTC shall be considered the owner of
    the Products (including the source code thereof) and all related
    documentation and any copies thereof, and of all copyright, trade secret,
    patent and other intellectual or industrial property rights therein. 
    PANDA shall not modify, decompile, disassemble or reverse engineer the
    Products.  PTC shall not modify, decompile, disassemble or reverse
    engineer the Computer Products without PANDA's prior consent. 

7.  Distribution.

    (a)  PTC shall have the sole right to distribute the Products through any
         means of distribution selected by PTC.  PTC shall have the sole right
         to appoint Distributors of the Products.

    (b)  All documentation provided by PTC to PANDA and customers and
         Distributors will be in English only.

8.  Term.   This Agreement shall remain in effect unless terminated in
    accordance with Section 9 of this Agreement for one and a half years after
    the port is completed, or until such time that the Parties mutually agree
    to terminate this Agreement.  The obligations and rights of the Parties
    set forth in Sections 4, 5, 6, and 7 (which by their nature are intended
    to survive) shall survive the expiration of this Agreement pursuant to
    this Section 8.

9.  Termination.

    (a)  This Agreement may be terminated:

         (i)  By PTC, in the event that PANDA fails to provide the general
              technical support, required under Section 2(a) of this Agreement
              and fails to remedy such breach within 30 days after written
              notice of such breach is provided to PANDA;
<PAGE>
Page 42

         (ii) By PTC, in the event that PANDA fails to make any of the
              payments to PTC when due under Section 2 of this Agreement and
              fails to remedy such breach within 15 days after written notice
              of such breach is provided;

         (iii)By PTC, in the event that it is unable to secure the software
              and hardware products necessary to implement the Project on the
              Computer Products as set forth in Section 2(a) of this
              Agreement;

         (iv) By PTC, in the event that PTC rejects, with appropriate
              explanation, the software and hardware products necessary to
              implement this Project on the Computer Products as set forth in
              Sections 2(a) and 2(c) of this Agreement; or

          (v) By PANDA, in the event that PTC breaches any of is obligations
              under this Agreement and fails to remedy such breach within
              thirty (30) days after written notice of such breach is provided
              to PTC.

    (b)  Upon any termination of this Agreement pursuant to Section 9(a) of
         this Agreement, neither PANDA nor PTC shall be relieved of any
         obligations incurred prior to such termination and the rights and
         obligations of the Parties set forth in Sections 2(b)(ii), 4, 5 and 6
         of this Agreement (which by their nature are intended to survive)
         shall survive such termination of this Agreement. PANDA's obligation
         to take delivery of and make payment for the Second Shipment of PTC
         Software pursuant to Section 2(b)(ii) shall terminate if PTC
         terminates this Agreement under Section 9(a)(iv) prior to said Second
         Shipment of PTC Software.

    (c)  The right of PTC and/or PANDA to terminate this Agreement as set
         forth in this Article 9 shall be in addition to, and not in lieu of,
         any other rights or remedies which PTC and/or PANDA may have in law
         or in equity to proceed against the other.

10. Relationship Between Parties.   The relationship between PTC and PANDA is
    that of independent contractors, and nothing in this Agreement shall be
    construed to constitute any Party as an employee, partner or agent of any
    other Party.  Without limiting the foregoing, no Party shall have
    authority to act for or to bind any other Party in any way, to make
    representations or warranties or to execute agreements on behalf of any
    other Party or to represent that any other Party is in any way
    responsible for the acts or omissions of such Party.  Each Party shall
    indemnify and hold the other Party harmless for any liability or damage
    to such other Party resulting from a violation of this Section 10.

11. Warranties.

    (a)  PTC warrants that it is the owner as set forth in Section 6 of the
         Products.

    (b)  PANDA warrants that the Computer Product is an Intel or other
         architected Computer Products, that has a Windows NT operating system
         and graphical system that substantially conform to the industry
         accepted standards for these software products.
<PAGE>
Page 43
    (c)  PANDA further warrants that each Computer Products shipped to
         customers has a unique hardware identification that cannot be
         modified by the customer, and that PANDA will provide PTC with a
         means of determining such unique hardware identification each time
         PTC Software shall run on the customer's machine.

12. Limitation of Liability.   UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE
    LIABLE TO THE OTHER FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES WITH
    REGARD TO THIS AGREEMENT, EVEN IF SAID PARTY HAS BEEN ADVISED OF THE
    POSSIBILITY OF SUCH DAMAGES.

13. Force Majeure.   In the event that a Party is prevented from performing,
    or is unable to perform, any of its obligations under this Agreement due
    to any act of God, fire, casualty, flood, war, failure of public
    utilities, epidemic, destruction of production facilities or insurrection,
    and if such Party shall have used its best efforts to avoid such
    occurrence and minimize its duration and shall have given written notice
    to the other Parties, then the affected Party's performance shall be
    excused and the time for performance shall be extended for the period of
    delay of inability to perform due to such occurrence.

14. Notice.   All notices, demands, requests, consents, approvals or other
    communications required or permitted to be given hereunder or which are
    govern with respect to this Agreement shall be in writing and may be
    personally served or may be sent by a recognized courier service (fees
    prepaid), addressed as follows:

    If to PTC:   Parametric Technology Corporation
                      Contracts Manager
                      128 Technology Drive
                      Waltham, Massachusetts 02154
                      Attention:  Contracts Manager

    If to Customer:   PANDA

                      ------------------------------
 
                      ------------------------------

                      5201 Congress Avenue
                      Boca Raton, FL  33487-3630

    or to such other address or person as a Party shall have specified most
    recently by written notice provided in accordance with this Section 14.
    Notice shall be deemed given on the date of service if personally served. 
    Notice sent as provided herein shall be deemed given on the third business
    day following the date so sent.

15. Entire Agreement.   This Agreement and the Schedules hereto constitutes
    the entire agreement between PTC and PANDA with respect to the subject
    matter hereof.  No waiver, consent, modification, amendment or change of
    the terms of this Agreement or any Schedule hereto shall apply unless
    specifically agreed to in writing by both Parties.

16. Severability.   In the event that any provision of this Agreement is held
    by a court of competent jurisdiction to be unenforceable because it is
    invalid or in conflict with any law or any relevant jurisdiction, the
    validity of the remaining provisions shall not be affected, and the rights
    and obligations of the Parties shall be construed and enforced as if the
<PAGE>
Page 44

    Agreement did not contain the particular provisions held to be
    unenforceable.

17. Assignments.   This Agreement may not be assigned or delegated, whether by
    operation of law or otherwise, without the written consent of the other
    Parties, which consent shall not be unreasonably withheld.  Any other
    assignment of rights or delegation of duties or obligations under this
    Agreement made without the prior written consent of the other Parties
    hereto shall be void and of no effect.  For the purposes of this
    Section 17, a sale of the majority of the assets of common stock of a
    party to this Agreement shall not be considered an assignment.

18. Governing Law.   This Agreement shall be governed by and construed as a
    sealed instrument in accordance with the laws of the Commonwealth of
    Massachusetts.

19. Waivers and Extensions.   No waiver of any breach of any agreement or
    provision herein contained shall be deemed a waiver of any preceding or
    succeeding breach thereof or of any other agreement or provision herein
    contained. No extension of time for performance of any obligations or acts
    shall be deemed an extension of the time for performance of any other
    obligations or acts.

20. Counterparts.   This Agreement may be executed in counterparts, each of
    which shall be deemed an original, but all of which taken together shall
    constitute but one and the same instrument.

IN WITNESS WHEREOF, the Parties hereto executed this Agreement under seal as
of the day and year indicated above.

PANDA PROJECT                 PARAMETRIC TECHNOLOGY CORPORATION

By:                           By:
   ------------------------      --------------------------

Name:                         Name:
     ----------------------        ------------------------

Title:                        Title:
      ---------------------         -----------------------

Date:                         Date:
     ----------------------        ------------------------
<PAGE>
Page 45
                                  SCHEDULE B
                                  ----------
Quote No.
        Purchase Order No.
Parametric Technology Corporation

         CUSTOMER PRODUCT SCHEDULE TO AGREEMENT FOR PTC LICENSED PRODUCTS
Customer                         Maintenance Address
Name     The Panda Project       Customer:
Address  5201 Congress Ave.      Address:  Same
         Boca Raton, FL 33487
Country                          Country
Telephone (407) 994-2300         Telephone
End User                         Attn
Distributor and                  End User Contact & Phone No.
PTC Sales Rep
-----------------------------------------------------------------------------
In accordance with the terms and conditions of the Agreement for PTC Licensed
Products (License Agmt. No.   ) made between PTC and     on the     day of
      19   ("Agreement").  PTC hereby grants to Customer a License to use the
Licensed Products listed in this Product Schedule, all subject to said terms
and conditions.  The following licensed Products are hereby made subject to
the Agreement. Pro/JR products are covered under the Pro/JR license agreement
included in the PRO/JR package.                             TERM:  PERPETUAL
-----------------------------------------------------------------------------
Pro/ENGINEER TRAINING & CONSULTING
Order No.                      Description                       Price

                  COMBINED SOFTWARE TOTALS (Add A+B+C+D+E+F+G)
                                       FROM THE ATTACHED PAGES  $704,000
                                                                --------
                                                 SOFTWARE TOTAL
                                                                --------
                                    TRAINING & CONSULTING TOTAL  $50,000
                                                                --------
                            MAINTENANCE TOTAL * (Add Z+Y+X+W+V)
                                                                --------
                                   PRODUCT SCHEDULE GRAND TOTAL $754,000
                                                                --------
*Maintenance must be calculated separately from software.
Pro/ENGINEER Default Language Option English / / French / /  German / /
Japanese / / Italian / /
If your default language is not available at the time of your order, PTC will
ship the English translation in its place.
----------------------------------------------------------------------------
CUSTOMER ACKNOWLEDGES THAT ITS HAS READ THE AGREEMENT AND THIS PRODUCT
SCHEDULE AND AGREES TO BE BOUND BY THEIR TERMS AND CONDITIONS.  In the event
of conflict between this Product Schedule and said Agreement, the terms and
conditions of this Product Schedule shall govern.

CUSTOMER                       PARAMETRIC TECHNOLOGY CORP
Authorized Signature           Authorized Signature
Name                           Name
Title                          Title
Date                           Date
Order No. DS-0007              Part No. S00071295
PRODUCT SCHEDULE
<PAGE>
Page 46
                             PRODUCT SCHEDULE

Order No.  FLOATING Licenses & Modules  Configurations   

                                 List               
FLOATING LICENSES                Price 1 2        Hardware Information
                                                      Configuration
                                                  Single/ / Fault  / /
                                                            Tolerant
128-F Pro/Engineer Basic Package                  Server 1  
122-F Advanced Design Package                     Clients check all that apply
173-F Advanced Machinist               X          CPU ID or     UNIX    NT  
139-F Package                                     Install No.   DEC
103-F Industrial Designer Package                            ---    ---  ---
172-F Mold Designer Package                       Media No.      HP
105-F Production Machinist               X                   ---    ---  ---
158-F Package                                     Platform      IBM      N/A
171-F Sheet Metal Package                                    ---    ---  ---
      Supplier Package                            Model      OS SGI      N/A
      Tool & Die Machinist                                   ---    ---  ---
      Package                                     Server 2
                                                                SUN      N/A
                                                                    ---
                                                  (if Fault Tolerant)

                                                  CPU ID    
                                                           --- --- --- ---
                                                  Media No.
                                                           --- --- --- ---
                                                  Platform
                                                           --- --- --- ---
                                                  Model     OS
                                                           --- --- --- ---
                                                  Server 3 (if Fault Tolerant)
                                                  CPU ID
                                                         ------ ------
                                                  Media No.
                                                         ------ ------
                                                  Platform 
                                                         ------ ------
                                                  Model    OS
                                                         ------ ------

      ADD-ON LOCKED 
      MODULES

      OTHER
<PAGE>
Page 47

Order No.  FLOATING Licenses & Modules  Configurations  Hardware Information
       CONFIGURATION 
       PRICE                            24,000 29,000   Configuration
                                                        Single / / Fault / /
                                                                   Tolerant
       QUANTITY                              16      1   Server 1  Clients
                                                                  check all
                                                                  that apply
C      CONFIGURATION                   384,000 29,000   CPU ID or  UNIX  NT  
       SUBTOTAL
                                                        Install No. DEC   
                                                                  --- --- ---
                                                        Media No.    HP
                                                                  --- --- ---
       ANNUAL MAINT. (per                               Platform    IBM   N/A
       config.)                                                   --- --- ---
X      MAINT. SUBTOTAL (ann.                            Server 2    SUN   N/A
       Maint X qty)                                               --- --- ---
       FLOATING MODULES                      3       4  (if Fault Tolerant)
                                                        CPU ID
                                                              --- --- --- ---
                                                        Media 
                                                        No.
                                                              --- --- --- ---
       Pro Cabling              9,000        1          Server 3
                                                        (If Fault Tolerant)
                                                        CPU ID
                                                              --- ---
       Pro Diagram              9,000        1          Media
                                                        No.
                                                              --- ---
                                                        Platform
                                                              --- ---
       Pro Harnes Mfg.          7,000        1          Model OS
                                                              --- ---
       Pro ECAD                 5,000        1

       Pro Sheetmetal           9,000        3
       Pro Library Access       3,000       13
       Pro Mold Design         12,000        1
       Pro Mesh                 9,000        1
       Pro FemPost              7,000        1

D      FLOATING MODULE 
       SUBTOTAL                        124,000
W      MAINTENANCE 
       SUBTOTAL
<PAGE>
Page 48

        Pro/PDM                          A      B           Pro/PDM Server A
500     Server Connections(#)   2,500   11                  CPU ID or
                                                            Install No.
                                                            ------------------
                                                            Media No.
                                                            ------------------
502     Pro/PDM or ORACLE (x)                               Platform
                                                            ------------------
                                                            Model      OS
                                                            ------------------
501     Pro/PDM Toolkit (x)                                 Graphic Option
                                                            ------------------
E       Pro/PDM Subtotal             27,500                 Pro/PDM Server B
                                                            CPU ID or
V       Pro/PDM Maint.                                      Install No.
        SUBTOTAL                                            ------------------
                                                            Media No.
                                                            ------------------
                                                            Platform
                                                            ------------------
                                                            Model      OS
                                                            ------------------
                                                            Graphic Option
                                                            ------------------

        Library Databases  Qty.          Qty.

                                   604-CD  MOLD BASE
                                                      ---
                                   607-CD PIPE FITTING
                                                      ---
                                   606-CD PIPING &
601CD   BASIC                          HEATING SYS.
                  ---                                 ---
603CD   CONNECTOR                  602-CD TOOLING
                  ---                                 ---
603CD   ELECTRICAL 
                  ---
605CD   SYMBOL
                  ---
508CD   HUMAN 
        FACTORS
                  ---
F              LIBRARY DATABASE TOTAL
<PAGE>
Page 49

Order                  List
No.   Products         Price  Configurations       Product Information

      PACKAGES                1     2     3               CPU ID
165   Pro/MECHANICA                              (Indicate Server ID when
      Basic Package                                    ordering NLS)
                                                       Configuration 1
147   Power Pack        40000 X                  CPU ID or
        Choose 1 from:                                      -----------
                                                 Install No.
360-0 Pro/MECHANICA                                         -----------
      INTERFACE FOR UG    0                      Platform
                                                            -----------
359-0 Pro/MECHANICA                              Model
      INTERFACE for                                         -----------
      CATLA               0                      OS
                                                            -----------
361-0 Pro/MECHANICA                              Graphics Options
      INTERFACE for IGES  0    X                            -----------

362-0 Pro/MECHANICA                                  Configuration 2
      INTERFACE for VDA   0                      CPU ID or
                                                            -----------
                                                 Install No.
149   Pro/MECHANICA MOTION                                  -----------
                                                 Platform
      Optional Modules:                                     -----------
                                                 Model
357   Pro/MECHANICA                                         -----------
      EQUATIONS                                  OS
      DEVELOPER                                             -----------
                                                 Graphics Options
356   Pro/MECHANICA LOADS                                   -----------

367   Pro/MECHANICA TIRE MODULE                       Configuration 3
                                                 CPU ID or
148   Pro/MECHANICA STRUCTURE                               -----------
                                                 Install No.
      Optional Modules                                      -----------
                                                 Platform
350   Pro/MECHANICA THERMAL                                 -----------
                                                 Model
351   Pro/MECHANICA VIBRATIONS                              -----------
                                                 OS
150   Pro/MECHANICA EQUATIONS                               -----------
      RUNTIME                                    Graphics Options
                                                            -----------
151   Pro/MECHANICA DEVELOPERS 
      TOOLKIT

170F  Pro NC Post Advance

ADDITIONAL PRODUCTS
<PAGE>
Page 50

Order                           List
No.     Products                Price   Configurations     Product Information

359     Pro/MECHANICA INTERFACE for CATLA
361     Pro/MECHANICA INTERFACE for IGES
360     Pro/MECHANICA INTERFACE for UG
362     Pro/MECHANICA INTERFACE for VDA
363     Network License Server 1 (1-3 Seats)
364     Network License Server (4-  Seats)

        TIME LIMITED OFFER -Exp. 12/28/95             Motion or Structure
        Choose either Motion or Structure                           

154-IX  Design & Analysis Special Offer - Locked                 Notes:
154-FX  Design & Analysis Special Offer - Floating               The DXF and 
153-X   PTC Customer Offer One                                   Pro/ENGINEER
159-X   PTC Customer Offer Two                                   interfaces 
160-X   Power Pack Upgrade                                       are included
152-IX  Pro/MECHANICA Customer Offer - Locked                    with every 
152-FX  Pro/MECHANICA Customer Offer - Floating                  purchase of 
                                                                 Pro/MECHANICA
                                                                 MOTION or
                                                                 Pro/MECHANICA

                                                                 
                                                                 STRUCTURE.
                                                                 All Time
                                                                 Limited
                                                                 Offers listed
                                                                 on this page
                                                                 will expire
                                                                 on December
                                                                 28, 1995

        CONFIGURATION PRICE                       40,000   200,000
        QUANTITY                                       3         1
G       LICENSE SUBTOTAL                         120,000    20,000
        ANN. MAINT (per config.)
U       MAINT. SUBTOTAL
<PAGE>
Page 51
                             SCHEDULE A

                        ARCHISTRAT 4s SERVER
                            PRICE SHEET


                   Prices as of January 30, 1996


                          ARCHISTRAT 4s-100


Quantity  Archistrat's 
          Part Number   Color  Description                         Price
-------------------------------------------------------------------------
1          48991661            Archistrat 4s Server - 166 Mhz
1                              3.5 Diskett Drive
1                              4X CD ROM Drive
1                              Keyboard
1                              32 Memory Card 
1                              PCI 64-bit SVGA Adapter w/2MB VRAM
1                              2GB Fast-SCSI Hard Drive 7200 RPM
1                              10/100-Mbps Fast Ethernet Adapter
-------------------------------------------------------------------------
                       MFG SUGGESTED PRICE                        $12,720
-------------------------------------------------------------------------

Archistrat 4s Server base configuration includes:
166 MHz Intel Pentium Processor & ZIF Socket
Cache Memory-16KB Internal & 512KB External
Expansion Slots - Six 32/64-bit PCI & Four 16-bit IAS slots (6 slots total)
Archistrat 4s Standard Video
Staircase - 3.5  and CD-ROM plus two optional drives (four bays total)
Hard Drive Bays - 12 low-profile or 10 half-high drives in two bays
I/O Ports
Keyboard, mouse, and 400 watt power supply
<PAGE>
Page 52
                             ARCHISTRAT 4s SERVER
                                 PRICE SHEET

                        Prices as of January 30, 1996

                              ARCHISTRAT 4s-200

Quantity  Archistrat's 
          Part Number   Color  Description                         Price
-------------------------------------------------------------------------
1         48991662             Archistrat 4s Server - 166 MHz
1                              3.5 Diskett Drive
1                              4X CD ROM Drive
1                              Keyboard
                               Mouse
1                              64MB Memory Card
                               PCI 64-bit SVGA Adapter w/2MB VRAM
1                              Adaptec Fast/Wide SCSI-3 Adapter
1                              4GB Fast/Wide-SCSI Hard Drive 7200 RPM
1                              10/100-Mbps Fast Ethernet Adapter
-------------------------------------------------------------------------
                       MFG SUGGESTED PRICE                       $15,600
-------------------------------------------------------------------------

Archistrat 4s Server base configuration includes:
166 MHz Intel Pentium Processor & ZIF Socket
Cache Memory-16KB Internal & 512KB External
Expansion Slots - Six 32/64-bit PCI & Four 16-bit IAS slots (6 slots total)
Archistrat 4s Standard Video
Staircase - 3.5  and CD-ROM plus two optional drives (four bays total)
Hard Drive Bays - 12 low-profile or 10 half-high drives in two bays
I/O Ports
Keyboard, mouse, and 400 watt power supply
<PAGE>
Page 53
                             ARCHISTRAT 4s SERVER
                                 PRICE SHEET

                        Prices as of January 30, 1996

                              ARCHISTRAT 4s-300
Quantity  Archistrat's 
          Part Number   Color  Description                         Price
-------------------------------------------------------------------------
1         48991662      Archistrat 4s Server - 166 MHz
1                       3.5 Diskett Drive
1                       4X CD ROM Drive
1                       Keyboard
                        Mouse
1                       64MB Memory Card
                        PCI 64-bit SVGA Adapter w/2MB VRAM
1                       PC Wide-SCSI RAID Adapter
1                       4 MB ECC Cache SIMMs for RAID Adapter
1                       2GB Fast/Wide SCSI Hard Drives
                        4-Port PCI 100-Mbps Fast Ethernet adapter
-------------------------------------------------------------------------
                            MFG SUGGESTED PRICE                   $27,140
-------------------------------------------------------------------------

Archistrat 4s Server base configuration includes:
166 MHz Intel Pentium Processor & ZIF Socket
Cache Memory-16KB Internal & 512KB External
Expansion Slots - Six 32/64-bit PCI & Four 16-bit IAS slots (6 slots total)
Archistrat 4s Standard Video
Staircase - 3.5  and CD-ROM plus two optional drives (four bays total)
Hard Drive Bays - 12 low-profile or 10 half-high drives in two bays
I/O Ports
Keyboard, mouse, and 400 watt power supply
<PAGE>
Page 54
                            ARCHISTRAT 4s OPTIONS

                                                                     Suggested
Part Number   Description                                Detail        Price

              Archistrat 4s Server                        1.2
-01           RED
-02           BLUE
-03           BLACK
-04           TEAL
-05           CAPPUCCINO
-06           TERRA COTTA
-07           PANDA WHITE

SYSTEM MEMORY
48260029      Archistrat 32MB Memory Module                             $2,340
48260030      Archistrat 64MB Memory Module                             $4,576
DISPLAYS
48200002      Nokia Multigraph 447X 17" Monitor                         $1,169

SCSI CONTROLLERS
48260025      Adaptec PCI SCSI Adapter                    3, 4, 10      $  254
48260044      Adaptec PCI Dual Channel SCSI Adapter       3, 4          $  402
48260115      Adaptec PCI Fast/Wide SCSI-3 Adapter        3, 4, 10      $  415
48260116      DPT PCI Fast/Wide RAID Adapter              3, 4, 10      $1,310
48260077      DPT PCI Fast/Wide SCSI Adapter              3, 4, 10      $  649
48260117      DPT Wide-SCSI Single-Channel 
              Expansion Option                                          $  459
48260038      DPT 4MB ECC SIMM                            4, 5          $  519
48260041      DPT 16MB ECC SIMM                           4, 5          $2,144

                                                                     Suggested
Part Number   Description                                Detail        Price

48220029      Fast-SCSI HDD-Option Hardware Kit           4               TBD
48400001      Wide-SCSI HDD-Option Hardware Kit           4               TBD

HARD DRIVES
48220009      2GB Fast SCSI-2 Hard Drive                  3, 4, 7, 8    $  987
48220010      4GB Fast SCSI-2 Hard Drive                  3, 4, 7, 9    $1,481
48220032      2GB Fast/Wide SCSI-2 Hard Drive             3, 4, 8       $1,065
48220033      4GB Fast/Wide SCSI-2 Hard Drive             3, 4, 9       $1,599

COMBINATIONS
48260072      Cogent EM110TX PCI Fast Ethernet Adapter                   $ 
194
48260073      Cogent EM400 Quartet Fast Ethernet Adapter                $1,260
<PAGE>
Page 55

                            ARCHISTRAT 4s OPTIONS:
                              Additional Detail

1.  The base price of the server is determined by the configuration ordered. 
    The price for additional memory and hard drives must be added to that
    price.  See System Memory and Hard Drives for available selections.

2.  Select a color.  Add the two-digit color ID number to the configuration
    order number.  (The color ID number is in the part number column next to
    the desired color.)

3.  An optional SCSI or RAID adapter must be added to the base configuration
    if drives are installed in the hard-drive cage.  A hard drive in the
    staircase does not require an adapter because it is controlled by the
    built-in SCSI-2 controller.    

4.  The internal SCSI cabling for the upper bay in the hard-drive cage is
    included with the base system; cabling for the lower bay is not.  When
    installing drives in the lower bay, order the appropriate HDD-option
    hardware kit (standard or wide-SCSI).

5.  This cache memory provides ECC memory for the DPT RAID adapter.  ECC
    memory provides on-the-fly, error detection and correction.

6.  This option is required when installing cache on the DPY PCI SCSI Adapter. 
    It supports up to 64MB of cache using four SIMMs.  SIMMs are ordered
    separately.

7.  Two additional SCSI drives can be installed in the empty bays in the
    staircase.  These drives are controlled by the built-in SCSI-2 controller,
    which does not support wide-SCSI drives.

8.  Up to 12 of these drives can be installed in the hard-drive cage.

9.  Up to 10 of these drives can be installed in the hard-drive cage.

When ordering SCSI or RAID adapters, consider an adapter with multiple-channel
capabilities to conserve PCI slots.  A single dual-channel adapter uses only
one PCI slot, and can support all 12 drives in the hard-drive cage (the
adapter actually supports up to 14 drives).  It would take two single channel
adapters to support the same 12 drives.
<PAGE>
Page 56
                                                               EXHIBIT 10.16
                   CONFIDENTIAL MATERIALS OMITTED AND FILED 
          SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                     ASTERISKS DENOTE SUCH OMISSIONS.

                           LICENSE AGREEMENT

         This License Agreement is made and entered into as of June   , 1996,
by and between THE PANDA PROJECT INC. ("PANDA" or "Licensor") a corporation
existing under the laws of Florida, which has its principal office at Boca
Raton, Florida, and AMP INCORPORATED, a corporation existing under the laws of
Pennsylvania, which has its principal office at Harrisburg, Pennsylvania, The
Whitaker Corporation, a corporation existing under the laws of Delaware, and a
wholly-owned subsidiary of AMP INCORPORATED that owns, manages, and maintains
AMP INCORPORATED's intellectual property, which has its principal office at
Wilmington, Delaware, and Connectware Inc., a corporation existing under the
laws of Delaware and a wholly-owned subsidiary of AMP INCORPORATED, which has
its principal office at Richardson, Texas (collectively "AMP" or "Licensee").  

         WHEREAS, Licensor possesses certain valuable intellectual and
industrial property rights; and

         WHEREAS, Licensor is willing to grant, and Licensee desires to
acquire, rights to use such rights on a worldwide basis in accordance with the
terms and conditions set forth herein;

         NOW, THEREFORE, in consideration of the premises and mutual promises,
terms and conditions of this License Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:

                              I.  DEFINITIONS

          A.  "Licensed Product" shall mean a semiconductor package as
      described in the patent applications identified in Appendix A of this
      License Agreement, and any improvements, modifications, and derivations
      thereof and know-how related thereto owned, developed, or acquired
      (except in a grant back from another PANDA licensee) by PANDA, and which
      PANDA has the right to license, during the term of this License
      Agreement.

          B.  "Licensed Process" shall mean any process or method pertaining
      to the use, manufacture, or testing of Licensed Product and all know-how
      related thereto.

          C.  "Licensed Product Sold" shall mean the sale, lease, or other
      transfer of a Licensed Product or a product incorporating a Licensed
      Product to a non-affiliated third party by AMP or an AMP Affiliate; or
      the internal use for productive purposes of a Licensed Product, by AMP
      or an AMP Affiliate.  A product shall be considered sold at the time of
      invoicing or shipment, whichever is earlier, or if there is no such
      invoicing or shipment, in the case of internal use, at the time of such
      use.  

          D.  "Patent Rights" shall mean any United States or foreign
      applications or patents, owned, controlled, or acquired by PANDA in
      whole or in part, during the term of this License Agreement, relating to
      Licensed Product or Licensed Process, and which PANDA has the right to
<PAGE>
Page 57
      license, which disclose and claim Licensed Process or Licensed Product,
      including, but not limited to, the construction thereof, methods for the
      manufacture and use thereof, and improvements thereto, and to any
      reissues or extensions of such patents and all divisions, continuations,
      and continuations-in-part.  Such "Patent Rights" shall not include
      licenses or sublicenses related to Licensed Products or Licensed Process
      hereafter granted to PANDA by its other licensees.  

          E.  "Proprietary Information" shall mean all information or trade
      secrets of any description relating to Licensed Product or Licensed
      Process developed by, owned, or controlled by PANDA at any time prior to
      the termination or expiration of this License Agreement, including, but
      not limited to, the development, selling, marketing, use, properties,
      structures, compositions, manufacture or quality control of Licensed
      Product or Licensed Process, and including, but not limited in form, to
      samples, prototypes, data books, manufacturing instructions, drawings,
      formulae, and customer lists.  Proprietary Information does not include:
      (i) information which was known by AMP prior to receipt from PANDA; (ii)
      information lawfully disclosed to AMP by a third party which did not
      derive the information from PANDA; (iii) information which is or becomes
      a matter of public knowledge or part of the public domain other than
      through a breach of this License Agreement; and (iv) information which
      AMP independently develops without any reference to the proprietary
      information.  Such "Proprietary Information" shall not include
      Proprietary Information licensed or sublicensed to PANDA by its other
      licensees.  

          F.  "AMP Affiliate" shall mean any corporation, firm, partnership,
      proprietorship, or other form of business organization as to which
      control of the business is exercised by AMP, and any corporation, firm,
      partnership, proprietorship, or other form of business organization in
      which AMP has at least a fifty-one percent (51%) ownership interest, or
      the maximum ownership interest AMP is permitted to have in the country
      where such business organization exists.

          G.  "PANDA Affiliate" shall mean any corporation, firm, partnership,
      proprietorship, or other form of business organization as to which
      control of the business is exercised by PANDA, and any corporation,
      firm, partnership, proprietorship, or other form of business
      organization in which PANDA has at least a fifty-one percent (51%)
      ownership interest, or the maximum ownership interest PANDA is permitted
      to have in the country where such business organization exists, and any
      entity under common control with PANDA.  

          H.  "Effective Date" shall mean the later of the date of signature
      of this License Agreement by authorized representatives of PANDA and
      AMP.

                            II.  GRANT OF LICENSES

          A.  Subject to the terms of this License Agreement, PANDA agrees to
      grant and does grant to AMP a non-exclusive, worldwide license during
      the term of this License Agreement to make, have made for it, use, sell,
      or otherwise dispose of Licensed Product and to use and have used the
      Licensed Process under Patent Rights and Proprietary Information.  Such
      license does not include the right to grant sublicenses or assign this
      license.  Upon AMP's written request, PANDA agrees to grant the above
      license or any part thereof to an AMP Affiliate (but only so long as
      such entity is an AMP Affiliate), with the right of the AMP Affiliate to
<PAGE>
Page 58

      pay royalties directly to PANDA, provided that such AMP Affiliate
      executes as Licensee, an agreement containing terms substantially
      identical to this License Agreement (providing for the payment of
      Royalties by the AMP Affiliate directly to PANDA).  The grant of the
      above license or any part thereof to an AMP Affiliate pursuant to this
      Section II shall not release AMP from any of its obligations under this
      License Agreement.

          B.  Subject to the terms of this License Agreement, PANDA agrees to
      grant and does grant to AMP an exclusive, worldwide license for a period
      of three years from Licensee's first sale of a Licensed Product, or five
      years from the date of this Agreement, whichever occurs first, to make,
      have made for it, use, sell, or otherwise dispose of Licensed Product
      and to use and have used Licensed Process under Patent Rights and
      Proprietary Information in the ATM Switch Field and the Fast Ethernet
      Field, as hereinafter defined.  Such license does not include the right
      to grant sublicenses or assign this license.  However, upon AMP's
      written request, PANDA agrees to grant the above license or any part
      thereof to an AMP Affiliate (but only so long as such entity is an AMP
      Affiliate), with the right of the AMP Affiliate to pay royalties
      directly to PANDA, provided that such AMP Affiliate executes as
      Licensee, an agreement containing terms substantially identical to this
      License Agreement (providing for the payment of Royalties by the AMP
      Affiliate directly to PANDA).  As used herein, the term "ATM Switch
      Field" means the development, manufacture and sale or other distribution
      of switches incorporating asynchronous transfer mode technology.  The
      term "Fast Ethernet Field" means the development, manufacture and sale
      or other distribution of switches incorporating Fast Ethernet
      technology.  

                       III.  CONFIDENTIALITY CLAUSE BY AMP

          A.  Except as may be required by law or by a governmental agency,
      AMP agrees that it will not, directly or indirectly, disseminate,
      disclose or otherwise make available to any third party, or reverse
      engineer, any Proprietary Information and will use the same degree of
      care to prevent disclosure thereof that AMP uses to protect its own
      proprietary and confidential information, but in any event no less than
      reasonable.  AMP agrees to obligate any Affiliates to abide by this
      confidentiality obligation.  Employees of AMP or its Affiliates shall be
      provided access to Proprietary Information by AMP only on a "need to
      know" basis and shall be advised of the confidential nature thereof, and
      shall be bound to protect the confidentiality of such information.  The
      provisions hereof shall survive expiration or termination of this
      License Agreement for a period of seven (7) years.

          B.  AMP and its Affiliates are authorized to disclose to its
      distributors and customers only such Proprietary Information received
      from PANDA concerning the Licensed Process and Licensed Product as is
      reasonably necessary to enable Licensed Product to be sold, leased,
      placed or used, and AMP and its Affiliates are authorized to disclose to
      their respective contractors and suppliers only such Proprietary
      Information received from PANDA as is reasonably necessary to enable AMP
      or AMP's Affiliate to make or have made the Licensed Product.

          AMP shall have the obligation to bind any such distributor,
      customer, contractor, or supplier receiving Proprietary Information to
      protect the confidentiality of such information.
<PAGE>
Page 59
                              IV.  ROYALTY CLAUSE

          A.  The Licenses granted under Section II, above, shall be subject
      to a Royalty as provided for in Appendix C to this License Agreement for
      Licensed Product Sold by AMP or an AMP Affiliate.  

          B.  The Royalties provided herein are in consideration of the trade
      secrets, know-how, Patent Rights, and Proprietary Information provided
      by PANDA hereunder, and the ability of AMP to achieve a significant
      competitive advantage by its early entry into the marketplace due to its
      access to such intellectual property rights.

                         V.  PAYMENTS, RECORDS AND REPORTS

          A.  Within sixty (60) days after the end of each calendar quarter in
      which Royalties are earned or otherwise become due under this License
      Agreement, AMP shall furnish PANDA with a written report setting forth
      the computation of the Royalties payable during the preceding calendar
      quarter, and shall make such payment.  Royalties shall be paid to PANDA
      in U.S. dollars.  In case a conversion from one currency to another is
      involved in determining an earned Royalty Payment, the exchange rate
      shall be the exchange rate in effect at the Chase Manhattan Bank in New
      York City on the last day of the applicable Calendar Quarter.  Late
      payments shall bear interest at the rate of prime plus two percent, as
      in effect at the Chase Manhattan Bank in New York City at the time such
      payments originally became due.

          B.  AMP shall keep and maintain complete and accurate records in
      sufficient detail to enable Royalties payable to PANDA hereunder to be
      determined (including records on all conversion of currency under
      Paragraph A above), and it shall permit such records to be inspected
      once per year upon written notice by PANDA during reasonable business 
      hours by a certified public accountant or firm of certified public
      accountants reasonably acceptable to AMP and appointed by PANDA for this
      purpose; provided, however, that AMP shall have the right to destroy or
      discard such records in accordance with AMP's record retention policy,
      provided that such records shall be kept for a minimum of five (5) years
      after the end of the Calendar Quarter to which they apply.  PANDA shall
      bear the cost and expense of such investigation by accountants, unless
      the accountants determine that AMP's determination of the Royalties due
      and owing to PANDA was incorrect (in AMP's favor) in an amount exceeding
      six percent (6%) of the amount calculated by AMP, in which case AMP
      shall bear such cost and expense.

                         VI.  GRANTBACK OF LICENSE TO PANDA

          AMP grants to PANDA a perpetual license under information and
      inventions, whether patentable or not, related to improvements,
      modifications, and derivatives of Licensed Products or Licensed Process
      originated or invented during the term of this License Agreement by
      employees, agents, contractors, or suppliers  of AMP having access to
      Licensed Product, Licensed Process or Proprietary Information.  Such
      license to PANDA shall be non-exclusive, irrevocable, perpetual, world-
      wide, and royalty free to make, have made, use, import, sell and
      otherwise transfer products covered by such information and inventions. 
      PANDA may not sublicense or assign this right, other than to a PANDA
      Affiliate, or as part of an acquisition of PANDA or sale of PANDA
      assets.  
<PAGE>
Page 60
                          VII.   JOINT PUBLIC ANNOUNCEMENT

          Upon the signing of this License Agreement by authorized
      representatives of AMP and PANDA, a joint press release in a form
      mutually agreed will be issued announcing the execution of this License
      Agreement.

                          III.  USE OF PANDA'S TRADEMARKS

          A.  Use of Trademarks.  Licensee may use (in the manner specified by
      Licensor from time to time during the term of this Agreement) the
      trademark VSPA or other similar marks (the "Trademarks") in connection
      with the sale, distribution, marketing and promotion of the Licensed
      Products.  Licensee shall not pay Licensor any additional fee for such
      use.  Licensee may not use third party trademarks, tradenames, service
      marks and commercial symbols in connection with the sale, distribution,
      marketing and promotion of the Licensed Products, but Licensee may adopt
      and use its own trademarks, tradenames, service marks and commercial
      symbols in connection therewith.  Licensee shall give Licensor thirty
      (30) days prior written notice before using any Trademarks for the first
      time in a particular jurisdiction outside the United States.  At
      Licensor's request and expense, Licensee shall execute a registered user
      agreement and any other documents which Licensor may reasonably request
      in order to establish or confirm Licensor's right, title and interest
      with respect to the Trademarks.  

          B.  Quality Control.

              (a)  In order to comply with Licensor's quality control
                   standards, Licensee shall:  

                   (i)   maintain the quality of the Licensed Products sold
                         under the Trademarks by adhering to those specific
                         quality control standards that Licensor may from time
                         to time promulgate and communicate to Licensee with
                         respect to such Licensed Products sold under the
                         Trademarks; provided, however, that those standards
                         shall be no higher than the standards by which
                         Licensor manufactures such Licensed Products itself; 

                   (ii)  use the Trademarks in compliance with all relevant
                         laws and regulations; 

                   (iii) submit samples of Licensed Products sold under the
                         Trademarks, upon the request of Licensor, so as to
                         enable Licensor to inspect such samples and confirm
                         that Licensee is in compliance with its obligations
                         under this Section; and 

                   (iv)  not modify any of the Trademarks in any way and not
                         use any of the Trademarks on any goods or services
                         other than the Licensed Products.  

                   (v)   if Licensee fails to use such Trademarks in
                         compliance with this provision, such failure shall be
                         deemed to be a material breach of one of Licensee's
                         obligations under this Agreement, for the purposes of
                         possible termination of this Agreement.  
<PAGE>
Page 61

                   IX.  PURCHASE OF MANUFACTURING MACHINES

      AMP shall have the option to purchase two or more manufacturing machines
to make the VSPA packages from PANDA.  PANDA shall make available to AMP one
flexible machine (which can make multi-chip modules and single chip packages);
and one gang-loader high volume machine (which makes single-chip type
packages).  A separate standard purchase and sale agreement for each machine
shall be executed by the parties, at prices to be determined through
negotiation.  

                     X.  MOLDS, PLASTIC FRAMES AND PINS

      AMP will have the option to make the molds, plastic frames, covers and
pins, and PANDA will transfer drawings for such manufacture if requested to do
so, at no additional cost.  Alternatively, PANDA will supply molds, plastic
frames, covers and pins pursuant to a standard purchase and sale agreement to
be executed by the parties, at prices to be determined by negotiation.  

                        XI.  TRAINING OF AMP PERSONNEL

      In the first year of this Agreement, AMP shall be entitled to send two
employees to Boca Raton for training with respect to Licensed Product,
Licensed Process, and Proprietary Information.  Such training shall not exceed
three (3) weeks per person, and shall be done at a time agreed to by PANDA and
AMP.  

      In each subsequent year, AMP shall be entitled to send two employees to
PANDA for training with respect to Licensed Product, Licensed Process, and
Proprietary Information.  Such training shall not exceed two (2) weeks per
person per year and shall be done at a time agreed to by PANDA and AMP.  

      AMP shall be responsible for all expenses and liabilities of such
employees.

                     XII.  TRANSFER OF PROPRIETARY INFORMATION

      Within fifteen (15) days of execution of this Agreement, PANDA shall
provide two (2) copies of the materials identified in Appendix B.

                             XIII.  ASSIGNMENT BY PANDA

      PANDA may assign any of its rights, including rights to payments of
earned Royalties, to any corporation or other entity which is an Affiliate of
PANDA.

                             XIV.  TERM AND TERMINATION

      A.  This License Agreement shall become effective as of the Effective
Date and, unless otherwise terminated as provided herein, shall continue in
full force and effect until the last to expire of the Licensed Patents. 
Thereafter, AMP may acquire a license to know-how and trade secrets covered
herein at a reduced royalty rate to be agreed upon between AMP and PANDA.  

      B.  Termination for Cause.  After the occurrence of any of the following
events, this License Agreement may be terminated by either Party (the
"Terminating Party") by giving written notice of Termination to the other 
<PAGE>
Page 62

Party, such Termination being immediately effective upon the giving of such
Notice of Termination:

      (a)  A material breach or default as to any obligation hereunder by the
           other Party and the failure of the other Party to promptly pursue
           (within thirty (30) days after receiving written notice thereof
           from the Terminating Party) a reasonable remedy designed to cure
           (in the reasonable judgment of the Terminating party) such material
           breach or default; or

      (b)  The filing of a petition in bankruptcy, insolvency or
           reorganization against or by the other Party, which petition shall
           not have been dismissed within ninety (90) days of filing thereof,
           or the other Party becoming subject to a composition for Creditors,
           whether by law or agreement, or the other Party going into
           receivership or otherwise becoming insolvent; or

      C.  AMP shall have the right to terminate this License Agreement at any
time with or without cause upon six (6) months prior written notice to PANDA. 
Termination of this License Agreement by AMP shall not alter or affect the
rights or obligations of either party arising prior to such termination, nor
shall termination pursuant to this Section relieve AMP of its payment
obligations hereunder.  Any termination by AMP as provided in this Paragraph
shall not prejudice the right of PANDA to recover any earned Royalty, or other
sums owed or accrued at the time of such termination nor prejudice the right
of PANDA to maintain an action against AMP for infringement of its patent or
other intellectual property rights.

      D.  The parties agree that upon termination or expiration of this
License Agreement Licensee shall immediately cease:  (i) any use or practice
of the Licensed Product or the Licensed Process; and (ii), except as provided
in Section F below, any making, use, or sale of the Licensed Product,
including internal use within AMP or its Affiliates.  Upon termination or
expiration of this License Agreement, AMP shall, at its own expense, return to
PANDA all Proprietary Information as soon as practicable after the date of
termination or expiration, including, but not limited to, the materials
identified in Appendix B, original documents, drawings, computer diskettes,
models, samples, notes, reports, notebooks, letters, manuals, prints,
memoranda and any copies thereof, which have been received by AMP.  All
Proprietary Information and Patent Rights shall remain the exclusive property
of PANDA during the term of this License Agreement and thereafter.

      E.  Upon termination or expiration of this License Agreement, nothing
shall be construed to release Licensee from its obligations to pay Licensor
any and all Royalties, license fees or other amounts accrued but unpaid
hereunder prior to the date of such termination or expiration.

      F.  After termination or expiration of this License Agreement for any
reason by either party, AMP may sell all Licensed Product which it has on hand
upon the date of termination or expiration provided however, that the sales
shall be completed not later than six (6) months from the date of the
termination or expiration and that the termination or expiration shall not
relieve AMP from making the full earned Royalty payments herein provided on
all Licensed Product by it either before or after the date of the termination
or expiration.
<PAGE>
Page 63
                                 XV.  INFRINGEMENT

      In the event Licensee shall learn of the infringement of any patent
included in the patent Rights, Licensee shall promptly call Licensor's
attention thereto in writing and shall provide Licensor with evidence of the
infringement.  Both parties shall use their best efforts in cooperation with
each other to terminate the infringement without litigation.  If the efforts
of the parties are not successful in abating the infringement within ninety
(90) days after the infringer has been formally notified by Licensor of the
infringement, Licensor shall have the right to:  (a) commence suit on its own
account; and (b) join Licensee in such suit; and Licensor shall give timely
notice in writing to Licensee of its election.  Any proceeds of such suit
shall be the property of Licensor.  If Licensor declines to participate in
such suit, Licensee may, at its own cost and expense, pursue such legal
action.  If Licensee pursues such suit, Licensor may be joined into such suit
as a party plaintiff, if such joining is required under relevant laws.  All
costs and expenses of such suit shall be borne by Licensee, and Licensee shall
indemnify and hold harmless Licensor from any costs, expenses, liabilities, or
judgments which may result from such action.  All proceeds of such action
shall belong to Licensee.  

                                XVI.  PATENT MARKING

      Licensee agrees to mark all Licensed Products made, used, or sold under
the terms of this License Agreement, or their container with the numbers of
applicable patents of PANDA or other appropriate marking in accordance with
the patent marking laws of the country in which the Licensed Product is
manufactured, used, or sold.  

                              XVII.  WAIVER OF DEFAULT

      A waiver, express or implied, by either of the parties hereto of any
right hereunder or of any default, breach, or other failure to perform by the
other party hereto, shall not constitute or be deemed a future waiver of that
or any other right hereunder or of any default, breach or any other failure to
perform thereafter by such other party.  All waivers to be effective must be
in writing and signed by the waiving party.  

                               XVIII.  GOVERNING LAW

      This License Agreement shall be governed, interpreted, and construed in
accordance with the laws of the State of Florida, USA, excluding its conflict
of law principles.   

                           XIX.  NO RIGHTS BY IMPLICATION

      No rights or licenses with respect to Licensed Product or Licensed
Process are granted or deemed granted hereunder or in connection herewith,
other than those rights or licenses expressly granted in this License
Agreement.  

                             XX.  DEFENSIVE LITIGATION

      Licensee shall defend and indemnify Licensor from and against any
damages, liabilities, costs, and expenses, including reasonable attorney's
fees and Court costs, either:  (i) arising out of the manufacture, use, sale,
or other transfer of Licensed Product by Licensee or its customers; or (ii)
arising out of improvements, modifications, or derivatives of Licensed Product
introduced by Licensee or its customers; or (iii) arising out of injuries or 
<PAGE>
Page 64

damages caused by Licensed Product.  Such indemnification shall not extend to
any liabilities incurred as a result of infringement by Licensor of any third
party intellectual property rights.  

                        XXI.   DISPUTE RESOLUTION

      A.  Any dispute, controversy, or claim arising out of or relating to
this License Agreement, or to a breach thereof, including its interpretation,
performance, or termination shall be submitted to and finally resolved by
arbitration.  The arbitration shall be conducted in the English language in
accordance with the Commercial Rules of the American Arbitration Association
(AAA) in Boca Raton, Florida, USA.  The decision of the arbitrators shall be
final and binding upon the parties hereto, and the expense of the arbitration
(including without limitation the award of attorney's fees to the prevailing
party) shall be paid as the arbitrators determine.  The arbitration shall be
conducted by three (3) arbitrators to be selected by the American Arbitration
Association in accordance with its normal procedures.  

      B.  Notwithstanding anything contained in this Section, each party shall
have the right to institute judicial proceedings against the other party or
anyone acting by, through or under such other party in order to enforce the
instituting party's rights hereunder through reformation of contract, specific
performance, temporary restraining order, preliminary injunction, final
injunction, or similar equitable relief.  

                                   XXII.  NOTICES

      Each notice required or permitted to be sent under this License
Agreement shall be given by Federal Express or comparable express delivery
service to Licensor and to Licensee at the address indicated below.  

       For Licensor:       The Panda Project
                           5201 Congress Avenue
                           Suite C-100
                           Boca Raton, Florida  33487
                           Attention:  Stanford W. Crane, Jr.

       For Licensee:       The Whitaker Corporation
                           4550 New Linden Hill Road
                           Suite 450
                           Wilmington, DE  19808
                           Attention:  President

Either party may change its address for purposes of this License Agreement by
giving the other party written notice of its new address.  

                         XXIII.  ENTIRE UNDERSTANDING

      This License Agreement embodies the entire understanding between the
parties relating to the subject matter hereof, whether written or oral, and
there are no prior representations, warranties, or agreements that relate to
Licensed Product, Licensed Process, Proprietary Information, and Patent
Rights.  

                              XXIV.  INVALIDITY

      If any provision of this License Agreement is declared invalid or
unenforceable by an arbitration panel or by a court having competent 
<PAGE>
Page 65

jurisdiction, it is mutually agreed that this License Agreement shall endure
except for the part declared invalid or unenforceable.  The parties shall
consult and use their best efforts to agree upon a valid and enforceable
provision, which shall be a reasonable substitute for such invalid or
unenforceable provision, in light of the intent of this License Agreement.  

                                  XXV.  AMENDMENTS

      Any amendment or modification of any provision of this License Agreement
must be in writing, dated and signed by both AMP and PANDA.  

                          XXVI.  RESPONSIBILITY FOR TAXES

     If Licensee is required to withhold taxes from any amount payable by
Licensee hereunder, then Licensee shall pay to Licensor an additional amount
as may be necessary so that Licensor will receive, after deduction of the
withholding tax, the amount that Licensor would have received in the absence
of the withholding tax; provided that if Licensor takes and is allowed a
credit on its United States taxes for such withholding, then Licensee will not
be required to make such additional payment to the extent of such credit.  

                                XXVII.  COUNTERPARTS

      This License Agreement may be executed in any number of counterparts and
each such counterpart shall be deemed to be an original.  

                              XXVIII.  BINDING EFFECT

      This License Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their successors, assigns, estates, beneficiaries,
representatives, and heirs.  

                         XXIX.  WARRANTY AND DISCLAIMER

    A.  Licensor hereby represents and warrants to Licensee that:

        (1)  Licensor has no actual knowledge or actual notice that the
    practice of the Licensed Products or Licensed Process by Licensee
    hereunder will result in the infringement of any valid rights of any
    third parties, and Licensor has received no written notice from any
    third party of any such infringement, or challenging the validity of the
    Patent Rights.

        (2)  Licensor has full corporate power and authority to enter into
    and perform this Agreement.  This Agreement has been duly authorized and
    duly executed and delivered by Licensor, and it is valid, binding and
    enforceable against Licensor in accordance with its terms.

        (3)  Licensor owns all right, title and interest in and to the
    Patent Rights and has the full right to grant the licenses to Licensee
    herein granted.  Neither this Agreement nor the grant of licenses herein
    contained requires the consent of, or notice to, any third party.

        (4)  The Patent Rights are the only patents, patent applications, or
    other intellectual property rights held by Licensor under which Licensee
    or its Affiliates requires a license in order to practice the invention
    of the Patent Rights, or to make, have made, use or sell Licensed
    Product, or to use or have used the Licensed Process.
<PAGE>
Page 66

    B.  In no event shall the aggregate liability or cost to PANDA for any
action or claim arising out of this License Agreement, including without
limitation the provisions of Appendix C or any of the warranties herein,
regardless of the form of such action or claim, exceed an amount equal to
$250,000.  

    C.  EXCEPT AS SET FORTH IN THIS SECTION, THE PARTIES ACKNOWLEDGE AND AGREE
THAT THERE ARE NO WARRANTIES, COVENANTS, REPRESENTATIONS, OR AGREEMENTS BY
PANDA AS TO MARKETABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
OR OTHER ATTRIBUTES, TITLE, AND NON-INFRINGEMENT WHETHER EXPRESS OR IMPLIED
(IN LAW OR IN FACT), ORAL OR WRITTEN.  

    IN WITNESS WHEREOF, PANDA and AMP have signed this License Agreement.  

THE PANDA PROJECT, INC.

By:

Name:

Title:

Date:


AMP INCORPORATED

By:

Name:

Title:

Date:


THE WHITAKER CORPORATION

By:

Name:

Title:

Date:


CONNECTWARE INC.

By:

Name:

Title:

Date:
<PAGE>
Page 67
                                  APPENDIX A

Patent

Grant Date                 Country

3/11/95                    Taiwan

Patent Applications

Filing Date                Country

3/11/94                      U.S.
6/5/95                       U.S.
6/7/95                       U.S.
6/7/95                       U.S.
3/9/95                       U.S.
3/16/94                      W.O. (P.C.T.)
<PAGE>
Page 68
                                  APPENDIX B


Identification of Proprietary Information transferred to AMP


(1)   Drawings of relevant components


(2)   technical specifications for components


(3)   test results
<PAGE>
Page 69

                   CONFIDENTIAL MATERIALS OMITTED AND FILED
           SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
                      ASTERISKS DENOTE SUCH OMISSIONS.

                                  APPENDIX C



Royalty Schedule

    Number of I/O per package              Royalty per I/O

            *****                              *****
            *****                              *****
            *****                              *****
            *****                              *****
            *****                              *****
            (regardless of I/Os)

If Licensor has not been paid at least $250,000 in Royalties under this
Agreement by the fifth anniversary of this Agreement, Licensee shall
immediately pay to Licensor a sum in cash equal to the difference between
$250,000 and the amount of Royalties that have been paid to Licensor under
this Agreement as of such fifth anniversary (the "minimum payment").  However,
if AMP is substantially precluded from manufacturing and selling Licensed
Product or using the Licensed Process by reason of a third party intellectual
property claim which is asserted through the commencement of litigation, which
litigation is not terminated, dismissed, or successfully resolved, AMP shall
be relieved of any further obligation to make the minimum payment specified
herein.  
<PAGE>
Page 70

                                                                  EXHIBIT 23

SUBSIDIARIES

The Panda Project, Inc. has one subsidiary, Archistrat Corporation, which is
wholly-owned and currently inactive.
<PAGE>
<PAGE>
Page 71

                                                                 EXHIBIT 23.1


              Consent of Independent Certified Public Accountants


We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No.333-26053), Registration Statement on Form S-8
(No.33-86948), Registration Statement on Form S-8 (No.33-99058), and
Registration Statement on Form S-8 (No.333-00686), of The Panda Project, Inc.
of our report dated May 22, 1997 appearing in this Form 10-K.  We also consent
to the incorporation by reference of our report on the Financial Statement
Schedule, which appears in this Form 10-K.



/s/ Price Waterhouse LLP
------------------------
PRICE WATERHOUSE LLP



Fort Lauderdale, Florida
June 27, 1997
<PAGE>
[ARTICLE]   5
[PERIOD-TYPE]                      YEAR
[FISCAL-YEAR-END]           MAR-31-1997
[PERIOD-END]                MAR-31-1997
[CASH]                        3,243,505
[SECURITIES]                          0
[RECEIVABLES]                   276,055
[ALLOWANCES]                    110,962
[INVENTORY]                     822,309
[CURRENT-ASSETS]              4,348,775
[PP&E]                        4,963,759
[DEPRECIATION]                2,139,961
[TOTAL-ASSETS]                7,337,320
[CURRENT-LIABILITIES]         2,524,445
[BONDS]                               0
[PREFERRED-MANDATORY]                 0
[PREFERRED]                           0
[COMMON]                        101,247
[OTHER-SE]                    4,711,628
[TOTAL-LIABILITY-AND-EQUITY]  7,337,320
[SALES]                       1,547,896
[TOTAL-REVENUES]              2,382,019
[CGS]                         2,762,936
[TOTAL-COSTS]                 2,762,936
[OTHER-EXPENSES]             20,684,538
[LOSS-PROVISION]                236,303   
[INTEREST-EXPENSE]                    0
[INCOME-PRETAX]             (20,874,101)
[INCOME-TAX]                          0
[INCOME-CONTINUING]         (20,874,101)
[DISCONTINUED]                        0
[EXTRAORDINARY]                       0
[CHANGES]                             0
[NET-INCOME]                (20,874,101)
[EPS-PRIMARY]                     (2.15)
[EPS-DILUTED]                     (2.15)