<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q/A
_______________________
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
------
EXCHANGE ACT OF 1934
For the Quarter ended December 31, 1997
______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to ________.
Commission File Number: 000-21240
_________________________________
NEOWARE SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 23-2705700
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
400 Feheley Drive
King of Prussia, Pennsylvania 19406
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(610) 277-8300
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)
_________________________________________________
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 _____
----
As of February 13, 1998, there were outstanding 5,764,539 shares of the
Registrant's Common Stock.
Page 1 of 13 pages
Exhibit Index is on page 12
<PAGE>
NEOWARE SYSTEMS, INC.
---------------------
The Registrant hereby amends its Form 10-Q for the quarter ended December 31,
1997 for the purpose of amending certain financial information to reflect cash
payments made by wire transfer and the amortization of various prepaid licenses
which were not recorded in a timely fashion in the general ledger.
INDEX
-----
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
Consolidated Balance Sheets:
December 31, 1997 and June 30, 1997 3
Consolidated Statements of Operations:
Three and Six Months Ended December 31, 1997 and 1996 4
Consolidated Statements of Cash Flows:
Six Months Ended December 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
<PAGE>
NEOWARE SYSTEMS, INC.
---------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
ASSETS 1997 1997
------ ------------ -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 70,567 $ 1,452,409
Accounts receivable, net of allowance for doubtful accounts of
$124,086 7,767,057 9,308,731
Inventories 4,186,833 4,035,202
Prepaid expenses and other 1,054,745 789,179
Deferred income taxes 416,530 416,530
----------- -----------
Total current assets 13,495,732 16,002,051
PROPERTY AND EQUIPMENT, net 744,439 680,859
NOTE RECEIVABLE 700,000 --
CAPITALIZED AND PURCHASED SOFTWARE, net 1,517,277 1,630,339
DEFERRED INCOME TAXES 13,866 13,866
----------- -----------
$16,471,314 $18,327,115
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Line of credit $ 3,214,000 $ 3,071,000
Accounts payable 2,671,178 3,796,549
Accrued expenses 353,139 516,148
Deferred revenue 170,221 172,006
----------- -----------
Total current liabilities 6,408,538 7,555,703
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 1,000,000 shares authorized and
none issued and outstanding -- --
Common stock, $.001 par value, 50,000,000 shares
authorized, 5,760,820 shares issued and outstanding 5,761 5,761
Additional paid-in capital 9,168,171 9,168,171
Retained earnings 933,685 1,666,951
Deferred compensation (44,841) (69,471)
----------- -----------
Total stockholders' equity 10,062,776 10,771,412
----------- -----------
$16,471,314 $18,327,115
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NEOWARE SYSTEMS, INC.
---------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
-------------------------------- ---------------------------------
1997 1996 1997 1996
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
NET REVENUES $6,980,500 $8,924,802 $12,611,492 $12,380,422
COST OF REVENUES 5,126,123 6,384,870 9,215,768 8,487,435
--------- --------- --------- -----------
Gross profit 1,854,377 2,539,932 3,395,724 3,892,987
--------- --------- --------- -----------
OPERATING EXPENSES:
Sales and marketing 1,306,966 993,681 2,513,012 1,782,490
General and administrative 592,247 390,917 889,760 717,751
Research and development 450,177 379,975 883,862 638,112
---------- ---------- ----------- -----------
Total operating expenses 2,349,390 1,764,573 4,286,634 3,138,353
---------- ---------- ----------- -----------
Operating (loss) income (495,013) 775,359 (890,910) 754,634
INTEREST INCOME (EXPENSE), NET (81,722) 35,933 (175,260) 75,856
---------- ---------- ----------- -----------
(Loss) income before income taxes (576,735) 811,292 (1,066,170) 830,490
INCOME TAX (BENEFIT) EXPENSE (178,732) 267,313 (332,904) 274,224
---------- ---------- ----------- -----------
NET (LOSS) INCOME $ (398,003) $ 543,979 $ (733,266) $ 556,266
========== ========== =========== ===========
BASIC EARNINGS PER SHARE $ (.07) $ 0.09 $ (.13) $ 0.10
========== ========== =========== ===========
DILUTED EARNINGS PER SHARE $ (.07) $ 0.07 $ (.13) $ 0.07
========== ========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING IN BASIC EARNINGS PER SHARE 5,760,820 5,727,233 5,760,820 5,727,233
COMPUTATION ========== ========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING IN DILUTED EARNINGS PER SHARE 5,760,820 7,572,135 5,760,820 7,651,186
COMPUTATION ========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NEOWARE SYSTEMS, INC.
---------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
------------------------------
1997 1996
----------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (733,266) $ 556,266
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities-
Depreciation and amortization 444,712 112,758
Amortization of deferred compensation 24,630 26,052
Tax benefit from carrying back net operating loss (332,904) -
Changes in operating assets and liabilities-
(Increase) decrease in:
Accounts receivable 1,541,674 (1,691,165)
Inventories (151,631) (678,147)
Prepaid expenses and other 67,338 (447,356)
Increase (decrease) in:
Accounts payable (1,125,371) 2,125,218
Accrued expenses (163,009) 27,709
Deferred revenue (1,785) 35,655
----------- -----------
Net cash (used in)
provided by operating activities (429,612) 66,990
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (173,338) (45,138)
Capitalized software (221,892) (61,167)
----------- -----------
Net cash used in investing activities (395,230) (106,305)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under line of credit 143,000 -
Increase in note receivable (700,000) -
Exercise of stock options - 727,674
Principal payments on long-term debt - (7,965)
----------- -----------
Net cash (used in) provided by financing activities (557,000) 719,709
----------- -----------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (1,381,842) 680,394
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,452,409 2,700,298
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 70,567 $ 3,380,692
=========== ===========
SUPPLEMENTAL DISCLOSURES:
Cash paid for income taxes $ 50,719 $ 8,143
Cash paid for interest $ 175,260 $ 1,043
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NEOWARE SYSTEMS, INC.
---------------------
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
1. BASIS OF PRESENTATION:
----------------------
The accompanying unaudited consolidated financial statements of Neoware Systems,
Inc. and Subsidiaries (the "Company") have been prepared in conformity with
generally accepted accounting principles. The interim financial information,
while unaudited, reflects all normal recurring adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position and operating results for the interim periods presented. The results
of operations for the three and six month periods ended December 31, 1997 are
not necessarily indicative of the results expected for the full year. These
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report on Form 10-
K filed with the Securities and Exchange Commission.
2. MAJOR CUSTOMERS:
----------------
Net revenues from two customers represented 22% and 14% of total net revenues
for the three month period ended December 31, 1997 and 16% and 21% of net
revenues for the six month period then ended. Net revenues from three customers
represented 26%, 20% and 13% of total net revenues for the three month period
ended December 31, 1996 and 19%, 15% and 10% of net revenues for the six month
period then ended. At December 31, 1997 the Company had receivables from its
two major customers totaling approximately $5,351,000.
3. INVENTORIES:
------------
Inventories are stated at the lower of cost or market (first-in, first-out
method) and consisted of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
------------ ------------
<S> <C> <C>
Purchased components and subassemblies $ 2,021,779 $ 1,566,161
Work-in-process 398,150 301,565
Finished goods 1,766,904 2,167,476
------------ ------------
$ 4,186,833 $ 4,035,202
============ ============
</TABLE>
<PAGE>
4. NOTE RECEIVABLE:
----------------
In October 1997, the Company merged Information Technology Consulting, Inc., a
wholly-owned subsidiary, into The Reohr Group, Inc. ("Reohr") in exchange for a
2% stock interest in Reohr and the reimbursement of $1 million of expenses
incurred by the Company in connection with its efforts to make certain
acquisitions in the information technology consulting and staffing field. Of
the total reimbursement, $300,000 was paid in cash and the remaining $700,000 is
due on the earlier of three years or upon the completion of the initial public
offering of Reohr. The note bears interest at 8% per annum. Of the total
reimbursement, $292,000 was offset against general and administrative expenses
during the three months ended September 30, 1997 for costs previously incurred
and charged to expense.
5. LINE OF CREDIT:
---------------
The Company has a $5,000,000 revolving line of credit ($1,786,000 available at
December 31, 1997) with a bank which expires on November 30, 1998. Borrowings
under the line are at the bank's prime rate. Under the line, the Company is
required to maintain specified ratios of working capital and debt to net worth,
as defined.
6. EARNINGS PER SHARE
------------------
Effective December 31, 1997 the Company adopted SFAS No. 128, "Earnings per
Share", which supersedes APB Opinion No. 15, "Earnings per Share". SFAS 128
requires dual presentation of basic and diluted earnings per share (EPS) for
complex capital structures on the face of the income statement. Basic EPS is
computed by dividing income by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution from
the exercise or conversion of securities into common stock, such as stock
options. For the three and six month periods ended December 31, 1996 the
weighted average number of shares outstanding for purposes of calculating
diluted earnings per share included 1,844,902 and 1,923,953 shares,
respectively, attributable to stock options and warrants. In accordance with
the provisions of SFAS 128, EPS for prior periods have been restated.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
INTRODUCTION
The Company provides thin client computers and related software that are
designed to integrate and deliver information to the desktop cost effectively in
network-centric environments. The Company's @workStation and NeoStation thin
client computers combine a variety of windowed-display, graphical user interface
and communications industry standards to provide the user seamless and
transparent access to all information, including text, graphics, audio and video
data, on any type of network. The Company has licensed Netscape Navigator/TM/,
Citrix's ICA/TM/ and Sun Microsystems, Inc.'s Java/TM/ technology that it has
incorporated into its products to provide cost-effective access to information
and applications within the corporate enterprise and on the Internet.
The Company's current strategy is to become a leader in the emerging market
for thin client computers by focusing on expanding its software products and its
thin client computer hardware. The Company also plans to continue to seek to
develop strategic partnerships and acquire strategic technologies, products or
businesses complementary to its current business. The Company sells its products
in North America directly to end users and through distributors, resellers,
system integrators and OEMs. International sales are generally made through
distributors.
In August 1996, the Company formed a new subsidiary, Information Technology
Consulting, Inc. ("ITC"), for the purpose of acquiring companies in the computer
services field, including information technology staffing companies and client-
server consulting companies. In January 1997 the Company announced that ITC
entered into a definitive agreement to acquire the business of Global Consulting
Group ("Global"), an information technology staffing and consulting company,
subject to the consummation by ITC of a public offering of its stock. In March
1997 the Company announced that ITC entered into a definitive agreement to
acquire the business of The Reohr Group, Inc. ("Reohr"), an information
technology staffing and consulting company, subject to the consummation by ITC
of a public offering of its stock.
In October 1997, the Company merged ITC with Reohr and Global. Under the
merger, ITC and Global merged into Reohr, and Neoware received stock that
represents a 2% ownership of Reohr. The Company was also reimbursed for the
expenses incurred by the Company and ITC in connection with ITC's efforts to
make these acquisitions, $300,000 of which was paid in cash. The remainder of
the expenses were reimbursed by a $700,000 note from Reohr that is repayable on
the earlier of three years or the consummation of an initial public offering of
Reohr. The note bears interest at 8% per annum.
In February 1997, the Company formed a new subsidiary, Bridging Data
Technology, Inc. ("BDT"). BDT has acquired and further developed a software
product, SmartBridge, which utilizes the "intelligent bridging" approach to
upgrading programs and data for Year 2000 compliance. Neoware holds a majority
ownership stake in BDT, which is based in Atlanta, GA. The SmartBridge product
implements an on-site automated bridge building "factory" that creates
intelligent bridge modules. These modules allow the uncoupling of applications
and data, enabling conversions to take place quickly and with minimal impact to
system performance.
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain items
from the Company's consolidated statements of operations as a percentage of net
revenues.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Gross Profit 26.6% 28.5% 26.9% 31.4%
Operating expenses:
Sales and marketing 18.7 11.1 19.9 14.4
General and administrative 8.5 4.4 7.1 5.8
Research and development 6.5 4.3 7.0 5.1
--- ---- ---- ----
Operating (loss) income (7.1) 8.7 (7.1) 6.1
Interest income (expense), net (1.2) 0.4 (1.4) 0.6
---- ---- ----
(Loss) income before taxes (8.3) 9.1 (8.5) 6.7
Income tax (benefit) expense (2.6) 3.0 (2.7) 2.2
--- ---- ---- ----
Net (loss) income (5.7)% 6.1% (5.8)% 4.5%
=== ==== ==== ====
</TABLE>
Net revenues for the three month period ended December 31, 1997 decreased
to $6,980,500 from $8,924,802 for the comparable period in the prior fiscal
year. For the six month period ended December 31, 1997, net revenues increased
to $12,611,492, an increase of 2% from $12,380,422 for the comparable period in
the prior fiscal year. The decrease in net revenues for the three month period
ended December 31, 1997 versus the comparable period in the prior year was
attributable to the timing of the receipt of certain large orders during the
second quarter of fiscal 1997. The Company's revenues for the current year
represent shipments of its line of thin client computers. Revenues for the six
month period ended December 31, 1996 represent the initial shipments of its thin
client computer line and revenues earned from licensing agreements for its netOS
software for thin client computers. The Company is subject to significant
variances in its quarterly operating results because of the fluctuations in the
timing of the receipt of large orders.
The Company's gross profit as a percentage of net revenues was 26.6% and
28.5% for the three month periods ended December 31, 1997 and 1996,
respectively. The gross profit as a percentage of net revenues decreased to
26.9% for the six month period ended December 31, 1997 from 31.4% for the
comparable period in the prior fiscal year. The change in gross profit
percentage for the six month period ended December 31, 1997 was a result of the
Company deriving substantially less revenue from software licensing as well as
an increase in the percentage of sales through third party sales channels. The
Company anticipates that the gross margin percentage will vary from quarter to
quarter depending on the mix of business, including the mix of hardware and
software revenues. The gross profit margin also varies in response to
competitive market conditions as well as periodic fluctuations in the cost of
memory and other significant components. The market in which the Company
competes remains very competitive, and although the Company intends to continue
its efforts to reduce the cost of its products, there can be no certainty that
the Company will not be required to reduce prices of its products without
compensating reductions in the cost to produce its products in order to increase
its market share or to meet competitors' price reductions.
<PAGE>
For the three and six month periods ended December 31, 1997 the Company
incurred net losses of $398,003 and $733,266, respectively, as compared to net
income of $543,979 and $556,266 for the comparable periods in the prior fiscal
year. The decrease in net income for the three month period ended December 31,
1997 was attributable to lower net revenues, reduced gross margins and increased
operating expenses, including approximately $198,000 of net expenses related to
the Company's investment in BDT. The decline in net income for the six month
period ended December 31, 1997 versus the comparable period in the prior fiscal
year was attributable to the Company's continued investment in both sales and
marketing and research and development expenses. In addition, the Company
incurred net expenses of approximately $447,000 related to its investment in BDT
which were partially offset by the reimbursement for net expenses of
approximately $292,000 previously incurred in connection with its investment in
ITC. The decline in net income was also impacted by the increase in net interest
expense.
Operating expenses for the three and six month periods ended December 31,
1997 were $2,349,390 and $4,286,634, respectively, versus $1,764,573 and
$3,138,353 for the comparable periods in the prior fiscal year. Research and
development expenses for the three and six month periods ended December 31, 1997
increased to $450,177 and $883,862, respectively, from $379,975 and $638,112 in
the comparable periods in the prior fiscal year as the Company continued to
expand its investment to develop, adapt or acquire technologies that will expand
the market for its current and future products. Sales and marketing expenses
increased to $1,306,966 and $2,513,012 for the three and six month periods ended
December 31, 1997 as compared to $993,681 and $1,782,490 for the comparable
periods. The increase reflects the cost of additions to the Company's sales and
marketing staff and costs related to BDT partially offset by reduced advertising
during fiscal 1998. General and administrative expenses increased to $592,247
and $889,760 for the three and six month periods ended December 31, 1997 versus
$390,917 and $717,751 in the comparable periods in the prior year. General and
administrative expenses for the current year include the addition of the
Company's Chief Executive Officer and expenses related to BDT partially offset
by the reimbursement of expenses related to ITC.
Net interest expense for the three and six month periods ended December 31,
1997 was $81,722 and $175,260, respectively, versus net interest income of
$35,933 and $75,856 for the comparable periods in the prior year. The increased
interest cost is attributable to increased line of credit borrowings required to
finance higher inventory and accounts receivable balances.
The effective income tax rates were approximately 31.2% and 33.0% during
fiscal 1998 and 1997, respectively.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company had net working capital of approximately
$7,087,000 composed primarily of accounts receivable and inventory. The
Company's principal source of liquidity is a $5,000,000 bank line of credit
facility, $1,786,000 of which was available as of December 31, 1997. The bank
line of credit expires on November 30, 1998.
Cash and cash equivalents decreased by approximately $1,382,000 during the
six month period ended December 31, 1997, primarily as a result of the operating
loss, incurring acquisition costs for which the Company was reimbursed with a
note receivable in connection with the ITC merger and a decrease in accounts
payable and accrued expenses, which were offset by a decrease in accounts
receivable.
<PAGE>
The Company used approximately $430,000 in cash from operating activities
in the six month period ended December 31, 1997 compared to generating cash from
operations of approximately $67,000 during the comparable period of fiscal 1997.
The Company expects to fund current operations and other cash expenditures,
as well as any acquisitions, through the use of available cash, cash from
operations, funds available under its credit facility, possible new sources of
debt financing, and the sale of its securities.
YEAR 2000 COMPLIANCE
The Company's management information systems primarily use software
products purchased from commercial sources with minor customization. Updates to
these products are routinely installed by the Company to upgrade the systems and
correct known defaults in the software. All major systems have been reviewed for
Year 2000 issues and, where necessary, upgraded software has been identified and
implementation schedules are in process. There have been no significant
incremental costs identified with updates that specifically address Year 2000
compliance. The Company is also reviewing its products and services for
compliance with Year 2000 requirements. Based on a preliminary review, the
Company's products were determined to be Year 2000 compliant. Notwithstanding
the Year 2000 compliance of the Company's systems and products, there can be no
assurance that the Company will not be adversely affected by the failure of
distributors, suppliers, customers and vendors with which it interacts to become
Year 2000 compliant.
FORWARD-LOOKING STATEMENTS
The foregoing "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are subject to certain risks and uncertainties, including, but not
limited to, quarterly fluctuations in operating results, general economic
conditions affecting the demand for computer products, customer acceptance of
the Company's line of thin client computers and related software and the Year
2000 software tools offered by its subsidiary, the timing of significant orders,
increased competition, development, introduction, delivery and customer
acceptance of new products and delays in the receipt of key components. The
Company does not undertake to update any forward-looking statements made herein.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On December 10, 1997, the Company held its Annual Meeting of Stockholders.
The Stockholders voted to elect six members to the Board of Directors, to amend
the Company's 1995 Stock Option Plan and to ratify the selection of Arthur
Andersen LLP as the Company's independent accountant for the fiscal year ending
June 30, 1998
Elected to the Board of Directors were Arthur R. Spector (4,506,033 shares
voted for election and 604,364 shares were withheld), Edward C. Callahan, Jr.
(4,506,333 shares voted for election and 604,064 shares were withheld), Michael
G. Kantrowitz (4,506,333 shares voted for election and 604,064 shares were
withheld), Howard L. Morgan (4,506,333 shares voted for election and 604,064
shares were withheld), John M. Ryan (4,506,333 shares voted for election and
604,064 shares were withheld), and Carl G. Sempier (4,504,833 shares voted for
election and 605,564 shares were withheld).
The selection of Arthur Andersen LLP as the Company's independent
accountant was ratified with 4,542,568 shares voting in favor of ratification,
16,300 shares voting against ratification and 551,529 shares abstaining.
The amendment to the Company's 1995 Stock Option Plan was approved with
1,026,425 shares voting in favor of the proposal, 115,630 shares voting against
the proposal, 576,966 shares abstaining and 3,391,376 broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 10 1995 Stock Option Plan (as amended on December 10,
1997) *
(b) Reports on Form 8-K:
None
* Previously filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunder duly authorized.
NEOWARE SYSTEMS, INC.
Date: May 15, 1998 By: /s/ EDWARD C. CALLAHAN, JR.
---------------------------------
Edward C. Callahan, Jr., President
and Chief Executive Officer
Date: May 15, 1998 By: /s/ EDWARD T. LACK, JR.
---------------------------------
Edward T. Lack, Jr., Chief
Financial Officer (Principal
Accounting Officer and Principal
Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1997
<PERIOD-START> JUL-01-1997 JUL-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 70,567 1,452,409
<SECURITIES> 0 0
<RECEIVABLES> 7,891,143 9,432,817
<ALLOWANCES> 124,086 124,086
<INVENTORY> 4,186,833 4,035,202
<CURRENT-ASSETS> 13,495,732 16,002,051
<PP&E> 1,723,174 1,552,836
<DEPRECIATION> 978,735 871,977
<TOTAL-ASSETS> 16,471,314 18,327,115
<CURRENT-LIABILITIES> 6,408,538 7,555,703
<BONDS> 0 0
0 0
0 0
<COMMON> 5,761 5,761
<OTHER-SE> 10,057,015 10,765,651
<TOTAL-LIABILITY-AND-EQUITY> 16,471,314 18,327,115
<SALES> 12,611,492 12,380,422
<TOTAL-REVENUES> 12,611,492 12,380,422
<CGS> 9,215,768 8,487,435
<TOTAL-COSTS> 9,215,768 8,487,435
<OTHER-EXPENSES> 4,286,634 3,138,353
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 175,260 (75,856)
<INCOME-PRETAX> (1,066,170) 830,490
<INCOME-TAX> (332,904) 274,224
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (733,266) 556,266
<EPS-PRIMARY> (.13) .10
<EPS-DILUTED> (.13) .07
</TABLE>
