8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported) April 27, 2007

Neoware, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-21240	23-2705700
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
3200 Horizon Drive, King of Prussia, Pennsylvania		19406
(Address of Principal Executive Offices)		(Zip Code)

(610) 277-8300

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

     On May 1, 2007, Neoware, Inc.(the “Company”) issued a press release announcing its results for the third quarter ended March 31, 2007. The full text of the press release is set forth in Exhibit 99.1 hereto.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(d) On April 27, 2007, the Board of Directors (the “Board”) of the Company elected Leslie Hayman to fill a vacancy on the Board. Mr. Hayman will also serve on the Compensation and Stock Option Committee of the Board. Mr. Hayman will be paid cash compensation for his services as a director and committee member in accordance with the Board’s compensation policies for non-employee directors. In addition, in accordance with the Company’s Amended and Restated 2004 Equity Incentive Plan (the “Plan”), upon his initial election to the Board, Mr. Hayman was automatically granted options to purchase 10,000 shares of the Company’s Common Stock at an exercise price of $12.39, the fair market price (as defined in the Plan) of the Company’s Common Stock on the date of grant. These options vest and become exercisable six months from the date of grant. The full text of the press release announcing Mr. Hayman’s election is set forth in Exhibit 99.2 hereto.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The following documents are filed as exhibits to this report.

99.1 Press Release dated May 1, 2007

99.2 Press Release dated May 1, 2007 announcing election of Leslie Hayman as director

2

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 duly authorized.

	NEOWARE, INC.
Dated: May 1, 2007	By:	/S/ Keith D. Schneck
		Keith D. Schneck, Executive Vice President and
		Chief Financial Officer

3

EX-99.1

Exhibit 99.1

PRESS RELEASE

FOR IMMEDIATE RELEASE

Neoware Reports Third Quarter FY07 Results

KING OF PRUSSIA, Pa., May 1, 2007 — Neoware, Inc. (Nasdaq: NWRE), a leading supplier of thin client software and devices, today reported financial results for its third quarter of fiscal year 2007. The Company’s revenues were $22.1 million in the March 2007 quarter compared to $27.8 million in the prior year quarter.

“Our results this quarter reflect our planned transition from dependency on several large enterprise accounts to a broader, more sustainable revenue model,” commented Klaus Besier, Neoware’s President and CEO. “While we are not happy with the top line results, we are continuing to execute our plan for building a stronger Neoware. And we believe we are making good progress towards capitalizing on the great potential in our market.”

Other Third Quarter Fiscal 2007 vs. Third Quarter Fiscal 2006 Financial Results

• GAAP gross profit was 37% of revenues in the March 2007 quarter, compared to 44% of revenue in the prior year quarter. Non-GAAP gross profit was 39% of revenue, compared to 45% of revenue in the prior year quarter. The gross profit percentage declined in the March 2007 quarter due to increased sales of XPe-based products, which carry a lower gross profit margin percentage, and lower sales of our higher margin Linux products, due to a decline in revenues to large Linux enterprise customers that had purchased in the March 2006 quarter and to higher manufacturing overhead expenses as spending levels are geared to support a higher volume.

• GAAP operating expenses were $9.2 million in the March 2007 quarter, compared to $9.0 million in the prior year quarter.

• Non-GAAP operating expenses, which exclude amortization of acquisition-related intangibles and stock-based compensation expense, were $7.9 million in the March 2007 quarter, or 36% of revenue, compared to $7.6 million, or 28% of revenue, in the prior year quarter.

• GAAP net loss was ($.05) per diluted share in the March 2007 quarter, compared to a GAAP net income of $.12 per diluted share in the prior year quarter. Income before tax was $24,000 in the March 2007 quarter. However, an income tax expense of $1.1 million was recorded for the quarter resulting in a GAAP net loss of $1.1 million. The income tax provision was based on estimating the full fiscal year 2007 GAAP operating results and the associated effective GAAP income tax rate and adjusting the cumulative income tax provision for the nine-month period ended March 2007.

• Non-GAAP net income was $1.9 million, or $.10 per fully diluted share, in the March 2007 quarter, compared to $3.4 million, or $.18 per fully diluted share, in the prior year quarter.

• The Company’s cash balance increased $12 million during the quarter from $108 million at December 31, 2006 to $120 million at March 31, 2006. Cash increased due to planned reductions in inventory and accounts receivable, increases in payables and accrued liabilities and the collection of $1.7 million related to settlement of an escrow claim with the former shareholders of Maxspeed Corporation, which we acquired in November 2005.

• Non-GAAP results exclude amortization of acquisition-related intangibles, stock-based compensation and an adjustment to tax effect these items, for the purpose of showing a comparable view of the Company’s performance from period to period. Refer to the attached detailed reconciliation of GAAP to Non-GAAP results.

Other highlights for the quarter include:

• Introduced new channel promotions which drove revenue and incremental margin dollars, albeit at lower gross profit margin percentages. Overall, revenues from our small and medium sized customers in the March 2006 quarter increased 20% sequentially from our December quarter and 24% year over year.

• Launched our reseller program, adding new resellers which we anticipate will begin contributing revenue in future quarters.

• Shipments of our Neoware m100 thin client laptop product increased during the quarter, contributing incremental revenues.

• We had one new large enterprise customer this quarter which contributed $1.5 million of revenue, although we did experience revenue reductions in our existing base of larger enterprise customers as their purchase requirements fluctuate over the fiscal year.

• Made several key staff additions in sales and marketing.

• Defined marketing programs and accelerated their launch, with the addition of several new agencies.

• Added a general manager for Australia and New Zealand.

• Retained a sales partner to focus on building business in Latin America.

“Neoware is undergoing a significant transformation at a critical time in the evolution of the thin client industry,” Mr. Besier continued. “We have spent significant time this quarter visiting customers and see much broader interest in thin client computing as a replacement for desktop PCs, due in part to the proliferation of virtualization technology in the enterprise. Neoware has technical strength and IP in both thin client and virtualization technologies and we believe offering integrated solutions – especially in the emerging area of virtualization – will enable us to compete more effectively and take full advantage of the growing opportunity. In March 2007, we launched the industry’s first mobile virtual desktop thin client solution, an initiative that we believe will expand Neoware’s reach into the virtualization market. Today, we are focused on combining our broad technical expertise, financial resources and larger network of channel partners, together with a renewed commitment, to take advantage of the exciting growth opportunities that we see going forward.

We believe that the next level of growth for both the market and Neoware will be impacted by the interest in virtualization, which has contributed to slower growth for us because of the

extended selling cycle as customers consider the broad set of issues surrounding virtualization and as our new initiatives build new customer interest. While this creates uncertainty in our near term revenue opportunities, we are excited about the future.

Remainder of Fiscal Year 2007 Guidance

Based upon currently available information, the Company provides the following update on guidance for the fourth quarter of Fiscal Year 2007:

• Revenue will range between $22.0 million and $24.0 million.

• Non-GAAP gross profit margin will range between 36% and 38%, which can fluctuate based on product mix, sales channel and promotional and competitive pricing strategies.

• Non-GAAP operating expenses, which exclude stock-based compensation and amortization of acquisition-related intangibles, will increase by up to $800,000 to $1 million from the March 2007 quarter, driven by hiring and program spending. In addition, we expect to incur additional restructuring costs which could total approximately $500,000.

• Amortization of acquisition-related intangibles for the quarter will be $340,000 charged to cost of sales and $500,000 charged to sales and marketing.

• Stock-based compensation is expected to be $900,000.

CONFERENCE CALL INFORMATION

Neoware will host a conference call at 5:00 PM Eastern Time on May 1, 2007. The conference call will be available live via the Internet on Vcall at www.vcall.com and on the Neoware Web site at www.neoware.com/events. To participate, please go to the Web site 10 minutes prior to the call to register, download and install any necessary audio software. If you are unable to attend the live conference call, an Internet replay of the call will be archived and available after the call.

     The call will also be accessible by dialing 1-800-974-9436 for domestic U.S. calls and +1-641-297-7617 for international calls. The conference ID will be NEOWARE. A replay of the call will be available through May 31, 2007, by dialing 1-800-645-7959 in the U.S. and +1-641-297-5236 internationally. A copy of the press release announcing the Company’s earnings and other financial and statistical information about the period to be presented in the conference call will be available on the Company’s website at www.neoware.com/events.

Non-GAAP Financial Measures

Neoware presents the following non-GAAP financial measures: non-GAAP gross profit and margin; non-GAAP operating expenses; non-GAAP operating income and margin; non-GAAP effective income tax rate; non-GAAP income taxes; non-GAAP net income; and non-GAAP earnings per share. We exclude the following items in the development of the non-GAAP financial measures presented:

Stock-based compensation expenses. Our non-GAAP financial measures exclude stock-based compensation expenses, which consist of expenses for stock-based compensation that we began recording under SFAS 123R in the first quarter of fiscal 2006. We exclude these expenses from our non-GAAP financial measures primarily because (i) they are expenses that we exclude when assessing the performance of our business, and (ii) exclusion of these expenses allows more meaningful comparisons against financial models prepared by our investors and securities analysts that also present information on a GAAP and non-GAAP basis. In addition, stock-based compensation amounts are difficult to forecast, because the magnitude of the charges depends upon the volume and timing of stock option and other equity-based compensation grants, which can vary dramatically from period to period, and external factors such as interest rates and the trading price and volatility of our common stock. Excluding these stock-based compensation amounts improves comparability of the performance of the business across periods.

Amortization of acquired intangible assets. In accordance with GAAP, cost of sales and operating expenses include amortization of acquired intangible assets such as intellectual property, customer lists and covenants not to compete. We exclude these items from our non-GAAP financial measures because (i) they are expenses that we exclude when assessing the performance of our business, as the timing and amount of the expenses vary from period to period as we have a history of acquiring businesses which result in continued additions to amortization expense, and (ii) exclusion of these expenses better allows comparison against financial models prepared by our investors and securities analysts that also present information on a GAAP and non-GAAP basis.

Income taxes. We apply a non-GAAP income tax rate based on determination of the annual effective income tax rate based on the estimated annual non-GAAP taxable income.

The Company believes that its non-GAAP financial measures provide meaningful supplemental information regarding the Company’s operating results because they exclude amounts that the Company excludes as part of its monitoring of operating results and assessing the performance of the business. For example, the Company uses non-GAAP measures, including gross profit, operating expense and operating income excluding amortization and stock-based compensation expense in its financial and operational decision making, including decisions regarding staffing, future management priorities and how the Company will direct future operating expenses on the basis of non-GAAP financial measures. In addition, the Company has established incentive compensation programs utilizing, in part, such non-GAAP financial measures, including non-GAAP operating income. For the same reasons, management also uses this information in its budgeting and forecasting activities and in quarterly reports to its Board of Directors.

Non-GAAP financial measures should not be considered as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Neoware’s non-GAAP financial measures do not reflect a comprehensive system of accounting, and they differ from GAAP measures with similar names and from non-GAAP financial measures with the same or similar names that are used by other companies. We strongly urge investors and potential investors in our securities to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures that are included in this release, and our consolidated financial statements, including the notes thereto, and the other financial information contained in our periodic filings with the SEC and not to rely on any single financial measure to evaluate our business. The principal limitation of Neoware’s non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded. In addition, non-GAAP financial measures are subject to inherent limitations because they reflect the exercise of judgments by management about which charges are excluded from the non-GAAP financial

measures. To mitigate this limitation, Neoware presents its non-GAAP financial measures in connection with its GAAP results, and recommends that investors do not give undue weight to its non-GAAP financial measures.

A reconciliation between non-GAAP and GAAP measures can be found in the accompanying schedule and in the News section of our web site at www.neoware.com.

About Neoware

Neoware, Inc. (Nasdaq:NWRE), provides enterprises throughout the world with thin client computing devices, software that turns PCs into thin clients, and services that adapt thin client technology to virtually any enterprise computing environment. Neoware’s software powers, manages and secures thin client devices and traditional personal computers, enabling them to run Windows(r) and Web applications across a network, stream operating systems on demand, and connect to mainframes, mid-range, UNIX and Linux systems. Headquartered in King of Prussia, PA, USA, Neoware has offices in Australia, Austria, China, France, Germany, and the United Kingdom. Neoware’s products are available worldwide from select, knowledgeable resellers, as well as via its partnerships with IBM, Lenovo and ClearCube. Neoware can be reached by email at info@neoware.com.

Neoware is a registered trademark of Neoware, Inc. All other names products and services are trademarks or registered trademarks of their respective holders.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding: executing our plan for building a stronger Neoware; our new reseller program and its future contribution to revenues; our marketing program initiatives; building business in South America; the growth of thin client computing; the proliferation of virtualization technologies; our strength in thin client and virtualization technologies and its ability to improve our competitive advantage; our expectation that our mobile virtual desktop thin client solution will expand our reach into the virtualization market; our focus on growth opportunities; the impact of virtualization on market growth; our new promotional programs to improve our competitive advantage and add value for our customers; our introduction of new products and product enhancements in the next several months; our goals to take advantage of growth opportunities and increase market share; our expectations as to revenues, non-GAAP gross profit margins, operating expenses, restructuring costs, amortization of acquisition-related intangibles and stock-based compensation expense. Factors that could cause actual results to differ materially from those predicted in such forward-looking statements include: our success in implementing our expanded marketing, sales and product development initiatives and the rebuilding of our infrastructure within our planned timeframe; insufficient resources to fund our virtualization initiatives; the lack of growth in the virtualization market; higher than expected severance payments; additional write offs of inventory or acquisition-related expenses; our success in increasing sales to the targeted customers and our continued dependence on enterprise customers; our inability to manage our expanded organization; our inability to successfully integrate our acquisitions; the timing and receipt of future orders; our timely development, release and customers’ acceptance of our products; pricing pressures; rapid technological changes in the industry; growth of overall thin client sales; our ability to maintain our partnerships; our dependence on our suppliers and distributors; increased competition; our continued ability to sell our products through Lenovo to IBM’s customers; our ability to attract and retain qualified personnel; adverse changes in customer order patterns; our ability to identify and successfully consummate and integrate future acquisitions; adverse changes in general economic conditions in the U. S. and internationally;

risks associated with foreign operations; and political and economic uncertainties associated with current world events. These and other risks are detailed from time to time in Neoware’s periodic reports filed with the Securities and Exchange Commission, including, but not limited to, our annual report on Form 10-K for the year ended June 30, 2006 and our quarterly reports on Forms 10-Q for the quarters ended September 30, 2006 and December 31, 2006.

# # #

NEOWARE, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)

(unaudited)

	March 31,			June 30,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	90,283		$	19,328
Restricted cash		385			—
Short-term investments		29,700			94,798
Accounts receivable, net		16,349			16,877
Inventories		5,903			7,734
Prepaid income taxes		4,503			1,544
Prepaid expenses and other		2,722			1,687
Deferred income taxes		1,866			1,866
Total current assets		151,711			143,834
Property and equipment, net		1,568			1,586
Goodwill		37,223			37,761
Intangibles, net		9,712			12,175
Deferred income taxes		4,026			4,156
Other		81			61
	$	204,321		$	199,573
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,464		$	8,989
Accrued compensation and benefits		3,130			2,021
Other accrued expenses		4,587			4,159
Restructuring reserve		419			600
Income taxes payable		167			158
Deferred revenue		1,591			973
Total current liabilities		16,358			16,900
Deferred income taxes		811			755
Deferred revenue		315			316
Total liabilities		17,484			17,971
Stockholders’ equity:
Preferred stock		—			—
Common stock		20			20
Additional paid-in capital		163,803			158,671
Treasury stock, 100,000 shares at cost		(100	)		(100	)
Accumulated other comprehensive income		2,216			556
Retained earnings		20,898			22,455
Total stockholders’ equity		186,837			181,602
	$	204,321		$	199,573

NEOWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

(unaudited)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2007			2006			2007			2006
Net revenues	$	22,070		$	27,787		$	67,406		$	83,666
Cost of revenues
Cost of products (includes stock-based compensation expense of $28 and $20 for the three months and $80 and $60 for the nine months ended March 31, 2007 and 2006)		13,513			15,353			41,127			47,051
Amortization of intangibles		343			338			1,018			913
Total cost of revenues		13,856			15,691			42,145			47,964
Gross profit		8,214			12,096			25,261			35,702
Operating expenses
Sales and marketing		4,451			4,295			13,933			12,864
Research and development		1,557			1,645			4,927			4,446
General and administrative		2,710			2,451			10,022			7,614
Amortization of intangibles		491			586			1,670			1,377
Abandoned acquisition costs		12			—			874			—
Total operating expenses (includes stock-based compensation expense of $814 and $760 for the three months and $3,767 and $2,239 for the nine months ended March 31, 2007 and 2006)		9,221			8,977			31,426			26,301
Operating income (loss)		(1,007	)		3,119			(6,165	)		9,401
Foreign exchange gain (loss)		(13	)		(12	)		(57	)		64
Interest income, net		1,044			507			2,979			998
Income (loss) before income taxes		24			3,614			(3,243	)		10,463
Income taxes (benefit)		1,123			1,301			(1,686	)		3,767
Net income (loss)	$	(1,099	)	$	2,313		$	(1,557	)	$	6,696
Earnings (loss) per share:
Basic	$	(0.05	)	$	0.13		$	(0.08	)	$	0.40
Diluted	$	(0.05	)	$	0.12		$	(0.08	)	$	0.38
Weighted average number of common shares outstanding:
Basic		20,000			18,023			19,969			16,931
Diluted		20,000			18,848			19,969			17,474

NEOWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2007			2006			2007			2006
Cash flows from operating activities:
Net income (loss)	$	(1,099	)	$	2,313		$	(1,557	)	$	6,696
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangibles		834			924			2,688			2,290
Depreciation		137			134			410			302
Non-cash share-based compensation		842			780			3,847			2,299
Deferred income taxes		—			—			138			—
Changes in operating assets and liabilities- net of effect from acquisition:
Restricted cash		(385	)		—			(385	)		—
Accounts receivable		2,025			1,220			613			(4,239	)
Inventories		5,424			(579	)		1,831			465
Prepaid expenses and other		655			(987	)		(3,948	)		378
Accrued compensation and benefits		(331	)		147			1,102			764
Accounts payable		1,632			2,883			(2,535	)		3,104
Other accrued expenses		215			(674	)		193			(2,413	)
Income taxes payable		(8	)		221			1			(2,282	)
Deferred revenue		441			(313	)		595			108
Net cash provided by operating activities		10,384			6,069			2,993			7,472
Cash flows from investing activities:
Purchase of short-term investments		(34,900	)		(12,850	)		(128,200	)		(26,288	)
Sales of short-term investments		82,097			7,864			193,274			33,226
Purchases of property and equipment		(218	)		(594	)		(418	)		(1,412	)
Purchase of Visara thin client business		—			—			—			(2,107	)
Purchase of TeleVideo thin client business		—			—			—			(3,520	)
Acquisition of Maxspeed, net of cash acquired		1,674			(259	)		1,674			(12,053	)
Net cash provided by (used in) investing activities		48,653			(5,839	)		66,330			(12,154	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of expenses		—			71,236			(3	)		71,236
Exercise of stock options		195			638			640			6,014
Excess tax benefit from share-based payment arrangements		—			296			648			1,733
Net cash provided by financing activities		195			72,170			1,285			78,983
Effect of foreign exchange rate changes on cash		21			(65	)		347			(158	)
Increase in cash and cash equivalents		59,253			72,335			70,955			74,143
Cash and cash equivalents, beginning of period		31,030			10,093			19,328			8,285
Cash and cash equivalents, end of period	$	90,283		$	82,428		$	90,283		$	82,428
Supplemental disclosures:
Cash paid for income taxes	$	77		$	974		$	451		$	5,226

NEOWARE, INC.
RECONCILIATION OF GAAP TO NON GAAP AMOUNTS
(in thousands, except per share data)

(unaudited)

	Three Month Ended
	March 31, 2007									March 31, 2006
	GAAP			Adj.			Non-GAAP			GAAP			Adj.			Non-GAAP
Gross profit	$	8,214			371	A	$	8,585		$	12,096		$	358	A	$	12,454
Gross profit percentage		37.2	%					38.9	%		43.5	%					44.8	%
Operating expenses
Sales and marketing		4,451			(351	)B		4,100			4,295			(282	)B		4,013
Research and development		1,557			(102	)B		1,455			1,645			(99	)B		1,546
General and administrative		2,710			(361	)B		2,349			2,451			(379	)B		2,072
Amortization of intangibles		491			(491	)C		—			586			(586	)C		—
Abandoned acquisition costs		12			—			12			—			—			—
Operating expenses		9,221			(1,305	)		7,916			8,977			(1,346	)		7,631
Operating income (loss)		(1,007	)		1,676			669			3,119			1,704			4,823
Income tax expense (benefit)		(1,123	)		899	D		(224	)		1,301			613	D		1,914
Net (loss) income	$	(1,099	)				$	1,924		$	2,313					$	3,404
Earnings (loss) per share — diluted	$	(0.05	)				$	0.10		$	0.12					$	0.18
Weighted average shares outstanding — diluted		20,000						20,025			18,848						18,848

A - To exclude the effect of stock-based compensation expense and the amortization of intangible assets related to business
       combinations.

B - To exclude the effects of stock-based compensation expense.

C - To exclude the effects of the amortization of intangible assets related to business combinations.

D - To exclude the tax effect of reconciling items.

NEOWARE, INC.
RECONCILIATION OF GAAP TO NON GAAP AMOUNTS
(in thousands, except per share data)

(unaudited)

	Nine Month Ended
	March 31, 2007									March 31, 2006
	GAAP			Adj.			Non-GAAP			GAAP			Adj.			Non-GAAP
Gross profit	$	25,261		$	1,098	A	$	26,359		$	35,702		$	973	A	$	36,675
Gross profit percentage		37.5	%					39.1	%		42.7	%					43.8	%
Operating expenses
Sales and marketing		13,933			(1,061	)B		12,872			12,864			(829	)B		12,035
Research and development		4,927			(291	)B		4,636			4,446			(306	)B		4,140
General and administrative		10,022			(2,415	)B		7,607			7,614			(1,104	)B		6,510
Amortization of intangibles		1,670			(1,670	)C		—			1,377			(1,377	)C		—
Abandoned acquisition costs		874			—			874			—			—			—
Operating expenses		31,426			(5,437	)		25,989			26,301			(3,616	)		22,685
Operating income (loss)		(6,165	)		6,535			370			9,401			4,589			13,990
Income tax expense (benefit)		(1,686	)		1,488	D		(198	)		3,767			1,652	D		5,419
Net income (loss)	$	(1,557	)				$	3,490		$	6,696					$	9,633
Earnings (loss) per share — diluted	$	(0.08	)				$	0.17		$	0.38					$	0.55
Weighted average shares outstanding – diluted		19,969						20,017			17,474						17,474

A - To exclude the effect of stock-based compensation expense and the amortization of intangible assets related to business combinations.

B - To exclude the effects of stock-based compensation expense.

C - To exclude the effects of the amortization of intangible assets related to business combinations.

D - To exclude the tax effect of reconciling items.

EX-99.2

Exhibit 99.2

Leslie Hayman Joins Neoware’s Board of Directors

With Nearly 40 years in the IT Sector, Hayman Brings Extensive International Experience and
Strategic Guidance as Neoware Looks to the Future of Enterprise Computing

KING OF PRUSSIA, Pa. — May 1, 2007 — Neoware, Inc. (Nasdaq:NWRE), a leading provider of thin client computing solutions, today announced that recognized global executive and IT industry leader, Leslie Hayman, has joined the company’s Board of Directors. Hayman, who most recently held leadership positions at SAP and Sun Microsystems, will help guide Neoware’s strategy and business development in Europe, the Middle East, Africa (EMEA) and Asia Pacific (AP). During its regular Board meeting on April 27, 2007, Mr. Hayman was elected to fill a vacancy on the company’s Board of Directors, effective immediately. Mr. Hayman will also serve on the Board’s Compensation and Stock Option Committee.

“I am thrilled to be joining Neoware at such an exciting time in the company’s lifecycle,” said Mr. Hayman. “The traditional view of the personal computer in the enterprise is changing, especially with the advent of virtualization technologies, and Neoware offers desktop and mobile computing devices and software that offer a clear and desirable alternative. I’m looking forward to working with the Neoware team to further the Company’s success.”

Mr. Hayman most recently served as the Ambassador in the Office of the CEO at SAP AG. He has worked at SAP AG in a number of other capacities including: Global Head of Human Resources, Chairman and CEO EMEA, President and CEO Asia Pacific, Managing Director Australia & New Zealand and Member of the Extended Board SAP AG. Prior to joining SAP, Mr. Hayman served as the CEO of Australia and New Zealand for Sun Microsystems where he built the business from $50 million to $200 million in five years. He had previously held leadership positions at Caylx Software, Data General and Digital Equipment Corporation.

“Les is a seasoned business professional and we are pleased to welcome him to our Board,” said Klaus Besier, President and CEO, of Neoware. “His strong international experience, organizational expertise, and strategic vision will be tremendous assets to the Company, as we continue to execute our plan for building a stronger Neoware. Les’ accomplishments and knowledge of business operations in EMEA and AP will be of great value to Neoware as we continue to drive thin client adoption in those regions.”

About Neoware

Neoware, Inc. (Nasdaq:NWRE), provides enterprises throughout the world with thin client computing devices, software that turns PCs into thin clients, and services that adapt thin client technology to virtually any enterprise computing environment. Neoware’s software powers, manages and secures thin client devices and traditional personal computers, enabling them to run Windows(r) and Web applications across a network, stream operating systems on demand, and connect to mainframes, mid-range, UNIX and Linux systems. Headquartered in King of Prussia, PA, U.S.A., Neoware has offices in Australia, Austria, China, France, Germany, and the United Kingdom. Neoware’s products are available worldwide from select, knowledgeable resellers, as well as via its partnerships with IBM, Lenovo and ClearCube. Neoware can be reached by email at info@neoware.com.

# # #

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding: the changing view of enterprise personal computing, especially relating to the advent of virtualization technology; and our strategy to build a stronger company. Factors that could cause actual results to differ materially from those predicted in such forward-looking statements include: Factors that could cause actual results to differ materially from those predicted in such forward-looking statements include: our success in implementing our expanded marketing, sales and product development initiatives and the rebuilding of our infrastructure within our planned timeframe; insufficient resources to fund our virtualization initiatives; the lack of growth in the virtualization market; the timing and receipt of future orders; our timely development, release and customers’ acceptance of our products; pricing pressures; rapid technological changes in the industry; growth of overall thin client sales; our ability to maintain our partnerships; our dependence on our suppliers and distributors; increased competition; our ability to attract and retain qualified personnel; adverse changes in customer order patterns; adverse changes in general economic conditions in the U. S. and internationally; risks associated with foreign operations; and political and economic uncertainties associated with current world events. These and other risks are detailed from time to time in Neoware’s periodic reports filed with the Securities and Exchange Commission, including, but not limited to, our annual report on Form 10-K for the year ended June 30, 2006 and our quarterly reports on Forms 10-Q for the quarters ended September 30, 2006 and December 31, 2006.

Neoware is a trademark of Neoware, Inc. All other names, products and services are
trademarks or registered trademarks of their respective holders.

Contact:
Palmer Reuther
Racepoint Group
781-487-4606
neoware@racepointgroup.com