-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JTi3ABYXbNKSVzrayWv3IyJypJit3QqYF12yYAaSqjr+pb+oGv78okyq1RsUIW+Q A2QEomNHDS4P20w1SGhFIA== 0001036050-98-000901.txt : 19980518 0001036050-98-000901.hdr.sgml : 19980518 ACCESSION NUMBER: 0001036050-98-000901 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HDS NETWORK SYSTEMS INC CENTRAL INDEX KEY: 0000894743 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 232705700 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 000-21240 FILM NUMBER: 98624751 BUSINESS ADDRESS: STREET 1: 400 FEHELEY DR CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 BUSINESS PHONE: 6102778300 MAIL ADDRESS: STREET 1: 400 FEHELEY DR CITY: KING OF PRUSSIA STATE: PA ZIP: 19406 FORMER COMPANY: FORMER CONFORMED NAME: INFORMATION SYSTEMS ACQUISITION CORP DATE OF NAME CHANGE: 19930108 10-Q/A 1 FORM 10-Q/A 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 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 -----
Page Number ------ 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
NEOWARE SYSTEMS, INC. --------------------- CONSOLIDATED BALANCE SHEETS --------------------------- (UNAUDITED)
DECEMBER 31, JUNE 30, ASSETS 1997 1997 ------ ------------ ----------- 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 =========== ===========
The accompanying notes are an integral part of these financial statements. NEOWARE SYSTEMS, INC. --------------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (Unaudited)
Three Months Ended Six Months Ended December 31, December 31, -------------------------------- --------------------------------- 1997 1996 1997 1996 ---------- ---------- ----------- ----------- 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 ========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements. NEOWARE SYSTEMS, INC. --------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS ------------------------------------- (Unaudited)
Six Months Ended December 31, ------------------------------ 1997 1996 ----------- ---------- 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
The accompanying notes are an integral part of these financial statements. 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:
December 31, June 30, 1997 1997 ------------ ------------ 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 ============ ============
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. 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. 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.
Three Months Ended Six Months Ended December 31, December 31, ----------------------- ---------------------- 1997 1996 1997 1996 -------- -------- -------- -------- 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% === ==== ==== ====
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. 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. 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. 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. 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) EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS 6-MOS JUN-30-1998 JUN-30-1997 JUL-01-1997 JUL-01-1996 DEC-31-1997 DEC-31-1996 70,567 1,452,409 0 0 7,891,143 9,432,817 124,086 124,086 4,186,833 4,035,202 13,495,732 16,002,051 1,723,174 1,552,836 978,735 871,977 16,471,314 18,327,115 6,408,538 7,555,703 0 0 0 0 0 0 5,761 5,761 10,057,015 10,765,651 16,471,314 18,327,115 12,611,492 12,380,422 12,611,492 12,380,422 9,215,768 8,487,435 9,215,768 8,487,435 4,286,634 3,138,353 0 0 175,260 (75,856) (1,066,170) 830,490 (332,904) 274,224 0 0 0 0 0 0 0 0 (733,266) 556,266 (.13) .10 (.13) .07
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