<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 September 30, 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 November 13, 1997, there were outstanding 5,760,820 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 September 30, 
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:                        
             September 30, 1997 and June 30, 1997                           3 
                                                                             
             Consolidated Statements of Operations:                          
             Three Months Ended September 30, 1997 and 1996                 4
                                                                             
             Consolidated Statements of Cash Flows:                          
             Three Months Ended September 30, 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 6.   Exhibits and Reports on Form 8-K                                 12
                                                                            
            Signatures                                                     13
</TABLE> 
<PAGE>
 
                             NEOWARE SYSTEMS, INC.
                             ---------------------

                          CONSOLIDATED BALANCE SHEETS
                          ---------------------------

                                  (Unaudited)
                                        
<TABLE>
<CAPTION>
                                                                                September 30,               June 30,  
                              ASSETS                                                 1997                     1997   
                              ------                                            ------------              ----------- 
CURRENT ASSETS:
<S>                                                                             <C>                       <C>
  Cash and cash equivalents                                                      $   517,805              $ 1,452,409
  Accounts receivable, net of allowance for doubtful accounts of  
   $124,086                                                                        8,953,000                9,308,731
  Inventories                                                                      4,659,414                4,035,202
  Prepaid expenses and other                                                         453,977                  789,179
  Deferred income taxes                                                              416,530                  416,530
                                                                                 -----------              ----------- 

          Total current assets                                                    15,000,726               16,002,051

PROPERTY AND EQUIPMENT, net                                                          731,562                  680,859

NOTE RECEIVABLE                                                                      700,000                       --

CAPITALIZED AND PURCHASED SOFTWARE, net                                            1,557,397                1,630,339

DEFERRED INCOME TAXES                                                                 13,866                   13,866
                                                                                 -----------              -----------

                                                                                 $18,003,551              $18,327,115
                                                                                 ===========              ===========
          LIABILITIES AND STOCKHOLDERS' EQUITY
          ------------------------------------ 

CURRENT LIABILITIES:
 
  Line of credit                                                                 $ 4,833,000              $ 3,071,000
  Accounts payable                                                                 2,184,049                3,796,549
  Accrued expenses                                                                   367,107                  516,148
  Deferred revenue                                                                   170,221                  172,006
                                                                                 -----------              -----------

           Total current liabilities                                               7,554,377                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                                                                1,331,688                1,666,951  
  Deferred compensation                                                              (56,446)                 (69,471) 
                                                                                 -----------              -----------  

           Total stockholders' equity                                             10,449,174               10,771,412  
                                                                                 -----------              -----------  

                                                                                 $18,003,551              $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
                                                          September 30,
                                                   ----------------------------
                                                       1997            1996
                                                   -----------     ------------
<S>                                                <C>             <C>
NET REVENUES                                       $5,630,992      $ 3,455,620
COST OF REVENUES                                    4,089,645        2,102,565
                                                   ----------      -----------

             Gross profit                           1,541,347        1,353,055
                                                   ----------      -----------
OPERATING EXPENSES:

  Sales and marketing                               1,206,046          788,809
  General and administrative                          297,513          326,834
  Research and development                            433,685          258,137
                                                   ----------      -----------

             Total operating expenses               1,937,244        1,373,780
                                                   ----------      -----------

             Operating loss                          (395,897)         (20,725)
 INTEREST INCOME (EXPENSE), NET                       (93,538)          39,923
                                                   ----------      -----------

             (Loss) income before income taxes       (489,435)          19,198
 INCOME TAX (BENEFIT) EXPENSE                        (154,172)           6,911
                                                   ----------      -----------

             NET (LOSS) INCOME                     $ (335,263)     $    12,287
                                                   ==========      ===========

 (LOSS) EARNINGS PER SHARE                         $     (.06)     $       .02
                                                   ==========      ===========
 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
                                                    5,760,820       10,934,314
                                                   ==========      ===========
</TABLE>



   The accompanying notes are an integral part of these financial statements.
<PAGE>
 
                             NEOWARE SYSTEMS, INC.
                             ---------------------

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     -------------------------------------

                                  (Unaudited)

<TABLE> 
<CAPTION> 
                                                                              Three Months  Ended
                                                                                 September 30,
                                                                        -------------------------------
                                                                           1997                1996
                                                                        -----------          ---------- 
<S>                                                                     <C>                  <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net (loss) income                                                     $  (335,263)         $   12,287
  Adjustments to reconcile net (loss) income to net cash 
   provided by (used in) operating activities-
     Depreciation and amortization                                          220,396              36,000
     Amortization of deferred compensation                                   13,025              13,000
     Tax benefit from carrying back net operating loss                     (154,172)                  -
  Changes in operating assets and liabilities-
   (Increase) decrease in:
     Accounts receivable                                                    355,731           2,260,136
     Inventories                                                           (624,212)           (802,119)
     Prepaid expenses and other                                             489,374             (80,310)
  Increase (decrease) in:
     Accounts payable                                                    (1,612,500)           (601,922)
     Accrued expenses                                                      (149,041)           (111,257)
     Deferred revenue                                                        (1,785)             27,681
                                                                        -----------          ---------- 
       Net cash provided by 
       (used in) operating activities                                    (1,798,447)            753,496
                                                                        -----------          ----------
                                                                                    
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment                                       (98,082)            (15,157)
  Capitalized software                                                     (100,075)            (25,000)
                                                                        -----------          ----------
       Net cash used in investing activities                               (198,157)            (40,157)
                                                                        -----------          ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under line of credit                                         1,762,000                   -
  Increase in note receivable                                              (700,000)                  -
  Principal payments on long-term debt                                            -                (340)
                                                                        -----------          ----------
       Net cash provided by (used in)  financing activities               1,062,000                (340)
                                                                        -----------          ----------

INCREASE (DECREASE) IN CASH                                                (934,604)            712,999
  AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                            1,452,409           2,700,298
                                                                        -----------          ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                $   517,805          $3,413,297
                                                                        ===========          ==========
SUPPLEMENTAL DISCLOSURES:
     Cash paid for interest                                                  93,538               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 month period ended September 30, 1997 are not
necessarily indicative of 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 one customer represented 30% of total net revenues for the
three months ended September 30, 1997, while net revenues from two customers
represented 33% of total net revenues for the three months ended September 30,
1996.  At September 30, 1997, the Company had receivables from these customers
of approximately $6,398,000.

3. INVENTORIES:
   ------------

Inventories are stated at the lower of cost or market (first-in, first-out
method) and consisted of the following:

<TABLE>
<CAPTION>
                                                              September 30,      June 30,
                                                                 1997             1997
                                                              -------------   -------------- 
       <S>                                                    <C>             <C> 
       Purchased components and subassemblies                 $   1,722,777   $    1,566,161
       Work-in-process                                              346,799          301,565
       Finished goods                                             2,589,838        2,167,476
                                                              -------------   -------------- 
                                                              $   4,659,414   $    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 an initial public
offering of Reohr.  The note bears interest at 8%.  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 ($167,000 available at
September 30, 1997) with a bank which expires on December 31, 1997, subject to
annual renewal.  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. STOCK OPTIONS:
   --------------

The Company has a stock option plan  (the "Plan") for employees and directors
which provides for the grant of incentive and non-qualified stock options.  The
Company is authorized to issue options for the purchase of up to 1,100,000
shares of Common Stock.  Under the terms of the Plan, the exercise price of
options granted cannot be less than fair market value on the date of grant.
Employee options generally vest and become exercisable ratably over four years.
Director options vest and become exercisable ratably six months and one year
from the date of grant.  All options expire five years from the grant date. As
of June 30, 1997, the Company had options outstanding under the Plan for the
purchase of 697,349 shares of Common Stock at prices ranging from $5.125 to
$7.875 per share.  Options to purchase 442,750 shares of Common Stock were
vested at June 30, 1997.
<PAGE>
 
7. EARNINGS PER SHARE
   ------------------

Earnings per share for the three months ended September 30, 1997 and 1996 are
calculated as follows:


<TABLE>
<CAPTION>
                                                        1997              1996
                                                        ----              ----
<S>                                                 <C>                <C>
Net income as reported                              $ (335,263)        $    12,287
Imputed interest income, net of income taxes                 -             225,356
                                                    ----------         -----------
 
Adjusted net income                                 $ (335,263)        $   237,643
                                                    ==========         ===========
 
Actual number of shares outstanding                  5,760,820           5,619,595
Net additional shares arising from exercise
 of warrants and options                                     -           5,314,719
                                                    ----------         -----------

Weighted average number of shares outstanding        5,760,820          10,934,314
                                                    ==========         ===========
 
(Loss) earnings per share                           $     (.06)        $       .02
                                                    ==========         ===========
</TABLE>

SFAS No. 128, "Earnings per Share", which supersedes APB Opinion No. 15,
"Earnings per Share", was issued in February 1997.  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.  SFAS 128 is
required to be adopted for the Company's fiscal year ending June 30, 1998 and,
when adopted, will require restatement of prior periods' EPS.
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

INTRODUCTION

     The Company provides network 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 network
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 network computer product line was introduced in June 1996.
Prior to the introduction of the network computer, the Company manufactured and
marketed a family of desktop computing devices, including multimedia-capable X
Window terminals.

     The Company's current strategy is to become a leader in the emerging market
for thin client computers by focusing on expanding its operating system software
products and its network 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(TM), 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
                                           September 30,
                                        ------------------ 
                                         1997        1996
                                         ----        ---- 
<S>                                     <C>          <C> 
Gross Profit                             27.4%       39.2%
Operating expenses:
   Sales and marketing                   21.4        22.8    
   General and administrative             5.3         9.5  
   Research and development               7.7         7.5  
                                         ----        ----  
Operating loss                           (7.0)       (0.6) 
   Interest income (expense), net        (1.7)        1.2  
                                         ----        ----   
Income before taxes                      (8.7)        0.6  
   Income tax (benefit) expense          (2.7)        0.2
                                         ----        ----
Net (loss) income                        (6.0)%       0.4%
                                         ====        ====
</TABLE> 


     For the three months ended September 30, 1997, net revenues increased to
$5,630,992, an increase of 63% from $3,455,620 for the comparable period in the
prior fiscal year. The Company's revenues for the current quarter represent
shipments of its line of network computers. Revenues for the three months ended
September 30, 1996 represent the initial shipments of its network computer line
and revenues earned from licensing agreements for its netOS operating system
software for network computing devices. 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 decreased to
27.4% for the three months ended September 30, 1997 from 39.2% for the
comparable three-month period of the prior fiscal year. The change in gross
profit percentage 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 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 months ended September 30, 1997, the Company's net loss was
$335,263 as compared to net income of $12,287 for the comparable period in the
prior year. The decrease in net income was attributable to lower product
margins, net expenses of approximately $249,000 related to the Company's
investment in BDT and the Company's continued investment in sales and marketing
and research and development. In addition the Company was reimbursed for net
expenses of approximately $292,000 previously incurred in connection with its
investment in ITC. The increase in net interest expense also contributed to the
Company's net loss.

     Operating expenses for the three months ended September 30, 1997 were
$1,937,244 an increase of $563,464 from operating expenses of $1,373,780 in the
comparable period of the prior year. Research and development expenses for the
three months ended September 30, 1997 increased by $175,548  to $433,685 from
$258,137 in the prior 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 by $417,237
to $1,206,046 for the three months ended September 30, 1997 as compared to
$788,809 for the prior year as a result of significantly increasing the
Company's sales and marketing staff, especially in Europe, and costs totaling
$162,000 related to BDT.  General and administrative expenses decreased to
$297,513 for the three months ended September 30, 1997 from $326,834 in the
prior year due to the reimbursement of expenses related to ITC.  General and
administrative expenses for the current year also include the Company's Chief
Executive Officer and $56,000 of expenses related to BDT.

     Net interest income (expense) decreased in the three month period ended
September 30, 1997 due to increased borrowings under the Company's line of
credit, lower interest rates and lower investment balances caused by financing
of higher inventory and accounts receivable balances.

     The effective income tax rates were approximately 31.5% and 36.0% in the
three month periods ended September 30, 1997 and 1996.

LIQUIDITY AND CAPITAL RESOURCES

     At September 30, 1997, the Company had net working capital of approximately
$7,446,349 composed primarily of cash and cash equivalents, accounts receivable
and inventory.  The Company's principal sources of liquidity included
approximately $518,000 of cash and cash equivalents and a $5,000,000 bank line
of credit facility, $167,000 of which was available as of September 30, 1997.

     Cash and cash equivalents decreased by approximately $935,000 during the
three-month period ended September 30, 1997, primarily due to the loss from
operations, an increase in inventory and a decrease in accounts payable and
accrued expenses, which was offset by a decrease in accounts receivable and an
increase in the line of credit.

     The Company used approximately $1,798,000 in cash from operating activities
in the three months ended September 30, 1997 compared to generating cash from
operations of approximately $753,000 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 its securities.
<PAGE>

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 network 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 6. EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits:

               None

          (b)  Reports on Form 8-K:

               None
<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)