SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.


                                    FORM 1O-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



                For the Quarterly Period Ended September 30, 1997



                         Commission File Number 0-17977





                              BOUNDLESS CORPORATION

             (Exact name of registrant as specified in its charter)



                                    Delaware
         (State or other Jurisdiction of Incorporation or Organization)



                                   13-3469637
                      (I.R.S. Employer Identification No.)



                                100 Marcus Blvd.
                                  Hauppauge, NY

                    (Address of principal executive offices)



                                      11788
                                   (Zip Code)



                                 (516) 342-7400
              (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 October 29, 1997, the  Registrant  had 51,364,796  shares of Common Stock,
$.01 par value per share outstanding.


<PAGE>

                         PART 1 - FINANCIAL INFORMATION

Item 1.   Financial Statements

              INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Consolidated Balance Sheets as of September 
     30, 1997 (unaudited) and December 31, 1996..............    3

Consolidated Statements of Operations 
     (unaudited)for the three and nine months ended 
     September 30, 1997 and 1996.............................    4

Consolidated Statements of Cash Flows (unaudited)
     for the nine months ended September 30, 1997 
     and 1996................................................    5

Notes to Consolidated Financial Statements 
     (unaudited).............................................    6

 


                                      2
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                         (dollar amounts in thousands)



                                                          
                                                  September 30,     December 31,
                                                      1997              1996
                                                ---------------- ---------------
Current assets:                                    (unaudited)

   Cash and cash equivalents.................          $ 1,889           $ 5,213
   Trade accounts receivable, net............           14,479            22,046
   Inventories...............................           13,258            18,525
   Deferred income taxes.....................                -                 -
   Prepaid expenses and other current assets.              859               256
                                               ---------------- ----------------
      Total current assets...................           30,485            46,040
Property and equipment, net..................           10,812            11,474
Goodwill, net................................            8,697             9,505
Other assets.................................            1,948             2,506
                                              ---------------- -----------------
                                                      $ 51,942          $ 69,525
                                              ================ =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Notes payable............................          $ 7,950          $ 13,950
   Current portion of long-term debt........            5,432             8,009
   Accounts payable.........................            8,297            10,892
   Accrued expenses.........................            5,822             6,345
   Deferred revenue.........................              296               180
   Net liabilities of discontinued operation              145             3,492
                                                     --------- ----------------
      Total current liabilities.............           27,942            42,868
Long-term liabilities:
   Long-term debt, less current maturities..            8,000            13,382
   Deferred income taxes....................                -                 -
   Other ...................................              746               918
                                                     --------- ----------------
      Total long-term liabilities...........            8,746            14,300
                                                     --------- ----------------
      Total liabilities.....................           36,688            57,168
Commitments and contingencies
Mandatorily redeemable preferred stock of subsidiary    3,555             3,555
Stockholders' equity:
   Preferred stock..........................                -                 -
   Common stock.............................              508               486
   Additional paid-in capital...............           33,006            31,440
   Accumulated deficit......................          (21,815)          (23,124)
                                                     --------- ----------------
      Total stockholders' equity............           11,699             8,802
                                                     --------- ----------------
                                                     $ 51,942          $ 69,525
                                                     ========= ================

The  accompanying  notes are an integral part of these  condensed  consolidated
financial statements.

                                       3
<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)

<TABLE>
<CAPTION>

                                                       Nine Months Ended              Three Months Ended
                                                         September 30,                   September 30,
                                                 ------------------------------  ------------------------------
                                                      1997            1996            1997            1996
                                                 --------------  --------------  --------------  --------------
                                                          (unaudited)                     (unaudited)
<S>                                                     <C>              <C>              <C>            <C>

Revenue.....................................          $ 71,373        $ 99,656        $ 24,262        $ 29,066
Cost of revenue.............................            54,297          77,778          18,009          21,858
                                                 --------------  --------------  --------------  --------------
Gross margin................................            17,076          21,878           6,253           7,208
Operating expenses:
   Sales and marketing......................             5,575           8,430           2,009           3,432
   General and administrative...............             4,631           5,339           1,499           1,788
   Research and development.................             2,004           3,326             610           1,013
                                                --------------  --------------  --------------  --------------
      Total operating expenses..............            12,210          17,095           4,118           6,233
                                                --------------  --------------  --------------  --------------
           Operating income.................             4,866           4,783           2,135             975
Other (income) expense:
   Interest expense, net....................             2,675           3,154             978           1,016
   Other....................................                71             (12)            180             (69)
                                                --------------  --------------  --------------  --------------
      Total other expense...................             2,746           3,142           1,158             947
                                                --------------  --------------  --------------  --------------
Income before income taxes
      and discontinued operations...........             2,120           1,641             977              28
Income tax expense..........................               439             643             313              13
                                                --------------  --------------  --------------  --------------
Income before discontinued operations.......             1,681             998             664              15
Loss from discontinued operations...........                 -          (2,541)              -          (1,055)
                                                --------------  --------------  --------------  --------------
Net income (loss)...........................             1,681          (1,543)            664          (1,040)
Dividend on preferred stock of subsidiary...               373             373             124             124
                                                --------------  --------------  --------------  --------------
Earnings available for common shareholders..           $ 1,308        $ (1,916)          $ 540        $ (1,164)
                                                ==============  ==============  ==============  ==============
Weighted average common shares outstanding..            48,931          46,703          49,797          47,598
                                                ==============  ==============  ==============  ==============
Earnings per common share:
   Continuing operations....................            $ 0.03          $.0.01          $ 0.01       $ 0.00
   Discontinued operations..................            $ 0.00         $ (0.05)         $ 0.00      $ (0.02)
                                                --------------  --------------  --------------  --------------
Earnings per common share...................            $ 0.03         $ (0.04)         $ 0.01      $ (0.02)
                                                ==============  ==============  ==============  ==============

</TABLE>
The  accompanying  notes are an integral part of these  condensed  consolidated
financial statements.

                                       4
<PAGE>

<TABLE>
<CAPTION>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (dollar amounts in thousands)
                    For the Nine Months Ended September 30,

                                                                           1997            1996
                                                                     ---------------  --------------
                                                                                (unaudited)
<S>                                                                                          <C>                <C>   
Cash flows from operating activities:                                                                          
   Net income...................................................         $ 1,681           $ 998 
   Adjustments to reconcile net income to net cash provided by
      (used in) operating activities:
      Loss from discontinued operations.........................               -          (2,541)
      Depreciation and amortization.............................           2,629           2,277
      Deferred revenues.........................................             116            (739)
      Provision for doubtful accounts...........................             148              32
      Provision for excess and obsolete inventory...............             486           1,028
      Estimated value of compensatory warrants..................               -             161
   Changes in assets and liabilities:
      Trade accounts receivable.................................           7,420           2,318
      Inventories...............................................           4,781          (2,337)
      Other assets..............................................            (977)            491
      Accounts payable and accrued expenses.....................          (7,001)         (4,697)
                                                                  ---------------  --------------
Net cash provided by (used in) operating activities.............           9,283          (3,009)
                                                                  ---------------  --------------
Cash flows from investing activities:
   Capital expenditures.........................................            (164)         (1,286)
                                                                  ---------------  --------------
Net cash used in investing activities...........................            (164)         (1,286)
                                                                  ---------------  --------------
Cash flows from financing activities:
   Proceeds from issuance of common stock.......................               2           4,469
   Decrease in short-term debt, net.............................               -             (30)
   Proceeds from debt issuance..................................           1,514           1,626
   Purchase of treasury stock...................................               -          (1,305)
   Net change in revolving loan payable.........................          (6,000)          5,200
   Payment on term loan.........................................          (7,950)         (5,285)
   Payments on capital leases...................................              (9)             (9)
                                                                  ---------------  --------------
Net cash provided by (used in) financing activities.............         (12,443)          4,666
                                                                  ---------------  --------------
Net increase (decrease) in cash and cash equivalents............          (3,324)            371
Cash and cash equivalents at beginning of period................           5,213             369
                                                                  ---------------  --------------
Cash and cash equivalents at end of period......................         $ 1,889           $ 740
                                                                  ===============  ==============

</TABLE>
The  accompanying  notes are an integral part of these  condensed  consolidated
financial statements.

                                       5
<PAGE>

                     BOUNDLESS CORPORATION AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                          (dollar amounts in thousands)
                                   (Unaudited)

1.    Condensed Consolidated Financial Statements

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Regulation S-X.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the  opinion  of  management,  all  adjustments  (consisting  of only  normal
occurring  accruals)  considered  necessary  for a fair  presentation  have been
included.  Certain prior period amounts in these financial  statements have been
reclassified to conform to current period  presentation.  Operating  results for
the three-month  period ended September 30, 1997 are not necessarily  indicative
of the results  that may be expected for the year ended  December 31, 1997.  For
further information refer to the consolidated financial statements and footnotes
thereto in the Company's  Annual Report on Form 10-K for the year ended December
31, 1996.

2.    Background

Boundless  Corporation  (the  Company)  is  engaged,   through  its  subsidiary,
Boundless  Technologies,   Inc.  (Boundless),  in  designing  and  manufacturing
computer  terminals  and thin client  devices for business  use.  The  Company's
general  strategy  is to provide  access to  corporate  computing  environments,
including  mainframes,   LANs,  WANs,  intranets  and  the  Internet.  Boundless
principally  designs,   assembles,   sells  and  supports  (i)  General  Display
Terminals,  (ii) Thin Clients and (iii) other terminal products that are used in
multi-user, personal computer and mini-computer-based  environments. The Company
receives a royalty from a partnership (the GAI Partnership)  formed by Boundless
and  General  Automation,  Inc.  (GAI) and managed by GAI.  The GAI  Partnership
designs,  integrates,  sells and supports  multi-user  computer systems that can
manage  large  volumes  of data  running  Boundless'  and  GAI's  versions  of a
data-based system licensed from Pick Systems.

3.    Inventories

Inventories  are stated at the lower of cost or market.  Cost is determined on a
first-in first-out basis. The major components of inventories are as follows:

                                                     September 30,  December 31,
                                                          1997         1996
                                                     -------------  -----------

Raw materials and purchased components                $   9,550      $   12,845
Finished goods                                            3,213           4,942
Demonstration equipment                                     150             396
Service parts                                               345             342
                                                      ------------   ----------
                                                      $  13,258      $   18,525 

                                       6

<PAGE>
4.  Equity

At September 30, 1997 and December 31, 1996, stockholders' equity consisted of
the following:
                                                     September 30,  December 31,
                                                           1997         1996
                                                     -------------  ------------
Preferred stock, $0.01 par value, 1,000,000 shares
     authorized, none issued                          $      -        $      -
Common stock, $0.01 par value, 100,000,000 shares
     authorized, 50,754,850 and 48,572,000 shares
     issued at September 30, 1997 and December
     31, 1996, respectively                                 508             486
Additional paid-in capital                               33,006          31,440
Accumulated deficit                                     (21,815)        (23,124)
                                                       ---------       ---------

Total stockholders' equity                             $ 11,699        $  8,802
                                                       =========       =========


5.  Financings

Regulation S Offerings

The company  completed  two offerings of  securities  under  Regulation S of the
Securities  Act of 1933 (a  "Regulation S Offering")  subsequent to December 31,
1996 described below:



      In February 1997, the Company received gross proceeds of $1,000 by selling
     convertible  notes,  bearing interest at 8%, convertible until December 31,
     1998 into common stock. As of September 30, 1997, $1,000 had been converted
     into 1,273,603 common shares.



      In March 1997,  the  Company  received  gross  proceeds of $400 by selling
     convertible  notes,  bearing interest at 8%, convertible until December 31,
     1998 into common stock.  As of September 30, 1997,  $400 had been converted
     into 588,490 common shares.  In connection with this offering,  the Company
     issued warrants to a financial  advisor to purchase 50,454 shares of common
     stock at an  exercise  price  of  $1.375  per  share,  exercisable  through
     February 28, 2000. These options were valued at approximately $19.


                                       7
<PAGE>

6.  Employee Stock Options Granted and Warrants Granted


Options to purchase  2,732,500  shares of common  stock of the Company (of which
1,252,500  replaced  existing  options) were granted  under the Company's  stock
option  plans  with an  exercise  price  of  $0.66.  The  options  vest  either
immediately,  or over the two year period  following the date of grant,  and are
exercisable through the year 2002.

During the third  quarter the Board of  Directors  approved  the increase in the
number of shares available to be granted under the Company's 1995 Incentive Plan
from 6 million to 10 million shares of common stock.



Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

RESULTS OF OPERATIONS

The numbers and  percentages  contained in this Item 2 are  approximate.  Dollar
amounts are stated in thousands.

For the Three and Nine Month Period Ending September 30, 1997

Revenue - Revenue for the quarter  ended  September  30,  1997 was  $24,262,  as
compared to $29,066 for the  quarter  ended  September  30,  1996.  Year-to-date
revenue was $71,373 for 1997 versus $99,656 in 1996.

Sales of the Company's General Display  Terminals  declined from $23,138 for the
quarter ended  September 30, 1996 to $19,721 for the quarter ended September 30,
1997;  and for the nine month period  revenue  declined to $59,281 from $80,624.
The decline for the latest  quarter is principally  attributable  to declines of
$1,738 and $2,513 in sales to VT and Dorio  distributors  and Digital  Equipment
Corporation (Digital), respectively, offset by increased sales of $2,440 to IBM.
Under the terms of the Digital  Acquisition  agreement  Digital was  required to
purchase 80,000 units in the first year. As a result,  the Company believes that
the  significant  purchases by Digital during the fourth quarter of 1996 to meet
this volume  commitment  leaves Digital with inventory levels sufficient to meet
its  terminal  needs for the  remainder  of 1997.  Therefore,  1997 sales of the
Company's text terminals are not expected to reach the levels  achieved in 1996.
The VT and Dorio  terminals  are based on a proprietary  architecture  and, as a
result,  its  users  requiring  flexibility  are prone to more  quickly  move to
alternative  platforms.  Finally,  demand  for  the  General  Display  Terminals
continues to decline as competing  technologies,  including Thin Client devices,
are gaining market share. For these reasons,  sales of General Display Terminals
for 1997 are not expected to reach the levels achieved in 1996.


                                       8
<PAGE>

Based on  independent  research  results,  the Company's  share of the 1996 text
terminal market worldwide,  in the U.S., and in Europe regions increased to 36%,
34% and 43%,  respectively.  As a result,  the  Company  has the second  largest
market share  worldwide and in the U.S., and the largest market share in Europe.
However, this research projects continued decline in the text terminal market.

Sales of X Windows-based Network Graphics Displays declined $509 to $948 for the
quarter ended  September 30, 1997,  from $1,457 for the quarter ended  September
30,  1996.  This  decline  was  anticipated  and  relates to  specific  projects
undertaken by NCR during 1995,  and  completed  during 1996.  Year-to-date  1997
revenue  declined 47% to $3,650 from $6,920 for the  comparable  period in 1996.
The Company  believes that sales of Network  Graphics  Displays will continue to
decline as demand is satisfied by the more capable Thin Client devices.

On May 12, 1997, the Company launched a new line of advanced Thin Client devices
along  with  network  administration  software  marketed  under the trade  names
Viewpoint(R) TC and Viewpoint(R) Administrator(TM), respectively. The company is
targeting the  approximately  35 million users of Text Terminals and X terminals
many of whom are currently transitioning or intending to transition to graphical
applications  that include  Windows,  the Intranet  and Java.  In addition,  the
Company is targeting the task-oriented users of older, less capable PCs that are
unable to run the latest Windows applications, including those users in business
and education.

The  Company  believes  its unique  ability to  customize  its  Viewpoint(R)  TC
products  to  meet  specific  end-customer  needs  will  give  it a  sustainable
competitive advantage. Historically, this ability has been of great value to the
Company's terminal customers and the Company believes that this strategy will be
equally advantageous in the corporate Network Computer marketplace.

During the third quarter NCR Corporation selected Boundless as an OEM to support
NCR's entrance into thin client computing.  In addition,  Boundless continued to
witness  significant  customer  support for its Windows Based Terminals with new
customer wins in a number of important markets  including  education and retail.
The Company is working with  Microsoft  to promote  Windows  Based  Terminals- a
concept now embraced by Microsoft.

                                       9


<PAGE>

Revenues  from the  Company's  Thin  Clients  amounted to $1,332 for the quarter
ended September 30, 1997; and are $1,889  year-to-date.  Despite the substantial
increase in sales  during the third  quarter,  the revenue  levels are below the
Company's  expectations due to slower than anticipated market acceptance of this
new technology. However, the Company believes that Microsoft's recent support of
the  thin-client  computing  concept  for  accessing  Windows  applications,  as
employed by the Company in its  Viewpoint(R)  TC, and the recent  abandonment of
the "Net PC" as a competing technology by some large computer manufacturers will
greatly increase market acceptance for its products.

Net revenue from the Company's  repairs and spare parts business  decreased 52%,
or $1,067,  from $2,047 for the quarter ended September 30, 1996 to $980 for the
quarter ended September 30, 1997. The decline was due to reduced spares sales to
NCR and Digital,  resulting  from a change in NCR's field  support  strategy and
inventory  purchasing  habits and the overall  decline in unit sales to Digital.
For the nine months ended September 30, 1997, repairs and spare parts sales were
$2,916  versus  $6,226  in 1996.  Due to new  designs  and  engineering  changes
resulting in fewer  components and increased  reliability,  the Company does not
anticipate that repair and spare parts revenue will meet prior period levels.

GAI Partnership  royalties for the quarter ending  September 30, 1997, were $456
versus $572 in 1996. The GAI Partnership  agreement  provides for the payment of
royalties to the Company as a percentage of partnership revenues, commencing May
1995, as follows:  months 1-12, 12%; months 13-24, 10%; months 25-36, 9%; months
37-48,  8%; and months 49-60,  7%.  Year-to-date  royalties were $1,419 for 1997
versus $2,302 in 1996.  Royalties have declined  versus prior periods due to the
decline in the royalty rate.

As of September  30, 1997,  the Company was owed $825 under the GAI  Partnership
agreement;  of which $600 was past due. The Company is currently negotiating the
paydown of this amount; and believes a settlement can be reached.

IBM was the most significant customer for the Company's products, accounting for
14% of revenue for the quarter ended  September 30, 1997.  Although both Digital
and NCR are expected to remain significant customers for the Company's products,
neither is expected to account for revenues of the Company  comparable  to 1996.
The loss of IBM, NCR or Digital as a customer, and as a distribution channel for
the Company's  products,  would have a material  adverse effect on the Company's
results of operations and liquidity.

Gross Margin - Gross margin for the three and nine months  ended  September  30,
1997 were $6,253 (26% of revenue) and $17,076 (24% of revenue) respectively,  as
compared to gross margin of $7,208 (25% of revenue) and $21,878 (22% of revenue)
for 1996. The decline in gross margin is wholly  attributable  to the decline in
revenue.  The increase in gross margin as a percent of revenue  stems  primarily
from cost reductions and reduced warranty expense for the VT and Dorio products;
offsetting  declines in spare parts margin  resulting from the sale of spares to
Digital  under  a  parts  purchase   agreement   contained  within  the  Digital
Acquisition.

In a continuing effort to maintain and improve margins in an industry  otherwise
characterized  by  commodity   pricing,   management  has  focused  on  quality,
flexibility,  and product cost reductions.  In addition,  sales of the Company's
Thin Clients,  which carry margins greater than its General  Display  Terminals,
are expected to positively impact the Company's gross margin. However, there can
be no assurance, given the recent introduction of this new technology,  that the
Company's Thin Clients will improve gross margin.

                                       10

<PAGE>
From time-to-time  margins are adversely  affected by industry  shortages of key
components.  The Company  emphasizes product cost reductions in its research and
development  activities and frequently  reviews its supplier  relationships with
the view to obtaining the best component prices available.

Total Operating  Expenses - For the quarter ended September 30, 1997,  operating
expenses  were $4,118 (17% of revenue),  compared to expenses for 1996 of $6,233
(21% of  revenue).  For the nine months  ended  September  30,  1997,  operating
expenses were $12,210 (17% of revenue), compared to expenses for 1996 of $17,095
(17% of revenue).  As a result of a reorganization  of the Company,  including a
reduction-in-force  affecting 130 employees at Boundless and the discontinuation
of operations at OTW (previously  named  TradeWave,  a former  subsidiary of the
Company), management expects that operating expenses will decline in 1997.

Sales and Marketing  Expenses - Sales and marketing  expenses decreased 41% from
$3,432 (12% of revenue) for the quarter  ended  September 30, 1996 to $2,009 (8%
of  revenue)  for  the  quarter  ended  September  30,  1997.  Expenses  for the
nine-month  period were $5,575 in 1997 versus $8,430 in 1996.  The decline stems
from reductions in corporate advertising, marketing consulting, bad debt expense
and expenses  related to the  integration  of the VT and Dorio product line into
Boundless.

The  Company  promotes  its  products  by  means  of a  balanced  mix  of  media
advertising,  direct mail,  telemarketing,  trade shows,  public  relations  and
cooperative  channel marketing  programs.  The Company's  installed base of over
five million units is the primary target market for its new line of Viewpoint(R)
TC Thin Clients.  The Company plan to reach this market is based on direct mail,
telemarketing  and  advertising  and an aggressive  public  relations  campaign,
including several domestic and international  press tours. The Company will also
participate in key trade shows during the fourth quarter.

General  and  Administrative  Expenses  - General  and  administrative  expenses
decreased  from $1,788 (6% of revenue),  to $1,499 (6% of revenue) for the three
months ended September 30, 1996 and 1997,  respectively.  Year-to-date  expenses
for 1997 were $4,631 as compared  to 1996  expenses of $5,339.  The decline is a
result of the reduction-in-force, previously discussed, as well as reductions in
depreciation and legal expenses.

Research and Development  Expenses - Research and  development  expenses for the
third quarter  decreased  40% from $1,013 in 1996 to $610 in 1997.  Research and
development  expenses for the nine months ended  September  30, 1997 were $2,004
compared  to $3,326 for 1996.  The  decline  stems from the  reduction-in-force,
including the shutdown of the Company's Orlando,  Florida,  facility, as well as
expenses  incurred  during  1996 to  integrate  the VT and  Dorio  product  into
Boundless.

                                       11
<PAGE>

Other  Charges - Other  expenses for the quarter  ended  September 30, 1997 were
$1,158 compared to $947 for the comparable period in 1996. Other charges for the
nine months ended September 30, 1997 were $2,746 versus $3,142 in 1996. Interest
expense  (net of  interest  income)  amounted  to $978  for  the  quarter  ended
September 30, 1997 compared to $1,016 for 1996.  Despite higher  interest rates,
interest expense declined due to the reduction in outstanding debt.

In the third quarter the Company paid $77 to Morgan Kent Group, Inc., a majority
shareholder,  in  consideration  for the pledge of its holdings of the Company's
common stock as  collateral  against the  Company's  outstanding  debt under the
Company's existing bank relationship. In addition, the Company has agreed to pay
Morgan Kent Group,  Inc. a monthly  financial  consulting fee for services which
the Company  believes  are  critical  to its  success.  Consulting  fees for the
quarter amounted to $80.

Income Tax Expense - There is no  provision  for federal  income tax expense for
the quarter ended  September 30, 1997 due to net  operating  loss  carryforwards
available  resulting from the discontinuation of operations at OTW. State income
tax expense for the quarter and  year-to-date  periods ending September 30, 1997
were $313 and $439, respectively.

Loss From Discontinued  Operations - The Company recorded a loss relating to the
discontinuation  of OTW of $1,055 and $2,541 for the three and nine months ended
September 30, 1996, respectively. Since commencing business in 1995 OTW incurred
net losses; and consumed significant amounts of cash. The discontinuation of OTW
was a material component of the Company's  restructuring program and is intended
to allow the Company to focus on its core businesses conducted by Boundless.

Net Income - For the quarter ended  September 30, 1997,  net income was $540 (2%
of revenue),  compared to net loss of $1,164 for the quarter ended September 30,
1996. 1997  year-to-date  net income was $1,308 (2% of revenue) as compared to a
net loss of $1,916 in 1996. Despite an anticipated  decline in revenues in 1997,
the  Company  believes  that it will be  profitable  in 1997 as a result  of its
restructuring programs and introduction of its Network Computers.

Impact of Inflation - The Company has not been  adversely  affected by inflation
because technological advances and competition within the microcomputer industry
have  generally  caused prices of products  sold by the Company to decline.  The
Company has flexibility in its pricing and could, if necessary, pass along price
changes to most of its customers.

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<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The discussion  below regarding  liquidity and capital  resources should be read
together with the information  included in the Notes to  Consolidated  Financial
Statements.

As  of  September  30,  1997,  the  Company  had  working   capital  of  $2,543.
Historically,   the  Company  has  relied  on  cashflow  from  operations,  bank
borrowings and sales of its common stock to finance its working capital, capital
expenditures and  acquisitions.  As a result of positive cash flows, the Company
has not borrowed under its revolving credit facility since the fourth quarter of
1996.

The Company remains highly leveraged,  although substantial improvement has been
made since December 31, 1996. As of September 30, 1997, the Company had tangible
net worth of  $1,054  and total  liabilities  of  $40,243.  The  Company's  cash
requirements at September 30, 1997 included  repayment of the remaining  balance
of  $5,432,  plus  interest,  of the term loan in five  quarterly  installments;
repayment of a revolving  loan of $7,950,  plus  interest,  due September  1998;
payment of an $8,000 note,  plus  interest,  payable to NCR on January 31, 1999;
payment of $3,555 to NCR if it  exercises a put option at any time in 1999;  and
annual payments to NCR of $498 in cash or the Company's Common Stock.

Borrowing under the revolving loan is based on a borrowing base formula of up to
80% of eligible receivables, plus 50% of delineated eligible inventory, plus 30%
of  non-delineated  eligible  inventory.  Up to  $7,500 is  available  under the
revolving loan for letters of credit. As a result of the borrowing-base formula,
the credit  available to the Company could be adversely  restricted in the event
the Company's sales decline.

With the exception  that the Company will be required to refinance the NCR Note,
which is secured by a  mortgage  on the  Company's  Hauppauge  facility,  by its
January  31,  1999 due date,  the  Company  believes  that cash  generated  from
operations  and available  under the Chase Credit Line will be sufficient to pay
its other obligations as they become due. In the event there is a decline in the
Company's sales and earnings  and/or a decrease in availability  under the Chase
Credit Line, the Company's cash flow would be adversely  affected.  Accordingly,
the Company may not have the necessary cash to fund all of its obligations.

Net cash provided by operating  activities  for the nine months ended  September
30, 1997 was $9,283;  due principally to reductions in receivables of $7,420 and
inventory of $4,781.  These  reductions  were partially  offset by a decrease in
payables and accrued expenses of $7,001.  Net cash used in investing  activities
was  comprised  of  capital  expenditures  of $164.  Net cash used in  financing
activities was $12,443,  including  payments of $7,950 and $6,000 made to reduce
the balance of the Company's term and revolving loans,  respectively;  offset by
proceeds of $1,514 from the issuance of convertible debt.

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<PAGE>
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE

This Form 10-Q contains  forward-looking  statements  and  information  that are
based on  management's  beliefs as well as assumptions  made by and  information
currently  available  to  management.  When  used in this  document,  the  words
"anticipate,"  "believe,"  "estimate," and "expect," and similar expressions are
intended to identify  forward-looking  statements.  Such statements  reflect the
Company's current views with respect to future events and are subject to certain
risks,  uncertainties  and  assumptions,  including  the  specific  risk factors
described  in the  Company's  Form 10-K for the year ended  December  31,  1996.
Should  one or more of  these  risks or  uncertainties  materialize,  or  should
underlying assumptions prove incorrect,  actual results may vary materially from
those anticipated,  believed, estimated or expected. The Company does not intend
to update these forward-looking statements and information.

New Accounting Standards



In March 1997, the FASB issued Statement 128,  "Earnings Per Share"  ("Statement
128"), which requires a calculation of "Basic" and "Diluted" earnings per share.
Basic  earnings  per share  include no  dilution.  The  Company  does not expect
Statement 128 to have a significant  impact on its  calculation  of earnings per
share.





                           PART II - OTHER INFORMATION

Item 5.      Other Information

Effective  October 31, 1997,  Mr. Wayne  Schroeder  resigned as Vice President -
Finance and Chief Financial Officer.

Joseph Gardner was appointed Vice  President-Finance and Chief Financial Officer
effective  October  31,  1997.  Mr.  Gardner  has  been  employed  by  Boundless
Technologies, Inc. since April of 1990 and had served as the Controller and Vice
President-Quality  Assurance.  Prior to 1990,  Mr.  Gardner was  employed by NCR
Corporation  where he held  positions in the financial  planning and  treasurers
departments.

Item 6.      Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 11:  Statement  Concerning  Computation  of Per Share Earnings is hereby
incorporated by reference to "Condensed  Consolidated  Statements of Operations"
of Part I- Financial  Information,  Item 1- Financial  Statements,  contained in
this Form 10-Q.

Exhibit 27:  Financial  Data  Schedule for the nine months ended  September  30,
1997.

(b) Reports on Form 8-K - None

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<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 thereunto duly authorized.

Dated:  November 12, 1997



Boundless Corporation



By:/s/Joseph Gardner
   ----------------------------------------
   Joseph Gardner
   Vice President and Chief Financial Officer
   (Principal Accounting and Financial Officer)


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