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 30,1998



                         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 14, 1998,  the Registrant had  approximately  4,539,056  shares of
Common Stock, $.01 par value per share outstanding.

                                    1 of 16

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

              INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Consolidated Balance Sheets as of September 30, 1998 (unaudited) and
   December 31, 1997....................................................   3

Consolidated Statements of Operations (unaudited)
   for the three and nine months ended September 30, 1998 and 1997......   4

Consolidated Statements of Cash Flows (unaudited)
   for the nine months ended September 30, 1998 and 1997................   5

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

                                    2 of 16
<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                          (dollar amounts in thousands)
<TABLE>
<CAPTION>

<S>                                                                  <C>              <C>
                                                                           September 30,      September 30,
                                                                               1998               1997
                                                                           -------------      -------------
                                                                           (unaudited)
   Cash and cash equivalents...................................              $ 2,092           $ 2,929
   Trade accounts receivable, net..............................               13,974            14,395
   Income tax refund...........................................                  800               800
   Inventories.................................................               12,656            13,682
   Deferred income taxes.......................................                1,561             1,561
   Prepaid expenses and other current assets...................                  601               711
                                                                     ---------------- ----------------
      Total current assets.....................................               31,684            34,078
Property and equipment, net....................................               10,402            10,614
Goodwill, net..................................................                7,619             8,428
Other assets...................................................                  655             1,428
                                                                     ---------------- ----------------
                                                                            $ 50,360          $ 54,548
                                                                     ================ ================

                                               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Notes payable...............................................              $ 8,500           $ 7,650
   Current portion of long-term debt...........................                8,000             3,250
   Accounts payable............................................                6,157             8,840
   Accrued expenses............................................                6,917             5,378
   Deferred revenue............................................                  234               180
                                                                     ---------------- ----------------
      Total current liabilities................................               29,808            25,298
Long-term liabilities:
   Long-term debt, less current maturities.....................                    -             8,000
   Deferred income taxes.......................................                1,561             1,561
   Other ......................................................                  526               727
                                                                     ---------------- ----------------
      Total long-term liabilities..............................                2,087            10,288
                                                                     ---------------- ----------------
      Total liabilities........................................               31,895            35,586

Mandatorily redeemable preferred stock of subsidiary...........                3,555             3,555
Stockholders' equity:
   Preferred stock.............................................                    -                 -
   Common stock................................................                   45                51
   Additional paid-in capital..................................               31,400            34,094
   Accumulated deficit.........................................              (16,535)          (18,738)
                                                                     ---------------- ----------------
      Total stockholders' equity...............................                14,910            15,407
                                                                     ---------------- ----------------
                                                                       $       50,360  $         54,548
                                                                     ---------------- ----------------
</TABLE>


      SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                    3 of 16
<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                               Nine Months Ended              Three Months Ended                 
                                                                 September 30,                   September 30,                   
                                                         ------------------------------  -----------------------------           
                                                              1998            1997            1998           1997                
                                                         --------------  --------------  -------------- --------------           
                                                                  (unaudited)                     (unaudited)                    
<S>                                                      <C>             <C>             <C>            <C>

Revenue.........................................              $ 68,349        $ 71,373        $ 23,555        $ 24,262           
Cost of revenue.................................                49,184          54,297          16,754          18,009           
                                                         --------------  --------------  -------------- --------------           
           Gross margin.........................                19,165          17,076           6,801           6,253           
Operating expenses:
   Sales and marketing.........................                  6,013           5,575           1,728           2,009           
                                                                                                                                 
   General and administrative..................                  4,634           4,631           1,612           1,499           
                                                                                                                                 
   Research and development....................                  2,597           2,004             959             610           
                                                                                                                                 
   Other  charges..............................                   (111)             71             350             180           
                                                         --------------  --------------  -------------- ---------------          
      Total operating expenses.................                 13,133          12,281           4,649           4,298           
                                                         --------------  --------------  -------------- ---------------          
           Operating income....................                  6,032           4,795           2,152           1,955           
    Interest expense...........................                  2,045           2,675             698             978           
                                                         --------------  --------------  -------------- ---------------          
Income before income taxes                                       3,987           2,120           1,454             977           
Income tax expense.............................                  1,411             439             629             313           
                                                         --------------  --------------  -------------- ---------------          
Net income......................................                 2,576           1,681             825             664           
Dividend on preferred stock of subsidiary.......                   373             373             124             124           
                                                         --------------  --------------  -------------- ---------------          
Earnings available for common shareholders.......              $ 2,203         $ 1,308           $ 701           $ 540           
                                                         ==============  ==============  ============== ===============          
Weighted average common shares outstanding.......                4,941           4,893           4,539           4,980           
                                                         ==============  ==============  ============== ===============          
Basic earnings per common share..................               $ 0.45          $ 0.27          $ 0.15          $ 0.11           
                                                                                                                                 
Weighted average dilutive shares outstanding.....                4,986           5,057           4,539           5,197           
                                                         --------------  --------------  ============== ===============          
Diluted  earnings per common share...............               $ 0.44          $.0.27          $ 0.15          $ 0.11
                                                         --------------  --------------  ============== ===============          
</TABLE>


     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                    4 of 16
<PAGE>
                    BOUNDLESS CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (dollar amount in thousands)
                     For the Nine Months Ended September 30
                                  (unaudited)


<TABLE>
<CAPTION>

<S>  
                                                                              1998           1997
                                                                            -------          -----
                                                                            <C>              <C>
Cash flows from operating activities:
   Net income......................................................         $ 2,576          1,681
   Adjustments to reconcile net income to net cash provided by
      (used in) operating activities:
      Depreciation and amortization................................           2,460          2,629
      Loss from disposal of fixed assets...........................              40              -
      Deferred revenues............................................              53            116
      Provision for doubtful accounts..............................             203            148
      Provision for excess and obsolete inventory..................             874            486
      Options issued for treasury stock purchase...................             300              -
   Changes in assets and liabilities:
      Trade accounts receivable....................................             217          7,420
      Inventories..................................................             152          4,781
      Other assets.................................................             (35)          (977)
      Accounts payable and accrued expenses........................          (1,717)        (7,001)
                                                                     --------------- --------------
Net cash provided by operating activities..........................           5,123          9,283
                                                                     --------------- --------------
Cash flows from investing activities:
   Capital expenditures.............................................           (560)          (164)
                                                                     --------------- --------------
Net cash used in investing activities...............................           (560)          (164)
                                                                     --------------- --------------
Cash flows from financing activities:
   Proceeds from issuance of common stock...........................              -              2
   Proceeds from debt issuance......................................              -          1,514
   Purchase of treasury stock.......................................         (3,000)             -
   Net change in revolving loan payable.............................         (2,400)        (6,000)
   Payments on loans payable........................................              -         (7,950)
   Payments on capital leases.......................................              -             (9)
                                                                     --------------- --------------
Net cash provided by (used in) financing activities.................         (5,400)       (12,443)
                                                                     --------------- --------------
Net increase (decrease) in cash and cash equivalents................           (837)        (3,324)
Cash and cash equivalents at beginning of period....................          2,929          5,213
                                                                     --------------- --------------
Cash and cash equivalents at end of period..........................        $ 2,092        $ 1,889
                                                                     --------------- --------------

</TABLE>

       SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                    5 of 16
<PAGE>

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 nine-month period ended September 30, 1998 are not necessarily indicative of
the results  that may be expected  for the year ended  December  31,  1998.  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, 1997.

2.    Background

Boundless  Corporation  (the  "Company")  is engaged,  through  its  subsidiary,
Boundless  Technologies,  Inc.  ("Boundless"),  in designing  and  manufacturing
computer  terminals  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)  Windows(R)-based
Terminals  ("WBTs"),  sometimes  referred to as "thin clients",  and (iii) other
terminal   products  that  are  used  in  multi-user,   personal   computer  and
mini-computer-based environments.

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,
                                                     1998            1997
                                                  -------------- -----------
Raw materials purchased components.........       $    10,496    $    10,723
Finished goods.............................             1,770          2,477
Demonstration equipment....................                54            135
Service parts..............................               336            347
                                                  -------------- -----------
                                                  $    12,656    $    13,682
                                                  -------------- -----------

4.   Equity

At Septemver 30, 1998 and  December 31, 1997  stockholders'  equity consisted of
following:

                                    6 of 16
<PAGE>

                                                  September 30,  December 31,
                                                     1998            1997
                                                  -------------- -----------
Preferred stock, $0,01 par value, 1,000,000
     shares authorized, none issued...............$         -    $         -
Common stock, $0.01 par value, 25,000,000 shares
     authorized, 4,539,056 and 5,139,228 shares
     issued at September 30, 1998 and December 31,
     1997, respectively...........................          45             51
Additional paid-in capital........................      31,400         34,094
Accumulated deficit...............................     (16,535)       (18,738)
                                                  -------------- ------------
     Total stockholders' equity...................$     14,910   $     15,407
                                                  -------------- ------------

5.     Major Customers

The  Company  markets  its  terminal   products   through   original   equipment
manufacturers  ("OEMs") and reseller  distribution  channels.  Customers can buy
Boundless'  products  from an  international  network of  value-added  resellers
(VARs) and regional  distributors.  Through its sales force,  the Company  sells
directly  to  large  VARs and  regional  distributors  and  also  sells to major
national and international  distributors.  For the third quarter ended September
30, 1998 and 1997,  sales to two major OEMs as a  percentage  of total  revenues
were 28% and 18%, respectively.


6.     Business Segments

The  Company's  business is  concentrated  almost  entirely in one product area-
computer  terminals- which are sold throughout many diverse  markets.  It is not
possible,  therefore,  to divide the Company's business into meaningful industry
segments.

The  Company's  operations  are  worldwide  and  can  be  grouped  into  several
geographic  segments.  The Company's  manufacturing is conducted at its New York
facility  and  its  sales  force  operates  from  six  geographically  dispersed
locations in the United States and a European office in the Netherlands.  During
1997,  the Company  expanded its  marketing  efforts to include  South  America,
Asia-Pacific, Australia and New Zealand.


Pertinent  financial  data by major  geographic  segments for the third  quarter
ended September 30, 1998 and 1997 are:

                                                  September 30,  September 30,
                                                     1998            1997
                                                  -------------- ------------

Net sales to unaffililated customers:
United States.....................................$    15,763    $    17,604
Europe............................................      7,026          5,495
Other foreign areas...............................        766          1,163
                                                  -----------    -----------
Net sales as reported in the accompanying 
     income statement.............................$    23,555    $    24,262
                                                  -----------    -----------

                                    7 of 16
<PAGE>

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, 1998
-------------------------------------------------------------

Revenue - Revenue  for the  quarter  ended  September  30,  1998 was  $23,555 as
compared to $24,262 for the  quarter  ended  September  30,  1997.  Year-to-date
revenue was $68,349 for 1998 versus $71,373 in 1997.

Sales of the Company's General Display Terminals increased 2% to $20,076 for the
quarter ended  September  30, 1998 from $19,721 for the quarter ended  September
30, 1997. The increase for the latest quarter is attributable to increased sales
of $2,453 to Digital Equipment Corporation  ("Digital") and $462 to customers of
Boundless'  ADDS(R)-branded  products,  offset by a decrease of $2,420 to VT and
Dorio  distributors.  The VT and  Dorio  terminals  are  based on a  proprietary
architecture and, as a result, its users requiring flexibility are prone to move
more quickly to alternative  platforms.  Sales of General Display  Terminals for
1998  are not  expected  to  reach  the  levels  achieved  in 1997 as  competing
technologies, including WBTs, are gaining market share.

Sales of the Company's WBT hardware and software, marketed under the trade names
Viewpoint(R) TC and Viewpoint(R) Administrator, respectively, amounted to $2,382
versus $1,889 for the quarter ended  September 30, 1998 and 1997,  respectively.
The Company is targeting the  approximately  35 million users of General Display
Terminals and Network Graphics Displays 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  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 thin client marketplace.


                                    8 of 16
<PAGE>

Net revenue from the Company's  repairs and spare parts business  decreased 28%,
or $211,  to $546 for the quarter ended  September  30, 1998,  from $757 for the
quarter  ended  September  30, 1997.  The decline was due to reduced spare parts
sales to Digital and NCR,  resulting  primarily from the overall decline in unit
sales to Digital  during  1997.  For the nine months ended  September  30, 1998,
repairs  and spare parts sales were  $1,852  versus  $2,668 in 1997.  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.

IBM and Digital were the most significant  customers for the Company's products,
accounting  for 14% and  13% of  revenue  respectively,  for the  quarter  ended
September 30, 1998.  Although NCR is expected to remain a  significant  customer
for the Company's products,  it is not expected to account for the same level of
revenues  (4% of the  Company's  revenues)  as it did in 1997.  The loss of IBM,
Digital, or NCR 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,
1998 were $6,801 (29% of revenue) and $19,165 (28% of revenue), respectively, as
compared  to gross  margins  of $6,253  (26% of  revenue)  and  $17,076  (24% of
revenue)  for the  comparable  periods in 1997.  The increase in gross margin is
attributable  to cost  reductions  achieved  in the  Company's  General  Display
Terminals and WBTs product  lines.  The increase in gross margin as a percent of
revenue stems  primarily from cost  reductions and a more favorable  revenue mix
resulting from the  discontinuation  of the low margin X  Windows-based  Network
Graphics Displays.

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
WBTs,  which carry  margins  greater  than its General  Display  Terminals,  are
expected to positively impact the Company's gross margins. However, there can be
no assurance,  given the recent introduction of this new technology,  that sales
of the Company's WBTs will improve overall gross margins.


                                    9 of 16
<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, 1998,  operating
expenses  were $4,649  (20% of  revenue),  compared  to  expenses  for the third
quarter of 1997 of $4,298 (18% of revenue).  For the nine months ended September
30, 1998,  operating expenses were $13,133 (19% of revenue) compared to expenses
for the comparable period in 1997 of $12,281 (17% of revenue).

Sales and  Marketing  Expenses - Sales and marketing  expenses  decreased 14% to
$1,728 (7% of revenue) for the quarter ended  September 30, 1998 from $2,009 (8%
of revenue) for the quarter ended  September  30, 1997.  The decrease was due to
recovery in the amount of $375 on a doubtful customer accounts receivable during
the current quarter, which was fully provided for in the second quarter of 1998.
Expenses for the nine-month period ended September 30 were $6,013 in 1998 versus
$5,575 in 1997. The increase stems from  participation  in a number of important
tradeshows during 1998 and increases in marketing  expenses  associated with the
Company's WBTs.

The  Company  promotes  its  products  using  media  advertising,  direct  mail,
telemarketing,  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 TC WBTs.  The Company's  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  several  key trade  shows  during  the
remainder of 1998.

General  and  Administrative  Expenses  - General  and  administrative  expenses
increased to $1,612 (7% of  revenue),  from $1,499 (6% of revenue) for the three
months  ended  September  30,  1998 and  1997,  respectively.  Expenses  for the
nine-month period ended September 30 were $4,634 in 1998 versus $4,631 in 1997.

Research and Development  Expenses - Research and  development  expenses for the
third quarter increased 57% to $959 in 1998 from $610 in 1997.  Expenses for the
nine-month  period ended September 30, 1998 were $2,597,  compared to $2,004 for
the comparable  period in 1997. The increase is related to development  expenses
associated with the Company's Viewpoint product family.


                                    10 of 16
<PAGE>


Other Charges- During the third quarter of 1998 the Company recorded expenses of
$300  relating to the  granting of  warrants to purchase  150,000  shares of the
Company's  Common  Stock to Morgan Kent  Group,  Inc.  The  Company  granted the
warrants in  consideration  of Morgan Kent  Group's  agreement  to sell  600,000
shares to the Company,  reducing Morgan Kent Group's  ownership from 51% to 46%,
and thereby providing shares of Common Stock for planned acquisitions.

Interest Expense - Interest expense for the quarter ended September 30, 1998 was
$698 compared to $978 for the comparable  period in 1997.  Interest  expense for
the  nine-month  period ended  September 30 was $2,045 in 1998 versus  $2,675 in
1997. The decline is related to the reduction in the amount of debt  outstanding
under the Company's revolving credit facility and a decline in interest rates.

Income Tax Expense - Income tax expense for the quarter ended September 30, 1998
was $629, compared to $313 for the comparable period in 1997.

Net Income - For the quarter ended  September 30, 1998,  net income was $825 (4%
of revenue), compared to $664 (3% of revenue) for the comparable period in 1997.
Net  income  for the  nine-month  period  ended  September  30 was $2,576 (4% of
revenue) in 1998 versus $1,681 (2% of revenue) in 1997.

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.

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.


                                    11 of 16
<PAGE>

As of September 30, 1998, the Company had working  capital of $1,876 as compared
to $8,780 at December 31, 1997. The decline stems from the  reclassification  of
an $8,000 note, due January 31, 1999,  from long-term debt to short-term debt as
well as $2,400 in additional short-term borrowing used to purchase shares of the
Company's  common stock.  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 reduced its total  liabilities  by $3,691 since December
1997.

The Company is highly  leveraged.  As of  September  30,  1998,  the Company had
tangible net worth of $6,788 and total  liabilities  of $31,895.  The  Company's
cash requirements at September 30, 1998,  included repayment of a revolving loan
of $8,500,  plus interest,  due December 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,  until
such put option is exercised, 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
of further  declines in the  Company's  sales and increases in orders may not be
able to be financed under the Company's revolving credit line.

With the  exception  of the $3,555  put  option  and  $8,000 NCR note,  which is
secured by a mortgage on the Company's  Hauppauge facility and which the Company
believes  will have to be refinanced  before its January 31, 1999 due date,  the
Company  believes that cash  generated from  operations and available  under the
Company's  revolving  credit line will be sufficient to pay its  obligations  as
they become due. The Company  anticipates that it will negotiate an extension of
its current  revolving  credit line which expires in December 1998. In the event
there is a decline in the  Company's  sales and  earnings  and/or a decrease  in
availability  under the 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.


                                    12 of 16
<PAGE>

Net cash provided by operating  activities  for the nine months ended  September
30,  1998 was  $5,123  due  principally  to net  income of $2,576  and  non-cash
expenses (principally  depreciation) of $3,877. These increases in cash provided
by  operating  activities  were  partially  offset by a decrease in payables and
accrued expenses of $1,717. Net cash used in investing  activities was comprised
of capital  expenditures  of $560.  Net cash used in  financing  activities  was
comprised  of $3,000  used to purchase  treasury  stock and $2,400 to reduce the
balance of the Company's term and revolving loans.

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,"  "expect," and, depending on the context,
"will,"  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, 1997. 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.

COMPLIANCE WITH YEAR 2000 ISSUE

In  the  next  two  years,  most  companies  could  face a  potentially  serious
information  systems problem because many software  applications and operational
programs written in the past were designed to handle date formats with two-digit
years and thus may not properly  recognize  calendar dates beginning in the Year
2000. This problem could result in computers either outputting incorrect data or
shutting down  altogether  when attempting to process a date such as "01/01/00."
Management  has  initiated  a  Company-wide  program  to prepare  the  Company's
computer systems and applications for Year 2000 compliance.  The Company expects
to incur internal staff costs as well as other expenses necessary to prepare its
systems for the year 2000. The Company  expects to both replace some systems and
upgrade others.  Maintenance or modification costs will be expensed as incurred.
The total cost of this effort is still being  evaluated,  but is not expected to
be material to the Company.

The Company also could be exposed to a potential  adverse impact  resulting from
the failure of  financial  institutions  and other third  parties to  adequately
address the Year 2000 problem. The Company intends to devote necessary resources
to  identify  and resolve  Year 2000  issues that may exist with third  parties.
However,  the Company cannot  estimate the cost of this effort at this time, nor
can any  assurance  be given that the Year 2000 problem will not have a material
adverse  effect  on the  Company's  business,  operating  results  or  financial
condition.


                                    13 of 16
<PAGE>

NEW ACCOUNTING STANDARDS

Statement of Financial  Accounting Standards No. 129, "Disclosure of Information
about Capital Structure" ("SFAS No. 129") is effective for financial  statements
ending after December 15, 1997. The new standard  reinstates  various securities
disclosure  requirements  previously in effect under Accounting Principles Board
Opinion No. 15, which has been  superseded by SFAS No. 128. The Company does not
expect  adoption  of SFAS No.  129 to have a  material  effect,  if any,  on its
consolidated financial position or results of operations.

Statement of Financial  Accounting  Standards No. 130, "Reporting  Comprehensive
Income" ("SFAS No. 130") is effective for financial statements with fiscal years
beginning after December 15, 1997.  Earlier  application is permitted.  SFAS No.
130 establishes  standards for reporting and display of comprehensive income and
its  components  in a full  set of  general-purpose  financial  statements.  The
Company does not expect adoption of SFAS No. 130 to have a material  effect,  if
any, on its consolidated financial position or results of operations.

Statement of Financial  Accounting Standard No. 131,  "Disclosure about Segments
of an  Enterprise  and Related  Information"  ("SFAS No. 131") is effective  for
financial  statements  beginning  after  December  15,  1997.  The new  standard
requires that public  business  enterprises  report  certain  information  about
operating  segments in complete sets of financial  statements of the  enterprise
and in condensed financial statements of interim periods issued to stockholders.
It also requires that public  business  enterprises  report certain  information
about their products and services,  the  geographic  areas in which they operate
and their major customers. The Company will include information required by SFAS
No. 131 in the Notes to Consolidated Financial Statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         None.

                                    14 of 16
<PAGE>

                           PART II - OTHER INFORMATION

Item 5.      Other Information

          In September  1998, the Company's  Board of Directors  elected Stephen
Maysonave to be an  additional  member of the Board of Directors  increased  the
Company's  full Board of Directors to five members and elected  Kenneth East the
Chief Operating Officer of Boundless Technologies, Inc.

     Mr. Maysonave,  who is also a strategy consultant for the Company, played a
key role in the turnaround and sale of Digital  Research to Novell in 1994. From
1994 to  1997,  he held  senior  management  positions  with  Informix  Software
(NASDAQ.IFMX).  As Vice President of Global Partners for Informix  Software,  he
was responsible for working with partners including SAP,  PeopleSoft,  Baan, HP,
Sun, IBM, Compaq,  Dell,  Andersen Consulting and EDS. Prior to joining Informix
Software,  Mr. Maysonave spent six years with Intel where he was responsible for
developing  direct  sales  and  distribution   networks  throughout  Europe  and
Asia/Pacific.   Additionally,   Mr.   Maysonave   serves  as  an  Internet   and
Communication  Strategist  with Nichimen  Corporation,  a  $30-billion  Japanese
trading company.

     Mr.  East,  who joined  Boundless  Technologies  in February  1998 as Chief
Technology  Officer,  served  as  Director  of  Software  Development-Integrated
Network Management Systems at NEC America, Inc. from 1990 to 1998. In this role,
Mr.  East was  responsible  for  development  of software to monitor and control
large-scale national and international  telecommunication networks. Prior to his
tenure  with  NEC,  Mr.  East  conducted  artificial  intelligence  and  network
management research for AT&T Bell Laboratories.  The resulting expert system was
used to predict and diagnose problems in AT&T customer networks.

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,
1998.

(b) Reports on Form 8-K - None







                                    15 of 16
<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 13, 1998



Boundless Corporation



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



                                    16 of 16