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 June 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 July 10, 1998, the Registrant had approximately 4,539,056 shares of Common
Stock, $.01 par value per share outstanding.

                                       1

<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.      Financial Statements

              INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



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

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

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

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


                                       2

<PAGE>

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

                                 ASSETS

<TABLE>
<CAPTION>
                                                                             June 30,        December 31,
                                                                               1998              1997
                                                                       ------------------- ------------------
                                                                            (unaudited)
<S>                                                                             <C>              <C>    
Current assets:                                                               
   Cash and cash equivalents....................................               $   617         $ 2,929
   Trade accounts receivable, net...............................                13,999          14,395
   Income tax refund............................................                   800             800
   Inventories..................................................                14,602          13,682
   Deferred income taxes........................................                 1,561           1,561
   Prepaid expenses and other current assets....................                   470             711
                                                                       -------------------- ------------------
      Total current assets......................................                32,049          34,078

Property and equipment, net.....................................                10,512          10,614
Goodwill, net...................................................                 7,889           8,428
Other assets....................................................                   918           1,428                 
                                                                       -------------------- ------------------
                                                                               $51,368         $54,548
                                                                       ==================== ==================
    
                                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Notes payable................................................               $10,000        $ 7,650
   Current portion of long-term debt............................                 8,000          3,250
   Accounts payable.............................................                 7,855          8,840
   Accrued expenses.............................................                 5,486          5,378
   Deferred revenue.............................................                   247            180
                                                                         ------------------- -----------------
      Total current liabilities.................................                31,588         25,298
Long-term liabilities:
   Long-term debt, less current maturities......................                    -           8,000
   Deferred income taxes........................................                 1,561          1,561
   Other .......................................................                   755            727
                                                                          ------------------ -----------------
      Total long-term liabilities...............................                 2,316         10,288
                                                                          ------------------ -----------------
      Total liabilities.........................................                33,904         35,586

Mandatorily redeemable preferred                                                 
       stock of subsidiary.....................................                  3,555          3,555                               
   Preferred stock.............................................                     -               -                     
   Common stock................................................                     45             51                    
   Additional paid-in capital..................................                 31,100         34,094                   
   Accumulated deficit.........................................                (17,236)       (18,738)  
                                                                          ------------------- -----------------                  
      Total stockholders' equity...............................                 13,909         15,407   
                                                                          ------------------- -----------------           
                                                                              $ 51,368        $54,548   
                                                                          =================== ================= 

</TABLE>
     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

<TABLE>
<CAPTION>

                                                   Six Months Ended               Three Months Ended
                                                       June 30,                        June 30,
                                             ------------------------------  ------------------------------
                                                  1998            1997            1998           1997
                                             --------------  --------------  -------------- ---------------
                                                      (unaudited)                      (unaudited)

<S>                                                <C>             <C>              <C>             <C>

Revenue......................................     $ 44,794        $ 47,111        $ 21,930        $ 23,186
Cost of revenue..............................       32,430          36,288          15,827          17,821
                                             --------------  --------------  -------------- ---------------
           Gross margin......................       12,364          10,823           6,103           5,365
Operating expenses:
   Sales and marketing.......................        4,285           3,566           2,251           1,783
   General and administrative................        3,023           3,132           1,610           1,504
   Research and development..................        1,638           1,393             770             668
   Other  charges............................         (462)           (109)           (532)           (104)
                                             --------------  --------------  -------------- ---------------
      Total operating expenses...............        8,484           7,982           4,099           3,851
                                             --------------  --------------  -------------- ---------------
           Operating income..................        3,880           2,841           2,004           1,514
   Interest expense..........................        1,347           1,697             676             890
                                             --------------  --------------  -------------- ---------------
Income before income taxes                           2,533           1,144           1,328             624
Income tax expense...........................          782             127             323             127
                                             --------------  --------------  -------------- ---------------
Net income...................................        1,751           1,017           1,005             497
Dividend on preferred stock of subsidiary...           249             249             124             125
                                             --------------  --------------  -------------- ---------------
Earnings available for common shareholders..       $ 1,502           $ 768           $ 881           $ 372
                                             ==============  ==============  ============== ===============
Weighted average common shares outstanding           5,024           4,873           4,945           4,890
                                             ==============  ==============  ============== ===============
Basic earnings per common share.............        $ 0.30          $ 0.16          $ 0.18          $ 0.08
Weighted average dilutive shares outstanding         5,077           5,009           5,026           5,090
                                             ==============  ==============  ============== ===============
Diluted  earnings per common share..........        $ 0.30          $ 0.16          $ 0.18          $ 0.08
</TABLE>


     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                       4

<PAGE>
                     BOUNDLESS CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                         (dollar amounts in thousands)
                       For the Six Months Ended June 30,
                                  (unaudited)
<TABLE>
<CAPTION>


                                                                          1998           1997
                                                                      -----------    ----------
<S>                                                                        <C>           <C>

Cash flows from operating activities:
   Net income...................................................        $ 1,751        $ 1,017
   Adjustments to reconcile net income to net cash provided by
      (used in) operating activities:
      Depreciation and amortization.............................          1,624          1,734
      Loss from disposal of fixed assets........................             35              -
      Deferred revenues.........................................             66             15
      Provision for doubtful accounts...........................            412            118
      Provision for excess and obsolete inventory...............            578            618
   Changes in assets and liabilities:
      Trade accounts receivable.................................            (17)         9,499
      Inventories...............................................         (1,497)         3,171
      Other assets..............................................            159         (1,645)
      Accounts payable and accrued expenses.....................         (1,098)        (8,026)
                                                                 --------------- --------------
Net cash provided by operating activities.......................          2,013           6,501
                                                                 --------------- --------------
Cash flows from investing activities:
   Capital expenditures.........................................           (425)          (100) 
                                                                 --------------- --------------
Net cash used in investing activities...........................           (425)          (100) 
                                                                 --------------- --------------
Cash flows from financing activities:
   Proceeds from issuance of common stock.......................              -              2  
   Proceeds from debt issuance..................................              -          1,513  
   Purchase of treasury stock...................................         (3,000)             -  
   Net change in revolving loan payable.........................              -         (5,500) 
   Payments on loans payable....................................           (900)        (5,698) 
   Payments on capital leases...................................              -             (9) 
                                                                 --------------- --------------
Net cash provided by (used in) financing activities.............         (3,900)        (9,692) 
                                                                 --------------- --------------
Net increase (decrease) in cash and cash equivalents............         (2,312)        (3,291) 
Cash and cash equivalents at beginning of period................          2,929          5,213  
                                                                 --------------- --------------
Cash and cash equivalents at end of period......................          $ 617        $ 1,922  
                                                                 --------------- --------------
</TABLE>

     SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                       5
<PAGE>


                     BOUNDLESS CORPORATION AND SUBSIDIARIES
               NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollar Amount 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 six-month  period ended June 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. The Company is a party to a royalty agreement
with 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:

                                             June 30,             December 31,
                                               1998                  1997
                                         ---------------       ---------------

Raw materials and purchased components... $      11,704         $     10,723
Finished goods...........................         2,484                2,477
Demonstration equipment..................            79                  135
Service parts............................           335                  347
                                         ---------------       ---------------
                                          $      14,602         $     13,682
                                         ---------------       ---------------

                                       6
<PAGE>
4.  Equity

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

                                              June 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 June 30, 1998 and              
  December 31, 1997, respectively.......              45                   51
Additional paid-in capital..............          31,100               34,094
Accumulated deficit.....................         (17,236)             (18,738)
                                          ---------------       ---------------
  Total stockholders' equity............   $      13,909         $     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 second quarter ended June 30,
1998 and 1997,  sales to two major OEMs as a percentage  of total  revenues were
22% and 26%, respectively.

                                       6

<PAGE>
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 second quarter
ended June 30, 1998 and 1997 are:

                                             June 30,             December 31,
                                               1998                  1997     
                                         ---------------       ---------------
                                                                              
Net sales to unaffiliated customers:     
United States............................ $      14,968         $     15,829  
Europe...................................         5,772                6,643  
Other foreign areas......................         1,190                  714  
                                         ---------------       ---------------
Net sales as reported in the accompanying
  income statement                        $      21,930         $     23,186  
                                         ---------------       ---------------
                                         

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 Six Month Period Ending June 30, 1998                         
-------------------------------------------------------

Revenue - Revenue for the quarter ended June 30, 1998 was $21,930 as compared to
$23,186 for the quarter  ended June 30,  1997.  Revenue for the six months ended
June 30 was $44,794 for 1998 versus $47,111 for 1997.                           
                                                                                
                                       7
<PAGE>
Sales of the Company's General Display Terminals declined 10% to $18,282 for the
quarter  ended June 30, 1998 from  $20,334 for the quarter  ended June 30, 1997.
$3,583  in sales to VT and Dorio  distributors,  offset  by  increased  sales of
$1,087 to Digital Equipment  Corporation  ("Digital") and $1,184 to customers of
Boundless'  ADDS(R)-branded  products. 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.  Demand for General Display
Terminals  continues to decline as competing  technologies,  including WBTs, are
gaining market share. For these reasons,  sales of General Display Terminals for
1998 are not expected to reach the levels achieved in 1997.

Sales of the Company's WBT hardware and software, marketed under the trade names
Viewpoint(R) TC and Viewpoint(R) Administrator, respectively, amounted to $2,417
and $416 for the  quarters  ended  June 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.

Revenues from the Company's  WBTs are expected to increase  during the third and
fourth  quarters of 1998 with the  availability  of new  Viewpoint TC models and
Viewpoint  Administrator software and on the basis of the maturing of the market
for thin client  devices in the third quarter of 1998,  the  versatility  of the
Company's new Viewpoint TC thin client product line, the  significant  number of
end-user trials of the new products now in progress and the Company's strong OEM
relationships.

Sales of Network Graphics  Displays  declined $333 to $213 for the quarter ended
June 30,  1998,  from $546 for the  quarter  ended June 30,  1997.  Sales of the
Company's  Network Graphics  Displays have generally been limited to a few large
telecommunications  customers.  Due to the small  customer base, the low margins
associated  with Network  Graphics  Displays,  and the  emergence  of WBTs,  the
Company announced a discontinuation  of this product family in the first quarter
of 1998. As a result, during the first quarter the Company recorded an inventory
reserve of $252 against a portion of the  remaining  Network  Graphics  Displays
inventory.

Net revenue from the Company's  repairs and spare parts business  decreased 31%,
or $265, to $590 for the quarter ended June 30, 1998,  from $855 for the quarter
ended June 30,  1997.  The  decline  was due to  reduced  spare  parts  sales to
Digital,  resulting  from the  overall  decline in unit sales to Digital  during
1997. For the six months ended June 30, 1998, repairs and spare parts sales were
$1,305 versus $1,911 for the  comparable  period 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.

The GAI  Partnership  agreement  provides  for the payment of  royalties  to the
Company as a percentage  of  partnership  revenues,  since 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%. GAI Partnership royalties received for the quarter ending June
30, 1997,  were $197. At June 30, 1998 the Company was owed an estimated  $1,467
and had not received  required payments since June 1997.  Discussions  regarding
payment of the past due amount are ongoing.  During the fourth  quarter of 1997,
the Company began to record GAI  Partnership  revenue only to the extent of cash
received.

IBM was the most significant customer for the Company's products, accounting for
16% of revenue for the quarter  ended June 30, 1998.  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 1997
levels which were 6% and 3%, respectively. 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.

                                       8
<PAGE>
Gross  Margin - Gross  margin for the three and six months  ended June 30,  1998
were $6,103  (28% of revenue)  and  $12,364  (28% of revenue)  respectively,  as
compared  to gross  margins  of $5,365  (23% of  revenue)  and  $10,823  (23% 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
between the Company's spare and repair business as compared to the prior year.

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.

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 June 30,  1998,  operating
expenses  were $4,099  (19% of  revenue),  compared  to expenses  for the second
quarter of 1997 of $3,851 (17% of  revenue).  For the six months  ended June 30,
1998,  operating  expenses were $8,484 (19% of revenue)  compared to expenses in
the comparable period in 1997 of $7,982 (17% of revenue).

Sales and  Marketing  Expenses - Sales and marketing  expenses  increased 14% to
$2,251 (10% of revenue)  for the quarter  ended June 30, 1998 from  $1,783(8% of
revenue) for the quarter ended June 30, 1997.  Expenses for the first six months
were $4,285 in 1998 versus $3,566 in 1997. The increase stems from an additional
reserve for doubtful accounts on an international customer receivable as well as
participation in a number of important  tradeshows  during the second quarter of
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 of General Display Terminals
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 $1,610 (7% of  revenue),  from $1,504 (6% of revenue) for the three
months ended June 30, 1998 and 1997,  respectively.  Expenses for the  six-month
period were $3,023 in 1998 versus $3,132 in 1997.

Research and Development  Expenses - Research and  development  expenses for the
second quarter increased 20% to $770 in 1998 from $668 in 1997. Expenses for the
six-month  period  ended June 30,  1998 were  $1,638,  compared to $1,393 in the
comparable  period in 1997.  The  increase  is related to  development  expenses
associated with the Company's Viewpoint product family. Research and development
expenses  are  expected  to exceed 1997  spending  levels due to  investment  in
software for the Company's WBTs.

Other Charges - During the second quarter of 1998 the Company  released  Digital
warranty  reserves  amounting  to $325  due to the  expiration  of the  warranty
period. As a result of the decline in unit shipments to Digital the Company does
not expect future releases of reserves to be comparable in size.

                                       9

<PAGE>

Interest Expense - Interest expense for the quarter ended June 30, 1998 was $676
compared to $890 for the  comparable  period in 1997.  Interest  expense for the
first six months  were  $1,347 in 1998  versus  $1,697 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 June 30, 1998 was
$323 (24% of income  before tax) compared to $127 (20% of income before tax) for
the comparable period in 1997. For the six months ended 1998 and 1997 income tax
expense was $782 and $127 respectively.

Net Income - For the quarter  ended June 30,  1998,  net income was $1005 (5% of
revenue),  compared to $497 (2% of revenue) for the  comparable  period in 1997.
Net  income for the six months  ended  June 30 was  $1,751 (4% of  revenue)  and
$1,017 (2% of revenue) in 1998 and 1997, respectively.

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.

As of June 30,  1998,  the Company  had  working  capital of $461 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 $3,000 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 outstanding  borrowings  under its revolving
credit agreement by $17,332 since December 1996.

The Company is highly  leveraged.  As of June 30, 1998, the Company had tangible
net worth of  $5,284  and total  liabilities  of  $33,904.  The  Company's  cash
requirements  at June  30,  1998,  included  repayment  of a  revolving  loan of
$10,000,  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  or  canceled,  of $498 in cash or the  Company's
Common Stock.

                                       10
<PAGE>


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.

Net cash provided by operating activities for the six months ended June 30, 1998
was  $2,013,  due  principally  to net  income of $1,751 and  non-cash  expenses
(principally  depreciation)  of $2,716.  These  increases  in cash  provided  by
operating  activities  were  partially  offset by an increase in  inventories of
$1,499 and a decrease in payables and accrued expenses of $1,098.  Net cash used
in investing  activities was comprised of capital expenditures of $425. Net cash
used in financing  activities was comprised of $3,000 used to purchase  treasury
stock and $900 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

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.

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<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.



                                       12
<PAGE>

                           PART II - OTHER INFORMATION



Item 5.  Other Information

On May 18, 1998,  the Board of Directors of the Company  approved the repurchase
of 600,000  shares of the Company's  then  outstanding  Common Stock from Morgan
Kent Group, Inc., its majority  shareholder.  The repurchase at $5 per share, or
approximately  14% below the closing market price on May 15, 1998 as reported on
the  Nasdaq  SmallCap  Market,   was  authorized  to  accomplish  the  following
objectives:

     -    Reduce the voting power of Morgan Kent Group, Inc. from  approximately
          51% to approximately 45%; and

     -    Set aside treasury  shares enabling the Company to issue up to 600,000
          shares  of  its  Common  Stock  in  acquisitive  transactions  without
          diluting the public shareholders.

As an inducement to the repurchase transaction,  the Company issued a warrant to
Morgan Kent Group, Inc. to purchase 150,000 shares of the Company's Common Stock
at an  exercise  price of $5.80 per common  share.  The  warrant is  exercisable
immediately and has a term of seven years.



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 six months ended June 30, 1998.

(b) Reports on Form 8-K - None

                                       13

<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:  August 6, 1998







Boundless Corporation



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

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