<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q

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



For the quarterly period ended March 31, 1997    Commission File Number 0-28904

                       AWARD SOFTWARE INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

          CALIFORNIA                                         94-2893462
  (State or other jurisdiction                            (I.R.S. Employer
of incorporation or organization)                        Identification No.)


                            777 EAST MIDDLEFIELD ROAD
                            MOUNTAIN VIEW, CALIFORNIA             94043
                  (Address of principal executive offices)     (Zip Code)


                                  415-968-4433
              (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 
                                     ---     ---

Registrant had 6,603,013 shares of Common Stock, no par value, outstanding at
April 25, 1997.

                                       1
<PAGE>
 
                       AWARD SOFTWARE INTERNATIONAL, INC.

                                      INDEX

                                                                         Page 
                                                                         Number


PART I.  FINANCIAL INFORMATION

Item 1.   Condensed Consolidated Financial Statements

          a) Condensed Consolidated Balance Sheet as of March 31,
              1997 (Unaudited) and December 31, 1996                          3

          b) Condensed Consolidated Statement of Income for the three
               months ended March 31, 1997 and 1996 (Unaudited)               4

          c) Condensed Consolidated Statement of Cash Flows for the three
              months ended March 31, 1997 and 1996 (Unaudited)                5

          d) Notes to Condensed Consolidated Financial Statements             6

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                           7


PART II. OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K                                   18

SIGNATURES                                                                   19



  Award Software International (R) and SMSAccess are trademarks of registrant.
                                          ------

                                       2
<PAGE>
 
PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements


                      Award Software International, Inc.
                     Condensed Consolidated Balance Sheet
                       (in thousands, except share data)
<TABLE> 
<CAPTION> 
                                                                               March 31,             December 31,
                                                                                 1997                   1996
                                                                                -------                -------
                                                                              (Unaudited)
<S>                                                                           <C>                   <C> 
ASSETS
Current assets:
   Cash and cash equivalents                                                    $23,191                $23,248
   Accounts receivable, net                                                       2,290                  2,068
   Receivable from related party                                                    815                  1,015
   Receivable from GCH Systems, Inc.                                                112                    182
   Other current assets                                                             630                    598
                                                                                -------                -------
             Total current assets                                                27,038                 27,111

Property and equipment, net                                                         797                    683
Other assets                                                                        820                    616
                                                                                -------                -------
                                                                                $28,655                $28,410
                                                                                =======                =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                                $373                   $215
   Accrued liabilities                                                            2,271                  3,104
                                                                                -------                -------
            Total current liabilities                                             2,644                  3,319
                                                                                -------                -------
Shareholders' equity:
   Preferred stock, 5,000,000 shares authorized; 
     no par value; no shares issued or outstanding                                    -                      -
   Common stock, 40,000,000 shares authorized; no par value;
       6,590,513 and 6,538,951 shares issued and outstanding                     21,304                 21,269
   Deferred stock compensation                                                     (161)                  (180)
   Retained earnings                                                              5,056                  4,130
   Cumulative translation adjustment                                               (188)                  (128)
                                                                                -------                -------
            Total shareholders' equity                                           26,011                 25,091
                                                                                -------                -------
                                                                                $28,655                $28,410
                                                                                =======                =======
</TABLE> 
    See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>
 
                      Award Software International, Inc.
                  Condensed Consolidated Statement of Income
                     (in thousands, except per share data)
                                  (Unaudited)


                                                Three months ended
                                                     March 31,
                                               ---------------------
                                                 1997         1996
                                               --------    ---------
Revenues:
  Software license fees                        $ 3,494       $ 2,175
  Engineering services                             347           131
  Related parties                                  645           506
                                               -------       -------
    Total revenues                               4,486         2,812
                                               -------       -------

Cost of revenues:
  Software license fees                            139            52
  Engineering services                              85            26
  Related parties                                   26           210
                                               -------       -------
    Total cost of revenues                         250           288
                                               -------       -------

Gross profit                                     4,236         2,524

Operating expenses:
  Research and development                       1,522           855
  Sales and marketing                              917           560
  General and administrative                       660           590
                                               -------       -------
    Total operating expenses                     3,099         2,005
                                               -------       -------

Income from operations                           1,137           519

Interest income, net                               266            84
                                               -------       -------
Income before income taxes                       1,403           603

Provision for income taxes                         477           217
                                               -------       -------

Net income                                     $   926       $   386
                                               -------       -------

Net income per share                           $  0.12       $  0.06
                                               =======       =======

Weighted average number of common and
  common equivalent shares outstanding           7,483         6,076
                                               =======       =======

    See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>
 
                      Award Software International, Inc.
                Condensed Consolidated Statement of Cash Flows
                                (in thousands)
                                  (Unaudited)
<TABLE> 
<CAPTION> 
                                                                                      Three months ended
                                                                                            March 31,
                                                                                    -------------------------
                                                                                     1997              1996
                                                                                    -------           ------- 
<S>                                                                                 <C>               <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                          $926              $386
   Adjustments to reconcile net income to
      net cash provided by operating activities:
        Depreciation and amortization                                                    92                53
        Deferred stock compensation                                                      19                19
        Changes in assets and liabilities:
          Accounts receivable, net                                                     (221)             (428)
          Receivable from related party                                                 200              (347)
          Other current assets                                                          (37)              (64)
          Other assets                                                                 (217)              (52)
          Accounts payable                                                              158               (58)
          Accrued liabilities                                                          (837)              325
                                                                                    -------           ------- 
             Net cash provided by (used in) operating activities                         83              (166)
                                                                                    -------           ------- 

CASH FLOWS USED IN INVESTING ACTIVITIES FOR
   THE PURCHASE OF PROPERTY AND EQUIPMENT                                              (192)             (233)
                                                                                    -------           ------- 
CASH FLOWS FROM FINANCING ACTIVITIES:
   Net proceeds from common stock issuances                                              35             4,511
   Collections on receivable from GCH Systems, Inc.                                      70                24
                                                                                    -------           ------- 
              Net cash provided by financing activities                                 105             4,535
                                                                                    -------           ------- 
Effect of exchange rate changes on cash                                                 (53)              (43)
                                                                                    -------           ------- 
Net increase (decrease) in cash and cash equivalents                                    (57)            4,093

Cash and cash equivalents at beginning of period                                     23,248             6,498
                                                                                    -------           ------- 
Cash and cash equivalents at end of period                                          $23,191           $10,591
                                                                                    =======           ======= 

</TABLE> 
    See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>
 
                       AWARD SOFTWARE INTERNATIONAL, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       BASIS OF PRESENTATION

         The accompanying condensed consolidated financial statements of Award
Software International, Inc. (the "Company") as of March 31, 1997 and for the
three months ended March 31, 1997 and 1996 are unaudited. The condensed
consolidated financial statements reflect all adjustments, consisting only of
normal recurring adjustments, which in the opinion of management are necessary
for a fair presentation of the financial position, operating results and cash
flows for the periods presented. The condensed consolidated financial statements
have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
for the year ended December 31, 1996 on Form 10-K filed on March 28, 1997 by the
Company under the Securities Exchange Act of 1934.

         The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full year or for
any future period.

2.       NET INCOME PER SHARE

         Net income per share is computed using the weighted average number of
common and common equivalent shares, when dilutive, from stock options and
warrants (using the treasury stock method). Pursuant to a Securities and
Exchange Commission Staff Accounting Bulletin, common and common equivalent
shares (using the treasury stock method and the public offering price) issued by
the Company within 12 months prior to the Company's initial public offering
filing have been included in the calculation as if they were outstanding for all
periods through the effective date of the Company's initial public offering.

3.       NEW ACCOUNTING PRONOUNCEMENTS

     In February 1997, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings
per Share," and No. 129 ("SFAS No. 129"), "Disclosure of Information about
Capital Structure." SFAS No. 128 establishes financial accounting and reporting
standards for calculation of basic earnings per share and diluted earnings per
share. SFAS No. 128 supersedes APB No. 15 and is effective for the periods
ending after December 15, 1997, including interim periods. SFAS No. 129
establishes standards for disclosing information about an entity's capital
structure. It eliminates the exemption of nonpublic entities from certain
disclosure requirements of accounting standards previously issued. SFAS No. 129
is effective for financial statements for periods ending after December 15,
1997. The Company will adopt the standards in the year ending December 31, 1997.
The cumulative effect of adopting SFAS No. 128 and SFAS No. 129 did not have a
material impact on the condensed consolidated financial statements for the three
months ended March 31, 1997 and 1996, respectively.

                                       6
<PAGE>
 
                       AWARD SOFTWARE INTERNATIONAL, INC.

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

         The Company designs, develops and markets system management software
for the global computing market. On February 21, 1997, the Company acquired
certain of the assets of Willows software ("Willows acquisition") for $400,000
cash, direct acquisition costs of $40,000 and the assumption of liabilities
totaling $44,000. The purchase price was allocated based upon the estimated fair
market value of identifiable tangible and intangible assets and liabilities
assumed, including $289,000 to in-process research and development. The amount
allocated to in-process research and development relates to acquired development
projects that had not reached technological feasibility at the acquisition date
and had no alternative future use.

         The following is a discussion of the financial condition and results of
operations of the Company as of March 31, 1997 and for the three months ended
March 31, 1997 and 1996, respectively, and should be read in conjunction with
the accompanying Quarterly Condensed Consolidated Financial Information and
Notes thereto and the Company's audited consolidated financial statements and
notes thereto for the year ended December 31, 1996, included in the Company's
Form 10-K, and is qualified in its entirety by reference thereto.


RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, certain
consolidated statement of income information as a percentage of the Company's
total revenues represented by each item. The Company's historical results are
not necessarily indicative of results in any future period.

                                       7
<PAGE>
 
                                        Three months ended
                                             March 31,
                                           1997       1996
                                          ------     ------
Revenues:                       
  Software license fees                       78%        77%
  Engineering services                         8          5
  Related parties                             14         18
                                          ------     ------
    Total revenues                           100        100
                                          ------     ------     

Cost of revenues:
  Software license fees                        3          2
  Engineering services                         2          1
  Related parties                              1          7
                                          ------     ------
    Total cost of revenues                     6         10
                                          ------     ------     
Gross profit                                  94         90

Operating expenses:
  Research and development                    34         30
  Sales and marketing                         20         20
  General and administrative                  15         21
                                          ------     ------
    Total operating expenses                  69         71
                                          ------     ------

Income from operations                        25         19       

Interest income, net                           6          3
                                          ------     ------
Income before income taxes                    31         22

Provision for income taxes                    10          8
                                          ------     ------
Net income                                    21%        14%
                                          ======     ======


                                       8
<PAGE>
 
COMPARISON OF THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996

         REVENUES. The Company's revenues consist of software license fees and
engineering services revenues. Revenues increased by $1.7 million (60%) for the
three month period ended March 31, 1997 from the same period of the prior year.
Software license fees increased by $1.3 million (61%) for the three month period
ended March 31, 1997 from the same period of the prior year primarily due to
higher unit shipments to new and existing motherboard customers in Taiwan and
the U.S. and embedded systems customers in the U.S., partially offset by a
decrease in software license fees from a European customer. Engineering services
revenues increased by $216,000 (165%) for the three month period ended March 31,
1997 from the same period of the prior year primarily due to higher engineering
services revenues from customers in the U.S. Related parties revenues increased
by $139,000 (27%) for the three month period ended March 31, 1997 from the same
period of the prior year primarily due to higher software license fees partially
offset by lower engineering services revenues.

         COST OF REVENUES.  Cost of revenues consist primarily of the cost of
materials and freight expenses associated with software license fees and direct
costs associated with engineering services revenues. Cost of revenues as a
percentage of revenues decreased to 6% of revenues for the three month period
ended March 31, 1997 as compared to 10% of revenues for the same period of the
prior year. The decrease in cost of revenues as a percent of revenues for the
three month period ended March 31, 1997 was primarily due to a decrease in cost
of engineering services revenues from a related party product development effort
partially offset by higher cost of software license fees and cost of engineering
services revenues.

         RESEARCH AND DEVELOPMENT.  Research and development expenses consists
primarily of engineering personnel and related expenses and equipment costs.
Research and development expenses increased by $667,000 (78%) for the three
month period ended March 31, 1997 from the same period of the prior year
primarily due to the Willows acquisition, including the hiring of engineering
personnel and related expenses and a one-time charge of $289,000 for in-process
research and development, and the hiring of engineering personnel and related
expenses to develop new software products, such as mobile BIOS and the SMSAccess
product suite. The Company anticipates that it will continue to devote
substantial resources to product research and development and that such expenses
will continue to increase in absolute dollars.

         SALES AND MARKETING.  Sales and marketing expenses consist primarily of
personnel and related expenses, sales commissions and travel costs. Sales and
marketing expenses increased by $357,000 (64%) for the three month period ended
March 31, 1997 from the same period of the prior year primarily due to the
hiring of sales and marketing personnel and related expenses, higher sales
commissions for increased revenues, higher advertising expenses and increased
participation in trade shows.

         GENERAL AND ADMINISTRATIVE.  General and administrative expenses 
consist primarily of personnel and related expenses, professional services and
facilities costs. General and administrative expenses increased by $70,000 (12%)
for the three month period ended March 31, 1997 from the same period of the
prior year primarily due to higher professional services fees, increased
personnel and related expenses and higher facilities costs. This increase was
partially offset by a one-time employee severance cost of $90,000 in the
Company's European operations for the three month period ended March 31, 1996.
During the second half of 1995, the Company recorded $297,000 of deferred stock
compensation related to the difference between the exercise price of certain
Common Stock options and the deemed fair market value of the Common Stock on the
date of grant. Amortization of deferred compensation expense of $19,000 is
included in general and administrative expense for the three month period ended
March 31, 1997.

         INTEREST INCOME, NET. Interest income, net consists primarily of
interest expense associated with short-term borrowings and interest 

                                       9
<PAGE>
 
income on cash and cash equivalents, net of expenses. Interest income, net
increased by $182,000 for the three month period ended March 31, 1997 from the
same period of the prior year primarily due to an increase in interest income
earned on higher cash balances.

         PROVISION FOR INCOME TAXES.  The Company's effective tax rate decreased
to 34% from 36% for the three month periods ended March 31, 1997 and March 31,
1996, respectively, primarily due to an increase in income taxable in Taiwan at
rates lower than the applicable statutory rates in the U.S. and Germany.


LIQUIDITY AND CAPITAL RESOURCES

         The Company has funded its operations primarily through the private
sale of equity securities and from cash generated from operations. As of March
31, 1997, the Company had cash and cash equivalents of $23.2 million and working
capital of $24.4 million. Net cash provided by operating activities was $83,000
for the three month period ended March 31, 1997 and was primarily due to higher
net income and collections on accounts receivable from a related party partially
offset by reductions in accrued liabilities and increases in other assets.

         Net cash used in investing activities was $192,000 for the three month
period ended March 31, 1997 and was primarily due to the purchase of equipment
resulting from the Willows acquisition.

         Net cash provided by financing activities was $105,000 for the three
month period ended March 31, 1997 and was primarily due to collections on
receivable from GCH Systems, Inc. and exercises of stock options under the
Company's 1995 Stock Option Plan.

         On October 25, 1996, the Company consummated the initial offering of
its Common Stock to the public ("IPO"). Pursuant to the IPO, the Company sold an
aggregate of 1,250,000 shares of common stock at $8.00 per share, resulting in
net proceeds to the Company of approximately $7.8 million. The Company believes
that the net proceeds from the sale of Common Stock, together with anticipated
cash flows from operations and existing cash balances, will satisfy the
Company's projected expenditures through 1997 for working capital and general
corporate purposes, including an increase in the Company's internal product
development, staffing in connection with new product introductions and other
related product development expenditures. From time to time, in the ordinary
course of business, the Company enters into strategic relationships with its
customers or other participants in the PC industry. Such strategic relationships
may include equity investments in the Company. If additional funds are raised
through the issuance of equity securities, the percentage ownership of the
shareholders of the Company will be reduced, shareholders may experience
additional dilution, or such equity securities may have rights, preferences or
privileges senior to those of the holders of the Company's Common Stock. Other
than its relationships with Vobis Microcomputer AG ("Vobis") and Advanced Micro
Devices, Inc., the Company has no current commitments or agreements with respect
to any strategic relationships, including any equity investments.


NEW ACCOUNTING PRONOUNCEMENTS

     In February 1997, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings
per Share," and No. 129 ("SFAS No. 129"), "Disclosure of Information about
Capital Structure." SFAS No. 128 establishes financial accounting and reporting
standards for calculation of basic earnings per share and diluted earnings per
share. SFAS No. 128 supersedes APB No. 15 and is effective for the periods
ending after December 15, 1997, including interim periods. SFAS No. 129
establishes standards for disclosing information about an entity's capital
structure. It eliminates the exemption of nonpublic entities from certain
disclosure requirements of accounting standards previously issued. SFAS No. 129
is effective for financial statements for periods ending after December 15,
1997. The Company will adopt the standards in the year ending December 31,

                                       10
<PAGE>
 
1997. The cumulative effect of adopting SFAS No. 128 and SFAS No. 129 did not
have a material impact on the condensed consolidated financial statements for
the three months ended March 31, 1997 and 1996, respectively.

         This quarterly report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21A of the Securities Exchange Act of 1934, as amended, which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth below and those discussed in the Company's Form 10-K
for the year ended December 31, 1996 on file with the Securities and Exchange
Commission.


BUSINESS RISKS

DEPENDENCE UPON THE UNDERLYING PC INDUSTRY; DEPENDENCE ON CURRENT PC INDUSTRY 
-----------------------------------------------------------------------------
STANDARDS
---------

     The demand for the Company's system management software depends principally
on (i) PC manufacturers and other customers licensing the Company's software
rather than developing their own system management software, (ii) the market
acceptance of the products incorporating the Company's software sold by the
Company's original equipment manufacturer ("OEM") customers, (iii) the emergence
of new PC technologies that require system management software solutions to
provide functionality, user value and performance, and (iv) the technological
competence of the Company's core products. Sales of PCs fluctuate substantially
from time to time based on numerous factors, including general economic
conditions in the markets for the Company's customers' products, new hardware
and software product introductions, demand for new applications and shortages of
key components. Further, the markets in the PC industry are extremely
competitive and characterized by rapid and frequent price reductions.

     The introduction of new hardware architectures, microprocessors, peripheral
equipment and operating systems within the PC industry has increased the
complexity, time to market and cost to develop PCs. A number of computer
manufacturers, including IBM Corporation ("IBM") and Compaq Computer Corporation
("Compaq"), develop their own BIOS products to achieve compatibility with and
integrate new technologies into their products. While the Company believes that
price and time-to-market pressures will continue to foster a trend among its
customers and potential customers to outsource system management software
requirements to third parties, there can be no assurance that this trend will
continue or will not reverse itself, which would have a material adverse effect
on the Company's business, financial condition and results of operations.

     The Company's software to date has been primarily based on central
processing units ("CPUs") designed by or compatible with those of Intel
Corporation ("Intel") and operating system software designed by Microsoft Corp.
("Microsoft"). If the market for Intel and Intel-compatible CPUs with x86
architecture is materially diminished or if another CPU, such as Motorola,
Inc.'s "PowerPC," achieves a high degree of success, demand for the Company's
current software would be reduced. In addition, most of the Company's software
has been installed on computers using Microsoft's MS/DOS or Windows operating
systems. If Microsoft's operating systems cease to be the dominant operating
systems for the PC industry, or if PC manufacturers use other operating systems,
which are not compatible with MS/DOS or Windows, the Company could experience
increased product development costs and/or diminished revenues.

                                       11
<PAGE>
 
CONCENTRATION OF REVENUES FROM DESKTOP BIOS
-------------------------------------------

         The Company depends on sales of desktop BIOS for a substantial majority
of its revenues. The Company has not generated substantial revenues from the
sale of other products to date, including sales of mobile PC products. If sales
of the Company's desktop BIOS decline for any reason, the Company's business,
financial condition and results of operations would be adversely affected,
unless the Company is able to replace those sales with increased sales of other
products. Sales of desktop BIOS could decline for a number of reasons, including
a shift in the market for PCs away from desktop PCs in favor of mobile PCs.

COMPETITION FROM SYSTEM MANAGEMENT  SOFTWARE  COMPANIES AND OTHER  PARTICIPANTS,
-------------------------------------------------------------------------------
INCLUDING  MICROSOFT AND INTEL, IN THE PC INDUSTRY
--------------------------------------------------

     The markets for the Company's software are highly competitive. The Company
faces competition primarily from other system management software companies,
including American Megatrends, Inc., Phoenix Technologies Ltd. and SystemSoft
Corporation, as well as in-house software development staffs of current and
prospective customers. Certain of the companies with which the Company competes
or may in the future compete have substantially greater financial, marketing,
sales and support resources and greater brand name and technology leadership
recognition than the Company. There can be no assurance that the Company will be
able to develop software comparable or superior to software offered by its
competitors. In addition, the PC market experiences intense price competition
and the Company expects that, in order to remain competitive, it may have to
decrease unit prices on some or all of its software products. Any such decrease
would have a material adverse effect on the Company's business, financial
condition and results of operations.

     The Company believes that interdependencies may develop between system
management software companies and their customers, which would need to be
overcome in order to replace an entrenched competitor. While the Company
believes that such entrenchment may benefit the Company in its existing
relationships with key participants in the desktop PC market, customer
entrenchment may make it more difficult for the Company to displace entrenched
competitors or increase market presence, particularly in the mobile PC market,
where competitors may already have strong relationships with certain mobile PC
manufacturers. Intel has entered into formal agreements with, and has become a
significant shareholder in, Phoenix Technologies Ltd. and SystemSoft
Corporation. In addition, SystemSoft Corporation has entered into agreements
with Microsoft, IBM and Compaq to license its PC Card software.

     Operating system software vendors may in the future enter the Company's
primary markets as direct competitors or incorporate enough features into their
products so as to reduce the need for the Company's products. Microsoft includes
basic PC Card software in its Windows 95 operating system and has announced the
inclusion of full PC Card software support in its next generation Windows 9x and
Windows NT operating systems. Microsoft's recently released Windows CE operating
system includes Hardware Abstraction Layer (HAL) software that incorporates
system management software features. As software developers provide greater
functionality and features, user value and performance in their products that
eliminate or reduce the need for the Company's system management software, the
market for the Company's products could be materially diminished. In addition,
chipset manufacturers, including Intel, may increase their presence in the
motherboard manufacturing market, which may have an adverse effect on the
Company's OEM customers. There can be no assurance that other participants in
the PC industry will not develop products and solutions that reduce the demand
or obviate the need for the Company's products.

ABILITY TO RESPOND TO RAPID TECHNOLOGICAL CHANGE
------------------------------------------------

     The market for system management software is characterized by rapidly
changing technology, evolving industry standards and frequent new product
introductions. The general trend in the PC industry is toward shorter product
life cycles, resulting in rapid product and technology obsolescence. The life
cycle of the Company's products is highly dependent on the life cycles of the
products sold by its customers, who are primarily in the desktop PC industry.
Although the Company's core products, specifically, the 

                                       12
<PAGE>
 
desktop and embedded device BIOS and PC Card software, may have a life cycle as
long as several years, specific customized adaptations of the Company's core
products are generally expected to have a life cycle of six months to one year.
The Company's future success will depend upon its ability to enhance its core
software and to develop and introduce new software which keeps pace with
technological developments and evolving industry standards as well as to respond
to its customers' and end-users' demand for greater features and functionality.
The Company is currently developing certain technologies that it will need to
remain competitive. There can be no assurance that the Company will be
successful in developing such enhancements or new software, or, even if
successful, that it will not experience delays in achieving such developments.
Any failure or delay by the Company to develop such enhancements or new software
or the failure of its software to achieve market acceptance would adversely
affect the Company's business, financial condition and results of operations. In
addition, there can be no assurance that products or technologies developed by
others will not render the Company's software or technologies non-competitive or
obsolete.

DEPENDENCE ON KEY CUSTOMER RELATIONSHIPS; CONCENTRATION OF CREDIT RISK
----------------------------------------------------------------------

     The Company believes that its success to date has been largely due to its
relationship with participants in the desktop PC industry, particularly OEMs in
the desktop PC market. The Company works closely with its customers to provide
quick response to their product design needs and assists them in evaluating new
technological developments as they affect future products and enhancements to be
sold by the Company's customers. The loss of any one of these strategic
relationships or any other significant customer in the PC industry could
adversely affect the Company's product development efforts, business, financial
condition and results of operations.

     For the three month period ended March 31, 1997, Vobis accounted for
approximately 9% of the Company's total revenues. The loss of any key customer
or the inability of the Company to replace revenues provided by a key customer
would have a material adverse effect on the Company's business, financial
condition and results of operations. Revenues from the distribution of the
Company's PC Card software accounted for 2% of the Company's total revenues in
the three month period ended March 31, 1997.

     The Company's customer base consists primarily of motherboard manufacturers
and OEMs in the desktop PC market, and as a result the Company maintains
individually significant receivable balances from these customers. If these
customers fail to satisfy their payment obligations, the Company's business,
financial condition and results of operations would be adversely affected.

UNCERTAIN ACCEPTANCE IN NEW AND DEVELOPING MARKETS
--------------------------------------------------

     The Company's future success is dependent on customer acceptance of new
products and penetration of markets outside the desktop PC market. There can be
no assurance that the Company will be able to expand its products and
technologies into the mobile PC, embedded device and network computing and
Internet markets or that the Company will be able to increase its market
presence in the desktop PC market. Expansion of the Company's software and
technology into the mobile PC market will depend primarily on the Company's
ability to replace entrenched competitors. Penetration of markets outside the
desktop PC market, such as the embedded device market, will depend upon the
development and availability of system management software providing the
necessary functionality and customer acceptance of such new technology. There
can be no assurance that the Company will be able to develop or obtain from
third parties the necessary software and technology to penetrate these markets,
or that, if such software and technology is developed by the Company or obtained
from third parties through licensing, which may include payments of license fees
or royalties in advance, the Company will be able to successfully distribute
such products. There can be no assurance that such products will not be
developed by others rendering the Company's products non-competitive or
obsolete. In addition, there can be no assurance that the Company will not
experience difficulties that could delay or prevent 

                                       13
<PAGE>
 
the successful development, introduction and marketing of such new products, or
that such products will achieve market acceptance.

     Any increase in the demand for the Company's embedded device products is
dependent upon the increasing use and complexity of embedded computer systems in
new and traditional products. No assurance can be given that this trend will
continue or, even if it does, that the Company will be able to design system
management software that will address the unique requirements of the embedded
device market. Further, since the Company's experience and expertise are based
on Intel x86 architecture, the Company's success in the embedded device market
is significantly dependent on Intel's continued commitment to, and the increased
presence of x86 architecture in, this market. There can be no assurance that
Intel will not de-emphasize or withdraw its support of the embedded device
market, or that the trend toward x86 architecture in the embedded device market
will continue, any of which could result in a material adverse effect on the
Company's growth strategies, financial condition and results of operations.

     Certain of the markets for the Company's existing and future products, such
as the Internet and private internet protocol networks ("Intranet"), have only
recently begun to develop and are rapidly evolving. Demand and market acceptance
for recently introduced or developing products are subject to a high level of
uncertainty and risk. Critical issues concerning the commercial use of the
Internet remain unresolved and could adversely affect the growth of Internet
use. There can be no assurance that commerce and communication over the Internet
or Intranet will become widespread, or that the Company's planned products
addressing the Internet and Intranet markets will become widely accepted.
Because these markets for the Company's existing and developing products are new
and rapidly emerging, it is difficult to predict the future growth rate, if any,
and size of these markets. There can be no assurance that such markets for the
Company's existing and developing products and technology will develop or that
such products will be accepted. If these markets fail to develop, develop more
slowly than anticipated or become saturated with competitors, or if the
Company's products do not obtain customer acceptance, the Company's business,
financial condition and results of operations could be materially adversely
affected.

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; SEASONALITY
--------------------------------------------------------

     The Company has experienced and expects to continue to experience
fluctuations in its quarterly results of operations. The Company's revenues are
affected by a number of factors, including the demand for PCs and embedded
devices, timing of new product introductions, product mix, volume and timing of
customer orders, activities of competitors and the ability of the Company to
penetrate new markets. The Company's business is seasonal with revenues
generally increasing in the fourth quarter as the result of increased PC
shipments during the holiday season. Consequently, during the three quarters
ending in March, June and September, the Company has historically not been as
profitable as in the quarter ending in December. In addition, the Company's
revenues and profits have historically decreased in the first quarter of each
year as compared with the fourth quarter of the previous year. The Company
generally ships orders as they are received and, as a result, has little or no
backlog. Quarterly revenues and results of operations therefore depend on the
volume and timing of orders received during the quarter, which are difficult to
forecast. Because the Company's staffing and other operating expenses are based
on anticipated revenues, delays in the receipt of orders can cause significant
variations in results of operations from quarter to quarter. The Company also
may choose to reduce prices, increase spending in response to competition or
pursue new market opportunities, each of which decisions may adversely affect
the Company's business, financial condition and results of operations.
Therefore, the Company believes that period-to-period comparisons of its
revenues and operating results are not necessarily meaningful and should not be
relied upon as indicators of future performance.

     Due to all of the foregoing factors, it is likely that in some future
quarters the Company's operating results will be below the expectations of
public market analysts and investors. Regardless of the general outlook for the
Company's business, the announcement of quarterly results of operations below

                                       14
<PAGE>
 
analyst and investor expectations is likely to result in a decline in the
trading price of the Company's Common Stock.

VARIATIONS IN OPERATING RESULTS
-------------------------------

     The revenue growth rates experienced by the Company to date may not be
indicative of future growth rates and there can be no assurance that the Company
will remain profitable in the future. Future results of operations may fluctuate
significantly based upon numerous factors including the demand for PCs and
embedded devices, the timing of new product introductions, product mix, volume
and timing of customer orders, activities of competitors and the ability of the
Company to penetrate new markets. The volume and timing of new contracts and
delays in the achievement of milestones could have a significant impact on
operating results for a particular quarter.

DEPENDENCE ON KEY PERSONNEL; ABILITY TO ATTRACT AND RETAIN KEY TECHNICAL 
------------------------------------------------------------------------
EMPLOYEES
---------

     The Company's success to date has depended to a significant extent upon a
number of key management and technical employees. The loss of services of one or
more of these key employees, particularly George C. Huang, the Company's
Chairman of the Board, President and Chief Executive Officer; Lyon T. Lin,
General Manager, Taiwan and President, Award Software Hong Kong Limited, Taiwan
Branch; and Maurice W. Bizzarri, the Company's Vice President, Engineering could
have a material adverse effect on the Company's business, financial condition
and results of operations. Except for the Company's employees in Germany, none
of the Company's employees is party to an employment agreement with the Company.
The Company believes that its future success will also depend in large part upon
its ability to attract and retain highly skilled technical, management and sales
and marketing personnel. Moreover, because the development of the Company's
software requires knowledge of computer hardware, operating system software,
system management software and application software, key technical personnel
must be proficient in a number of disciplines. Competition for such technical
personnel is intense, and the failure of the Company to hire and retain talented
technical personnel or the loss of one or more key employees could have an
adverse effect on the Company's business, financial condition and results of
operations.

     Future growth, if any, of the Company will require additional engineering,
sales and marketing, financial and administrative personnel, to expand customer
services and support and to expand operational and financial systems. There can
be no assurance that the Company will be able to attract and retain the
necessary personnel to accomplish its growth strategies or that it will not
experience constraints that will adversely affect its ability to satisfy
customer demand in a timely fashion. If the Company's management is unable to
manage growth effectively, the Company's business, financial condition and
results of operations could be adversely affected.

MANAGEMENT OF GROWTH
--------------------

     The growth of the Company's business and, in particular, the Company's
customer base, has placed, and is expected to continue to place, a strain on the
Company's management systems and resources. The Company's ability to compete
effectively and manage future growth, if any, will require the Company to
continue to improve its financial and management controls, reporting systems and
procedures on a timely basis and expand, train and manage its work force. There
can be no assurance that the Company will be able to do so successfully, and the
failure to do so would have a material adverse effect upon the Company's
business, financial condition and results of operations. The Company's success
will depend to a significant degree on the ability of its executive officers and
other members of its senior management, none of whom has any prior experience
managing public companies in their current roles, to manage future growth, if
any.

                                       15
<PAGE>
 
INTERNATIONAL OPERATIONS; CURRENCY FLUCTUATIONS; INTERNATIONAL UNREST
---------------------------------------------------------------------

     The Company operates on a multinational basis, and a significant portion of
its business is conducted in currencies other than the U.S. Dollar. As a result,
the Company is subject to various risks, including exposure to currency
fluctuations, greater difficulty in administering its global business, multiple
regulatory requirements and other risks associated with international sales,
such as import and export licenses, political and economic instability,
overlapping or differing tax structures, trade restrictions, changes in tariff
rates, different legal regimes, difficulty in protecting intellectual property,
enforcing agreements and collecting accounts receivable. During the three month
period ended March 31, 1997, approximately 44% and 3% of the Company's revenues
were denominated in New Taiwan Dollars and German Marks, respectively. While the
impact of foreign exchange rate movements have not had a material impact on the
Company's financial statements, there can be no assurance that fluctuation in
foreign currency exchange rates will not have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
does not currently engage in foreign currency hedging transactions. There can be
no assurance that exchange rate fluctuations will not have a material adverse
effect on the Company's business, financial condition or results of operations.
The Company's business, financial condition or results of operations could be
adversely affected by factors associated with international operations such as
changes in foreign currency exchange rates, uncertainties relative to regional
economic circumstances, political instability in emerging markets, and
difficulties in staffing and managing foreign operations, as well as by other
risks associated with international activities.

         Award Software Hong Kong Limited, the company's wholly owned
subsidiary, is incorporated under the laws of Hong Kong ("Award Hong Kong").
Substantially all of the Company's Asian desktop motherboard and OEM
manufacturing and design facilities are operated through Award Hong Kong's
branch office located in Taipei, Taiwan. These operations could be severely
affected by national or regional political instability in China, including
instability which may occur in connection with a change in leadership in China,
change of control of Hong Kong from the United Kingdom to China, by evolving
interpretation and enforcement of legal standards, by conflicts, embargoes,
increased tensions or escalation of hostilities between China and Taiwan and by
other trade customs and practices that are dissimilar to those in the United
States. Interpretation and enforcement of China's laws and regulations continues
to evolve and the Company expects that differences in interpretation and
enforcement will continue in the foreseeable future.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
--------------------------------------------

     The Company's success depends in significant part on the development,
maintenance and protection of its intellectual property. The Company regards all
of its software as proprietary and attempts to protect it with a combination of
patents, copyrights, trademarks and trade secrets, employee and third-party
nondisclosure agreements and other methods of protection. Despite these
precautions and the protection of copyright laws, it may be possible for
unauthorized third parties to copy the Company's software or to reverse engineer
or obtain and use information that the Company regards as proprietary. The
Company has patent applications pending in the U.S. and/or abroad on six
inventions, three of which are owned jointly with a third party. There are
currently no issued patents covering the Company's products. However, the
Company does not generally rely on patents to protect its products. The Company
licenses its object and source code under written license agreements. Certain
provisions of such licenses, including provisions protecting against
unauthorized use, copying, transfer and disclosure of the licensed programs, may
be unenforceable under the laws of certain jurisdictions. In addition, the laws
of some foreign jurisdictions, including Taiwan, do not protect the Company's
proprietary rights to the same extent as do the laws of the United States. There
can be no assurance that the protections put in place by the Company will be
adequate.

     Significant and protracted litigation may be necessary to protect the
Company's intellectual property to determine the scope of the proprietary rights
of others or to defend against claims of infringement. Moreover, although the
Company is not currently involved in any litigation with respect to intellectual
property rights, in the past there have been allegations that certain portions
of the Company's core BIOS infringed on a third party's copyrights. In response,
the Company rewrote certain software routines in a

                                       16
<PAGE>
 
"clean room" procedure and upgraded its customers to the new version of such
software routines in order to avoid any further allegations of infringement. The
Company believes that its software does not infringe the copyrights of any third
parties. However, there can be no assurance that other parties will not make
allegations of infringement in the future. Such assertions could require the
Company to discontinue the use of certain software codes or processes, to cease
the manufacture, use and sale of infringing products, to incur significant
litigation costs and expenses and to develop non-infringing technology or to
obtain licenses to the alleged infringing technology. Although the Company has
been able to acquire licenses from third parties in the past, there can be no
assurance that the Company would be able to develop alternative technologies or
to obtain such licenses or, if a license were obtainable, that the terms would
be commercially acceptable to the Company in the event such assertions are made
in the future.

VOLATILE MARKET FOR STOCK
-------------------------

     The market for the Company's stock is highly volatile. The trading price of
the Company's Common Stock has been and will continue to be subject to
fluctuations in response to financial condition and results of operations,
announcements of technological innovations or new products by the Company and
its competitors, changes in the Company's or its competitors' product mix or
product direction, changes in the Company's revenue mix and revenue growth
rates, changes in expectations of growth for the PC industry, as well as other
events or factors which the Company may not be able to influence or control.
Statements or changes in opinions, ratings or earnings estimates made by
brokerage firms and industry analysts relating to the market in which the
Company does business, companies with which the Company competes or relating to
the Company specifically could have an immediate and adverse effect on the
market price of the Company's stock. In addition, the stock market has from time
to time experienced extreme price and volume fluctuations that have particularly
affected the market price for many high-technology companies and that often have
been unrelated to the operating performance of these companies. These broad
market fluctuations may adversely affect the market price of the Company's
Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE
-------------------------------

     Sales of a substantial number of shares of Common Stock in the public
market could adversely affect the market price for the Company's Common Stock.
Certain shares of Common Stock held by existing shareholders are "restricted
securities" as such term is defined in Rule 144 under the Securities Act of
1933, as amended (the "Act") (the "Restricted Shares"). Restricted Shares may be
sold in the public market only if registered or if they qualify for an exemption
from registration under Rules 144, 144(k) or 701 or Regulation S promulgated
under the Act. Recently, the Securities and Exchange Commission enacted a new
rule effective April 29, 1997 shortening the holding periods under Rule 144 to
permit resales of limited amounts of Restricted Shares after one year and
unlimited amounts of Restricted Shares by non-affiliates of the Company after
two years. Further, the Company, all directors and executive officers and
certain shareholders of the Company had agreed not to sell or otherwise dispose
of any shares of Common Stock for a period of 180 days after October 24, 1996,
which period expired April 23, 1997.

                                       17
<PAGE>
 
PART II.  OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.
          (a)      Exhibits

                   The following exhibits are filed herewith:

                        Exhibit 10.18    1997 Compensation Plan.

                        Exhibit 11.1     Computation of Net Income per Share.

                        Exhibit 27       Financial Data Schedule.

          (b)      Reports on form 8-K

                   No reports on Form 8-K were filed during the three
                   month period for which this report is filed.

                                       18
<PAGE>
 
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                   AWARD SOFTWARE INTERNATIONAL, INC.


May 9, 1997                        By:      /s/ George C. Huang
                                            -------------------
                                            George C. Huang
                                            Chairman of the Board, President
                                            and Chief Executive Officer

May 9, 1997                        By:      /s/ Kevin J. Berry
                                            ------------------
                                            Kevin J. Berry
                                            Vice President, Finance, Chief 
                                            Financial Officer,
                                            Treasurer and Secretary

                                       19
<PAGE>
 
                                  EXHIBIT INDEX


Exhibit No.                         Description                    Page Number


Exhibit 10.18        1997 Compensation Plan.                          21

Exhibit 11.1         Computation of Net Income per Share.             23

Exhibit 27           Financial Data Schedule.                         24



                                     20