<PAGE>   1
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              --------------------
                    
                                    FORM 10-Q

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

                                       OR

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

                FOR THE TRANSITION PERIOD FROM ______ TO _______

                        COMMISSION FILE NUMBER: 000-23260


                             ONEWORLD SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)


              DELAWARE                                         94-3095680
   (State or other jurisdiction of                          (I.R.S. Employer
   incorporation or organization)                          Identification No.)

                              1144 EAST ARQUES AVE.
                               SUNNYVALE, CA 94086
          (Address of principal executive offices, including zip code)

                                 (408) 523-1100
              (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 [ ]

The number of shares of Common Stock outstanding as of July 31, 1998 was
17,426,859.
--------------------------------------------------------------------------------


<PAGE>   2






                             ONEWORLD SYSTEMS, INC.

                                    FORM 10-Q

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                                       Page
                                                                                                                       ----
<S>                                                                                                                    <C>
PART I.  FINANCIAL INFORMATION

         Item 1. Consolidated Financial Statements.......................................................................3

                 Condensed Consolidated Balance Sheets
                     as of June 30, 1998 and March 31, 1998..............................................................3

                 Condensed Consolidated Statements of Operations
                     for the three months ended June 30, 1998 and 1997...................................................4

                 Condensed Consolidated Statements of Cash Flows
                     for the three months ended June 30, 1998 and 1997...................................................5

                 Notes to Condensed Consolidated Financial Statements....................................................6

         Item 2. Management's Discussion and Analysis of Financial Condition
                  and Results of Operations..............................................................................8


PART II. OTHER INFORMATION

         Item 1. Legal Proceedings......................................................................................15

         Item 2. Changes in Securities/Recent Sales of Unregistered Securities..........................................15

         Item 3. Defaults Upon Senior Securities........................................................................15

         Item 4. Submission of Matters to a Vote of Security Holders....................................................15

         Item 5. Other Information......................................................................................15

         Item 6. Exhibits and Reports on Form 8-K.......................................................................15


SIGNATURES..............................................................................................................16

</TABLE>


<PAGE>   3


                          PART I. FINANCIAL INFORMATION

                  ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

                             ONEWORLD SYSTEMS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                       June 30, 1998     March 31, 1998
                                                           -------         -------
<S>                                                    <C>               <C>    
ASSETS
Current assets:
     Cash and cash equivalents                             $ 4,876         $ 3,097
     Note receivable from Boca Research, Inc.                5,855              --
     Accounts receivable, net                                   27           8,160
     Inventories, net                                           --           2,351
     Other current assets                                      313             253
                                                           -------         -------
        Total current assets                                11,071          13,861

Property and equipment, net                                    526           4,049
Other assets                                                    65              63
                                                           -------         -------
        Total assets                                       $11,662         $17,973
                                                           =======         =======


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                      $   803         $ 7,625
     Accrued and other liabilities                           4,134           6,003
                                                           -------         -------
        Total current liabilities                            4,937          13,628

Stockholders' equity                                         6,725           4,345
                                                           =======         =======
        Total liabilities and stockholders' equity         $11,662         $17,973
                                                           =======         =======
</TABLE>


          See accompanying Notes to Consolidated Financial Statements


                                       3
<PAGE>   4




                             ONEWORLD SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                Three months ended June 30,
                                                                   1998               1997
                                                                --------          --------
<S>                                                             <C>               <C>     
Net revenue                                                     $ 12,365          $ 15,907
Cost of revenue                                                    9,549            10,316
                                                                --------          --------
     Gross profit                                                  2,816             5,591
                                                                --------          --------

Operating expenses:
     Research and development                                      2,537             2,422
     Marketing and sales                                           2,781             3,793
     General and administrative                                    1,111             1,408
     Restructuring costs                                             404                --
                                                                --------          --------
        Total operating expenses                                   6,833             7,623
                                                                --------          --------
        Loss from operations                                      (4,017)           (2,032)
                                                                --------          --------

Other income, net:
     Gain on sale of modem operations                              6,128                --
     Other income                                                     12                57
                                                                --------          --------
        Total other income, net                                    6,140                57
                                                                --------          --------
     Income (loss) before income taxes                             2,123            (1,975)
     Income tax benefit                                               22                --
                                                                --------          --------
        Income (loss) from continuing operations                   2,145            (1,975)
                                                                --------          --------

Discontinued operations:
     Income from discontinued operations                              90                --
                                                                --------          --------

        Net income (loss)                                       $  2,235          $ (1,975)
                                                                ========          ========


Basic per share data:
     Income (loss) per share from continuing operations         $   0.12          $  (0.12)
     Income per share from discontinued operations                  0.01                --
                                                                --------          --------
        Net income (loss) per share                             $   0.13          $  (0.12)
                                                                ========          ========

Diluted per share data:
     Income (loss) per share from continuing operations         $   0.12          $  (0.12)
     Income per share from discontinued operations                  0.01                --
                                                                --------          --------
        Net income (loss) per share                             $   0.13          $  (0.12)
                                                                ========          ========

Shares used in basic per share computations                       17,163            16,933
Dilutive effect of stock options                                     201                --
                                                                --------          --------
Shares used in diluted per share computations                     17,364            16,933
                                                                ========          ========
</TABLE>

          See accompanying Notes to Consolidated Financial Statements


                                       4
<PAGE>   5


                             ONEWORLD SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                        Three months ended June 30,
                                                                         1998                 1997
                                                                         -------          -------
<S>                                                                      <C>              <C>     
OPERATING ACTIVITIES:
     Net income (loss)                                                   $ 2,235          $(1,975)
     Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
        Depreciation and amortization                                        570              938
        Gain on sale of modem operations                                  (6,128)              --
        Changes in operating assets and liabilities:
            Accounts receivable, net                                      (1,145)          (4,440)
            Inventories                                                      218             (457)
            Income taxes                                                      --            7,665
            Other current assets                                             105             (216)
            Accounts payable                                               2,816           (3,364)
            Accrued and other liabilities                                   (693)            (545)
                                                                         -------          -------
     Net cash used in operating activities of:
        Continuing operations                                             (2,022)          (2,394)
        Discontinued operations                                             (184)              --
                                                                         -------          -------
            Net cash used in operating activities                         (2,206)          (2,394)
                                                                         -------          -------

INVESTING ACTIVITIES:
     Proceeds from sale of modem operations                                4,000             (115)
     Purchases of property and equipment                                     (22)              --
     Other assets                                                             (2)              54
                                                                         -------          -------
             Net cash provided by (used in) investing activities           3,976              (61)
                                                                         -------          -------

FINANCING ACTIVITIES:
     Repayments under line of credit                                          --           (4,241)
     Proceeds from issuance of Common Stock, net                               8              107
                                                                         -------          -------
            Net cash provided by (used in) financing activities                8           (4,134)
                                                                         -------          -------

Net increase (decrease) in cash and cash equivalents                       1,778           (6,589)
Cash and cash equivalents at beginning of period                           3,098            9,687
                                                                         -------          -------
Cash and cash equivalents at end of period                               $ 4,876          $ 3,098
                                                                         =======          =======

SUPPLEMENTAL DISCLOSURES:
     Cash paid:
        Interest                                                         $   198          $   104
        Income taxes                                                     $    19          $    --
     Non-cash investing and financing activities:
        Sale of modem operations in exchange for note receivable
        from Boca Research, Inc.                                         $ 5,855          $    --
        Warrants issued to Boca Research, Inc.                           $   140          $    --
</TABLE>

          See accompanying Notes to Consolidated Financial Statements


                                        5
<PAGE>   6



                             ONEWORLD SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.    DESCRIPTION OF BUSINESS

      OneWorld Systems, Inc. ("OneWorld Systems" or the "Company") (founded in
      1989 as "Global Village Communication, Inc." and incorporated in
      Delaware), designs, develops, manufactures and sells products that enhance
      and simplify wide area data communications for the small and medium size
      office market. The Company's recently introduced OneWorld 5000
      communications servers are designed to be versatile, easy-to-use,
      cost-effective and expandable solutions that combine Internet access and
      routing, remote access, on-line service access, and fax capabilities.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      BASIS OF PRESENTATION. The interim condensed consolidated financial
      statements as of June 30, 1998 and for the three months ended June 30,
      1998 and 1997, include all adjustments (consisting of only normal
      recurring adjustments) that in the opinion of management are necessary to
      present fairly the financial information set forth therein, in accordance
      with generally accepted accounting principles. Certain reclassifications
      have been made for consistent presentation. These financial statements
      should be read in conjunction with the Company's consolidated financial
      statements and notes thereto contained in the Company's Form 10-K for the
      fiscal year ended March 31, 1998.

      The Company's interim results are subject to fluctuation and largely based
      on sales from the Company's modem operations, which were sold in June 1998
      (see note 5 of the Notes to Condensed Consolidated Financial Statements).
      As a result, the Company believes the results of operations for the
      interim periods are not indicative of the results to be expected for any
      future period.

      NET INCOME (LOSS) PER SHARE. Basic earnings per share ("EPS") excludes
      dilution and is computed by dividing net income available to common
      stockholders by the weighted-average number of common shares outstanding
      for the period. Diluted EPS includes dilution and net income per share is
      computed using the weighted average number of common and dilutive common
      equivalent shares outstanding during the period. For the three months
      ended June 30, 1998 "in-the-money" dilutive options of approximately
      201,000 were included in the calculation of diluted EPS. For the three
      months ended June 30, 1997 "in-the-money" dilutive options of
      approximately 427,000 were not included in the calculation of diluted EPS
      as they were considered antidilutive. The Company has restated net income
      (loss) per share for the three months ended June 30, 1997 presented in the
      accompanying condensed consolidated financial statements to reflect net
      income (loss) per share on both a basic and a diluted basis.

      INVENTORIES. Inventories are stated at the lower of cost or market. Costs
      are calculated using standard cost, which approximates the lower of actual
      cost (first-in, first-out method) or market. Currently, the Company has no
      unreserved inventory. Inventories consisted of

<TABLE>
<CAPTION>

      (in thousands)                                        March 31, 1998
                                                                ------
            <S>                                             <C>   
            Purchased parts                                     $   --
            Work in process                                         --
            Finished goods                                       2,351
                                                                ------
               Total inventories                                $2,351
                                                                ======
</TABLE>


                                       6

<PAGE>   7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
----------------------------------------------------




3.    LINE OF CREDIT

      The Company has a line of credit agreement with a bank which expires in
      April 1999. As of June 30, 1998 there were no borrowings under this line
      of credit. As a result of the Company's sale of its modem operations, the
      line of credit has been suspended because the sale included most of the
      assets that would have secured borrowings under the line of credit. The
      Company is currently negotiating a new line of credit.

4.    DISCONTINUED OPERATIONS

      In the second quarter of fiscal 1997, the Company adopted a formal plan to
      discontinue its enterprise network server operation based in the United
      Kingdom (formerly, the Company's ISDN Division). The disposition of the
      division has been accounted for as a discontinued operation in accordance
      with Accounting Principles Board (APB) No. 30 and prior period financial
      statements have been restated to reflect the discontinuation of the
      enterprise network server operation.

5.    SALE OF MODEM OPERATIONS

      On June 18, 1998 the Company completed the sale of its modem operations to
      Boca Research, Inc. ("Boca"). Included in the sale were substantially all
      of the Company's assets related to the Company's single user modem and
      software product offerings. Additionally, the Company issued to Boca a
      five year Warrant to purchase up to 425,000 shares of the Company's Common
      Stock at approximately $1.00 per share. In consideration for these assets,
      Boca assumed certain of the Company's liabilities related to the modem
      operations, paid the Company $4.0 million in cash, and delivered a
      non-interest bearing promissory note for $6.0 million payable in two equal
      installments on September 30 and December 31, 1998, which has been
      recorded at $5.855 million. The difference between the booked value and
      the face value of the note will be recognized as interest income over the
      life of the note. During the quarter, the Company recorded a net gain of
      $6.1 million on the sale of its modem operations.

      The Condensed Consolidated Balance Sheet as of June 30, 1998, contained
      herein, gives full effect to the sale of the modem operations to Boca. The
      assets purchased by Boca included products which represented the
      overwhelming majority of the Company's revenues and gross profit. For the
      quarter ended June 30, 1998, these products accounted for approximately
      99% of the Company's reported net revenue and gross profit, and for the
      year ended March 31, 1998, these products accounted for approximately 95%
      of the Company's reported net revenue and approximately 88% of reported
      gross profit. The Company's modem operations sold to Boca were not
      separate from, nor accounted separately from, the other activities of the
      Company. Therefore, the Company is unable to accurately estimate the
      operating expenses associated with the assets sold to Boca.

6.    RESTRUCTURE COSTS

      On March 31, 1998 the Company announced a fundamental shift in business
      strategy to refocus its efforts on its new line of communication servers
      for small and medium size offices and a change of its name to OneWorld
      Systems, Inc. During the first fiscal quarter of 1999, the Company
      recorded a restructuring charge of approximately $404,000 comprised of
      additional one-time costs for severance and employee related costs
      (approximately $247,000), lease abandonment (approximately $88,000), and
      fixed asset write-offs (approximately $69,000) associated with the
      transition to OneWorld Systems.


                                       7


<PAGE>   8

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


The following discussion should be read in conjunction with the attached
condensed consolidated financial statements and notes thereto, and with the
Company's audited consolidated financial statements and notes thereto for the
fiscal year ended March 31, 1998. This report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Actual results could differ materially from those anticipated in forward-looking
statements as a result of the risk factors and other cautionary disclosures set
forth below and elsewhere in this report.

OVERVIEW

OneWorld Systems, Inc. ("OneWorld Systems" or the "Company") (founded in June
1989 as "Global Village Communication, Inc." and incorporated in Delaware),
designs, develops, manufactures and sells products that enhance and simplify
wide area data communications for the small and medium size office market. The
Company's recently introduced OneWorld 5000 communications servers are designed
to be versatile, easy-to-use, cost-effective and expandable solutions that
combine Internet access and routing, remote access, on-line service access, and
fax capabilities.

On March 31, 1998 the Company announced an agreement to sell its modem
operations to Boca Research, Inc. ("Boca") and unveiled a new corporate strategy
focusing on wide-area data communications for the small and medium size office.
The transaction closed June 18, 1998, and the Company changed its name to
OneWorld Systems, Inc. at that time.

Upon the close of the transaction, the Company ceased selling individual use
modems or other individual use communications systems. These products
represented substantially all of the Company's revenue during the first quarter
of fiscal 1999.

The Company's primary source of revenue in the future will be from its recently
introduced OneWorld 5000 communications server product line. The Company does
not expect to be profitable in the short-term, nor can there be any assurance
that the Company will ever achieve profitability.

The OneWorld 5000 family of communications servers will provide the major data
communications functions required by small businesses, including sending and
receiving faxes; Internet access and routing so that the entire office has
access to the Internet (not just one PC in the office); modem pooling so that
the entire office can share modems and access on-line services from any desk at
anytime; and remote access so that employees can dial into the office network
from home or on the road. In addition, the OneWorld 5000 family of
communications servers will be among the first to offer all these capabilities
simultaneously to both Windows and Macintosh users.

The Company's planned shipment of its server products is dependent upon the
completion of the development of the product. The Company may have difficulty
resolving these product development issues, or any other issues that may arise,
in a timely manner, which could delay the planned shipment of the new OneWorld
Systems communications server product line. Commercial acceptance of these
products is dependent on certain factors including the Company's sales and
marketing efforts, technical reviews by third parties, introductions of new
technologies or standards, performance of the Company's distributors and
suppliers, and announcements by the Company's competitors. Many of the Company's
future competitors have substantially greater financial, technical, sales,
marketing and other resources, as well as greater name recognition and a larger
customer base, than the Company. OneWorld products will not be sold through the
same channels as the Company's modem products were sold. Consequently, the
Company will be required to establish new distribution channels, including
expanding the Company's VAR channel. There can be no assurance that the Company
will be successful in establishing an effective distribution channel for its new
products. As a result, the Company believes that period-to-period comparisons of
its results of operations are not necessarily meaningful and should not be
relied upon as an indication of future performance.

In the past, the industry in which the Company competed was subject to short
product life cycles. As a result, the Company traditionally experienced a
reduction in the average selling prices of its products as the time from product
introduction elapses. There can be no assurances that similar pricing pressures
will not lead to reductions in average selling prices of the Company's new
servers.


                                       8

<PAGE>   9

The Company intends to ship products within a short period after receipt of an
order, consequently, the Company does not expect to have a material backlog of
unfilled orders, and shipments in any quarter will be substantially dependent on
orders booked in that quarter. The Company's expense levels are based in part on
its expectations as to future revenues. Therefore, the Company may be unable to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall of demand in relation to the
Company's expectations or any material delay of customer orders would have an
almost immediate adverse impact on the Company's results of operations and
liquidity. Fluctuations in operating results may also result in volatility in
the price of the Company's Common Stock.

In addition, announcements by the Company's competitors of new products with the
potential to replace products developed by the Company may cause customers to
defer purchasing the Company's products, which could have a material adverse
effect on the Company's results of operations. As a result of changing
technology and market factors, the Company is subject to the risk that its
inventories may rapidly become obsolete or that the Company may carry quantities
of certain products that exceed current or projected demand. While the Company
has written down inventory that it considers to be excess or obsolete, there can
be no assurance that the Company's write downs will be adequate, and a material
increase in such write-downs and returns over historical rates would have a
material adverse effect on the Company's results of operations and working
capital. There can be no assurance that the Company will be successful in
developing new products or enhancing its current products on a timely basis, or
that such new products or product enhancements will achieve market acceptance.

NET REVENUE

On June 18, 1998, the Company sold its modem operations to Boca Research. The
modem operations accounted for substantially all of the Company's revenue during
the quarter and in the previous fiscal year. Consequently, the comparisons below
should not be relied upon as predictors of future performance.

Net revenue includes revenue from gross shipments, licenses and royalties, less
reserves for returns and allowances. Net revenue decreased 22.3% to $12.4
million for the first quarter of fiscal 1999 as compared to $15.9 million for
the first quarter of fiscal 1998. The decrease in net revenue for the first
quarter of fiscal 1999 as compared to the same period in fiscal 1998 was
primarily attributable to decreased shipments of the Company's Teleport and PC
Card modem products and the Company's sale of its modem operations. The decline
in revenue was partially offset by an increase in OEM modem revenues. During the
quarter ended June 30, 1998, the Company's two largest customers accounted for
approximately 50% and 18%, respectively, of the Company's net revenue.
Substantially all revenues to these customers were from modem operations
products. The Company sold no modem operations products after the close of the
transaction with Boca Research on June 18, 1998.

International net revenue increased to $6.1 million or 49% of net revenues for
the first quarter of fiscal 1999 from $2.5 million or 16% of net revenue for the
first quarter of fiscal 1998. The increase in international revenue was
primarily due to an increase in international OEM modem product shipments.

Revenue reserves and allowances are established for estimated future returns due
to stock balancing and discontinued and nonsaleable products based on the
Company's past experience and internal forecasts. There can be no assurance that
the Company's historical experience regarding returns and allowances will
continue or that its projections will prove accurate. If the Company experiences
returns in excess of its reserves, the Company's results of operations could be
materially, adversely effected.

                                       9
<PAGE>   10
COST AND EXPENSES

On June 18, 1998, the Company sold its modem operations to Boca Research. The
modem operations accounted for substantially all of the Company's gross profit
and a significant portion of its research and development, marketing and sales,
and general and administrative expenses during the quarter and in the prior
fiscal year. Consequently, the comparisons below should not be relied upon as
predictors of future performance.

GROSS PROFIT

Cost of revenue primarily consisted of cost of materials, contract manufacturing
costs, manufacturing overhead expenses, royalty payments and warranty expenses.
The Company's gross profit as a percentage of net revenue decreased to 22% in
the first quarter of fiscal 1999 from 35% in the first quarter of fiscal 1998.
The gross profit margin decrease was primarily attributable to price reductions
on certain of the Company's modem products, a product mix change to lower margin
OEM business, and one-time costs associated with the transition to OneWorld
Systems. Gross profit margins are likely to fluctuate as a result of the sales
mix between lower and higher margin products, the nature and amount of licensing
and royalty income, and changes in distribution channels, as well as changes in
component and production costs, price reductions and reserve requirements.

RESEARCH AND DEVELOPMENT

Research and development expenses increased 5% to $2.5 million or 21% of net
revenues for the first quarter of fiscal 1999 from $2.4 million or 15% of net
revenues in the comparable quarter of fiscal 1998. The increase in research and
development expenses is primarily related to development, testing and
pre-production costs of the OneWorld 5000 communication server products. The
increase was partially offset by reductions in headcount and manufacturing
support costs resulting from the sale of the modem operations to Boca Research.

Development costs incurred in the research and development of new software
products and enhancements to existing software products are expensed as incurred
until technological feasibility has been established, in compliance with SFAS
No. 86, "Accounting for the Costs of Software to be Sold, Leased, or Otherwise
Marketed." Historically, software development has been substantially completed
concurrently with the establishment of technological feasibility, and,
accordingly, no costs have been capitalized to date.

MARKETING AND SALES

Marketing and sales expenses decreased 27% to $2.8 million or 23% of net
revenues in the first quarter of fiscal 1999 compared to $3.8 million or 24% of
net revenues during the same period of fiscal 1998. The decline in fiscal 1999
expenses was primarily attributable a reduction in advertising and promotion
expenses, as well as, a reduction in personnel costs associated with the sale of
the modem operations.

GENERAL AND ADMINISTRATIVE

General and administrative expenses decreased 21% to $1.1 million from $1.4
million between the first quarter of fiscal 1999 and the first quarter of fiscal
1998. General and administrative expenses remained essentially flat as a
percentage of net revenues at 9% of net revenues for first quarter of fiscal
1999 and for the same period of fiscal 1998. The decrease was primarily
attributable to a reduction in personnel costs associated with the sale of the
modem operations.

RESTRUCTURING COSTS

On March 31, 1998 the Company announced a fundamental shift in business strategy
to refocus its efforts on its new line of communication servers for small and
medium size offices and a change of its name to OneWorld Systems, Inc. During
the first fiscal quarter of 1999, the Company recorded a restructuring charge of
approximately $404,000 comprised of additional one-time costs for severance and
employee related costs (approximately $247,000), lease abandonment
(approximately $88,000), and fixed asset write-offs (approximately $69,000)
associated with the transition to OneWorld Systems.


                                       10

<PAGE>   11

NET OTHER INCOME

Net other income increased to $6.1 million or 50% of net revenues for the first
fiscal quarter of fiscal 1999 from $0.1 million or 1% of net revenues for the
first fiscal quarter of 1998. Net other income in the first fiscal quarter of
1999 included a gain on sale of the Company's modem operations of $6.1 million.

On June 18, 1998 the Company completed the sale of its modem operations to Boca
Research. Included in the sale were substantially all of the Company's assets
related to the Company's single user modem and software product offerings.
Additionally, the Company issued to Boca a Warrant to purchase up to 425,000
shares of the Company's Common Stock. In consideration for these assets, Boca
assumed certain of the Company's liabilities related to the modem operations,
paid to the Company $4.0 million in cash, and delivered a non-interest bearing
promissory note for $6.0 million payable in two equal installments on September
30, 1998 and December 31, 1998 (see note 5 of the Notes to Condensed
Consolidated Financial Statements). During the quarter, the Company recorded a
net gain of $6,1 million on the sale of its modem operations.

The effective tax rate for the first quarter of fiscal 1999 was 1% as compared
to zero in the first quarter of fiscal 1998. The increase relates to refunds of
prior periods state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents totaled $4.9 at June 30, 1998,
representing 42% of total assets. The Company's working capital was $6.1 million
at June 30, 1998 as compared to $0.2 million at March 31, 1998, an increase of
$5.9 million. The increase in working capital was primarily attributable to the
receipt of proceeds and elimination of certain liabilities associated with the
sale of the modem operations to Boca Research.

At June 30, 1998, the Company's principal source of liquidity was $4.9 million
in cash and future payments of notes receivable from Boca Research, Inc. (see
note 5 of the Notes to Condensed Consolidated Financial Statements).

The Company does not expect fiscal 1999 capital expenditures to exceed
historical levels and may possibly be reduced. During the past several quarters,
the Company has experienced significant negative cash flows from operations.
However, the Company currently believes that its existing cash and cash proceeds
from the sale of its modem operations (see note 5 of the Notes to Condensed
Consolidated Financial Statements), should enable the Company to meet its short
term needs. The preceding sentence is a forward-looking statement. The Company's
funding requirements may change at any time due to various factors, including
the Company's operating results, the results and timing of the Company's launch
of new products and services, the Company's ability to reduce or control various
operating expenses through cost containment measures or operating reductions,
the success of the Company's marketing efforts, technological advances and
competition. The Company may be required to issue additional debt or equity
securities which could substantially dilute the ownership of existing
stockholders. Any shortfall in funding could result in the Company having to
curtail the introduction or development of new products and its entry into new
markets, any of which could have a material adverse affect on the Company's
business, financial condition and results of operations.

YEAR 2000 ISSUES

The Company is aware of the potential issues facing the Company, its vendors and
its customers with respect to the ability for computer software to function
properly in the year 2000. The Company has assessed the impact on its corporate
information system for Year 2000 issues and has a plan to adopt a new
information system that will accommodate dates after 1999. The Company believes
that after conversion to the new software system, the year 2000 issue will not
pose significant operational problems for its computer system. The financial
impact of making the required systems changes is not expected to be material to
the Company's financial position, results of operation or cash flows. The
Company has been contemplating a decision to move to another information system
for other business reasons and will resolve any year 2000 issues by making the
conversion.

Additionally, the Company is in the process of reviewing the year 2000 issues
with its customers, suppliers and other business partners. There can be no
assurance made at this time, that all the systems of its customers, suppliers
and other business partners will be year 2000 compliant on a timely basis. If
said systems are not compliant, it could have a material adverse impact on the
Company.


                                       11

<PAGE>   12

The Company has commenced efforts to ensure that all products that the Company
produces will be fully year 2000 compliant. While this evaluation is not yet
complete, the Company believes that any costs incurred to bring its products
into compliance will not have a material impact on its financial position,
results of operation or cash flows. There can be no assurances, however, that
non-year 2000 compliant products would not result in the loss of or delay in
market acceptance of the Company's products.

CERTAIN FACTORS WHICH MAY AFFECT FUTURE PERFORMANCE

In addition to the other information in this Quarterly Report, one should
carefully consider the following factors in evaluating the Company.

PRODUCT DEVELOPMENT AND TECHNOLOGICAL CHANGE

The Company believes that its future success will depend on its ability to
develop new products on a timely and cost-effective basis that meet changing
customer needs and respond to emerging industry standards and other
technological changes. In particular, the Company must adapt its products to the
evolving technological standards of the various computer platforms and new
technical standards resulting from increases in data transmission speed and
wireless communication. Any failure by the Company to anticipate or respond
adequately to changes in technology and customer preferences or any significant
delay in product development or introduction would have a material adverse
effect on the Company's results of operations. Due in part to the factors
described above, the Company is subject to the risk that its inventories may
rapidly become obsolete or that the Company may carry quantities of certain
products that exceed current or projected demand. In addition, products as
complex as those offered by the Company may contain undetected errors or defects
when first introduced or as new versions are released. There can be no assurance
that, despite testing by the Company and by current and potential customers,
errors will not be found in new products after commencement of commercial
shipments resulting in a delay in market acceptance or a recall of such
products.

MARKET ANTICIPATION OF NEW PRODUCTS OR TECHNOLOGIES

Since the environment in which the Company will operate in the future is
characterized by rapid new product and technology introductions and generally
falling prices for existing products, the Company's customers may from time to
time postpone purchases in anticipation of such new product introductions or
lower prices. If such anticipated changes are viewed as significant by the
market, then this may have the effect of temporarily slowing overall market
demand and negatively impacting the Company's operating results.

COMPETITION

The market for the Company's products is intensely competitive and is
characterized by rapidly changing technology, evolving industry communication
standards and frequent new product introductions. The Company's OneWorld fax
server products compete primarily with dedicated fax servers, stand-alone fax
machines, electronic mail, centralized fax systems produced by independent
manufacturers such as Castelle, 4Sight, Cypress, and STF, as well as printer
vendors, including Apple and NEC, which offer fax capabilities with some of
their products. The Company's OneWorld Remote Access, Suite, Network Modem and
Combo servers compete with the same products in the fax server category, as well
as with remote access server router and modem pool products produced by
competitors such as Cisco Systems, Shiva, 3COM, and others. Other companies in
the personal computer industry could seek to expand their product offerings by
designing and selling products using competitive technology that could render
obsolete or have a material adverse effect on sales of the Company's future
products.

Many of the Company's competitors have substantially greater financial,
technical, sales, marketing and other resources, as well as greater name
recognition and a larger customer base, than the Company. In addition, the
market for the Company's server products is characterized by significant price
competition, and the Company expects that it will face increasing pricing
pressures from its competitors. Accordingly, there can be no assurance that the
Company will be able to provide products that compare favorably with the
products of the Company's competitors or that competitive pressures will not
require the Company to reduce its prices. Any material reduction in the price of
the Company's products could negatively affect gross profit as a percentage of
net revenue and could require the Company to increase unit sales in order to
maintain net revenue. There can be no assurance, however, that the Company would
be able to increase its unit sales or make up for a short fall. Any 

                                       12



<PAGE>   13

failure to increase unit sales or make up for a short fall in net revenue would
have a material adverse effect on the Company's financial condition and results
of operations.

DEPENDENCE ON MANUFACTURERS

Historically, the Company purchased fully manufactured and tested units from a
"turnkey" manufacturing subcontractor. The Company anticipated that it will
continue to utilize this manufacturing strategy for its new family of OneWorld
5000 communications servers. The Company believes that there are a number of
alternative contract manufacturers that could produce the Company's products.
However, it could take a significant period of time and result in significant
additional expense to qualify an alternative subcontractor and commence
manufacturing in the event of a reduction or interruption of production.
Therefore, the Company is highly dependent, on a short-term basis, on its
continued relationship with its "turnkey" manufacturing subcontractor and any
reduction, interruption, or termination of this relationship could have a
material adverse effect on the operating results of the Company. Components and
manufacturing services from the Company's suppliers are obtained on an as-needed
basis.

The Company has been, and will continue to be, dependent on sole or limited
source suppliers for certain key components used in its products, particularly
chip sets designed and manufactured by Rockwell International and Motorola. The
Company generally purchases sole or limited source components pursuant to
purchase orders placed from time to time in the ordinary course of business and
has no guaranteed supply arrangements with its sole or limited source suppliers.
Certain component suppliers, such as Rockwell, are also modem manufacturers and,
accordingly, could elect to satisfy their internal supply requirements rather
than the Company's purchase requirements. The Company at times in the past has
experienced delays in product development and difficulties in manufacturing
sufficient product to meet demand due to the inability of certain suppliers to
meet the Company's volume and schedule requirements. There can be no assurance
that the Company's suppliers will be able to meet the Company's requirements for
key components and failure to meet such requirements in the future could have a
material adverse effect on the Company's results of operations.

RELIANCE ON VALUE ADDED RESELLERS

The Company will distribute its new OneWorld 5000 communications servers through
national and regional value added resellers (VARs) and corporate resellers,
particularly those with a focus on serving the small and medium size office
market. The Company intends to increase the number of VARs by launching VAR
recruiting, training and support programs. There can be no assurance that the
Company will be successful in attracting existing or new VARs to distribute
these products, or that the VAR channel will be a successful distribution
channel for the OneWorld 5000 product family. Failure to attract these VARs or
their inability to sell the products would cause sales of such products to be
below Company expectations, and the Company's business, financial condition and
results of operations would be materially adversely affected.

DEPENDENCE ON KEY PERSONNEL

The Company's future success depends to a significant extent on its senior
management and other key employees, including key development personnel. The
loss of the services of any of these individuals or group of individuals could
have a material adverse effect on the Company's results of operations. The
Company believes that its future success will depend in large part on its
ability to attract and retain additional key employees. Competition for such
personnel in the computer industry is intense, and there can be no assurance
that the Company will be successful in attracting and retaining such personnel.
If the Company were to fail to replace or retain its key employees or attract
additional key employees, the Company's results of operations could be
materially adversely effected.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

The Company relies primarily on a combination of copyright and trademark laws,
trade secrets, confidentiality procedures and contractual provisions to protect
its proprietary rights. The Company has no patents or patent applications
pending. The Company seeks to protect its hardware, software, documentation and
other written materials under trade secret and copyright laws, which afford only
limited protection. The Company seeks to protect its brand names under trademark
and unfair competition laws. Despite the Company's efforts to protect its
proprietary rights, unauthorized parties may attempt to copy aspects of the
Company's products or to obtain and use information that the Company regards as
proprietary. Policing unauthorized use of the Company's products is difficult,
and while the Company is unable to determine the extent to which piracy of its
software products exists, software piracy can be expected to be a persistent
problem. In addition, the laws of 

                                       13



<PAGE>   14

some foreign countries do not protect the Company's proprietary rights to as
great an extent as do the laws of the United States. There can be no assurance
that the Company's means of protecting its proprietary rights will be adequate
or that the Company's competitors will not independently develop similar
technology.

The Company believes that, due to the rapid pace of innovation within the
communications software industry, the Company's success in establishing and
maintaining a technological leadership position is likely to depend more upon
the technological and creative skills of its personnel, continued innovation,
its marketing skills and customer support than on the various legal means of
protecting its existing technology.

The Company is aware of products in addition to its own that are marketed under
the trademark "OneWorld." There can be no assurance that litigation with respect
to these trademarks will not be instituted by any third parties. If any such
litigation were successful, the Company could be required to pay damages and
cease all use of a particular trademark. There can be no assurance that any loss
of the right to use a trademark would not reduce sales of the Company's
products. In any event, even if the Company were successful in any such
litigation, the legal and other costs associated with such litigation could be
substantial. As is customary in the Company's industry, the Company from time to
time receives communications from third parties asserting that the Company's
products infringe, or may infringe, the proprietary rights of third parties or
seeking indemnification against such infringement. There can be no assurance
that any such claims would not result in protracted and costly litigation. The
Company anticipates that the duration of its trademarks will be perpetual.

VOLATILITY OF STOCK PRICE

The market price of the Company's Common Stock has been volatile and trading
volumes have been relatively low. Factors such as variations in the Company's
revenue, operating results and cash flow and announcements of technological
innovations or price reductions by the Company, its competitors, or providers of
alternative products could cause the market price of the Company's Common Stock
to fluctuate substantially. In addition, the stock markets have experienced
significant price and volume fluctuations that particularly have affected
technology-based companies and resulted in changes in the market prices of the
stocks of many companies that have not been directly related to the operating
performance of those companies. Such broad market fluctuations may adversely
affect the market price of the Company's Common Stock.

ANTI-TAKEOVER PROVISIONS

The Company's Board of Director's has the authority to issue up to 5,000,000
shares of Preferred Stock and to determine the price, rights, preferences and
privileges of those shares without any further vote or action by the
stockholders. The rights of the holders of the Company's Common Stock will be
subject to, and may be adversely affected by, the rights of the holders of any
Preferred Stock that may be issued in the future. While the Company has no
present intention to issue shares of Preferred Stock, any such issuance could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company. In addition, the
Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which could have the effect of delaying or
preventing a change of control of the Company. Furthermore, certain provision of
the Company's Certificate of Incorporation may have the effect of delaying or
preventing changes in control or management of the Company, which could
adversely affect the market price of the Company's Common Stock.

UNCERTAIN INTERNATIONAL DEMAND

There can be no assurance that the Company will be able to attain international
demand for the its new OneWorld 5000 communications server products or that the
Company's distributors will be able to effectively meet that demand. Risks
inherent in the Company's international business activities generally include
unexpected changes in regulatory requirements, tariffs and other trade barriers,
costs and risks of localizing products for foreign countries, longer accounts
receivable payment cycles, difficulties in managing international operations and
distributors, potentially adverse tax consequences, repatriation of earnings,
the burdens of complying with a wide variety of foreign laws and changes in
demand resulting from fluctuations in exchange rates. In addition, the laws of
certain foreign countries do not provide protection for the Company's
intellectual property to the same extent as do the laws of the United States.

                                       14

<PAGE>   15



                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS  -  Not applicable.

ITEM 2.  CHANGES IN SECURITIES/RECENT SALES OF UNREGISTERED SECURITIES

In connection with the sale of the modem operations, the Company issued to Boca
Research a warrant to purchase up to 425,000 shares of the Company's Common
Stock at approximately $1.00 per share. The warrant was sold in a private
placement to Boca Research in reliance on Section 4(2) of the Securities Act of
1933, as amended. The warrant expires on June 18, 2003.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES  -  Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held a special meeting of Stockholders on June 8, 1998. The
following matters were approved by the stockholders by the votes indicated:
<TABLE>
<CAPTION>

                                                                                  Number of Shares
                                                       -----------------------------------------------------------------------
                                                                                                                   Broker
Matter:                                                     For             Against            Abstain            Non-Vote
---------------------------------------------------    --------------    ---------------    ---------------    ---------------
<S>                                                    <C>                  <C>                <C>              <C>      
To approve and adopt that certain Asset Purchase           8,642,429            576,118            162,469          7,475,853
Agreement dated March 31, 1998, and the transactions 
contemplated thereby, pursuant to which Boca Research,
Inc. a Florida Corporation, and Boca Global, Inc., a 
Florida Corporation and a wholly owned subsidiary of 
Boca Research, Inc., will purchase the Modem Business
from the Company. 

To approve and adopt a proposal to amend the              16,179,465            557,638            119,766                 --
Company's Certificate of Incorporation, as
amended, to change the name of the Company to
"OneWorld Systems, Inc."

To transact other such business as may properly           15,158,613            967,356            730,891                 --
come before the meeting.
</TABLE>

ITEM 5.  OTHER INFORMATION -  Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

    (a)  Exhibits

            4.9   Warrant to Purchase 425,000 Shares of Common Stock granted by
                  the Company to Boca Research, Inc., dated as of June 18, 1998

            27.1  Financial Data Schedule

     (b)  Reports on Form 8-K

          On April 1, 1998 the Company filed a Form 8-K in which the Company
          presented two press releases, dated March 31, 1998, "Boca Research to
          Acquire Global Village Modem Business" and "Global Village Unveils New
          Corporate Strategy For Small and Medium Size Office Networking Market;
          Sells Modem Business to Boca Research."


                                       15

<PAGE>   16

                                   SIGNATURES

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



                                          OneWorld Systems, Inc.



Date:    August 12, 1998                  /S/Neil Selvin
                                          --------------------------------------
                                          President and Chief Executive Officer
                                          (Principle Executive Officer)


Date:    August 12, 1998                  /S/Marc E. Linden
                                          --------------------------------------
                                          Senior Vice President Finance and
                                          Chief Financial Officer
                                          (Principle Financial and Accounting 
                                          Officer)



                                       16
<PAGE>   17

                               INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number                         Description
------                         -----------

<S>   <C>                                                                      
4.9   Warrant to Purchase 425,000 Shares of Common Stock granted by the Company
      to Boca Research, Inc., dated as of June 18, 1998

27.1  Financial Data Schedule
</TABLE>